How To Speak Japanese

One aspect of trading the Forex, or even talking to Forex traders, that can be really intimidating is that the Forex market has an awful lot of jargon. For those of us who have been trading for years, this jargon comes as second nature and we don’t even think about it anymore.

If you’re just getting started, however, you might not know a kiwi from an Aussie, a major currency from a minor, or the base from the cross in a currency pair. When you take all this into consideration, it’s easy to see how intimidating that can be.

This article will set out to help you get started. There is a lot of Forex lingo, but at least now you’ll be able to jump into the game a little bit more after knowing these common Forex terms:

“The major currencies.” There are eight major currencies, which are: the U.S. Dollar, Canadian Dollar, Australian Dollar, New Zealand Dollar, the Euro, Japanese Yen, the British Pound, and the Swiss Franc.

“Minor currencies.” This is any currency that does not belong to the major eight. So even currencies of large economies like Brazil, Mexico, Russia, China, and India are all still considered minor currencies.

“Base currency.” This is the first currency listed in a currency quote, and is always measured in a unit of 1.

“Cross currency.” The second currency listed in a currency quote.

“The Aussie.” A slang term for the Australian Dollar.

“The Kiwi.” A slang term for the New Zealand Dollar.

“The Bid.” Refers to the bid price, which is the price the market will currently purchase a specific currency pair for. The bid price will always be higher than the ask price.

“The Ask.” Refers to the ask price, which is what you will sell a currency for. The ask price is the one used when selling.

“The Spread.” The difference in value between the ask price and the bid price. This miniscule difference is how some brokers make their money off Forex traders instead of charging a commission.

“Bull Market.” A market distinguished by an overall rise in price.

“Bear Market.” A market distinguished by an overall fall in price.

This is hardly the end all, be all, of Forex lingo, but this article should at least give you a good informed start into getting comfortable with the slang you’ll hear around the Forex markets.

Knowing what these slang terms mean will make the transition into currency trading that much easier.

This entry was posted on Saturday, January 10th, 2009 at 5:03 pm and is filed under Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.