Basic Investment Terms Explained

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Now that the New Year is here a lot of us might be looking for a new skill or two to try for ourselves. One of the skills which can be super handy for making money in the New Year is investing, and currency trading in particular can be a wonderful option for you in 2019. Here are just some of the simple investment terms which you need to know if you want to start dabbling in the stock market this year.

 

Forex

The first term is one we have already mentioned above, and this is Forex. Forex trading is a type of trading which is currency to currency. Forex means foreign exchange, and it makes up the largest trading market in the world. Over $5 trillion are trading across the world each and every day as people bet on the rise and fall of exchange rates.

 

Currency Pair

When trading on the Forex market, one of the things you will notice is that currencies always come in pairs. You will have a pair such as EUR/USD or GBP/USD and these will work together to help you invest your money. A currency pair is any pair of currencies which are traded against each other in the stock market. The way these interact with each other is what will determine whether you should buy or sell.

 

Exchange Rate

An exchange rate, simply put, is the difference in value between one currency and another. You may notice when you visit the Bureau De Change for your holidays that £1 is equal to around $1.26 a piece. This is a relative price which states the value of one against another. When exchange rates were first introduced this was due to the fact that some countries had more good than others, and this meant that certain countries would have a higher abundance and therefore gold in that country was worth less.

 

Stop Loss

When trading on the stock market and starting up your own little side business in real estate with Fundrise, currency with Alpha Zone or even business stocks like Apple, you need to have a plan. A stop loss is an order you set when you open up a trade, which will tell the trade to close and sell off once it reaches below a certain value. This allows you to limit your losses as much as you can and manage the risk you take.

 

Limit order

A limit order is the opposite to a stop loss and this is an order which allows you to set an upper limit for closing a deal. This is something which you might not think you need, but when trading it can be helpful to have a value to work towards and one which you meet to meet your goals.

 

Broker

A broker is a company or a person who will act as an intermediary for your trading, and will bring you bother buyers and sellers for stocks. They are helpful for first time traders and even more experienced ones and they can save you a lot of work and time.

 

 

 

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