10 common foreign exchange professional terms that beginners need to know about foreign exchange speculation

The first thing for beginners to come into contact with and learn about foreign exchange is a variety of foreign exchange professional terms. Understanding these foreign exchange professional terms and knowing what they represent is conducive to subsequent in-depth learning and practical application.

1. Leverage

Leveraged trading in foreign exchange trading, also known as virtual trading, uses the investor's equity fund as a guarantee to amplify the foreign exchange clothes trading through the financing of banks or brokers. The greater the leverage, the less money the customer needs to pay. There are various leverage ratios on the market, and different banks or brokers offer different leverage ratios. Common leverage is: 1:10, 1:20, 1:50, 1:100, 1:200, 1:300, 1:400, 1:500. Example: If you use 10,000 dollarsaccount openingIf you use 100 times leverage, then you can operate 100,000 dollars for foreign exchange trading. If you buy $1 USD/JPY with a price difference of 0.01, when you buy $100,000 USD/JPY, the trader can get $1000 in income. If your direction judgment is wrong, it will be deducted from your remaining $9,000, 1 point 1 dollar, if deducted to 0, it will be forced position squaring.

2. Margin

Foreign exchange margin, also known asforeign exchangeDeposit refers to the trader using a certain proportion or a certain amount of funds as a margin, so as to achieve a certain leverage to enlarge foreign exchange transactions. The $1000 deposit mentioned above is the foreign exchange margin. Margin will also have a common calculation formula, margin = lot number × 100,000 base currency × exchange rate ÷ leverage. For example: If you have a US dollar account, open a position when the exchange rate of US dollar to Japanese yen USD/JPY is 128.41, the lot number is 1, and the leverage is 100, then your margin is at least 1 * 100000 (US dollars) * 128.41 ÷ 100 = 128410 (JPY), which is converted to US dollars for $1000.

3. Standard hand/mini hand/miniature hand

Standard lot is a commonly used conversion unit standard in foreign exchange trading. Standard lot is a currency conversion in units of 100,000 base currency. For example, if you are trading in US dollars, a standard lot is 100,000 US dollars. In foreign exchange trading operations, in units of points, each point of the standard batch is a 10-unit change, that is, the average pip of the standard lot is $10 per point. When you fall 10 points, you have to remember that it is actually a $100 loss.

The mini lot is a conversion of 10,000 base currency. If you are using a US dollar account and a US dollar currency pair when trading, then 1 pip is worth 1 US dollar.

Micro lots are quoted in 1000 base currencies and are the minimum number of trading lots that most brokers can use. If you are trading a US dollar currency pair, 1 pip will equal 10 cents. Forex beginners are usually more suitable for this type.

4. Base currency pair

The reference to base currency pairs in standard hands means that the first currency in a currency pair, such as the US dollar to the Japanese yen, is 128.41, then 1 US dollar can be exchanged for 128.41 yen. In the foreign exchange market, the US dollar is the base currency for quotes.

5. Primary and secondary currencies

The eight most frequently traded currencies in the foreign exchange market are called major currencies. They are the US dollar, the euro, the Japanese yen, the British pound, the franc, the Canadian dollar, the New Zealand dollar and the Australian dollar. In addition to these eight unexpected currencies, other currencies are called minor currencies.

6. Straight and cross

Straight trade refers to currency pairs that only contain US dollars in a currency pair, such as USD/JPY, CAD/USD, etc.; cross trade refers to currency pairs that do not contain US dollars in a currency pair. Such as JPY/EUR, AUD/GBP, etc.

7. Spread

The spread is the difference between the bid price and the ask price. For example, USD/JPY goes from the bid price of 128.41 to the ask price of 128.45, and the spread is 4 points. When GBP/USD changes from 1.3029 to 1.2709, the spread is 320. Here, the conversion is 0.0001 USD. The corresponding pip is 1 pip, depending on how many significant numbers are after the decimal point. According to the broker, there is a difference between a fixed spread and a floating spread. At the same time, the spread is also one of the sources of profit for brokers.

8. Hedge

Hedging refers to the fact that in order to reduce trading risks, traders conduct two transactions that are related to the market, in opposite directions, and in equal quantities, and can offset their profits and losses. There are two methods of hedging: direct hedging or correlation hedging, direct hedgingHedgeFor example, if you hold a long position in JPY/USD and then open a short position of the same number of lots; indirect hedging is to find two currency pairs that are very related, such as holding a long position in GBP/USD and recommending a short position in EUR/USD. Because the British pound and the euro are very similar politically and economically, the growth between these two currencies is positively correlated.

9. Position

We often hear two related words: long position and short position. Long position, that is, long buy, means optimistic about the rise of a currency pair and buy in order to make a profit. A position bought during the period is a long position; a short position refers to an investor who expects a currency pair to fall and sells at a high in advance. That is, a position sold during the period is a short position, referred to as short. Since the position has not been sterilized, investors can also profit in a falling market.

10. Take Profit and Stop Loss

Take Profit Stop Loss is an operation order in foreign exchange trading, that is, after reaching a fixed upper and lower deviation point, the system automatically operates Take Profit or Loss Out. Whether it is Take Profit or Stop Loss, traders need to set their own rules, which is a great test of experience and human nature. For example, if you are clearly in a rising trend but want to leave the market, watching the decline may take a chance, but miss the best stop loss point.

There are still many professional terms related to foreign exchange. As long as you encounter something you don't understand, you can check more, ask more, and understand more, which can better help you learn and understand in depth.foreign exchange market。