Forex Principles Terms You Need To Understand

What does the Ask Price (offer) mean in forex - the price at which a customer or trader can 'BUY' a certain currency pair and that price is the price the forex broker can sell at.

What is the meaning of Base Currency in forex - the first currency in a pair? For example in EUR / USD, EUR is the base currency.

What is the meaning of Bear Market in forex - the definition at which time the price is falling

What does the Bull Market mean in forex - the definition of a specific time when the price is going up

What does the bid price mean in forex - the price at which a trader can "SELL" a certain currency pair and the broker can buy.

What is meant by the conversion rate in forex - the rate at which one currency is exchanged for another currency.

What does a Currency Pair mean in forex - two points are placed in pairs and show the value of the second currency based on the first point. For example, EUR / USD at a price of 1.2510 means 1 Euro along with USD 1.2510

What does EA (expert advisor) mean in forex - software which is used with the MT4 platform which will run trades automatically based on a programmed script? By using an EA, you only need a little manual trading or maybe you don't need it right away.

What is meant by Leverage in forex - leverage allows a forex trader to increase his trading skills and use a large trading volume for trading. For example, with a leverage of 1: 100 and a trader deposit of USD100, this means that the strength of the capital increases as if the trader trades with a capital of USD10,000.


What does Lot mean in forex - the number of units of trading volume? 1 lot together 100,000 units.

What does Margin mean in forex - the value required to open a particular position.

What do Pips mean in forex - the number of movements in the price of a particular pair. For example, if EUR / USD moves from 1.5000 to 1.5500, it means that the price has moved 500 pips.

What does Swap / Roll Over mean in forex - the swap is the charged by a forex broker if a trading position is opened and is allowed to overturn another trading day. To avoid being subject to swap charges, you may request an Islamic Forex Account that is not subject to swap charges (Swap Free)

What does Scalping mean in forex - the term/title used when a trader opens and closes trading positions at short levels such as less than 5 minutes.

What does Swing mean in forex - the title/term used if a trader leaves a long trading position open so that 2-3 days are more or less?

What is the meaning of STP (straight-through processing) in forex - means a system that continues to automatic trading processes to a Liquidity Provider without involving the manual dealing desk process. Brokers that use the STP process are good brokers.