On the subject of foreign currencies, it’s crucial that you understand basic terminologies that are frequently utilized in trading. It’s a step towards being able to quickly catch on to forex lingo. But more importantly, knowing these terms will help you have an easier time getting a hold of how the trading market flows.
Currency Exchange Basic Terms
When a currency “appreciates”, it means that its value is becoming “stronger”. In other words, it’s value is increasing in comparison to that of others. Trade balance, enterprising cycles, and government regulations are among the many factors that cause currencies to appreciate.
2. Offer Or Ask Price
An “ask price” is commonly referred to as the “offer”. The basis for an ask price stems from what the market sets out for public viewing. From there, traders can choose to make an offer or an Ask price.
When prices are shown in pairs (two varying currencies), the left side is noted as the base currency and the one on the right, the Ask price. The Ask price is what you will pay for, for the currency of the base currency (numbers on the left).
*Currency Pair: Pricing placed on a “pair”--- two varying currencies that are placed in comparison against one another.
3. “At Best” Versus “At Or Better”
“At best” is the price asked from a buyer or seller, wherein the latter is requested to offer their “best” rate (hence the phrase) at a particular market period. The experts of https://numlookupapi.com/ suggest that you can interpret it as the ceiling for which a rate will be presented.
On the other hand, “at or better” is a combination of two trading actions. “At”, being the “at best” rate of the price BUT with a request for one that is “better”. It’s a negotiation term in case traders believe that the rate can be better, and if sellers are willing to grant better rates.
4. Barrier Option: Knock-In Barrier Option Or Knock-Out Barrier Option
Generally speaking, a barrier option has to do directly with the asset, and whether or not it has hit a predetermined rate or has eclipsed it. A barrier option moves according to the underlying value’s (asset) activity.
Knock-In Barrier Option
When a particular barrier is hit, a knock-in barrier option dictates that certain rights are to be implemented towards the first. It’s an “up-and-in” if prices exceed the pre-defined barrier. In contrast, a “down-and-in” is the phrase for when prices sink said pre-defined barrier.
“Above” is the word to remember here. Above and beyond the initial price.
Knock-Out Barrier Option
If the same asset hits the barrier within the span of the life of the barrier option, it’s called a “knock-out”. Looking at the paragraph before, “up-and-outs” are regarded as insubstantial when limits move past and above the barrier. Finally, “down-and-outs” are viewed just as insubstantial when limits move below said barrier.
5. End Of Day
An EOD is a notice that tells traders an order will remain at a certain rate only until the “end of day”. This usually means by 5:00 PM Eastern Daylight Time or New York Time.
6. A Flat Reading
A flat reading or in short, a “flat”, specifies how there are no changes with the current economic data being reviewed in comparison to previous data.