Forex:Market Terminology

Spot Deal
A deal taking part between two parties who can deliver a certain amount of different
currencies to each other within 2 business days of each other (excluding Canadian dollar
where the trade is executed within 1 business day)

Market Order
This is the execution you make when deciding to buy a currency. In other words you see
a currency exchange rate quote on screen and you place a ‘market order’ when you click
the button to execute the trade.

Entry Orders
This is basically and advance order, you decide at what price you want to buy or sell a
currency and you place an ‘entry order’. As soon as the currencies reaches this rate your
trade is exucted.

Stop-Loss Order
This is a function offered by some brokers which is aimed at reducing your risk, you can
decide the maximum and minimum amount of profit or loss you want to exit a trade at. In
other words if you decide you are happy to make $1,000 from one trade but don’t want to
lose anymore than $1,000 should the trade go the other way you can place this safety net
on your trade.

Bid
This is the currency rate that you wish to buy or sell at.

Offer
This is the currency rate you will actually get when buying or selling

Spread
The difference between the bid and offer rates

Pip
This is the last decimal of the exchange rate with the exception of the Japanese Yen
where it is the second decimal.

Lot
The amount of units of the base currency when you enter the market.

Margin
The minimum amount of money you need for each lot to trade, for example the margin
may be 1 lot for $100 and therefore you would need $300 in your account to trade 3 lots.

Trend
The direction the market is currently moving in.

Long Position
This is used to describe a market in a long-term buy trend

Short Position
This is used to describe a market in a short-term sell trend