Common terms used in forex trading:

1. Bid: It is the price at which a buyer has offered to buy the currency.

2. Ask: It is the price at which a seller has offered to sell the currency.

3. Spread: It is the difference between the bid price and the ask price.

4. Intraday: Refers to all positions that are opened and closed at anytime during a normal trading day.

5. Overnight position: Refers to all positions that are active at the end of the trading day and are carried over to the next day for trading.

6. Long position: In a long position, the trader buys a currency at a particular price with the intention of selling for a higher price at a later date.

7. Short position: In a short position, the trader sells a currency anticipating that it will depreciate.

8. Limit order: A limit order is an order with restrictions in regard to the maximum price to be paid or the minimum price to be received.

9. Stop loss order: In a stop loss, an open position is automatically liquidated at a specified price. This strategy is used to limit losses


The forex market is frequently referred to as the inter-bank market because banks dominate it. However, in recent years the number of other market participants such as multinational corporations, money managers, and speculators has increased significantly, particularly so with the advent of the internet permitting trading on a 24 hour basis.

In the FX market there are multiple dealers whose business is to unite buyers and sellers. Each dealer has the ability and the authority to execute trades independently of each other. This structure is inherently competitive as traders are faced with a choice between a variety of firms with an equal ability to execute their trades.