When starting in forex CFDs, many new traders are confused by the number of technical words used on trading platforms and websites. This GF Limited review explains key forex trading terms in clear, simple language. The goal is to help beginners understand common concepts before placing their first trades.
Source: https://www.markets.com/analysis/forex-cfd-trading-how-to-trade-forex-cf-ds-with-markets-com
Basic forex trading terms
Forex (Foreign exchange)
Forex is the global market where currencies are traded. Traders buy one currency and sell another at the same time, hoping to profit from price changes.
CFD (Contract for difference)
A CFD is a trading product that lets you speculate on price movements without owning the asset. In forex CFDs, you trade currency price changes instead of actual currencies.
Currency pair
Forex is always traded in pairs, such as EUR/USD or GBP/JPY. The first currency is the base currency, and the second is the quote currency.
Bid and ask price
The bid price is the price at which you sell a currency. The ask price is the price at which you buy. The difference between them is called the spread.
Spread
The spread is the cost of entering a trade. A lower spread usually means lower trading costs, which is important for active traders.
Trading mechanics and risk terms
Source: https://www.dailyexcelsior.com/the-pros-and-cons-of-cfd-trading/
Leverage
Leverage allows traders to control a larger position with a smaller amount of money. Although leverage can increase profits, it increases risk, especially in forex CFDs.
Margin
Margin is the amount of money required to open and maintain a leveraged position. It isn’t a fee but a portion of your trading balance set aside while a trade is open.
Margin call
A margin call happens when your account equity falls below the required level. The broker may ask you to add more funds or close positions to reduce risk.
Stop-loss order
A stop-loss order automatically closes a trade when the market reaches a certain price. It helps limit losses and is strongly recommended for beginners.
Take-profit order
A take-profit order closes a trade when a set profit level is reached. This helps traders lock in gains without watching the market constantly.
Market behavior and strategy terms
Source: https://www.shareindia.com/knowledge-center/currency-trading/forex-trading-for-beginners
Pip (Percentage in point)
A pip is the smallest price movement in most currency pairs. It is used to measure profits and losses in forex trading.
Lot size
A lot is the size of a forex trade. Standard lots are large, while mini and micro lots allow traders to trade smaller amounts with lower risk.
Volatility
Volatility describes how much and how fast prices move. High volatility means bigger price swings, which can bring higher risk and opportunity.
Liquidity
Liquidity refers to how easily an asset can be bought or sold. Forex is considered a highly liquid market, especially for major currency pairs.
Market order
A market order is an instruction to open or close a trade at the current market price. It is the fastest way to enter a trade.
Before trading, it is wise to review these terms carefully, start with small trade sizes, and use risk management tools. According to GF Limited, a clear understanding of trading language is the first step toward making informed decisions in the forex market.
Disclaimer:
This article is provided for educational and informational purposes only and should not be considered financial, investment, trading, or legal advice. Trading forex and CFDs involves significant risk and may not be suitable for all individuals. Past performance is not indicative of future results. Readers should conduct their own research and seek advice from qualified professionals before engaging in any trading activity. The information presented is general in nature and does not take into account individual financial circumstances or objectives.