Basic terms for trading?

<p id="isPasted">Before you start trading it is important to learn basic forex terminologies. Such as:</p><p>Currency pair, Exchange rate, Base currency, Quote currency, bid price, ask price, Spread, Pips, Lot, Leverage, Stop loss.</p><p>Currency pair:&nbsp;Forex is traded in currency pairs: one currency is bought, the other is sold. Together they make up the exchange rate.</p><p>Exchange rate: the rate at which one country’s currency can be exchanged for another currency.</p><p>Base currency: The first currency in a currency pair, also referred to as the nominator (e.g., in GBPUSD the GBP is the base currency)</p><p>Quote currency: The second currency in a currency pair, also referred to as the denominator (e.g., in GBPUSD the quote currency is USD)</p><p><strong>bid price:</strong> the market price for the sale of an asset</p><p><strong>ask price:</strong> the market price for the sale of an asset</p><p><strong>Spread:</strong> the difference between the selling price and the purchase price (“bid” and “ask” prices).</p><p><strong>Pips:</strong> &nbsp;a pip stands for “percentage in point”, Generally the lowest increment in which a currency pair is priced. Pips are used to measure movement in a forex pair.</p><p><strong>Lot: </strong>A Lot in Forex trading is the size of trade/position that you will open. A standard lot is equivalent to 100,000 units of the base currency. This is $100,000 if you were trading in US dollars. A mini lot has 10,000 and a micro lot has 1,000 units.</p><p><strong>Leverage: </strong>&nbsp;The means of gaining exposure to larger amounts of currency without having to pay the full value of your trade upfront. It effectively allows you to trade larger amounts with less capital.</p><p><strong>Stop loss: </strong>&nbsp; a stop-loss order is a risk management tool allowing a position to be closed once it reaches a specific pre-set price. This can protect against further losses in an open position if prices continue in an unfavorable direction for the investor. Please note, that placing a normal stop-loss order does not guarantee you will be filled at that certain market price due to slippage.</p>

<p>Few of the basic terms are Base and Counter Currencies, Long and Short Positions, Bid, Ask and Spread, Lots, Pip, etc. You will uncover more as you go deeper into trading.</p>

<p>Quote - The second currency in a currency pair, also referred to as the denominator (or bottom number). Leverage - The means of gaining exposure to larger amounts of currency without having to pay the full value of your trade upfront. It effectively allows you to trade larger amounts with less capital. For example, a leverage of 1:50 means you could use $200 to open a trade valued at $10,000. This means that both profit and losses are magnified.</p>

<p>Bear Market - Bull Market, Broker, Federal Reserve, Interest Rates, Foreign Exchange Volatility are also few terms you should look for.</p>

<p id="isPasted">You need to learn the language of the markets if you want to learn how to trade.</p><p><strong>Buy</strong></p><p>To take a position by buying shares of a company.</p><p>As a trader, you generally buy shares when you think a stock’s price will rise.</p><p><strong>Sell</strong></p><p>To sell the shares you currently own. Traders generally sell shares when they see an opportunity to take profits or they think the stock’s rise is ending.</p><p><strong>Bid&nbsp;</strong>When a trader in the market makes an offer to buy shares. Traders will bid for stock at a certain price.</p><p><strong>Ask</strong></p><p>When a trader offers their shares for sale at a certain price.</p><p><strong>Volatility</strong></p><p>The statistical measure of how much a stock moves up or down.</p><p>Stocks that move up and down wildly are known as&nbsp;volatile stocks. They can provide great profit opportunities, but also come with greater risk.</p><p><strong>Liquidity</strong></p><p>The measure of how easy it is to buy and sell a stock.</p><p>If a lot of buyers and sellers are actively trading stock, you’ll generally find it easier to enter and exit a position. The stock is more&nbsp;liquid.</p><p><strong>Trading Volume</strong></p><p>The number of shares being traded at any time.</p><p>More&nbsp;trading volume&nbsp;means more liquidity, and traders can more easily enter and exit positions.</p><p><strong>Going Long</strong></p><p>When going long, you purchase stock shares hoping to profit from an increase in the stock price.</p><p><strong>Going Short</strong></p><p>When a trader tries to profit from a stock’s dropping price.</p><p>Short sellers borrow shares from a broker, sell them, and hope the stock price declines. Then they buy the shares back and return them to the broker.</p>