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Different terminologies in currency trading

Currency trading is a whole new world – even for those used in equity. That’s why anyone who decides to be part of this market should take the time to learn different tips, tricks and terminologies to work well. That being said, here are the most common words that are launched in the Forex community.

Currency pair

This is one of the most important terms that will be used, referring to the two currencies that will be stung or compared against each other. The most common are the dollar and the euro or perhaps the dollar and the yen. The negotiation is mainly done in pairs and not by a single currency, which means that traders should consider both making a decision.

Basic currency and quotes

The base currency and currency refers to the currency pair like USD / EUR. The basic currency is generally constant and used as a measure relative to another currency. The basic currency is generally the first indicated, in this case the US dollar. As for the currency currency, it would be the latter or the euro.

Leverage

The general rule in currency trading is that the decline in leverage, better it would be for the starting trader. It is essentially a type of account provided by the broker, providing individuals with a quantity of commercial opportunities indicated. The merchant deposits money to the broker and the dealer would give them the chance to negotiate using more money than the initial deposit. If the merchant begins to gain from their transactions, the broker would also benefit. If they begin to lose, however, the broker would probably be cut off the leverage.

Seed

In commercial currency, this represents a “percentage in points” and is one of the most projected words in Forex. This refers to the smallest change unit in a currency pair. This is usually shown in decimal points and can be used to follow the currency movement. Brokers use them for their differences, which facilitates the analysis of the data and a correct decision.

Bollinger bands

It is actually a forex technique used to analyze the data to obtain a precise conclusion. Created by John Bollinger in the 80s, the concept is used to measure the depth and height of a price. It works by drawing two standard deviations and observing the movement of the bands in relation to the market situation. When bands move away from the moving average, it means that the market is volatile. When contracting, the market is less unstable, offering traders an idea of ​​negotiating or repairing and waiting.

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