· Pip: The price change between pairs of currency. Some call it point; either way, it’s the fourth digit after the fraction (0.0001).
e.g.: EUR/USD = 1.2345, when the price increases one pip, it will be 1.2346.
· Trend: The direction of a pair of currencies; it could be up trend or down trend or side ways (not up or down).
· Balance: The amount of money that you deposit into your account without adding / subtracting your profit / loss.
· Lot: The size a trader uses in the market, it is worth 100,000 from the currency on the left side
e.g.: EUR/USD = 1.1234, this equation means that 100,000 EUR can buy 112,340 USD.
In real life market, the trades are taken in Lots, but some brokers want to make space for small investors so they created fraction of the Lot (0.1, 0.2, 0.3…….)
· Equity: it’s the amount of money that you will have after adding / subtracting your profit / loss.
· Margin: The amount of money that you pay to book the lot. This amount will be returned after you close your trade.
· Free margin: the amount of money left remaining after the margin. You can use this to buy / sell Lots.
· Leverage: This is the most important option that you will have to choose when you go to the market.
Leverage is the power of money in the market, e.g. you pay 10,000 LE to buy a car with value 100,000 LE. This means that every 1 LE you pay bought 100 LE in the market. That means that your leverage is 1:100.
But, to use an analogy, this does not amount to actually buying the car; you just book the car for the intention of investing, not as a consumer.
· Bullish, Long: Buy because the market is going upward.
· Bearish, Short: Sell because the market is going downward.