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Term and Popular Description on Forex

Bear/Bearish
An investor who believes that a security, a sector, or the overall market is about to fall. opposite of bull. Also known as downtrend of a chart.

Bull/Bullish
Bull refers to having a positive outlook on a particular security or an investment. Also known as uptrend in a chart.

Example :
-if an analyst is "Bullish" on the US dollar, it means that the analyst believes the currency will appreciate. Bullish is used in contrast with bearish which connotes a negative point of view.
The entomology of expression "bull" derives from the male bovine. Bulls, the male counterpart to the cow, are known for their aggressiveness and sharp horns.

Broker
An individual or firm which acts as an intermediary between a purchaser and seller, generally charging a commission. For securities and most other products, a license is required.

Example : I'm using FxOpen as my primary broker on Forex Trading. My broker is Belverdec Inc.

Pip
Pip is taken from"percentage in point," refers to the very last digit of a currency price.

Example : Let's say the market price for Eur/Usd is 1.2636.
If the sell price were to increase to 1.2636 we have a one pip increase. Should the EUR/USD sell price move from 1.2635 up to 1.2735, we say EUR/USD increased 100 pips.

In the example of EURUSD, one pip is worth 1/100th of a US Dollar cent. Because currency traders are concerned with relatively small movements in the forex market, traders talk about that movement in terms of pips.

Spread
The Spread refers to the difference between the sell and buy price for a security.
Every market has a spread. Whether Foreign Exchange, equities, futures or your local boutique, the market maker will practically always charge a higher price than the price paid.
The size of the spread is primarily due to liquidity and transparency in the market. More buyers and sellers competing in the same space bring Bid/Offer spreads lower. When all participants have access to the same price information at the same time, few are able to get away with wider spreads.
Since Foreign Exchange is the world's biggest and most liquid market and as technology has given anyone with access to a computer and the internet real-time pricing information - spreads in fx extremely low, just factions a cent.
But,it is depends on the broker you have choose. Different broker may have different spread.

Example : If the market price for Usd/Jpy is 111.05, bid price is 111.05 and the ask price is 111.07. It means the spread for Usd/Jpy is 3pips.

3 comments:

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Ricky Smith said...

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Fehad hasan said...

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