# Leverage:
Loan Facility provide by the forex broker.
Leverage is the ratio of the amount capital used in a transaction to the required security deposit (margin). It is the ability to control large dollar amounts of a security with a relatively small amount of capital. Leveraging varies dramatically with different brokers, ranging from 2:1 to 1000:1
#Lot
The standard unit size of a transaction. Typically, one standard lot is equal to 100,000 units of the base currency, 10,000 units if it's a mini, or 1,000 units if it's a micro. Some dealers offer the ability to trade in any unit size, down to as little as 1 unit.
Standard Account
Trading with standard lot sizes, generally 100,000 units of the base currency. e.g. The pip value is $10 for EUR/USD.
Mini Account
Trading with mini lot sizes, generally 10,000 units of the base currency. e.g. The pip value is $1 for EUR/USD.
Micro Account
Trading with micro lot sizes, generally 1,000 units of the base currency. e.g. The pip value is $0.10 for EUR/USD
#Major Currency:
The eight most frequently traded currencies (USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD) are called the major currencies or the "majors." These are the most liquid and the most sexy.
All other currencies are referred to as minor currencies.
#Cross Currency:
A cross currency is any pair in which neither currency is the U.S. dollar. These pairs exhibit erratic price behavior since the trader has, in effect, initiated two USD trades. For example, initiating a long (buy) EUR/GBP is equivalent to buying a EUR/USD currency pair and selling GBP/USD. Cross currency pairs frequently carry a higher transaction cost.
#Commodity currency:
Currencies of countries that rely heavily on the export of commodities are often referred to as 'commodity currencies.' An important factor that any Forex trader should consider is that the value of commodity currencies usually rise and fall in tandem with the value of the country's main commodity exports. Both the value of the commodity and the country's trade balance, with respect to the commodity, are significant factors in the valuation of commodity currencies.
The most commonly traded commodity currencies are those of Canada (CAD), New Zealand (NZD) and Australia. (AUD)
Loan Facility provide by the forex broker.
Leverage is the ratio of the amount capital used in a transaction to the required security deposit (margin). It is the ability to control large dollar amounts of a security with a relatively small amount of capital. Leveraging varies dramatically with different brokers, ranging from 2:1 to 1000:1
#Lot
Standard Account
Trading with standard lot sizes, generally 100,000 units of the base currency. e.g. The pip value is $10 for EUR/USD.
Mini Account
Trading with mini lot sizes, generally 10,000 units of the base currency. e.g. The pip value is $1 for EUR/USD.
Micro Account
Trading with micro lot sizes, generally 1,000 units of the base currency. e.g. The pip value is $0.10 for EUR/USD
#Major Currency:
The eight most frequently traded currencies (USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD) are called the major currencies or the "majors." These are the most liquid and the most sexy.
All other currencies are referred to as minor currencies.
#Cross Currency:
A cross currency is any pair in which neither currency is the U.S. dollar. These pairs exhibit erratic price behavior since the trader has, in effect, initiated two USD trades. For example, initiating a long (buy) EUR/GBP is equivalent to buying a EUR/USD currency pair and selling GBP/USD. Cross currency pairs frequently carry a higher transaction cost.
#Commodity currency:
Currencies of countries that rely heavily on the export of commodities are often referred to as 'commodity currencies.' An important factor that any Forex trader should consider is that the value of commodity currencies usually rise and fall in tandem with the value of the country's main commodity exports. Both the value of the commodity and the country's trade balance, with respect to the commodity, are significant factors in the valuation of commodity currencies.
The most commonly traded commodity currencies are those of Canada (CAD), New Zealand (NZD) and Australia. (AUD)
Depend on: When goods export increase dollar value increase
#Base Currency, Quot Currency:
The base currency is the first currency in any currency pair. The currency quote shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6350, then one USD is worth CHF 1.6350.
In the forex market, the U.S. dollar is normally considered the "base" currency for quotes, meaning that quotes are expressed as a unit of 1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British pound, the euro, and the Australian and New Zealand dollar.
When goods export decrease dollar value decrease
#Base Currency, Quot Currency:
The base currency is the first currency in any currency pair. The currency quote shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6350, then one USD is worth CHF 1.6350.
In the forex market, the U.S. dollar is normally considered the "base" currency for quotes, meaning that quotes are expressed as a unit of 1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British pound, the euro, and the Australian and New Zealand dollar.
The quote currency is the second currency in any currency pair. This is frequently called the pip currency and any unrealized profit or loss is expressed in this currency.
Example: GBP/USD
Hear GBP is base currency & USD is quote currency that’s mean 1st currency is base currency & 2nd currency is quote currency.
Ratio:
Ratio is the value of the base currency against to quote currency. Again we can say that it is the value of the quote currency against to base currency.
Example:
EURUSD= 1.4235
EUR: USD= 1: 1.4235
That mean I can get 1.4235 USD against to 1 Euro
Again can say that word reversely that I can get 1/1.4235=0.7025 Euro against to 1 USD
#PIP (% in Point):
Hear GBP is base currency & USD is quote currency that’s mean 1st currency is base currency & 2nd currency is quote currency.
Ratio:
Ratio is the value of the base currency against to quote currency. Again we can say that it is the value of the quote currency against to base currency.
Example:
EURUSD= 1.4235
EUR: USD= 1: 1.4235
That mean I can get 1.4235 USD against to 1 Euro
Again can say that word reversely that I can get 1/1.4235=0.7025 Euro against to 1 USD
#PIP (% in Point):
The word ‘pip’ is an abbreviation for ‘percentage in point,’ which refers to the smallest movement that a price could make in the forex trading market. It’s often the last decimal place when you look at the price of a typical forex quote.
PIP is the term used in currency market to represent the smallest price increment in a currency. It is often referred to as ticks or points in the market. In EUR/USD, a movement from .9018 to .9019 is one pip. In USD/JPY, a movement from 128.50 to 128.51 is one pip. A pip is the last decimal place of a quotation. The Pip is how you measure your profit or loss.
#Pipette
One-tenth of a pip. Some brokers quote fractional pips, or pipettes, for added precision in quoting rates. For example, if EUR/USD moved from 1.32156 to 1.32158, it moved 2 pipettes.#Calculation of PIP:
Pip is calculated by difference between the lager amount & smaller amount,
For Example, EURUSD is 1.4235
After while it increase to 1.4327
Here PIP increase= 4327-4235=92 pips
#BID (selling Trade)
The bid is the price at which the market is prepared to buy a specific currency pair in the forex market. At this price, the trader can sell the base currency. It is shown on the left side of the quotation.
For example, in the quote GBP/USD 1.8812/15, the bid price is 1.8812. This means you sell one British pound for 1.8812 U.S. dollars.
If you seem to decrease the value of one currency in near future, then you can open a sell trade. When the trade is close at less then your price that you open the sell trade the difference is your profit.
#ASK (Buy Trade):
The ask/offer is the price at which the market is prepared to sell a specific currency pair in the forex market. At this price, you can buy the base currency. It is shown on the right side of the quotation.
For example, in the quote EUR/USD 1.2812/15, the ask price is 1.2815. This means you can buy one euro for 1.2815 U.S. dollars. The ask price is also called the offer price.
If you seem to increase the value of one currency in near future, then you can open a Buy trade. When the trade is close at getter then your price that you open the Buy trade the difference is your profit.
#Balance:
After closing the tread the amount is Balance.
Balance = Margin + Free Margin - (± Profit)
#Equity:
When the trade is open (Buy trade or sell tread) the equity is increase or decrease depend on profit or loss. At that position the equity is,
Equity = Balance ± Profit
Equity = Margin + Free Margin
But, When all trade is closed the equity is,
Equity = Balance
#Margin:
Used balance of total balance
When you open a new margin account with a forex broker, you must deposit a minimum amount with that broker. This minimum varies from broker to broker and can be as low as $100 to as high as $100,000.
Each time you execute a new trade, a certain percentage of the account balance in the margin account will be set aside as the initial margin requirement for the new trade based upon the underlying currency pair, its current price, and the number of units (or lots) traded. The lot size always refers to the base currency.
For example, let's say you open a mini account which provides a 200:1 leverage or 0.5% margin. Mini accounts trade mini lots. Let's say one mini lot equals $10,000. If you were to open one mini-lot, instead of having to provide the full $10,000, you would only need $50 ($10,000 x 0.5% = $50)
#Free margin:
Unused balance of won or future trade balance of current situation.
Free Margin = Equity - Margin
#Margin level:
Equity = Balance
#Margin:
Used balance of total balance
When you open a new margin account with a forex broker, you must deposit a minimum amount with that broker. This minimum varies from broker to broker and can be as low as $100 to as high as $100,000.
Each time you execute a new trade, a certain percentage of the account balance in the margin account will be set aside as the initial margin requirement for the new trade based upon the underlying currency pair, its current price, and the number of units (or lots) traded. The lot size always refers to the base currency.
For example, let's say you open a mini account which provides a 200:1 leverage or 0.5% margin. Mini accounts trade mini lots. Let's say one mini lot equals $10,000. If you were to open one mini-lot, instead of having to provide the full $10,000, you would only need $50 ($10,000 x 0.5% = $50)
#Free margin:
Unused balance of won or future trade balance of current situation.
Free Margin = Equity - Margin
#Margin level:
Its automatically close when the margin level reach at 100%. It is benefited to us when we stop trade when the margin level reach at 200%. That means 200% is the dangerous level of the traders.
The more the margin Laval the the more you get the trade facility.
Margin Level = (Equity ÷ Margin) × 100%
#Spread:
Difference between bid & ask. Is generally difference 3-7pips
The spread is the difference between the bid and ask price. The "big figure quote" is the dealer expression referring to the first few digits of an exchange rate. These digits are often omitted in dealer quotes. For example, the USD/JPY rate might be 118.30/118.34, but would be quoted verbally without the first three digits as "30/34." In this example, USD/JPY has a 4-pip spread.
Transaction cost (spread) = Ask Price - Bid Price
#Time Zone:
when two time zone overlap each other it means that time is the time of high volume.
When is one time zone it means it is the shorter volume
#Spread:
Difference between bid & ask. Is generally difference 3-7pips
The spread is the difference between the bid and ask price. The "big figure quote" is the dealer expression referring to the first few digits of an exchange rate. These digits are often omitted in dealer quotes. For example, the USD/JPY rate might be 118.30/118.34, but would be quoted verbally without the first three digits as "30/34." In this example, USD/JPY has a 4-pip spread.
#Transaction Cost
The critical characteristic of the bid/ask spread is that it is also the transaction cost for a round-turn trade.
Round-turn means a buy (or sell) trade and an offsetting sell (or buy) trade of the same size in the same currency pair. For example, in the case of the EUR/USD rate of 1.2812/15, the transaction cost is three pips. The formula for calculating the transaction cost is:Transaction cost (spread) = Ask Price - Bid Price
#Quote Convention
Exchange rates in the forex market are expressed using the following format:
Base currency / Quote currency = Bid / Ask #Time Zone:
when two time zone overlap each other it means that time is the time of high volume.
When is one time zone it means it is the shorter volume
