Understanding Forex Terminology

In order to succeed in any type of endeavor, one must study how that particular business works. If it’s a highly technical pursuit, you’ll want to understand the terminology so you can benefit from the multiple articles available; and better yet, you’ll want to be able to participate in forums, in chats and understand what people are talking about. So if you’re going to trade the Forex, you’ll want to comprehend its lingo. There are a few terms you may already know.

First, understand the difference between the major and exotic currencies. In the currency exchange the major pairs are the most popular and most traded. These include the U.S. Dollar, Euro, Pound, Swiss Franc and, Australian, New Zealand and Canadian Dollars. The currencies unlike in a currency converter chart are quoted in pairs. The one to the left is normally referred as the base currency i.e. EUR/USD. So if you’re told that the Euro traded at $1.3580 it means that it takes $1.3580 U.S. Dollars to purchase one Euro. The units to the right side of the decimal point in the price quote are known as the pips.

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