The aim of this section is to help new traders acquire major notions, which they will come across when working in the FOREX market.
ASK: The price at which bank/broker is willing to sell client a financial instrument.
BALANCE: The sum on the trading account after the last transaction.
BEAR: Market participant, playing on falling of the currency rate.
BEAR MARKET: The market, characterized by falling prices.
BID: The price at which bank/broker is willing to buy client a financial instrument.
BROKER: Mediator, who carries out trading operations on the client's order, getting commission.
BUY LIMIT: An order to buy currency on a lower rate, than it is in the market at the moment.
BUY STOP: An order to buy currency on a higher rate, than it is in the market at the moment.
BULL: A market participant, playing on rising of the currency rate.
BULL MARKET: The market, characterized by rising prices.
CLOSED POSITION: A position, on which counter-transaction was carried out, and calculation was made.
CROSS RATE: The rate of one currency against another, where US dollar is missing, for example, cross rates of GBP/JPY or EUR/JPY.
DAY TRADING: Opening and closing positions during one trading session (day).
DIVERGENCE: Difference between the chart of a technical indicator and trends on the market, which are depicted as a price chart.
EQUITY = BALANCE + current profit on opened positrons + SWAP
FLAT, SQUARE: A neutral situation, when all the positions are closed.
FOREIGN EXCHANGE, FOREX, FX: The term, meaning the operations on currency exchange by the agents of the exchange market, exchanging the agreed sums of the monetary unit of one country for the currency of another country according to the agreed rate on a certain date. This is also the term of the world exchange market.
FREE MARGIN=EQUITY - MARGIN
FUNDAMENTAL ANALYSIS: A technique of forecasting the direction of the movement of currency rates, based on macroeconomic indicators.
HEDGING: Concluding urgent transactions on currency exchange to avoid price fluctuations. The point of hedging is in selling (buying) currency contracts for the term with the simultaneous selling (buying) of currency at disposal, with the same term of supply, and carrying out the reverse operation when the term of the actual currency supply will come.
INTERBANK RATES: Currency rates, according to which big international banks exchange currency with other big international banks.
LEVERAGE: The credit, given by bank/broker to client for carrying out margin trading. Usually it is 1:100 to the amount of the sum of the security deposit.
LIMIT ORDER: An order to sell at a higher rate, or to buy at a lower rate, than at the moment.
LONG POSITION: The open BUY position.
LOT: The smallest undivided volume of the buy/sell operation.
MARGIN: The amount of deposit for one lot. See the specification of the contracts.
MARGIN CALL: A requirement of the broker to deposit more funds. All the opened positions are closed out by the broker on current quotes.
MARGIN LEVEL = EQUITY/MARGIN
MARGIN TRADING: Trading of currency contracts, using the guarantee deposit.
OPEN POSITION: A position on which no reverse transaction has been carried out up to now.
PIP, POINT: the last figure when writing down the currency rate, as a rule, it is 0.01 or 0.0001 from the whole part in the currency quote.
RALLY: The sharp rise of prices (quotes) in the market.
RESISTANCE: The price level, at which it is expected that active sales can suspend or turn around the rising trade.
SELL LIMIT: An order to sell currency at a higher rate, than at the moment.
SELL STOP: An order to sell currency at a lower rate, than at the moment.
SHORT POSITION: An opened SELL position.
STOP LOSS: An order to close out a position at a certain level, which is worse than the current price meaning. It serves to limit losses.
SPREAD: A difference between ask and a bid.
SUPPORT: The price level, at which it is expected that active buying can suspend or turn around the falling trade.
SWAP: The sum, added to the trading account or taken from it at opened positions. It's calculated from the difference of interest rates. See SWAP Table here.
TAKE PROFIT: An order to close out a position at a certain level, better than the current price meaning. Serves for profit fixation.
TECHNICAL ANALYSIS: A technique applied to forecast the currency rate movement by watching the charts of market dynamics during previous periods of time.
TRADER: A person, trading with his means or with the means of investors.
TREND: A stable movement of quotes in one direction.
VOLATILITY: The term, which characterizes the frequency of changes in the currency rate on the market in a period of time. As a rule, high volatility is characterized by sharp fluctuations of the rate in the market.
FOREX
