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Here are some commonly used Forex terminology:
Pip: A pip is the smallest unit of measurement for currency pairs. It represents the fourth decimal place for most currency pairs, except for Japanese yen pairs, where it represents the second decimal place.
Spread: The spread is the difference between the bid price and ask price of a currency pair. It represents the cost of trading, and is typically quoted in pips.
Margin: Margin is the amount of money required to open a position in Forex trading. It is typically expressed as a percentage of the total position size.
Leverage: Leverage is the ability to control a larger position size with a smaller amount of capital. It is expressed as a ratio, such as 100:1, and can magnify both gains and losses.
Stop Loss: A stop loss is an order to close a position at a specified price level to limit losses.
Take Profit: A take profit is an order to close a position at a specified price level to lock in profits.
Margin Call: A margin call is a request from the broker for the trader to deposit additional funds to maintain the required margin level. If the trader fails to meet the margin call, the broker may close out their position.
Long Position: A long position is a position where the trader buys a currency pair with the expectation that its value will increase.
Short Position: A short position is a position where the trader sells a currency pair with the expectation that its value will decrease.
Currency Pair: A currency pair is the quotation of one currency against another currency in the Forex market. For example, EUR/USD represents the Euro against the US dollar.
Liquidity: Liquidity refers to the ease with which a currency pair can be bought or sold without affecting its price.
These are just a few examples of Forex terminology, and there are many more terms used in Forex trading that traders should be familiar with to trade successfully.
LOT SIZE IN FOREX.
In Forex trading, there are different types of lot sizes that traders can use to enter positions & A lot is a standardized unit of measurement for Forex trading.
LOT TYPE | STANDARD SIZE | NUMBER OF UNITS | PIP VALUE (PER PIP MOVEMENT) |
Standard Lot | 100,000 | 100,000 unit of base currency | $10 for most currency pairs (except JPY pairs) |
Mini Lot | 10,000 | 10,000 units of base currency | $1 for most currency pairs (except JPY pairs) |
Micro Lot | 1,000 | 1,000 units of base currency | $0.10 for most currency pairs (except JPY pairs) |
Nano Lot | 100 | 100 units of base currency | $0.01 for most currency pairs (except JPY pairs) |
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