Forex Lingo

Ask: The amount at which a broker will agree to sell, also known as "offer"

Bid: The opposite of "ask"; the price at which a broker or dealer is willing spend in order to buy

Bid/Ask Spread (also known as "Spread"): The increment between the Bid and Ask figure. The tighter the spread, the more beneficial it is for the trader

Cost of Carry (also known as "Interest" or "Premium"): The price set in order to hold an open position. Very common to see this figure in dollars or pips daily

Drawdown: The scale in which an account value declines gradually in percentage or dollar terms

Fundamental Analysis: A strategy employed by the trader as he assesses what criterion should be set in order to trade currency. Rules include the economic situation within a region / country representing the particular currency

Leverage:

The extent in which a trader uses borrowed money in order to gain from trading.

Limit: instruction given by a trader to buy at a desired price when the market trend moves down to that particular price, or to sell at a specified price when the market moves up to that price.

Liquidity: How capable the market is at accepting bigger transactions. A market that is more liquid tends to provide a trader with more recurrent price quotes within a slighter spread.

Margin: How much is needed for a trader to own when he opens a position or to maintain one

Margin Call: A condition set by the broker to make more funds available in a bid to maintain an open position. This occurs when insufficient funds are detected in the account

Market Order: An instruction to buy at the recent Ask price

Overnight charges: What it takes to hold a position open overnight

Pip: The most miniscule price increment allowed within a currency

Premium (also "Interest" or "Cost of Carry"): The price or pips required to maintain an open position

Stop: An instruction given to buy expressly when the market soars up to a desired price or when the market plunges down to a desired price

Technical Analysis: Know-how applied to the price action of the market to build up trading decisions. Among the most used and loved technical studies include:

1. Bollinger Bands
2. Moving Averages
3. Parabolic SAR
4. MACD (Moving Average Convergence Divergence)
5. RSI (Relative Strength Index)
6. Momentum
7. Stochastic
8. Rate of Change