The Ultimate Glossary of Forex Jargons for Beginners

As a beginner in the world of forex trading, it's important to familiarize yourself with the various jargons and terminology used in the market. While the forex market can seem overwhelming at first, understanding the key terms and concepts will help you to navigate the market more confidently and make informed trading decisions.

Here is a comprehensive list of some of the most important forex jargons that every beginner should know:

1. Ask price: The ask price is the price at which a trader can buy a currency pair. It is also known as the "offer" price.

2. Base currency: The base currency is the first currency listed in a currency pair. For example, in the currency pair EUR/USD, the EUR is the base currency.

3. Bid price: The bid price is the price at which a trader can sell a currency pair. It is also known as the "bid" price.

4. Bullish: A bullish market refers to a market that is expected to rise in price. Traders who are bullish on a currency pair are expecting the price to go up.

5. Bearish: A bearish market refers to a market that is expected to fall in price. Traders who are bearish on a currency pair are expecting the price to go down.

6. Broker: A broker is a financial intermediary that facilitates the buying and selling of financial instruments, including currency pairs.

7. Candlestick chart: A candlestick chart is a type of chart that displays the high, low, open, and close prices of a currency pair over a specific time period.

8. Carry trade: A carry trade is a strategy in which a trader borrows a currency with a low interest rate and uses the proceeds to buy a currency with a higher interest rate.

9. Chart pattern: A chart pattern is a visual representation of price action that can be used to identify potential trading opportunities. Some common chart patterns include head and shoulders, triangles, and wedges.

10. Currency pair: A currency pair is a quotation of the relative value of one currency against another. The first currency listed in a currency pair is the base currency, while the second currency is the quote currency.

11. Drawdown: Drawdown refers to the peak-to-trough decline of an investment or trading account. It is typically expressed as a percentage of the account balance.

12. Fundamental analysis: Fundamental analysis is a method of evaluating the underlying value of a financial instrument by analyzing economic, political, and social factors.

13. Leverage: Leverage is the use of borrowed capital to increase the potential return on an investment. In forex trading, leverage allows traders to control larger positions with a smaller amount of capital.

14. Lot: A lot is a unit of measurement in forex trading. A standard lot is equal to 100,000 units of the base currency, while a mini lot is equal to 10,000 units of the base currency.

15. Margin: Margin is the amount of money that is required to be held in a trading account in order to open and maintain a trade.

16. Order: An order is a request to buy or sell a currency pair at a specific price. There are various types of orders, including market orders, limit orders, and stop orders.

17. Pips: Pips, or percentage in points, are the smallest unit of price movement in a currency pair. A pip is typically equal to the fourth decimal place of a currency pair, with the exception of JPY pairs, which are quoted to the second decimal place.

18. Quote currency: The quote currency is the second currency listed in a currency pair. It is also known as the counter currency. In the currency pair EUR/USD, the USD is the quote currency.

19. Resistance: Resistance is a price level at which the demand for a currency pair is expected to be strong enough to prevent the price from rising further.

20. Support: Support is a price level at which the demand for a currency pair is expected to be strong enough to prevent the price from falling further.

21. Technical analysis: Technical analysis is a method of evaluating the price action of a financial instrument by analyzing past price trends and patterns.

22. Take-profit order: A take-profit order is a type of order that is used to automatically close a trade at a predetermined profit level.

23. Trailing stop order: A trailing stop order is a type of order that is used to automatically adjust the stop-loss level of a trade as the price moves in favor of the trade.

24. Volatility: Volatility refers to the degree of price fluctuation in a financial instrument. A currency pair with high volatility experiences large price swings, while a currency pair with low volatility experiences smaller price movements.

By familiarizing yourself with these forex jargons, you will be better equipped to navigate the market and make informed trading decisions. However, it's important to continue learning and staying up-to-date with the latest developments in the forex market.