When you first start out in this business, it may seem like you’re hearing a foreign language, but is quite unique. I’m going to take the time and break down as many of the common terms, so you know what they mean.
Base Currency: When you see currency quoted, you’re going to see it like USD/CAD. Basically it is the value of a currency with respect to another. In this case, the base currency would be USD.Quote Currency: In the same scenario as above the quote currency would be CAD or the second currency listed.Long Buy: A long buy is when you plan on buying the base currency and selling the quote currency.Short Buy: A short buy is when you plan on selling the base currency and buying the quote currency.Bid: The “bid” is the price a dealer is willing to buy the base currency, in exchange for the quote currency.Ask: The “ask” is the price the dealer is willing to sell the base currency in exchange for the quote currency.Pips: Pips are the smallest decimal point a currency has. If the price is USD/CAD.
