Currency Trading Terms to Ponder

What’s the use of reading hundreds of currency trading tips when everything looks like Greek and Arabic combined? And the only way out of your present dilemma is to use this article to translate currency trading terms into something that’s, well, in real English?

Hedge – Never ever hedge in the currency trading market unless you can truly afford it.

Margin Requirement – One would think that this currency trading term is fairly easy to understand but I’m afraid not as many people still tend to freak out when they hear this term. When your currency trading broker asks you to make a margin deposit, it’s just his way of helping you out because a margin deposit is like a good faith deposit. It opens more doors for you in the currency trading market as it indicates that you’re there in good faith. Got it?

Offer – Mmm this is a bad, bad word – if you’re a player and not a currency trading dealer. The offer represents the value that the dealer is willing to sell a particular currency. Most of the time, it’s quite high!

Open Position – This refers to a particular currency trading deal in which nothing is formally settled as money hadn’t exchanged hands yet.

Pips – In the stock market, you know them as ticks or points. So basically, pips in currency trading are points or incremental units that make up a spread.

Spot Price – This is simply the currency trading term used to refer to the present market value of a particular currency. When you avail of a spot contract, you’re usually expected to pay the total amount in two business days.

Remember, the currency trading market is closed during weekends.

Swap – When someone makes a currency trading swap, a player purchases and sells the same amount of a particular currency at a forward exchange rate at the same time.

Variation Margin – When you hear this currency trading term being mentioned, that means the margin deposit you’ve made is now not enough because of unfavorable price movements.

Remember margin deposit? If not, simply go to the first part of this article and look up the currency trading term once more.

Yard – I salute you if this currency trading term is used in association with your name. A yard, simply put, is slang for a billion!

We hope you enjoyed our article and benefit from it as well. Hopefully, the next time you make a forex transaction, you’ll be speaking the same language that other brokers and players do!

 

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