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Common terms used in forex trading

Foreign exchange, or forex, trading is the buying and selling of currencies in the global marketplace. In order to understand forex trading, it’s important to be familiar with some of the common terms used in this field. Here are a few of the most important terms to know:

Pip: A pip is the smallest unit of measurement in forex trading. It represents the price movement of a currency pair, and is typically quoted as the fourth decimal place (e.g. 1.2345).

Spread: The spread is the difference between the bid price (the price at which you can sell a currency pair) and the ask price (the price at which you can buy a currency pair). This difference represents the profit that brokers make on each trade.

Leverage: Leverage allows traders to control larger positions than they would be able to with their own capital. It’s expressed as a ratio, such as 50:1 or 100:1, and means that for every dollar you have in your account, you can control $50 or $100 worth of currency.

Margin: Margin is the amount of money required to open a position in forex trading. It’s expressed as a percentage of your total trade size, and varies depending on your broker and your chosen leverage.

Stop-loss order: A stop-loss order is an instruction to close out a trade if it reaches a certain level of loss. This helps traders limit their losses and manage risk.

Common terms used in forex trading

By understanding these common terms, you’ll be better equipped to navigate the world of forex trading and make informed decisions about your investments.

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Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Risk Warning

MiralFX LLC. offers trading on Foreign Exchange (‘Forex’ or ‘FX’) and Contracts for Difference (‘CFDs’), which are complex financial products that are traded on margin. They carry a high level of risk since leverage can work both to your advantage and disadvantage. As a result, these products may not be suitable for all investors, as loss of all invested capital may occur. You should not risk more than you are prepared to lose. Before deciding to trade, you need to ensure that you understand the risks involved and consider your investment objectives and level of experience. Seek independent advice, if necessary.

MiralFX LLC. does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of a CFD. MiralFX LLC is not a financial advisor and all services are provided on an execution-only basis. This communication is not an offer or solicitation to enter into a transaction and shall not be construed as such.

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