Forex Trading Terms

When FX trading, it is a good idea to have some familiarity with basic terms that you will come across. Whether reading about the foreign currency exchange, or just understanding the jargon used by forex brokers, it is a good idea to have a basic knowledge of what common currency trading terms mean. Here are some terms forex brokers and others sometimes use in association with foreign exchange:

Leverage
This is the amount of money you are borrowing from forex brokers to make your FX trade. If you have 200:1 leverage, you pay 0.5% of what you are using to control your position, and the rest of the money comes from the forex broker.

Spread
This is the difference between the bid price and the ask price. You make a profit in currency trading when you overcome the spread.

Support
The level at which a forex trend changes from bearish to bullish.

Resistance
The opposite of support: The FX trend switches from bullish to bearish.

Pip
A term that stands for “percentage in point.” This is the smallest change that can be made to a currency rate.

Scalping
A technique that helps you get between three and five points per trade by using foreign currency pairs with low spreads. Most scalping trades last only a few seconds to a few minutes.

Margin cal
Forex brokers often monitor your margin requirements. When the equity of your forex trading account drops below your usable margin, your open positions on the foreign exchange market are closed to keep your losses from mounting.

Cable
This is the nickname for the Great Britain pound and U.S. dollar foreign currency pair on the FX market.Greenback, buck: Nicknames indicating the U.S. dollar in online currency trading.

Sterling
A nickname used for the Great Britain pound.

Fiber
A nickname used to indicate the euro currency.

Loonie
The currency exchange nickname for the Canadian dollar.

Kiwi
The FX trading nickname for the New Zealand Dollar