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Glossary

The document provides essential definitions and explanations related to forex trading, including terms like pip, leverage, lot size, currency pairs, and brokers. It highlights the significance of major currency pairs and lists the top five most traded currencies. Additionally, it offers personal broker preferences and recommends resources for further learning.

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Andre callum
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5 views4 pages

Glossary

The document provides essential definitions and explanations related to forex trading, including terms like pip, leverage, lot size, currency pairs, and brokers. It highlights the significance of major currency pairs and lists the top five most traded currencies. Additionally, it offers personal broker preferences and recommends resources for further learning.

Uploaded by

Andre callum
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BASIC TERMS

What is a pip?

A pip, short for point in percentage, represents a tiny measure of the


change in a currency pair in the forex market. It can be measured in terms
of the quote or in terms of the underlying currency. A pip is a standardized
unit and is the smallest amount by which a currency quote can change. It is
usually $0.0001 for U.S.-dollar related currency pairs, which is more
commonly referred to as 1/100th of 1%, or one basis point.

What is leverage?

Leverage involves borrowing a certain amount of the money needed to


invest in something. In the case of forex, money is usually borrowed from a
broker. Forex trading does offer high leverage in the sense that for an
initial margin requirement, a trader can build up—and control—a huge
amount of money.

When opening a real account, understand the higher the leverage, the
more the broker is covering for you.
What is a lot size?

A standard lot is the equivalent of 100,000 units of the base currency in


a forex trade. A standard lot is similar to trade size. ... Historically,
spot forex has only been traded in particular lots of 100, 1,000, 10,000 or
100,000 units. More recently, however, non-standard lot sizes are also
available to forex traders.

The example below shows lot sizes with higher leverage sized
What are currency pairs?

A currency pair is the quotation of two different currencies, with the value
of one currency being quoted against the other. ... Currency
pairs compare the value of one currency to another—the
base currency (or the first one) versus the second, or the quote currency.

What are the major currency pairs?


The most traded pairs of currencies in the world are called the Majors.
They constitute the largest share of the foreign exchange market, about
85%, and therefore they exhibit high market liquidity. The Majors are: EUR/
USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/
CAD.

The top 5 most traded currencies in the world are:


• US Dollar (USD)
• Euro (EUR)
• Japanese Yen (JPY)
• Great British Pound (GBP)
• Australian Dollar (AUD)
What is a broker?

Forex brokers are firms that provide traders with access to a platform that
allows them to buy and sell foreign currencies. Transactions in this market
are always between a pair of two different currencies, so forex
traders either buy or sell the particular pair they want to trade.

My broker preferences for forex trading:

Fx Choice (regulated): https://my.myfxchoice.com/registration/?


refer=160535

Hugo’s Way: https://www.hugosway.com/?cmp=3l0g1x2i&refid=3591

I will be adding one more, once they provide some clarification.

Stock Brokers

https://www.nerdwallet.com/best/investing/online-brokers-for-stock-trading

I highly recommend visiting www.babypips.com for additional clarity.

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