GCM Asia-Forex-Forex Term
The spread is the difference between the bid and the ask price. The bid price is the rate at which you can sell a currency pair, and the ask price is the rate at which you can buy a currency pair. The spread represents the difference between what the market maker gives to buy from a trader, and what the market maker takes to sell to a trader.
Swap is simply the cost-of-carry that is applied to your account on a day-to-day basis. It is the difference between the interest rates of the two currencies which a trader either earns or pays when a position is kept open overnight. In any one currency pair, the interest is paid on the currency sold and received on the currency bought.
The term “order volume” refers to the number of standard lots you want to trade.1.00 refers to 1 standard lot or 100,000 units of the base currency.0.10 refers to 1 mini lot or 10,000 units of the base currency.0.01 refers to 1 micro lot or 1,000 units of the base currency.
Long / Short position
If you are buying a currency pair, you are opening a ‘long’ position, if selling – ‘short’. For example, if you buy 1 lot of EUR/USD, it means you open a long position for 100,000 units of EUR against USD. And if you sell 10 lots of AUD/USD that means you open a short position for 1,000,000 units of USD vs AUD.
Slippage is when an order is filled at a price that is different than the requested price. Slippage occurs when the market gaps over prices or because available liquidity at a given price has been exhausted. Market gaps normally occur during fast-moving markets when a price can jump several pips without trading at prices in between. Similarly, each price has a certain amount of available liquidity. For instance, if the price is 50 and there is 1 million available at 50, then a 3 million order will get slipped, since 3 million is more than the 1 million available at the price of 50.
Margin is a percentage amount of the total trade size which a broker requires as a good faith deposit in order to allow a trader to open that position. This amount is not a fee or transaction cost; however, it is simply a portion of your account equity set aside within your account as a deposit towards the trade. Margin requirements are determined by taking a percentage of the notional trade size and are determined by the broker in advance in the trading conditions.
Margin Call is an alert to trader when the account equity falls below 100% Margin Level. This means, the account is left with only the supplied margin and should be funded with more money in order to prevent it from facing Stop Out or force closure.