• Base currency is the first currency in the pair.
• Quote currency is the second currency in the pair.
For eg:
USD / JPY = 120.50
i.e Base Currency / Quote Currency = Rate
(in this example, 120.25 Japanese Yen for one US Dollar)
This means how much you have to pay in Quote currency to obtain one unit of the Base currency. The minimum rate fluctuation is called a POINT or PIP.The currency pairs on Forex are quoted as the Bid and Ask prices.
• Bid is the rate at which you can sell the base currency. In the above mentioned example, it is ( US Dollar ), and buy the quote currency ( Japanese Yen.)
• Ask ( or Offer) is the rate at which one can buy the base currency, In the above mentioned example, buy ( US Dollar ), and sell the quote currency, ( Japanese Yen.)
• Spread is the difference between the Bid and the Ask price.
Pip is the smallest price increment a currency can make. Also known as a point. For instance – (1 pip = 0.0001 for EUR/USD, and 0.01 for USD/JPY.)
• Currency Rate is the value of one currency expressed in terms of another. The rate depends on the supply and demand on the market or restrictions by a government or by a central bank.
• Margin is the collateral required by any agency to open and maintain a position for you. And it varies from one service provider to the other.
• Balance is the total financial result of all completed transactions and deposits/withdrawals on the trading account.
• Floating Profit/Loss is current profit/loss on open positions calculated at the current prices.
• Equity is calculated as balance + floating profit - floating loss.
• Free margin means funds on the trading account, which may be used to open a position. It is calculated as equity less necessary margin.