Search
Close this search box.
Search
Close this search box.

5 Financial Trading Terms Every Rookie Should Know

Forex Trading In Singapore

You are new to trading and want to know essential must-know terms? When you are new to Forex, you can feel lost in different words, terms, and slang used by traders. But fear not because you arrived at the right place. As in any field, there are important terms in trading every new trader has to memorize. These words are used in online Forex, stock, and cryptocurrency trading websites and study materials. To be a successful trader you will have to grasp their meaning. In this article, you will find 5 of the most important ones. Terms are intuitively ordered, so let’s start.

Trading Instruments

You will hear this term often when opening any broker webpage. Trading instruments are any assets that can be traded. Forex currency pairs, stocks, cryptos, commodities, etc. anything you can buy or sell to trade is called a trading instrument. There are many different trading instruments and depending on what you want to trade you choose the broker accordingly.

Online brokers usually offer hundreds of trading instruments. Anything you want to trade is available somewhere and it is easy to find the specified instrument provider broker.  Most popular trading instruments include stocks, Forex currency pairs, Gold, ETFs, CFDs, and nowadays cryptocurrencies. When you buy bitcoin or gold, these assets are your trading instruments. After knowing this, it becomes easier to check if your favorite instruments are supported by your broker.

The Spread

Simply put, the spread is the difference between Bid and Ask prices. Whenever a trader opens the trade they automatically pay the spread. Spread is very important if you trade often and open many trades daily. You always pay spread whenever opening and closing a trade, this means spread can make a great difference in profit and loss.

Many traders avoid instruments with too much spread because this reduces their trading strategy profitability. Smaller the spread, the smaller the price you have to pay to open a buy or sell position. Knowing the meaning of spread in Forex trading has tremendous importance.

Bid And Ask Prices

Bid And Ask Prices

We emphasized how important spread is above and its meaning, but what are Bid and Ask?  Bid price refers to the highest price at the moment that the buyer is willing to pay to buy the specified trading instrument. The asking price is the lowest price the seller is willing to sell their asset.

Bid and Ask prices are the heartbeat of any financial market be it Forex, stock, or any other market where traders are buying and selling trading instruments: currency pairs, stocks, crypto, commodities, etc. Take the Forex market as an example. Not to get confused you pay the Ask price when buying the instrument and selling it for the Bid price. This little detail is sometimes enough to make traders confused.

Bear And Bull Markets

Bear And Bull Markets

When speaking about bulls and bears the famous charging bull statue from Wall Street is the first which comes to mind. As in many fields, animals have some meaning and symbolize specific events in Forex and stock trading too. The bears are trying to push prices down, bear market means prices are falling and traders are trying to short-sell the market.

Sellers have more power during bear markets. Bull markets on the other hand are the opposite; they represent rising prices and buyers’ power. These terms describe the overall financial market’s status. Traders love using these words and any novice should understand them as well.

Equity

Equity or your account equity simply refers to the total value of your trading account. So, if you got a let’s say $1000 FX account your total equity would be 1000 dollars. But what happens when you open the trade and it goes into profits or loss? Your current profit or loss will be added or subtracted from your account balance in real-time.

So if you opened a BTCUSD trade and you got lucky, trade went in your direction and you are at $200 profit, your account equity would be $1000 + $200 = $1 200. But what if it was in – a $100 loss? Total equity would be $1000 – $100 = $ 900. Knowing how to calculate equity is good for assessing your account’s total value. Today’s trading software is very advanced and they calculate account equity automatically, you can see total equity in the toolbox for MetaTrader.

After understanding these top 5 terms you should feel comfortable in the trading environment. This is the first step in trading. Now, these 5 terms are very important and essential but there are still more slang, terms, and words to know. So, continue your search and study them well.


Subscribe to Our Newsletter

Related Articles

Top Trending

Boston event planners
8 Event Planners In Boston Known For Creativity And Elegance
lainey wilson age
Lainey Wilson Age: A Look At The Country Singer's Life, Career, and More
Duke Dennis Age
Duke Dennis Age: Twitch Streamer's Height and Other Details Explored
Most Customizable WordPress Themes for Agencies
10 Most Customizable WordPress Themes for Agencies
WordPress newsletter plugins
10 WordPress Plugins That Help Increase Newsletter Signups

LIFESTYLE

retirement cities in California
10 Best Retirement Cities in California for a Relaxed and Affordable Life
Mother's Day Around The World
Mother’s Day Traditions Around the World: Mother's Day 2025 Special
summer birthday party ideas
Creative Summer Birthday Party Ideas for Kids in 2025
May 6 Zodiac
May 6 Zodiac: Positive Traits, Compatibility and More about Taurus
self storage solutions for life transitions
How Self Storage Can Help During Major Life Changes (Divorce, Moving, etc.)?

Entertainment

lainey wilson age
Lainey Wilson Age: A Look At The Country Singer's Life, Career, and More
Duke Dennis Age
Duke Dennis Age: Twitch Streamer's Height and Other Details Explored
Cannes Naked Dress Ban Red Carpet Fashion
Cannes 2025 Bans Naked Dresses: What It Means for Red Carpet Fashion
big meech net worth
Big Meech Net Worth: Breakdown of The Drug Dealer's Income
BAFTA TV Awards 2025 winners
BAFTA TV Awards 2025 Winners: Full List of Shows, Actors & Moments

GAMING

Gaming and Cognitive Skills
Gaming and Cognitive Skills: The Science Behind How Games Boost Your Brain
Hardest Boss Fights in Gaming
The Hardest Boss Fights in Gaming History (Ranked)
Avoid Getting Tilted in Competitive Gaming
How to Avoid Getting Tilted in Competitive Gaming?
Bingo Games
Are Live Bingo Games Still Popular?
Reduce Input Lag for a Smoother Gaming
How to Reduce Input Lag for a Smoother Gaming Experience?

BUSINESS

Can ADA Continue
Can ADA Continue to a $100 Level?
Eco-Friendly Plumbing Companies That Save Water and Energy
10 Eco-Friendly Plumbing Companies Helping You Save Water and Energy Efficiently
legacy shave net worth
Legacy Shave Net Worth: What Happened After Shark Tank
Crypto Facto Fintechasia Net
Crypto Facto Fintechasia Net: Unveiling The Latest Trends In Fintechasia
best emergency plumbing companies in UK cities
Top 10 Emergency Plumbing Companies in UK Cities for Quick Solutions

TECHNOLOGY

How to Change Snapchat AI Gender
How to Change Snapchat AI Gender: An Easy 5-Step Guide
Promote Your NFT Project
10 Best Ways To Promote Your NFT Project And Gain Visibility
Sensor Technology in New Zealand Farming
How Sensor Technology is Enhancing Farm Efficiency in New Zealand
Best gaming video editing software
How to Edit Gaming Videos Like a Pro: Top Software & Tips?
AI NPCs
The Rise of AI NPCs: Will They Replace Real Players?

HEALTH

Gaming and Cognitive Skills
Gaming and Cognitive Skills: The Science Behind How Games Boost Your Brain
Yimusanfendi
7 Incredible Benefits of Yimusanfendi Meditation and Possible Side Effects
Connection Between Hydration and Urinary Health
The Connection Between Hydration and Urinary Health
Neuralink Brain Implant Patient Regains Speech
Neuralink Brain Implant Helps ALS Patient Regain Speech with AI Support
Wegovy for Weight Loss
Wegovy for Weight Loss: Is It Worth Buying Online?