Welcome to the FOREX Lexicon

Here we will list important terms, concerning the topic of FOREX. We are also happy to receive your suggestions!

Ask Price or Ask Price
The Ask is the price at which the market buys a currency pair. So the price at which you buy the base currency. The Ask price or also called the offer price, is always on the right side and is larger than the bid.

Base currency
The base currency is the first currency in each currency pair. It shows how much the base currency is worth compared to the second currency. Example: the exchange rate is USD /CHF 1,6350, then a US dollar is worth as much as 1,6350 Swiss franc. In FOREX, in most cases, the US dollar is the base currency of a rate, what does the rate mean indicates how much you get from a particular currency for one US dollar. Exceptions are British Pounds, Euros and Australian and New Zealand dollars, here the US dollar is the counter currency.

Bear Market
With falling prices, we speak of a bear market. Is a currency pair bearish, so the base currency is on the decline.

Bid price or bid price
The bid is the price at which the market buys a currency pair. For you as a dealer, this means, the bid is the price at which you sell. A course is always announced by two numbers, the Bid and the Ask. Example GBP / USD = 1,8812 / 1.8815. The bid is always on the left side and always lower than the Ask. In this example, you would use a British pound for 1.8812 Sell US Dollars.

Stock exchange
An exchange is an organized market for justifiable things according to certain rules.
Securities can be traded, for example (e.g. shares, Bonds), Foreign exchange, certain goods (z. B. Metals and other raw materials) or with rights derived therefrom. The stock exchange leads supply and demand – mediated by broker (during defined trading hours) – in terms of the market and balances them by (Official) Fixing of prices (Courses) from. The determination of the prices or prices of the traded objects is continuously based on supply and demand.
An exchange serves the temporal and local concentration of trading of fungible goods under supervised pricing. The aim is to increase market transparency for securities, increasing efficiency and market liquidity, the reduction of transaction costs and protection against manipulation. Unlike in so-called over-the-counter trading “over the counter” (OTC Trading) exchange trading is carried out under stock exchange supervision law by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) (BaFin) as well as the trading surveillance offices of the stock exchanges.

Bull Market
In the financial world, the bull always stands for rising prices. We as FOREX- Traders always look at a currency pair. So if the price of a couple rises?, let's talk about a bull market. The bullish always refers to the base currency.

Broker
The name for a securities intermediary on exchanges and OTC (over the counter)- Trading venues is a broker. Brokers have the task, Execute securities transactions on behalf of clients, for which they pay a placement fee – Brokerage or brokerage – receive. In addition, brokers create analyses and reports on individual companies for their clients, Industries and Markets, to offer recommendations on securities on the basis of these.

In contrast to traders, brokers always work on someone else's account. Unlike stockbrokers, however, brokers are also allowed to serve private customers. The fees charged by the merchants are called ticket fees.

Foreign exchange
Under Foreign Exchange (Plural) is generally understood to mean any foreign means of payment; On the other hand, in the general sense of banking, foreign currency denominators, in foreign places (foreign economic entities) Receivables to be paid (Payment instructions, Bills of exchange and cheques), in the narrower sense, only receivables from foreign banks.

FOREX or Foreign Exchange Market
As a foreign exchange market (Foreign Exchange market, FX Market, also Forex, Currency market) refers to the global market, on the currency (or. Short-term receivables denominated in currencies, so-called foreign exchange) be sold. Supply and demand of foreign currencies meet here. The foreign exchange market is with a daily turnover of approx.. 4 Trillions of dollars a year 2007 the largest financial market in the world. There is no binding to a fixed stock exchange, but the market is created by a worldwide network of interbank relationships. The trading of foreign currencies usually takes place by telephone or telex.

A foreign exchange transaction involves the simultaneous purchase and sale of different currencies on the interbank market. This creates exchange ratios, so that the value of each currency can be expressed in the other. On the foreign exchange market, the nominal exchange rate is thus formed as the price ratio between two currencies.

Majors
The eight most traded currencies (EUR, USD, JPY, GBP, CHF, CAD, NZD and AUD) are used as the main currencies (Major) denoted. Don't bother with others (Minor) Currencies, they are only for professionals. Especially at the beginning you should pay attention to the five most liquid and interesting (EUR, USD, JPY, GBP and CHF) judge.

Leverage (Lever)
Leverage makes it possible to control large sums of money with little capital. Ratios of up to 1:400. So it is possible with only 25 US Dollar 10.000 Move US dollars in the market. High leverage increases your chances of big wins, however, your risk also increases.

Long Position
From a long position or “going Long” let's talk then, if we expect the price to rise and we buy as a result. This usually always refers to the base currency.
For example, if we expect the euro to rise against the Swiss franc. (EUR/CHF), let's open a long position for this currency pair, so we buy euros (Base currency) and sell Swiss francs.

Margin
With each trade, part of the investment is set aside by the broker as collateral. Should the price develop against your expectations, you can be sure that you will never lose more than the first bet. The amount of this security amount may vary depending on the broker and risk level.

Margin Call
Your broker ensures that you can never lose more than your first bet. Should the price develop badly, open positions are closed, so that no further losses can occur.
This automatic security measure in conjunction with a notification to you, is referred to as “Margin Call” denoted.

Market
The term market (from lat.: mercatus Trade, to merx ware) means in the narrower sense the place, where goods are regularly traded or exchanged (Emporium). In a broader sense, the term today refers to the regulated merging of supply and demand of goods, Services and rights.

Order
A securities order is the order to buy or sell a certain amount of shares in a public limited company or similar financial instrument. In the past, mainly shares were (Share certificates in a company) and pensions (Fixed-income bonds, z. B. Government bonds) considered as securities. In the meantime, the variety of products has changed (z. B. through options and futures) and one therefore speaks more of financial instruments.

Pip
A pip is the smallest unit of the price of a currency. Almost all currency pairs are valued by a five-digit number, where in most cases the comma is immediately after the first number (Example: EUR / USD = 1,2538). A pip is the smallest possible change in price, so 0.0001.

Short Position
If we expect the price of a currency pair to fall, we open a short position, which means we sell. The whole thing always refers to the base currency.
Freshly published economic figures suggest us, that e.g.. of the US- Dollar will lose to the British pound (USD/GBP). So we're going to be the base currency., in our case US- Sell dollars, in other words, we go short or open a short position.

Spread
The difference between bid and ask is called spread. The spread is the share your broker gets for their services. In online trading, these are usually 2 or 3 Pips.

Trader
A trader in the broadest sense or. according to the original meaning of the English term, a trader is for any goods.

Related to the financial market
A trader is a market participant in the German language of the financial markets – especially in the area of securities trading -, which predominantly engages in short-term speculative transactions and takes advantage of short-term fluctuations and trends in the market. In doing so, it relies on chart analysis and market analysis. Professional traders use sophisticated trading systems, minimize the risk of their trades through money management and control themselves through trading journals. A trader can trade on his own account or on behalf of others.

Traders are important participants in the financial market. Their short-term investment tactics increase market liquidity, which contributes decisively to the vitality and functionality of the market.
The opposite of the trader is the long-term investor. Rarely does one and the same person succeed, to establish themselves as a successful trader and investor at the same time. A well-known all-rounder of this kind is George Soros.

Volatility
The term volatility is often used in economics. In financial mathematics, it is a measure of the extent to which financial market parameters such as stock prices and interest rates fluctuate.. Volatility is defined here as the standard deviation of the changes (also returns, Returns) of the parameter under consideration and often serves as a risk measure.

Currency
A currency is in the broad sense the constitution and order of the entire monetary system of a state, which in particular the determination of the coin- and the grading system within the currency area. The currency area is the scope of a currency. It enables the transfer of goods and services. Often the term currency is used synonymously for the type of money recognized by the state. Currency is therefore a subform of money. Most currencies are traded on the international foreign exchange markets. The resulting price is referred to as the exchange rate. Almost all common currencies are based on the decimal system, that is, there is a main unit and a subunit, where the subunit 1/100 of the value of the main unit embodied.

Exchange rate
The exchange rate is the price of one currency expressed in another currency. The market, on which this price is formed, the global foreign exchange market is also known as FOREX.

The exchange rate is very important from an economic point of view, as it significantly influences the competitiveness of a currency area. For internationally active companies and investors, exchange rate changes create exchange rate uncertainty.

Counter currency (Course, or quota currency)
The counter currency is the second currency of a currency pair. She also likes to be called Pip- Currency may refer to:, since any unrealized gain or loss is expressed in that currency.