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Forex terms

To learn foreign exchange trading, investors need to master some commonly used terms. Only by understanding and understanding these terms can they be correctly applied in actual operations.

Currency pair

The special feature of the forex market is that currencies are traded in pairs. For example, when a forex trader talks about trading dollars, it is actually talking about the relative value of trading dollars to another currency, where the other currency may be the euro. The first currency in a currency pair is called the base currency, and the second currency is called the quote (or relative) currency.

Point

In foreign exchange transactions, "point" is a very common term. Investors often hear professionals say: "Today, the euro has risen by 200 points." The point here is the smallest unit of exchange rate fluctuations.

Interest

Interest is another potential cost in foreign exchange transactions.
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Hedge

Hedging refers to the simultaneous execution of two transactions that are related to the market, opposite in direction, equal in amount, and balanced in profit and loss. Hedging is an investment position or combination of positions used to reduce the volatility of value in a portfolio. It is a fairly professional trading function, and not every trader uses it. Hedging is extremely common in foreign exchange trading and is a risk reduction strategy.

Lever

Leverage is the ratio between the trading volume and the required margin. Through leverage, investors can buy and sell relatively large amounts with very little money. Leverage varies from broker to broker, ranging from 2:1 to 400:1.

Margin

When an investor opens a margin account with a foreign exchange broker, at least a minimum amount of funds needs to be deposited. This minimum account opening fund varies between brokers, ranging from $100 to $100,000. Whenever an investor makes a new transaction, a certain percentage of the funds in the account will be used as the initial margin (Initial Margin). As for the specific amount it occupies depends on the currency pair, the current exchange rate and the number of transactions.

Lock order

The order-locking function is usually used to hedge the position of the open position. If there is no lock order and a reverse order of the same currency group is directly made at the opened position, it will lead to a write-off with the original position. For example, there is already a USD/EUR buy position, if you open another USD/EUR sell position, it will cause the relative position to be automatically reversed. If a lock order is used, both parts in both directions will exist at the same time and will not reverse each other. Generally speaking, lock orders are used to lock in the current loss or profit until the appropriate time comes to deal with it.

  Major and minor currencies

The eight most frequently traded currencies, USD, EUR, JPY, GBP, CHF, CAD, AUD and NZD, are called major currencies. Other currencies are called secondary currencies. Investors do not have to worry about not understanding those secondary currencies, after all, these secondary currencies are only for very professional people. In fact, investors mainly analyze the five currencies of USD, EUR, JPY, GBP, and CHF. These currencies are the most liquid currencies and the most suitable currencies for trading.
  Base and quote currency The so-called "base currency" is not the base currency in monetary policy, but the first currency in any currency pair. The exchange rate shows how much the first currency is measured against the second currency. The quote currency is the second currency in any currency pair and is often referred to as Pip Currency.
    Bid-ask spread The bid-ask spread is also called "spread", which is the difference between the bid price and the ask price. Most quotations refer to the first few digits of the dealer's quotation. These numbers are often omitted in the dealer's quotation. For example, the full quote for USD/JPY is 118.30/118.36, but this quote is often omitted by traders as 30/36.
     Cross currency pair A cross currency pair is a currency pair that has no dollar. Since trading a cross currency pair is equivalent to trading two straight currency pairs, the price performance of these cross currency pairs is usually quite messy. For example, EUR/GBP is equivalent to buying EUR/USD and selling GBP/USD. The spreads of cross currency pair transactions are usually higher than straight currency pairs.
       Account balance The total value of the account, including profit and loss and funds used to maintain any open positions.
    Inquiry price/selling price The price of the selected currency against the base currency.

Selling price

The price of the base currency in the selected currency pair.
       CFD CFDs are derivative financial instruments calculated based on the price movements of the underlying contract.

Close out

Close open positions.
  Credit card online payment Through the secure customer area, customers use credit or debit cards to remit account funds.

Daily spread

The spread between 07:00 and 21:00 CET
       Demo account Visit the MetaTrader platform to test the system and conduct virtual transactions.
       Direct market A trading system that allows you to directly access the exchange to trade financial instruments.
      Available net worth Funds not used for open positions can therefore be withdrawn at will.
       Instant order Orders executed at the requested price unless re-quoted in the volatile market. Or at the specified acceptable maximum deviation price.
       Financial tool Any trading financial product, a set of currency pairs, CFDs or commodities.

Limit order

A pending order to sell and buy when the market moves to a profitable position for an open position.

Lots

Normative contract value of financial instruments.
      Market order You indicate that the order is to be executed at the current market exchange rate, which may be different from the exchange rate you requested.
       Maximum deviation User-defined parameters used with real-time orders allow closing of positions that deviate from the actual demand within a certain range.
   METATRADER The market-leading foreign exchange and CFD trading platform has a powerful technical toolbox and algorithmic trading functions using expert advisor analysis systems (EA).

Miniature hand

A common name for one hundredth (0.01) lot.

Mini hands

A common name for one tenth (0.1) lot.
       Open position Trades that have not yet been closed in the market.

Order

Any order for market orders or pending orders.
       Partial liquidation Part of the position was closed instead of the initial full position.

Pending order

Orders sent to MetaTrader for execution at a later time or at a specified market level.

Slippage

When the order is executed, the points differ outside the requested exchange rate.

Stop Loss Order

When the market moves in a direction that is not conducive to open positions, pending orders are used to close positions.
       Forced liquidation When the account principal is lower than the forced liquidation line, the position is automatically closed.
       Variable spread The price set with the target minimum spread, but the price may change due to market conditions.

 

 

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