Important Forex Terms You Should Know Before Starting Forex Trading. Forex trading requires traders to keep learning and up to date on the information in circulation in order to perform the most appropriate analysis. In fact, before starting forex trading, a prospective trader must understand the terms of forex trading to launch his forex trading experience. Furthermore, understanding of forex trading terms will also help you after entering the world of forex, as you enrich your knowledge by reading forex trading articles, discussing with more senior forex traders, and so on. Spread is the difference between the bid price and the ask price, which is expressed in pips. Spread is an income for forex brokers (forex broker intermediaries to enter the forex market), so a small spread is more profitable for traders to achieve BEP (Break Even Point). This then makes the spread very influential on your earnings from forex trading.
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| Terms You Should Know Before Starting Forex Trading |
Pips (Percentage in Points) are four numbers behind the dot (1.3856), while Pippette is five points behind the dot (1.36778). Discussion in forex trading on Pips are often heard is like: up 25 pips or up 56 pips. Raising a number of pips means the difference in pips at the opening of higher transactions amount compared to when closing the transaction. The number of pips increments is profit for you, while the exact value of the profit depends on the amount of lot you are trading. Lot is the standard size per transaction. Large small lots depending on the type of account used for forex trading. Generally for its large standard lot account is 100,000 units of its base currency, 10,000 units for mini accounts, and 1000 units for micro accounts. The number of lots is the size of the size of the transaction on forex, where the greater the number of lots of transactions, the capital must also must must be large. Of course, big profit or risk loss will be greater. Forex traders can see the profit and loss potential of the lot size.