As in any skill that you learn, you need to learn the lingo especially if you wish to win your love’s heart. Here, take forex as your new lover whom you want to win over.
You, being the newbie must know certain terms like the back of your hand before making your first trade, (grab a cup of your favourite kunu, zobo or water, all I want is that you follow me closely):
1. Major and minor currencies: the 8 most frequently traded currency are:
These are the most liquid, most sexy and most yummy, just like my favorites strawberry and vanilla flavours.
2. Base currency: currencies in forex are written in pairs e.g. EUR/USD, GBP/JPY etc. We can open our metatrader 4 application we’ll see all this in the quote section.
The first currency is the base currency(EUR as in EUR/USD), while the second is the quote currency (USD as in EUR/USD)
3. Pip: a pip is the smallest unit of price for any currency. Nearly all currency pairs consist of 5 significant digits and most pairs have the decimal points immediately after the first digit that is, EUR/USD equals 1.2538
A single pip equals the smallest change in the 4th decimal place that is 0.0001. therefore if the quote currency in any pair is USD, then 1 pip always equals 1/100 of a cent. Notable exceptions appears that include the Japanese yen where a pip equals 0.01.
4. To go long: means to buy
5. To go short: means to sell
6. Bullish market: a market that is going upward, also called uptrend
7. Bearish market: a market that is going downwards also called downtrend
8. Bulls: this refers to buyers
9. Bears: this refers to Sellers
10. Ranging: this is a market that doesn’t have a particular direction, it is neither moving upward nor downward
11. Trending: this is a market that has a particular direction, either trending upward or downward.
12. Hawkish this refers to Central Bank governor of the country who are liberal on interest rates and are willing to increase it. This is a very good news for investors.
13. Dovish: this is the exact opposite of hawkish. This refers to financial personnel of a country what are very restrictive, they did not want to tamper with the interest rate instead they may want to reduce it which translates to bad news for investors
14. NFP: this is an acronym for non-farm payroll. It is a very important news event in the United States. It’s released first Friday of every month, 7:30 AM New York Time (1:30 PM Nigerian time)
If you’ve come this far, I suggest you take a rest so you don’t bite more than you can chew. Understanding lo matter yeah? Make sure you fully understand what you’ve learnt so far before deciding to proceed or not.