Just as you learn any new skill, you need to learn jargon... Especially if you want to win the heart of your lover. As a novice, you must know some technical terms such as hand before you make the first transaction. Some of them you already know, but it's good for you to do some review.
Primary and secondary currencies
The eight most commonly used trading currencies (US dollar, euro, yen, pound, Swiss franc, Canadian dollar, New Zealand dollar and Australian dollar) are also known as major currencies. This is the most liquid and commonly used. All other currencies are called secondary currencies.
The base currency is the first currency in any currency pair. The currency quote shows the value of the base currency as measured against the second currency. For example, if the dollar / Swiss Franc ratio is equal to 1.6350, then the dollar is worth 1.6350 Swiss francs.
In, the U.S. dollar is generally considered as the "benchmark" currency in the quotation, that is, in the quotation of currency pairs, the currency with one dollar as the unit of quotation is exchanged with other currencies. The main exceptions to this rule are the pound, euro, Australian dollar and New Zealand dollar.
Currency of offer
The quoted currency is the second currency of any currency pair, that is, the non base currency. This is often referred to as the settlement currency in which any unrealized profit or loss is expressed.
Point is the minimum unit price of any currency. Almost all currency pairs contain the five most important numbers, and most currency pairs are followed by the decimal point immediately after the first number, that is, if the euro / dollar equals 1.2538. In this case, a point is equal to the minimum change in 4 digits - that is, 0.0001. So, if you quote dollars in any currency pair, an idea is always 1 / 100.
The obvious exception is the yen currency pair, where one basis point equals 0.01.
0.1 point (pipettes)
One tenth point. In order to make the quotation rate more accurate, some brokers will quote with fractional points, or pipettes. For example, if the euro / dollar rose from 1.32156 to 1.32158, it rose 2pipettes.
Bank purchase price
The bank bid price is the price at which you buy a specific currency pair on. At this price, traders can sell the benchmark currency. This will be displayed on the left side of the quote.
For example, the bid price is 1.8812/15 in GBP / USD, and the bid price is 1.8812. That means you sold a pound for $1.8812.
Bank selling rate
Bank offer rate is the price at which the bank sells you a specific currency pair. At this price, you can buy the benchmark currency. This will be displayed to the right of the quote.
For example, when quoted in euro / dollar 1.2812/15, the selling price is 1.2815. That means you can buy a euro for $1.2815. The asking price is also known as the offer price.
Floating is the difference between the buying and selling rates. "Big offer" means that what a trader needs is the first few figures of a trading rate. These figures are often omitted from the quotation of dealers. For example, the USD / JPY exchange rate may be 118.30/118.34, but the first three figures, namely "30 / 34", will not appear in the quotation. In this case, there is a four point spread between the dollar and the yen.
The format of the exchange rate is as follows:
Base currency / quotation currency = bank bid price / bank offer price (i.e. offer price / purchase price)
The main feature of spread is that it is also the transaction cost in the conversion transaction. Conversion transaction refers to the transaction of buying (or selling) and the transaction of offsetting the same size of selling (or buying) the same currency pair. For example, in the case of euro / dollar 1.2812/15, the transaction cost is three points.
The calculation formula of transaction cost is as follows:
Transaction cost = selling price - buying price
A cross currency is a currency pair that does not use the US dollar as the transaction currency. In fact, because traders start two dollar trades, the prices of these currency pairs behave abnormally. For example, starting a long-term (buy) euro / pound is equivalent to buying a euro / dollar currency pair and selling the pound / dollar. Cross currency pairs usually need to pay higher transaction costs.
When you open a new margin account with a foreign exchange broker, you must deposit the broker's minimum margin. The minimum margin price for each broker varies from as low as $100 to as high as $100000.
Each time a new transaction is made, a percentage of the margin account balance will be set aside, which will be used as opening margin in the benchmark currency pair of the new transaction. Its current price and the number of units (or shares) will be listed and traded. The size of these shares is usually referred to as the base currency.
Provide a margin of 1.0% for your small account, for example. Small account transactions are divided into many small shares. For example, a small portion is equivalent to 10000 yuan. If you open a small account without providing the full amount of 10000 yuan, you only need 50 yuan (10000 yuan × 0.5% = 50 yuan).
Leverage is the capital ratio of the deposit (margin) required in a transaction. It can use relatively less money to ensure the security of more funds. Different brokers have different leverage ratios, ranging from 2:1 to 500:1.