Forex Broker: Terminologies

forex broker is a term used to represent the companies and entities that provide easy access to the trading market. Before starting a journey in this field one should know the terminologies that are used in this field.
● Forex account: to carryout trading activities one must have a forex account. There are multiple options of accounts with different features available in each one. Which type of account one should go for is depend on their needs and demand.
● Leverage: when the customers don’t have enough deposits to invest or they need more capital to invest to earn a large amount of interest, brokers give them exposure up to a certain limit, the same as a type of loan.
● Margin: A fixed amount of your deposits kept aside from the account balance to ensure the recovery of potential loss of your trade.
● Spread: the difference between the sell rate and buy rate is considered a spread. The majority of the profit share in the forex market comes from this.
● Lot size: a lot is nothing but a currency unit being traded at any given time. There are 4 types of lot sizes.
1. The standard lot
2. Mini lot
3. Micro lot
4. Nano lot
● Pip: it is known as “percentage in point” or “price interest point.” To determine the change in the value of paired currencies pip is used as a unit of measurement.
● The Bull market and Bear market: when the price of currencies declines in a market it is known as a bear market, whereas, if the prices are increasing it is known as a bull market.
● Ask and Bid: A trader will offer to buy a currency at the ask price, while a trader will offer to sell a currency at the bid price.

A person who is willing to start a journey in the forex market should be aware of all of these terminologies to ace the preparation of trading. However, the skills and education required for this are provided by a forex broker as well.