While it is true that leverage can increase your profits, it also increases the risks of trading.

For a beginner trader, learning the key terms in Forex might be a vital step towards understanding this market better.

Some of these terms are vital to describe the market movements, while others are used to describe the general situation in the market.

In this guide, we will discuss the most important terms and concepts in Forex, that will help you become a more informed Forex trader.

This will help you better understand the basic terminology and feel more in touch with the market.

Before we go any further, lets discuss the meaning behind Forex.

The Foreign Exchange Market, better known as Forex, is a global, decentralized market that offers you access to currency pairs trading.

In terms of trading volume, Forex is known to be the largest market.

But what are they A currency pair is the main trading asset in Forex.

The changing value of the currency pair is what allows Forex traders to earn profits.

In EURUSD Euro is the base currency, and the US dollar is the quote currency.

In the Forex terms dictionary, you can find that Major currency pairs are the ones that are made up of the major currencies and USD.

Great examples for major currency pairs are EURUSD, USDGBP, and others.

Exotics, on the other hand, are the currency pairs that are made up of the currencies from emerging economies.

These nicknames are very easily distinguishable and you might have already come across them without knowing what they meant.

These names are very frequently used by traders and brokers alike.

The first price that you see is the bid price, which refers to the amount of the quote currency that the broker will pay you to buy the base currency.

In short, Bid is the buying price, while Ask is the selling price.

In most cases, spreads are the main source of the brokers commission.

It is also a fact that most traded currency pairs have tighter spreads.

For example, spreads for EURUSD should be tighter than for exotic currency pairs.

The minimum pip for the majority of currency pairs is 0.0001, while for JPY pairs, it is 0.01.

In Forex, you will most commonly come across three major types of lots, they are standard, mini, and macro lots.

A standard lot in Forex equals 100,000 USD, a mini lot equals 10,000 USD, and a macro lot equals 1,000 USD.

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