Before you choose any particular forex robot to help you trade in the forex market, it is essential that you understand the terms used by traders. Understanding terms used in the forex market will help you go a long way. Here is a list of some of the most commonly used terms used by traders.
Ask rate – This is the rate that a particular financial instrument is put up for sale.
Asset Allocation – This is the investment practice that is responsible for diving funds among various markets so that risk is diversified and the returns are consistent.
Base Currency – In the forex market the base currency is the currency of quote. The US Dollar is the general base currency where any particular quote is expressed in relation to $1 USD unit.
Bear Market – This is a market that is recognized because of its declining prices.
Bid/Ask Spread – This is a measure that is used commonly when you need to measure market fidelity. It is the difference between the offer price and the bid.
Broker – This refers to a firm or an individual who works as an intermediary for buyers and sellers for a particular commission or fee. A dealer looks forward to earning a good spread by trading and closing the trade with another party.
Clearing – This is a term used to settle a trade.
Commission – This is fee that a broker generally charges for trading on your behalf. Commission is generally a certain percentage of your profits or rewards.
Currency – It is the money that a central government of a country issues and is used for trading as well as legal tender.
Day Trading – This is when the positions are traded or opened and then closed on the same trading day.
Deficit – This refers to the negative in balance when it comes to trade or payments.
Depreciation – This generally is a term used for the fall in the currency value largely because of a few market forces.
Devaluation – When a currency price is adjusted deliberately as announced officially by a government authority.
ECB – It is an abbreviation of the European Central Bank
Futures Contract – This is an obligation for exchanging an instrument or a good according to a set price on a future date. The difference between futures and forwards is that futures are traded over an exchange while forwards are considered as OTC’s (over the counter) contracts.