understanding forex terminologies

@glo_forex - 9 months ago - Forex Education

what is scalping in forex

@dipuo_kefilwe - 9 months ago

Scalping is a trading style where you keep your trades open only for a short time. But if you are a beginner there are more crucial forex terminologies you should be aware of.

1. Spread: a fee charged by the broker on every trade you make, which represents the difference between the price you enter the trade at and the price you exit the trade at. The difference between these prices is the spread and it goes to your broker. You must always pay attention to the spread because though little, over time it can eat into your profits.

Spread is measured in pips so if i say the spread is 2 pips it depends on what the value of a pip is. if the value of a pip for the currency pair you are trading is $10 then 2 pips will be worth $20

2.Commission: this is another fee charged by the broker on special accounts that offer very low spread and sometimes brokers also charge commissions when you trade non-forex CFDs. Forex traders can avoid paying commissions by opening a Standard Account type instead of a Raw Spread Account.

3. Going Long: this term is used to refer to when you enter a trade by clicking the buy button.

4.Going Short: when you enter a trade by clicking on the sell button

5. MetaTrader: a kind of trading software; we have MT4 (older version) and MT5 (newer version)

6. Stop Loss: an automated order you set on the trading software to close your trade when your losses reaches a certain amount.

7.Take Profit: an automated order you set on the trading software to close your trade when your profit reaches a certain amount.

8. Pending Order: a buy or sell order you set on the trading software not to be executed immediately, but at a future date/time.

9.CFD: a way of trading used by forex brokers where you do not own the underlying instrument but only get compensated/debited on the difference in price from when you opened the trade to when you closed it. CFD is an acronym for Contract for Difference so you will only be compensated for the difference in price and you will not own the instrument. For example if you trade Share CFDs, you do not own the shares and you cannot vote during the company's Annual General Meeting.