Already into 2019, how is it going? Keeping to those New Year resolutions? This is the time they tend to fizzle out, but you have a whole year to sort them out. If one of your resolutions is to explore the intriguing landscape of FX trading, the sooner you start your research and discover what it is all about, the better.
The opportunity to trade in this trillion dollar activity is ongoing 24/5, as it is the largest, most liquid market in the world. You may find you need a short course in what is being said, as plain speaking is not always available irrespective of how often it is requested.
Do You Speak The Language?
If you visit another country that doesn’t speak your mother tongue, you often attempt to learn a few words either using a course or a phrase book. The same with forex trading, undertaking a beginners course is one of the best ways forward, and in doing so, you can learn the language of the trading world.
Language Of Trading
There are differing points of view between intellectuals regarding technical language and jargon; both have value in any profession. Whatever you want to call it, specific language is a way of communicating within a field that assists in providing cohesion and strength. Sometimes it starts off as a code, with the aim of keeping something private, and then develops into everyday business speak.
Forex trading language is international. Take the term ‘liquid market’ – it doesn’t matter if you are trading in Chile or Australia it means the same. This is a market where a trade can be executed quickly for a reasonable price due to the large numbers of buyers and sellers. Like all other jargons, it has numerous definitions with may vary slightly but overall when spoken or read the sense of it is understood.
To become a competent FX trader, you need to grow comfortable with the phrasing and terminology used. Learning it is part of the process of gaining experience.
Becoming More Language Literate In Forex
Read any article about Forex, and you might feel you need a dictionary by your side, so thank goodness for the speed of search engines! They allow you to clarify terminology to make more sense of what you are reading. Essential if you want to identify what currency pairs to trade on.
Do you know what currency pairs are? If not, don’t worry you will do now. In Forex, trading is always done in pairs of the currencies involved. They are presented, for example, as EUR/USD. The top four to eight pairs are often referred to as the majors, and the currency pairs themselves have their own names.
- EUR/USD – ’euro’
- USD/JPY – ‘gopher’
- GPB/USD – ‘cable’
- USD/CHF – ‘swissie’
- AUD/USD – ‘aussie’
- NZD/USD – ‘kiwi’
Quick Intro To Forex Jargon
Do you know what kind of trader you want to be?
A Scalper – is a trader who holds a position for short periods; taking minutes or even seconds to process a trade. In the attempt to make a profit they buy quickly and just as promptly resell at a higher price.
Day Traders – these traders make a decision what to do at the beginning of the day with no intention of holding the trade overnight. They can end the day with either a profit or loss, depending on their abilities to understand the analysis of the FX market.
Swing Traders – these traders tend to hold onto their trades for a couple of days, mainly due to the fact they cannot keep monitoring the charts for analysis throughout the day. An in-depth analysis is conducted in a suitable time period, like an evening, on which to base their market decisions.
Position Traders – traders who know that fundamental world events will have an influence on their trades. They will hold onto their trades for weeks, months, or even years.
Do you understand the analysis?
This is either fundamental or technical analysis. Both of these should be explored in depth, learning the particular jargon that is associated with each.
Fundamental Analysis – politics, social and economical factors are taken into consideration and how they affect a currency’s supply and demand.
Technical Analysis – this studies price movement, often by the use of charts as a visual aid to historical data.
It is safe to say that a ‘phrase book’ is not enough for you to become an efficient trader. A beginners course is the way forward to learning the necessary vocabulary to function. Reading, research and testing strategies are the way forward to becoming proficient. A demo account on any FX platform is an excellent way to do this. FX trading is not a get rich quick scheme; it is a professional business where you need all the ‘edge’ you can get. Spending the time to understand the jargon will make your first ventures into trading a lot less confusing and hopefully more rewarding.