Forex glossary | Brokerscout.ai

Glossary

Arbitration The procedure of simultaneously purchasing a certain commodity on the market at the lowest price and selling it on another trading floor at the highest price in order to generate income.

Example:

A trader noticed the possibility of arbitrage between different exchanges where the prices for the same asset are different and decided to use this gap to make a profit.
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Ask This is one of the basic concepts in forex, meaning the buying price.

Example:

A trader decides to buy a particular currency pair in response to increased demand for that currency as its position in the market strengthens.
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Base currency Base currency - currency, for the purchase or sale of which the client requests from the broker a quote of the current market exchange rate.

Example:

The base currency in a pair at the forex market determines the value of a unit of the quoted currency;
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Base interest rate The base rate is the interest rate that credit institutions use as a basis for calculating interest on various types of loans and deposits.

Example:

The Central Bank decided to change the base interest rate, which affected the cost of borrowing and credit conditions in the financial markets.
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Base point A unit of measurement that is equal to one hundredth of a percent. When calculating interest rate differentials, ambiguity must be avoided. In this case, the base point is the unit of measurement. Example: an increase in the interest rate from 7% to 7.2% is a change of 20 basis points.

Example:

A trader has fixed a profit of 50 basis points by closing a deal with a change in the price of the EUR/USD currency pair by 1.1500 to 1.1550.
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Risk Warning

Before embarking on Forex trading, it is essential to thoroughly evaluate your investment objectives, level of experience, and risk tolerance. Never allocate funds that you cannot afford to lose.

Off-exchange foreign exchange transactions carry significant risks, encompassing leverage, credit risk, limited regulatory protections, and market volatility. These factors can significantly influence currency prices and liquidity.

Furthermore, the leverage inherent in forex trading means that market fluctuations can result in substantial gains or losses relative to your initial investment. If market conditions go against you, you may risk losing your entire initial margin and be required to inject additional funds to maintain your position. Failure to meet margin requirements may lead to position liquidation and subsequent losses for which you bear responsibility

Before embarking on Forex trading, it is essential to thoroughly evaluate your investment objectives, level of experience, and risk tolerance. Never allocate funds that you cannot afford to lose.

Off-exchange foreign exchange transactions carry significant risks, encompassing leverage, credit risk, limited regulatory protections, and market volatility. These factors can significantly influence currency prices and liquidity.

Furthermore, the leverage inherent in forex trading means that market fluctuations can result in substantial gains or losses relative to your initial investment. If market conditions go against you, you may risk losing your entire initial margin and be required to inject additional funds to maintain your position. Failure to meet margin requirements may lead to position liquidation and subsequent losses for which you bear responsibility