Forex Basics
What is a Pip?
A price interest point, point in percentage, point in price, or pip for short, is a price unit that measures the change in value between two currencies...
What is Bid Ask Price?
In forex, the Bid price is the price that a trader is willing to sell a currency pair for. The Ask price is the price that a trader is willing to buy a currency pair at...
What is Spread?
The Spread is the difference between the Ask and the Bid price. For example, if the EURUSD is trading at the exchange rates of 1.13090 and 1.13000...
What are Base Quote and Quote Currency?
In foreign exchange, currencies are traded in pairs. For example, in EURUSD, the euro is the base currency, and the US Dollar is the quote currency.
What are the Majors?
The most traded currency pairs in the foreign exchange market are known as the Majors. They account for most of the daily turnover in the market.
What are the Crosses?
The cross-currency pairs or cross rates as they are also known, combine currencies of the major economies but do not involve the US Dollar.
What are the Exotics?
The exotics are another group of currency pairs in the foreign exchange market. They combine a currency of an emerging economy.
What is Forex?
Foreign exchange, or forex and fx for short, is a decentralized global market where the world's currencies are traded. Forex is the largest financial...
What is Balance?
A Balance is the amount of money you have in your trading account. It is the amount of available funds in your account excluding any unrealized profit...
What is Equity?
Equity refers to the amount of money in your account including any unrealized profit and loss, commissions, credit, and swaps.
What is a Lot?
In foreign exchange, transaction size is measured in lots. For example, if you were to buy one lot of EURUSD that simply means that you are going to buy...
What is Leverage?
In forex, traders may trade with more capital than the amount they deposited in their accounts. This is simply because of leverage...
What is Margin?
Margin is a “good faith deposit” required by the broker so you can open and maintain a position. It is actually the minimum amount of cash...
What is Free Margin?
Simply put, Free Margin is the amount of cash in your account that is available for trading. Say, that your account Balance is 10,000 US Dollars...
What is Margin Level?
The Margin Level is the ratio of the equity to the Margin Used in currently open positions. It is expressed as a percentage:
What is Margin Call?
A Margin Call is a red-flag warning that the available capital in the trading account is less than the minimum amount required to maintain the open positions.