Forex terms explained. Here's another forex quote that helps make clear the meaning of these terms in the forex market: EUR/USD = / Here the bid is , and the ask is Since the difference between a bid and an ask price in normal circumstances is a very small fraction -- less than 1/th of the currency unit.

Forex terms explained

Lesson 1 - What is Forex and how does It work?

Forex terms explained. In Forex Trading, Forex traders often use forex trading terms that can be ambiguous when you're just starting out. When you see a forex trading terminology you.

Forex terms explained


Established in , Pepperstone has quickly grown into one of the largest forex and CFD brokers in the world. With 11 trading platforms including MT4 and cTrader, Pepperstone provides the technology to trade your way, whenever you want. Pepperstone offers a wide range of resources to our valuable clients to help create the best possible trading experience.

Team up with the best. Before trading currencies, an investor has to understand the basic terminology of the forex market, including how to interpret forex quotes and calculations. Pepperstone quotes currency pairs by "5, 3 and 2" decimal places — these are known as fractional pips or pipettes.

A variable spread will condense and widen as market conditions and liquidity change. Pepperstone offers a maximum leverage of The same principal applies to all base currencies and leverage amounts.

Leverage gives the trader the ability to make meaningful profits on the normally miniscule daily currency movements, and, at the same time, risk only minimal capital on a given position. Leverage can exponentially increase your profits as well as your losses so it is crucial that traders take care when using leverage.

Margin is the term given to the amount of money required in your account in order to open a trade. Margin may be calculated as follows: This is to assist in protecting you from negative equity although you should not rely on us providing such protection. It is sensible to maintain adequate funding in your account. Hedging refers to the opening of a new position in the opposite direction of an existing position on the same instrument.

To hedge a 0. No additional margin is required to hedge a position. It is important to note that one cannot open a new position on an account with insufficient usable margin. Forex trading may also generate interest income as well as capital gains. Since forex is traded in pairs, every trade involves not only two different currencies, but their two different interest rates.

If the interest rate on the currency the trader bought is lower than the interest rate on the currency you sold, then the trader will pay rollover negative roll. These are fees that Pepperstone charges on the Razor account only. The commission amount equates to:. Expert Advisors are based on signals generated by various technical indicators and may be acquired online.

This minimizes the chance of system downtime due to technology and connectivity failures. Multi Account Manager account types on the Meta-Trader 4 platform are designed for Money Managers who trade on behalf of other investors and manage multiple accounts from a single interface.

This is a term used to describe trading an alternative currency or instrument that is less volatile as a result of market turmoil and uncertainty. Sample period 1st st of October CFDs and margin FX are leveraged products that carry a high level of risk to your capital. Trading is not suitable for everyone and may result in you losing substantially more than your initial investment. You do not own, or have any rights to, the underlying assets.

You should only trade with money you can afford to lose. Past performance is no guarantee of future performance and tax laws may be subject to change. Please consider our Risk Disclosure Statement , PDS and FSG and ensure that you fully understand the risks involved in light of your personal circumstances before you decide whether to acquire our services.

We encourage you to seek independent advice if necessary. Live Account Demo Account. Trading Platforms With 11 trading platforms including MT4 and cTrader, Pepperstone provides the technology to trade your way, whenever you want. Client Resources Pepperstone offers a wide range of resources to our valuable clients to help create the best possible trading experience. Basic Terminology Before trading currencies, an investor has to understand the basic terminology of the forex market, including how to interpret forex quotes and calculations.

Pips and Pipettes Pepperstone quotes currency pairs by "5, 3 and 2" decimal places — these are known as fractional pips or pipettes. On a 5 decimal place currency pair a pip is 0.


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