Introduction of buying Shares

Introduction

Before beginning your step by step guide to becoming a trader it is worth noting that becoming a trader often takes time depending a variety of factors such as how quickly you learn trading strategies to how long your brokerage account takes to set up etc. Patience is required but the rewards of making consistent profits far outweigh the effort required to learn how to trade! If your not 100% sure about becoming a stock market trader then perhaps you should try the idea out with a free practice trading account first.

1. Know the basics

So your thinking about trading shares in order to make some big bucks…

First of all you need to obtain a basic knowledge of shares and the stock market. It goes without saying that without knowing the aspects of a stock or the concept of how the stock market works its impossible to know what your doing. You can gain all the basic knowledge of the stock market in the basics section of the website.

These are the key concepts that need to be learnt before moving onto learning to trade;

1. Learn the aspects a share has e.g. dividends, bid/ask price, its chart etc.
2. Know what information (software/websites) is required to buy shares.
3. Learn how the stock market works
4. Know of the risk involved with trading shares

Its important to have this knowledge before paying money for a trading course (step 4) to enable you to fully understand the concepts being taught. By not knowing any basic stock market information, parts of courses could easily fly by you, meaning that you will struggle to understand the information that you will have paid for!

2. Open a practice account

Opening a practice account links with step 1 as it will help you grasp the concept of buying and selling shares in the stock market. Plus500 makes it really easy to get to grips with buying and selling shares.

The best thing about practice trading is that you can experiment with strategies and not lose any money! This is because when trading you are using ‘pretend’ cash balances which you can edit to represent how much cash you would actually want to trade with. Practice accounts also have free charting tools which will enable you to get used to technical analysis.

However as practice trading has many perks, I do have a word of warning, whatever you do don’t think that successful practice trading, without proper education, qualifies you to trade on the stock market. People can often get lucky by e.g. buying in a bull market, making money, and thinking this makes them a competent trader. Step 2 is just to help you grasp the concept of trading shares and hopefully enable you to realise how much money can be made from trading on the stock market.

3. Subscribe to a news site

By subscribing to a news site you will receive news before, after and sometimes (depending on the website) during a market day. Taking in news from the city will help you understand what economic factors influence the direction of the stock market. The morning report especially is helpful in predicting whether the market will start up or down, which consequently will enable you to make better (more informed) trading decisions.

News sites often come hand in hand with practice account, where you will find one you will find the other. If you register to one of our recommended practice accounts then you will have the option to receive commentary of the stock market via e-mail.

4. Educate yourself

Step 4 is the most important stage before trading shares.

 In relation to progressing through our step by step guide, paying for a course shows a huge commitment to becoming a trader, a commitment you need to take if your serious about making substantial money from the stock market.

5. Open a brokerage account

You should open a brokerage account soon after gaining a solid education of the stock market as this will help keep your momentum going towards becoming a trader. It is important to pick the right brokerage account for your style of trading. For example some accounts charge inactivity fees which would be bad for position traders (traders who trade rarely) whilst some have expensive trade fees which would represent a bad deal for day traders (traders who make several trades a day).

6. Obtain charting software

Charting software is essential when making trading decisions. Charting software provides accurate fundamental and extensive technical analysis which greatly improves the chances of making successful trading decisions.

Charting software will require a monthly payment which can put people off using it and using free charting websites instead. However, having solid and extensive information from charting software, before trading, will easily improve your stock picking decisions and easily justify paying for charting software.

7. Subscribe to a quality newsletter

Step 7 is not an essential step…some people like to make trading decisions by themselves however some people find newsletters with tips in give them more confidence to place trades.

However as well as providing tips, newsletters also provide useful insights into companies and the stock market.

8. Start practice trading

Unlike step 2, where practice trading is recommenced to help grasp concepts, this practice trading step is used to simulate the trading strategies you have learned, and will use when trading for real. It is essential that you become successful at practice trading over a period of time (8 weeks suggested) before trading for real. This is to make sure your strategies work and that your initial rookie mistakes (it happens to all of us!) do not dent your real cash balance!

Make sure you consistently make profits before using your own hard earned money to trade with.

9. Start real trading

If the 8 steps have been followed and all has gone well then it is time to start real trading!

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Type of Traders

The difference between traders and investors?

 Simple, traders buy stock for the short term and investors buy stock for the long term. Broadly speaking, there are four main types of trading, day trading, swing trading, position trading and investing.

Day trading is when shares are bought and sold within 1 day, this can produce big profits but is acknowledged as one the riskiest forms of trading shares.

Swing Trading is when shares are kept between 2-14 days and the idea is to follow the current upward or downward trend, like day trading this can be very profitable.

Position trading is where shares are kept for 1-6 months, this style is used to follow the long term trends of stocks. This style is often used by people in full time jobs who can’t devote regular time to managing their stock market portfolio.

Investing is where shares are kept for 6 months or more, this style often involves investing in young or highly profitable companies in order to capture their growth with the investment or to receive their dividends.

It is important to determine what type of trader you are in order to select strategies that suit your style of trading. Stock market courses will help you develop trading strategies.

The amount of time you have to give to trading shares will often determine your style of trading. For example if you want to trade shares and still work full time then you will not be suited to day trading.

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What are economic indicators?

What are economic indicators?

Economic indicators are the key statistics of the economy that reveal the direction the economy is heading, for example, the consumer price index (CPI).

CPI is the headline inflation number used by the Reserve Bank's Monetary Policy Committee to set the repo rate. February's CPI falling back into the government's target range of under 6% (but over 3% since a little inflation is seen as economically beneficial) and the Reserve Bank's confidence that it will stay there for the next two years resulted in this week's 0.5% rate cut.CPI is also widely used by the general business community in contracts. For instance, when engineering firms pitch for long-term construction projects, they conventionally quote their prices as escalating by CPI as the work progresses.But CPI is only one of dozens of economic indicators produced by Statistics South Africa.Besides government statistics, there are opinion polls like the purchasing manager's index (PMI) done by Stellenbosch University's Bureau of Economic Research, to mention one of many other data gatherers.To get an overview of just how many figures are regularly published to gauge the economy's temperature, a good starting point is all the data the Reserve Bank blends to track South Africa's business cycles (see below).Along with most countries, the Reserve Bank applies the theories set out by economists Arthur Burns and Wesley Mitchell in their 1946 book, Measuring Business Cycles.This separates economic indicators into three groups: leading, coincident and lagging.The coincident indicator offers an alternative to gross domestic product (GDP) as a measure of where we are now. But, like GDP, it is pretty historic by the time it gets published.The leading indicator looks ideal for investors, since it supposedly forecasts where the coincident indicator will be in 14 to 15 months.

Main Macroeconomic Indicators

Macroeconomic indicators are statistics that indicate the current status of the economy of a state depending on a particular area of the economy (industry, labor market, trade, etc.). They are published regularly at a certain time by governmental agencies and the private sector.
Markets.com provides an Economic calende for the dates of critical fundamental announcements and events. When properly used, these indicators can be an invaluable resource for any Forex trader.
In truth, these statistics help Forex traders monitor the economy's pulse; thus it is not surprising that these are religiously followed by almost everyone in the financial markets. After publication of these indicators we can observe volatility of the market. The degree of volatility is determined depending on the importance of an indicator. That is why it is important to understand which indicator is important and what it represents.

• Interest Rates Announcement

  Interest rates play the most important role in moving the prices of currencies in the foreign exchange market. As the institutions that set interest rates, central banks are therefore the most influential actors. Interest rates dictate flows of investment. Since currencies are the representations of a country’s economy, differences in interest rates affect the relative worth of currencies in relation to one another. When central banks change interest rates they cause the forex market to experience movement and volatility. In the realm of Forex trading, accurate speculation of central banks’ actions can enhance the trader's chances for a successful trade.
  

• Gross Domestic Product (GDP)

  The GDP is the broadest measure of a country's economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures: the advance report and the preliminary report. Significant revisions between these reports can cause considerable volatility.

• Consumer Price Index

  The Consumer Price Index (CPI) is probably the most crucial indicator of inflation. It represents changes in the level of retail prices for the basic consumer basket. Inflation is tied directly to the purchasing power of a currency within its borders and affects its standing on the international markets. If the economy develops in normal conditions, the increase in CPI can lead to an increase in basic interest rates. This, in turn, leads to an increase in the attractiveness of a currency.

• Employment Indicators

  Employment indicators reflect the overall health of an economy or business cycle. In order to understand how an economy is functioning, it is important to know how many jobs are being created or destructed, what percentage of the work force is actively working, and how many new people are claiming unemployment. For inflation measurement, it is also important to monitor the speed at which wages are growing.

• Retail Sales

  The retail sales indicator is released on a monthly basis and is important to the foreign exchange trader because it shows the overall strength of consumer spending and the success of retail stores. The report is particularly useful because it is a timely indicator of broad consumer spending patterns that is adjusted for seasonal variables. It can be used to predict the performance of more important lagging indicators, and to assess the immediate direction of an economy.

• Balance of Payments

  The Balance of Payments represents the ratio between the amount of payments received from abroad and the amount of payments going abroad. In other words, it shows the total foreign trade operations, trade balance, and balance between export and import, transfer payments. If coming payment exceeds payments to other countries and international organizations the balance of payments is positive. The surplus is a favorable factor for growth of the national currency.

• Government Fiscal and Monetary policy

  Stabilization of the economy (e.g., full employment, control of inflation, and an equitable balance of payments) is one of the goals that governments attempt to achieve through manipulation of fiscal and monetary policies. Fiscal policy relates to taxes and expenditures, monetary policy to financial markets and the supply of credit, money, and other financial assets.
  
  
  
  

Conclusion: There are many economic indicators, and even more private reports that can be used to evaluate the fundamentals of forex. It's important to take the time to not only look at the numbers, but also understand what they mean and how they affect a nation's economy.

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Stop Losses and Take Profit Orders

Forex trading can carry significant risks, and various techniques can be used to minimise and control this.

STOP (STOP LOSS) ORDER:

Stop Loss

A type of order that turns into a market order to buy or sell stock or options when and if a specified "stop" price is reached. Stop orders to buy stock or options specify prices that are above their current market prices. Stop orders to sell stock or options specify prices that are below their current market prices.

A Stop Loss Order is an automatic close of a trade that you can set to happen if your currency goes in a direction that would cause you to lose money. For example, if you sold a currency short with the intention of letting its value decrease and buying it back for a profit, you could set a stop loss order if the currency moved upwards by a certain amount. Additionally, if you bought a currency and it began to fall, your Stop Loss would keep you from losing more than you wanted to by selling the currency automatically.

UFXMarkets gives you the option of setting your own Stop Loss Orders so that you control the value of your trade and can ensure that it doesn't drop below a certain level. This way you can minimize your risk on each investment without constantly monitoring all your trades. It's important to remember that a Stop Loss does not guarantee to execute at your requested rate, though in Normal Market Conditions most Stop Losses are filled at the requested rate. Normal Market Conditions reflect any time in the market when liquidity is high and there are no extraordinary events occurring that increase volatility.

Stop-Loss / Limit Orders

Stop-Loss and Limit orders are protective orders that close an open position or future position under certain conditions, namely price.

Stop-Loss Orders are used to limit trader's losses if the market moves against their position. The trader sets the maximum amount (in terms of pips) that he is willing to lose on a certain trade. When that specified price is reached, the trade is executed.

Conversely, Limit Orders are used to lock in the trader's profit if the market moves favorably. The trader sets in advance the price at which he wants to close his position.

In the example below, a trade was opened at the market price of 1.0561(buying order). According to the stop-loss order, the position will be closed if and when the price falls to 1.0553. According to the take-profit order, the position will be closed if and when the price hits 1.0565.

Entry Stop Orders – Entry stop orders are orders that are being placed by traders to enter the market at a less favorable price than the current price. A BUY Entry Stop order will be placed above the current market price. When A SELL Entry Stop order will be placed below the current market price.

When placing Entry Stop Orders, the trader expects that once the market's momentum breaks through the specified price, the trend's movement is confirmed and will continue in that direction.

For example:

The USD/CAD trades at 1.0553 / 1.0557. You estimate that the USD/CAD will continue trending higher. You also believe that should the pair break above 1.0600, it will rise by at least 50 pips. Thus, you place your BUY entry stop order of 20 lots (100,000) USD/CAD at 1.0600.

Trailing Stop-Loss Orders

A trailing stop-loss order is a stop-loss order that is set by the trader at a fixed number of pips from his entry rate. The stop loss order is automatically moved as the market price moves, but only in the direction of the investor's trade.

For example:

If you're Long on the USD/CAD pair at 1.0552 and you set the trailing stop at 30 pips, the stop will initially become active at 1.0522 (=1.0552-0.030).

If the USD/CAD moves higher to 1.0565, the stop-loss order adjusts higher, pip by pip, with the market price and will then be active at 1.0535 (=1.0565-0.030).

If the USD/CAD ever goes down by 30 pips from 1.0565 to 1.0535, your stop will be triggered and your position closed. If the market goes up from 1.0565, your trailing stop will continue to move up in order to lock in additional profits.

One-Cancels-the-Other Orders (OCO)
OCO orders are combined orders with both a stop price and a limit price. When one of the orders is executed, the other is automatically cancelled. OCO orders can be applied to open positions, or they can be used to open a new position.

Say for example a trader believes that the USD/CAD, currently traded at 1.0548/1.0552, will continue trending higher; you believe that should the pair break above 1.0560, it will rise to at least 50 pips. Nevertheless, you expect that prior to this major incline, the pair will retrace to 1.0544. You can place an entry limit at 1.0544, but in case the pair does not hit 1.0544 before climbing higher, you would miss the trade. You then place an OCO order to buy the USD/CAD if it reaches 1.0544 or 1.0560. Of the two, the first bid price to exist in the market will trigger the order:

Stop and limit orders entered on an existing position are also types of OCO orders. When either the stop or the limit is executed, the other is automatically canceled.

Take Profit

A Take Profit is an automated order you set so that your account will liquidate a particular currency position if it reaches a certain level of profit. This way you ensure yourself a profit. The downside to the Take Profit is that sometimes you get in on the ground floor of an especially profitable trend that continues long after you've exited and you accidentally deprive yourself of an even more profitable trade.

Take Profit orders mean that you are able to take advantage of any profits before the rate falls again and your profit reduces, without constantly monitoring your trades.

Take Profit and Stop Loss Orders are crucial tools in enabling you to professionally manage your trades. Where you set these orders depends on your level of risk, but it is good practice to use them with every trade you make. Management of positions and your investment is key to successful Forex trading.

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Create Your Great Trading Strategies

Trading Strategies

There are many great trading strategies out there, and purchasing books or courses does save time, but trading can also be a "do it yourself" career. Many traders spend hundreds or even thousands of dollars looking for a great trading strategy. Building strategies can be fun, easy and surprisingly quick. 

To create a strategy, you will need access to charts which reflect the time frame to be traded, an inquisitive and objective mind and a pad of paper to jot down your ideas. These ideas can then be formalized into a strategy and "visually backtested" on other charts. In this article, we go over this process from start to finish including the questions to ask along the way. Then you'll be ready to start creating your own strategies in any market and on any time frame.

Time and Place?

Before a strategy can be created, you need to narrow the chart options. Are you a day trader, swing trader or investor? Will we trade on a one-minute time frame or a monthly time frame? Be sure to choose a time frame that suits your needs. 

Then you'll want to focus on what market you will trade: stocks, options, futures, forex or commodities? Once you've chosen a time frame and market, decide what type of trading you would like to do. As an example, let's say you choose to look for stocks on a one-minute time frame for day-trading purposes and want to focus on stocks that move within a range. You can run a stock screener for stocks that are currently trading within a range and meet other requirements such a minimum volume and pricing criteria.

Stocks, of course, move over time, so run new screens when needed to find stocks that match your criteria for trading once former stocks are no longer trading in a way that is congruent with your strategy.

Creating and Testing Strategies

Creating a strategy that works makes it is much easier to stick to your trading plan because the strategy was your own work (as opposed to someone else's).

For example, suppose that a day trader decides to will look at stocks on a five-minute time frame. She has a stock selected from the list of stocks produced by the stock screen she ran for a certain criteria. On this five-minute chart, she will look for money-making opportunities.

Look at rises and falls in price and see if you can find anything that precipitated those movements. Indicators such as time of day, candlestick patterns, chart patterns, mini-cycles, volume and other patterns should all be looked at. Once a potential strategy has been found, go back and see if the same thing occurred for other movements on the chart. Could a profit have been made over the last day, week or month using this method? If you are trading on a five-minute time frame, continue to only look at five minute time frames but look back in time and at other stocks that have similar criteria to see if it would have worked there as well.

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Trading Terms

Essential Trading Terms 

It is vital that you understand the basic terms of Forex & CFD trading. This will enhance your trading experience when investing on our leading trading platforms. Make sure to read the basic trading terms below before you begin trading with us.

Buy/Sell Spread

When an investor buys or sells units in a fund, the investment manager trades the underlying assets of that fund to either invest the money or provide cash for the withdrawal. This trading generates transaction costs, such as brokerage, which are paid for by the fund.

The buy-sell spread is the difference between a fund's entry price and exit price and is a cost incurred by investors each time they invest or withdraw funds. The buy-sell spread is retained by the fund (it is not a fee paid to us) and contributes towards the transaction costs associated with the fund buying or selling assets.

The spread ensures that those investors joining or leaving the fund contribute towards these transaction costs and other investors who are not joining or leaving at that particular time are not disadvantaged.

A buy-sell spread is expressed as a percentage of the net value of the Fund's assets. The buy-sell spreads for our funds are reviewed annually and can change from time to time. Any changes are updated on this website.

Currency Quotes

To put the term simply, a quote is known as the current price which is asked or offered for an asset. A quote will always be in the form of two figures. The first will be the Sell (Bid) price and the second figure will be the Buy (Ask) price. For example, as is the case with the following EUR/USD pair: 1.3550/1.3553. When trading on the Forex market, currency pairs are quoted according to the rate at which the online broker wishes to either buy or sell the currency pair in question.

Forex Rollover

Rollover is when the settlement date of a trade is rolled forward to the next value date. The process of rollover includes the positions being charged swap or credited based on the difference in interest rates between the two traded currencies.

FX Pips

Pip is one ten-thousandth of a point (1/10,000) or the typical unit to measure price changes for a currency pair. There are also mini pips that are present on the GoForex platform, enabling traders to get tighter spreads. The majority of currency pairs are quoted in decimal places. For example, this is the case with the EUR/USD where a movement from 1.3000 to 1.3001 is 1 pip (0.0001). The USD/JPY pair is quoted with 3 decimal places. For example 85.00, so 1 pip equals 0.01 JPY. Please note that the GoForex platform quotes in 3 decimal places.

Lot Measurements

Many Forex brokers trade their assets in lot measurements. Lots are traded in various units, such as 100,000 (100K) units. A lot is a representation of the trade size of a position in an underlying asset. GoForex uses lots, but it is important to note that not all brokers use lots. The measurement helps you understand how to optimize your trading. Opening up many lot positions increases your exposure to sudden market changes.

Margin Requirements

The margin represents the equity which is required to open or maintain a trade, as percentage of the current rate. You need to only deposit a small percent of the current value of the asset when trading on margin. For example, if you trade an index which requires a margin of 1%, you can use a leverage of 100 times your deposit. Therefore, a deposit of $1,000 can uphold a trade worth $100,000.

Trading Leverage

Leverage is commonly used in Forex & CFD trading nowadays. It involves investing in a position that is larger than your equity. While using leverage, you are depositing a small percentage of the market value of the asset. For example, if the stock you intend to trade requires a margin of 1%, this allows you to leverage your investment 100 times the required deposit. To put it simply, if you deposit $1,000, you can control an investment of $100,000.

Trading Spread

The spread is the difference between the Ask price which a position is bought and the Bid price at which a trading instrument is sold. In the case that the EUR/USD pair is trading at 1.30001/30003, the spread is 0.2 pips.

You will be able to know the spread by simply reading the quote of a currency pair or other instrument. The spread is wider if there is a lack of buyers and sellers in the market. On the other hand, the spread will be tighter if there are many market participants trading the currency pair in question.

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Trading Example

Forex Trading Example

The following Forex trading examples demonstrate the background of Forex trading. These examples show that trading on the Forex market may be potentially exciting, but at the same time there is also a significant amount of risk involved.

EUR/USD Example

You transfer a sum of $100,000 into your Forex account. The default setting of all trading accounts is 0.5% margin and leverage of 200:1. If you open a $10,000 position, then you are required to uphold a margin of $50 using 200:1 leverage. The calculation is simple, position size/leverage equals margin required. $10,000/200 = $50.

Trading Day One

As the investor, you foresee the EUR to gain in value against the USD. As a result, you buy $100,000 of the currency EUR/USD pair. The market price is quoted as 1.0250 / 1.0253. Therefore, you purchase EUR at 1.0253.
In the process of the above, you are buying EUR 100,000 (20 lots at $5,000 each) and selling USD 102,500 ($100,000 × 1.0250), as a margin of $500 ($100,000 × 0.5%) was used, while borrowing $99,500 ($100,000 - $500) from Forex.

Trading Day Two

The trade you bought has been a successful so far, as the EUR has risen against the USD. Now the quote for the EUR/USD is 1.0400 / 1.0403.
You now decide to take your profit by initiating a sell market order on the Forex trading platform. The sell market order is instantly executed, and 20 lots of EUR/USD is sold at 1.0400. In the process, you are simultaneously selling EUR 100,000 (20 lots at $5,000 per lot) and buying 104,000 USD ($100,000 × 1.0400).

Result

The USD account will show a debit of USD 102,500 and the credit of USD 104,000. Therefore, the profit is USD1,500.

Note: Interest rate between the EUR and USD currencies has been disregarded in the above during the 2 day time period, which would have changed the profit calculation.

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Basic Terms

Trading Basics

Learn All About Trading Basics

Trading Basics covers the founding principles of online foreign currency and trading. Read up on anything and everything you need to know about trading Indices , Commodities such Oil and Gold, and popular forex pairs such as the EUR/USD and GBP/USD.

An indicative market price, when used in Forex, refers to the prevailing exchange rate of the quoted currency at that moment. A quote will always be for a currency pair; for example EUR/USD, AUD/JPY or USD/JPY. The first currency in the pair is the quoted currency, while the second currency is referred to as the counterpart.

A currency pair is usually quoted to a 1/10,000 degree of precision (i.e. until the 4th digit right of the decimal point); except for Japanese yen pairs, where quotes are usually made to 1/100 degree of precision (i.e. to the second digit right of the decimal point).
A quote will always be provided in a form of two figures. The first figure is always the Bid or selling price, while the second is the Ask or buying price.

Bid/Ask 

The Bid or the selling price is the exchange rate at which a currency is offered for sale. The Ask or buying price is the exchange rate at which a currency can be bought.
In the example above the EUR/USD pair (Euro vs. US dollar) is quoted at 1.5034/1.5037. In other words, the quote for the EUR/USD pair is 1.5034/1.5037, where 1.5034 is the Bid price and 1.5037 is the Ask price. Meaning if you wish to sell the quoted currency – in this case the Euro – then you would receive 1.5034 US Dollars per 1 Euro. On the other hand, if you were buying the quoted currency, then the quote tells you that to buy Euros for US dollars, you would need to pay 1.5037  dollars per 1 euro.

Lot  

A lot is the standard unit size of a transaction. It represents the minimum quantity which can be traded in any given instrument.
For Forex Trading, Markets.com standard lot size is 1,000 units of the quoted currency.
For CFD Trading, the standard lot size varies from 1 to 500 units of the quoted CFD.

Pip 

This is the smallest value in a currency quote and can be different for different currencies. For most currency pairs a pip is the 1/10,000 (0.0001) fraction of the quoted currency. However, in Japanese yen pairs, a pip refers to a 1/100 (0.01) fraction of the quoted currency.
Profits on a trade can be expressed in pips, for example: Suppose you bought the EUR/USD at an exchange rate of 1.5016 and sold it at an exchange rate of 1.5037. 37-16=21. You made a 21 pip profit.

Pip Value 

The pip value can be either variable or fixed, depending on the  currency pair it refers to and the base currency (i.e. measuring  currency) of your account. The pip value is also a function of the amount traded.

The simplest way to calculate the pip value is to divide 1 pip by the exchange rate and multiply it by the lot size. This gives you the pip value in terms of the quoted currency. If the base currency of your account is other than the quoted currency, then simply multiply this by the applicable exchange rate.
For example: What is the pip value of a trade in GBP/JPY with a price of 128.92?
 The pip value of 1 standard lot (5,000) of GBP/JPY which is traded at 128.92 is:

0.01/128.92 = 0.00007756 GB
0.00007756 x 5,000=0.387 GBP

The base currency of your account is USD. If the exchange rate for GBP/USD is 2.0612, then the pip value for 1 standard lot in terms of the account's base currency is: 0.387x 2.0612 = $0.80.

Spread 

This is the difference between the bid price and the ask price. For example: If the quote for the EUR/USD pair is 1.5034/1.5037 (in other words the bid price is 1.5034 and the ask price is 1.5037), then the spread for the EUR/USD in this case is 3 pips. Low spreads ensure that traders can get in and out of their trades at very low slippage.

Leverage 

This is the use of borrowed capital to increase potential return.  Trading on leveraged capital means that you can trade amounts significantly higher than the balance of your funds, which only serves as the margin.
High leverage can significantly increase the potential return, but it can also significantly increase potential losses.

 The leverage is specified as a ratio, such as 200:1. This means that the trader can trade amounts 200 times higher than the sum in his or her margin account.
If the trader has $1,000 in his account, it means that he can now open trades worth $200,000.

Interest 

In a sense, interest is the price of money. It is the amount paid on loans and received on deposits.

Long 

A trader going long expects the price to go up when buying a currency pair or a CFD.

Short 

A trader going short expects the price to go down when selling a currency pair or a CFD.
Value date
The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments.

Rollover 

Process where the settlement of a deal is rolled forward to another value date and a charge is levied based on the difference in rates of interest of the two currencies.
Every day, at 21:00GMT, open positions are rolled over to the next day and the positions gain or lose interest based on the interest differential between the bought and sold currencies.
If you buy overnight a currency pair where the base currency has a higher interest rate than the terms currency, then you’ll receive interest and vice versa.

Margin

Margin can be thought of as a good faith deposit required to maintain open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit.
Margin requirements (per 1k lot) are determined by taking a percentage of the notional trade size plus a small cushion. A cushion is added to help alleviate daily/weekly fluctuations.
Trading on margin can both positively and negatively affect your trading experience as both profits and losses can be dramatically amplified.

Bear

A person who believes that the price of a particular security or the market as a whole will go lower.
Bearish

The outlook of a person anticipating lower prices in a particular security or the market as a whole.

Bear Market

Any market in which prices are trending lower.

Bullish

The outlook of a person anticipating higher prices in a particular security or the market as a whole.

Bull Market

Any market in which prices are trending higher.

Bull Spread

Generally speaking, it is any spread that theoretically profits when the market moves up. Specifically it refers to a vertical spread.

Butterfly spread

An option position composed of either all calls or all puts (with the exception of an iron butterfly), with long options and short options at three different strikes. The options are all on the same stock and of the same expiration, with the quantity of long options and the quantity of short options netting to zero. The strikes are equidistant from each other. For example, a long 50/60/70 put butterfly is long 1*50 put, short 2*60 puts, and long 1*70 put.

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