Generally the financial market, Forex has a lot of jargon in its communication. You who want to plunge should understand jargon in Forex Trading.
The following are the jargon or terminology commonly used in Forex Trading, namely:
Bid / Offer
Almost all financial markets in the world have bidirectional prices. This is the price you buy and sell in certain markets. The currency you trade is usually whatever the underlying currency of the market is.
Point / Pip / Tick
Point, pip or tick is the smallest unit where the market moves. For example on the Indonesian stock exchange, the minimum price change is Rp. 25.
The purpose of knowing the tick value of a transaction is to help calculate how much our profit or loss (P / L). This represents the financial implications of 1 point of movement in the transaction. So if you have bought £ 5,000 from Vodafone CFD then for each move point you will get or lose £ 5,000 / price (for example 142) = £ 35.21 depending on whether it goes up or down. You can also calculate this by knowing how many CFDs you are trading. So in this example to buy £ 5,000 worth of Vodafone CFD you have to buy 3,521 CFDs (£ 5,000 / £ 1.42). So for each move the pence tick value is 3521 x 0.01 = £ 35.21.
‘lot’ is the amount that you want to trade. Lot conditions are determined for each Forex market.
Order (Risk Management)
Order is an instruction to open or close a position at a certain price chosen by you. This is useful if you cannot keep up with market movements, because you can choose the price you want to enter the market (by placing an open order) or exit the market (by placing a close order). Close orders can be used to limit risk or take profits. Orders can be valid for a certain period of time and can be executed or expired, whichever comes first. Orders can be used to limit losses to a predetermined limit, although this is not always guaranteed because the market can experience a gap beyond your limit.
Stop and Limit
Stop orders are instructions that are executed only if the market price reaches a certain level that is less favorable than the current market level. A stop loss order is an instruction that is executed only if the market price reaches a certain level that is less favorable than the current market level, this is typically used to close open positions. Limit orders are instructions that are executed at a certain level when the market price reaches a level that is more profitable than the current market price. Limit orders can be used to open or close positions.
Margin Call is a request from your broker to put more money into your account if you want to continue trading.
Why is it called a call?
Because in the forex trading period first, before there was internet, the broker would call the trader to notify the lack of capital for this trade.
Loss or loss is an event that can not be avoided from trading activities. Even the best traders will experience loss.
Even though you can’t control market behavior, but you can certainly control how much you lose per trade.
Use Stop Loss to limit losses.
You can adjust your Stop Loss level yourself: loosened, tightened, or adjusted to your liking. Anyway, make sure that you always activate the Stop Loss feature on your trading platform.