Key Terms while Trading Currency • Ask: An ask is the lowest | MarkeTruth

Key Terms while Trading Currency

• Ask: An ask is the lowest price at which you are willing to buy a currency.
• Bid: A bid is the price at which you are willing to sell a currency.
• Bear Market: A bear market is one in which prices decline for all currencies.
• Bull Market: A bull market is one in which prices increase for all currencies.
• Leverage: Leverage is the use of borrowed capital to multiply returns. The forex market is characterized by high leverages and traders often use these leverages to boost their positions.
• Lot Size: Currencies are traded in standard sizes known as lots. There are three common lot sizes: standard, mini, and micro. 
• Margin: Margin is the money set aside in an account for a currency trade. Margin money helps assure the broker that the trader will remain solvent and will be able to meet monetary obligations.
• Pip: A pip is "percentage in point" or "price interest in point". It is the minimum price move, equal to four decimal points, made in currency markets. One pip is equal to 0.0001. 100 pips is equal to 1 cent and 10,000 pips is equal to $1.
• Spread: A spread is the difference between the bid (sell) price and ask (buy) price for a currency. Forex traders do not charge commissions; they make money through spreads.