Forex Terminology

Base Currency The first currency is the base currency that is quoted relative to the second currency. It is also typically considered the domestic currency.
Reference Currency The reference currency is the second currency quoted in the pair. All profits and losses are usually stated in the reference currency.
Spread Spread is the difference between the bid and the ask price of a currency pair.
Pip Pip – percentage in point is the smallest measure of price movement in Forex.
Lakh Lakh is a unit which is equal to 100,000 commonly used in Forex.
Going Long Going long refers to the purchase of a currency with the expectation that it will appreciate in value.
Short Selling Short selling refers to the sale of a currency that the seller does not own. Short sellers assume that they will be able to buy back the currency at a lower cost and thus profit when the currency depreciates.
Squaring Off To close an open position is called squaring off.
Rollover A rollover is a transaction where an open position from one value date (settlement date) is rolled over to the next value date. This is carried out to allow traders to hold their position for an indefinite period of time

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