If you want to invest in forex, then you need to understand the terms in forex. Forex is an investment that trades one currency for another.

When investing in forex, you need to register with the best forex broker so that you can trade safely. But before that, you need to learn a few things, including terms they use in forex trading.

Terms in Forex that You Must Know

Knowing the terms in forex before investing is very necessary. Here are some terms that you need to know before investing in Forex:

1. Margin

Margin can be said as a guarantee in Forex trading. For example, margin is a down payment or down payment for a house purchase.

If you pay an advance for a house purchase of IDR 20 million for a house worth IDR 100 million, then you will get a contract of sale and purchase agreement.

Even though you have just held the contract, legally you are already the legal owner of the house. You can sell the contract you already hold to someone else at full price or even more.

For example, you sell to someone else for IDR 125 million. Then you get a net profit of IDR 25 million (IDR 125 million-IDR 100 million).

If you understand these examples, then of course you will also understand in Forex. Because, this principle also applies in Forex trading. For example, USD/IDR then the value of 1 lot = US$10,000 in the contract.

To get it, you only need to spend a margin (down payment) of only US$ 100. Why only US$100? To find out, please see the next term, namely leverage.

2. Leverage

What is meant by leverage in Forex trading? It's a terms in forex that is the ratio used to determine how much margin is needed to make a transaction.

The ratio will be multiplied by the size of the contract. For example, 1:200 leverage on mini contracts. So, the required margin is (1/200) x 10,000 = 50 in units of currency traded.

Another example, leverage 1:200 on standard or regular contracts. So, the required margin is (1/200) x 100,000 = 500. Why multiply by 100,000? Because the contract used is a standard or regular contract.

3. Buy & Sell

The next terms in forex are buy and sell. Buy is a position to “buy” in Forex trading. Usually, a buy is done if the price is expected to rise. 

Basically, buy when it's cheap and sell when it's expensive. So, the profit obtained is the difference between the selling price and the buying price.

Sell is a position to “sell” in Forex trading. The opposite of buy, then sell is done if the price is expected to fall. When the price drops, you can close short positions with lower buys.

In simple terms, you sell first at a high price, then you buy back when the price is low. So, the difference is your profit.

4. Order and Position

An order is an order to buy or sell at a certain price. If your order "matches" then "order" will change to "position". The match in question is that there is an opponent.

For example, if you place an order to buy at a price of 10,000 and it turns out that someone wants to sell at a price of 10,000 as well, it means that your order has turned into a position.

However, if your order does not match, the name will still be ordered. Meanwhile, after the match, now it has become a position.

You can reorder (close a position) if you want to resell the position you already have. You can reorder in the opposite direction. 

That is, if your position is long, it is closed by selling and vice versa. To learn more about these terms, you can join Didimax forex broker because you can access free education. 

There are many other benefits by joining the trustworthy broker. Understanding the terms in forex can help you get to know forex better.