If you are a beginner in the Forex market, there are a lot of things for you to understand first. One important part is learning the lingo. Among a number of terms used in currency trading, a few are self-explanatory, while others are quite difficult to understand. Here, you can find brief definitions of some of the most common terms used in the Forex trading market.

Understanding the Basics

Bid/Offer Spread: The difference between the buying price (bid) and the selling price (offer).

Commission: A fee paid to a stockbroker for obtaining a security, generally as a percentage of the value of the trade or as a flat rate.

Hedging: A way of reducing the risk of losses that may occur if interest rates, share prices or foreign exchange rates move in the wrong direction. This usually involves the use of CFD or futures contracts.

Liquidity: The level of continual buy and sell activity making up the market demand for the shares and indicating the ease with which investors can undertake transactions.

Mid Price: The midpoint of the bid / offer spread quoted by the market makers. The price shown in the share price pages and market reports within the financial media, but not the price at which you could necessarily expect to conclude a deal to buy or sell. The price at which you buy will be higher and the price at which you sell will be lower than the mid price in almost all circumstances.

To know more terms, go to our Market Terminology page. This information provided by Orient Financial Brokers (OFB), licensed and regulated by Central Bank of the UAE since 1997, to conduct brokerage in Foreign Exchange, Commodities and Money Markets.