Forex For Beginners: Understand the Lingo - Singapore Forex Trading, Singapore Forex Academy, Singapore Forex Association

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Forex For Beginners: Understand the Lingo

A firm grasp of the most commonly-used forex lingo will make your entry into the market much simpler. Some words and phrases you’ll hear over and over again include:

  • Base currency: The currency you are holding. If you’re from the United States, your base currency is most likely the U.S. dollar.
  • Quote currency: The currency you are going to purchase.
  • Bid price: The price that your broker would be willing to “bid” or “buy” the base currency you are holding.
  • Ask price: The price that your broker will “ask” you for in exchange for buying your quote currency of choice. The ask price is always higher than the bid price.
  • Spread: The difference between the bid price and the ask price. This is just the broker’s commission.
  • Pip: The smallest measurable value of currency movement. The word “pip” is an acronym standing for “percentage in point,” and a single pip is equal to 1/100th of 1% of your currency. For example, if the value of the USD rises by a single pip, that means it increased in value by $0.0001.