Currency Pair
The two currencies that the exchange rate is comprised of. One of the currencies is bought, and the other is sold at the same time.
See also Base Currency, Counter Currency
Day Trading
The practice of opening and closing positions within the same trading day, so that at the end of the day the trader has no open positions.
See also Position Trading
Fed
The Fed is short for Federal Reserve, which is the central banking system of the United States. The Fed issues announcements regarding U.S. monetary policy which can have significant effect on the Forex market.
See also Fundamental Analysis
Forex
Forex, or FX, stands for Foreign Exchange. Forex is the simultaneous buying of one currency and selling of another. Since you purchase money with money, there are two transactions (buying and selling) happening at the same time.
Fundamental Analysis
This type of analysis focuses on the macroeconomic factors that influence the value of a country’s currency. Traders open positions based on how they think changes in these factors are bound to affect different economies.
See also Technical Analysis
Hedging
The practice of opening several positions at once where one position minimizes the risk of another position.
See also Leverage, Margin
Kiwi
Dealer slang for the NZD/USD currency pair.
See also Currency Pair
Leverage
Leverage is a loan from your broker, which enables you to trade with a small amount of capital. It can increase your potential profit, but it can also increase your risk.
See also Margin
Long Position
Going long means opening a position in which the trader buys currency in hopes that this currency’s value will increase (buy low, sell high).
See also Short Position
Loonie
Dealer slang for the USD/CAD currency pair.
See also Currency Pair
Lot
The standard unit of trading. One standard lot equals 100,000 units of the base currency, a mini lot equals 10,000 units, and a micro lot equals 1,000 units. eToro’s standard trade volume is the mini lot.
See also Leverage
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