Branching your portfolio into Forex trading can be a very lucrative way to increase your overall profitability but before you jump in head first, you are going to have to understand some of the terminology that is used during Forex currency trades. This is often considered a second language to people outside of the Forex industry, but if you spend enough time trying to learn them, you will have a much easier time remembering them than you will have trying to learn say Spanish, or German. It did take me a little while to completely understand the Forex players language, but once I grasped it, I quickly knew that my profits were going to increase.
Consider the Forex trading language like a language from another country. If you were to visit another country and not even attempt to speak their language, you are going to be left out in the cold. The same principal goes for Forex traders, wherein if you have no idea how to talk to them, you are too going to be left behind. It's not that Forex traders are stuck up or snobby anymore, it's just that you have a lot to learn and they understand this, simply by the way you speak.
Let's consider a few of the terms that you will hear while dealing with foreign exchange markets and traders. If you have ever heard the term bull or bullish being thrown around, the trader was probably being considered to generally trade on the long side of currency pairs with the belief that they will raise in profitability. On the other hand, if you are considered bearish, you have been accused of trading on the short sides of pairs believing that they are going to decrease in price.
Having a trader say that you are going long means that you are buying a pair of currencies hoping that the price will go up in time. While this is often times the case, you may often hear traders referring others or yourself as going short, which simply means that you are selling currency not yet owned by yourself. When attempting this strategy, you are in essence hoping that you can sell the currency pair only to purchase it again when the price drops on it. Hopefully these 4 terms will give you a better understanding of the Forex trading market and the terminology being thrown around.
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