ADX (Average Directional Index)
- A technical tool for measuring a trend's strength. This index works on a 0 to 100 scale. 0 indicates no trend at all. The closer the result is to 100, the stronger and more significant the trend is. ADX doesn’t indicate a trend's direction, but only its power.
- Algorithmic trading is a process of trading with the help of computer programs which follows certain commands to open and close trades. Algorithmic trading avoids human emotions and enhances the speed at which a trade can be executed. In our MT4 platform, the Expert Advisor is an example of algorithmic trading.
- In finance, an arbitrage is a process where a trader purchases an asset at lower prices and sells it at higher prices in another market. The trader makes a profit due to the difference between buying and selling prices.
- Also known as the Offer Price (appears as the second part of a Forex quote). The price at which the market is ready to sell a particular currency pair. This is the price a trader must pay to buy the base currency.
Aussie (AUD) -
Aussie is a slang term that is used to describe the Australian Dollar. If you are looking for the etymology, it's called Aussie merely to differentiate it from the other Dollars like U.S.. Dollar, which is named Greenback. Likewise, the Canadian Dollar is called Loonie.
- A common type of graphic representation of the price actions in Forex. Each bar is built of 4 points: Opening price, closing price, highest and lowest price for the time frame it represents
- Barack Obama served as the 44th President of the United States of America from the year 2009 to 2017. He graduated from the Columbia University in 1983 and later joined Harvard Law School in 1988. Earlier, from 2005 to 2008, he served in the U.S.. Senate representing Illinois, which is a state in the Midwestern region of the United States. He was the first African-American president of the United States.
- The first currency in the forex pair is termed the 'base currency'. It's also referred to as the ""primary currency"". For example, in the EUR/USD, the EUR is a base currency and the USD is a quote currency.Let us understand this through an example. If the EUR/USD is quoted at $1.0600, this means that one has to pay 1.0600 USD to purchase one Euro.
Basis Point (BPS)
- A basis point is one one-hundredth of one percent and is commonly used to calculate changes in interest rates and yields on bonds and loans. Price changes in other financial instruments may also be expressed in basis points.
Bearish Engulfing -
In the study of Candlesticks, a bearish engulfing pattern is formed when a small bullish candle is accompanied by a large bearish candle that overshadows or engulf the previous candle. It demonstrates the weakness in a buying trend and pre-indicates a potential selling trend in the market. For instance, the buyers are exhausted and sellers are likely to enter the market.
- A pessimistic market characterized with falling prices. In a bear market there are more sellers than buyers.
- The former head of the FED (USA central bank) since 2006. Considered as controversial, mainly thanks to the global economic crisis which started in the U.S.. but solid.
- The price at which the market is ready to buy a particular currency pair. It appears as the first part of a Forex quote and is the price a trader receives when they sell the base currency.
- The difference between the Bid price and the Ask price.
- Bitcoin is a digital form of currency, originating in 2009. Built upon “blockchain” technology, it allows for anonymous peer-to-peer transactions and eliminates the need for any banking intermediary. BTC is the most valuable cryptocurrency in the world, commonly viewed as the global benchmark.
BOC (Bank of Canada) - The central bank of Canada, established in 1935 and governed by Stephen Poloz. Its headquarter is in Ottawa, Ontario, Canada. Besides being a central bank, it's charged with the responsibility of price stability and economic growth.
BOE (Bank of England) - The central bank of the United Kingdom, established on 27 July 1694 and governed by Mark Carney. BOE is the center of focus for forex traders and stock market investors as it's charged with the responsibility of controlling the money supply through monetary policy, aiming to achieve the benchmark inflation, unemployment rate, and economic growth.
BOJ (Bank of Japan) - The central bank of Japan, established on 27 June 1882 and governed by Haruhiko Kuroda. Besides this, a nickname of the BOJ is Nichigin. Like other central banks, the BOJ is also a center of focus for forex traders and stock market investors as it's charged with the responsibility of controlling the money supply through monetary policy, aiming to achieve the benchmark inflation, unemployment rate, and economic growth.
- Technical indicators for measuring market volatility. Built of a band which includes 3 lines: Center, Top and Bottom. The center line connects the average prices over a period of time. The supporting lines define the band between the peaks and lows across the presented period. Bollinger bands are good for identifying upcoming trends.
– These happen when the price breaks (Crosses) a support or resistance level. Breakouts lead to serious currency movements and increasing volatility in the markets.
Brexit is a combination of "Br" and "Exit", where "Br" represents Britain and "Exit" denotes departure. A blending of both leads to "Britain's Departure" from the European Union. It refers to the referendum of June 23, 2016, where the British residents voted to exit from the European Union.
- The mediator between the buyers and sellers in the market. The broker executes the trader's buy and sell orders and charges the spread as a commission fee. Online Forex brokers
enable everyone to easily participate in the market without the necessity to act through banks.
Buck (USD) - Buck is a slang term used for the Dollar. According to etymology, the word originally is driven from "deerskins" which was used as a medium of exchange back in 1700's. The U.S.. Dollar became the leading medium of exchange once it was introduced after the Coinage Act in 1792, though the "Buck" term remained being used for the Dollar.
Bullish Engulfing - In the study of Candlesticks, a bullish engulfing pattern is formed when a small bearish candle is followed by a large bullish candle that overshadows or engulf the previous candle. It demonstrates the weakness in a selling trend and pre-indicates a potential buying trend in the market. For instance, the sellers are exhausted and buyers are likely to enter the market.
- An optimistic market characterized by rising prices. In a bull market there are more buyers than sellers.
Buy Limit -
A buy limit order is a type of pending order that allows a trader to put instructions in the trading software (MT4) in order to purchase a security at a specified price. It's placed below the CMP (current market price) if a trader expects that the price will bounce back after falling to a specific trading level. Here, the trader aims to buy at low price and sell at a higher price.
Buy Stop - A buy stop order is a type of pending order that allows a trader to put instructions in the trading software (MT4), to purchase a security at a specified price. It's placed above the CMP (current market price) if a trader expects that the price will soar further on the breakage of a certain level.
CAC 40 Index -
The CAC 40 index is a French stock market index comprised of the top 40 French stocks (by market capitalization) on the Paris Bourse (The Paris Stock Exchange). The CAC 40 can be traded on most retail forex trading platforms.
Cable is a slang term used by forex traders, particularly to refer the exchange rate of the GBP/USD currency pair. According to etymology, it roots to the 19th century when the large cable was used to transmit the exchange rates between USD and GBP across the Atlantic. Since then, the cable is used to refer GBP/USD.
- The most popular chart used in Forex. It is a nicer, more graphical version of the bar chart. Built of candle shaped sticks. Green (or white) candles indicate uptrends and red (or black) candles represent downtrends. Each candle shows the open, close, high and low prices for the specific time frame.
– A trading strategy that focuses on the interest rates of the currencies traded. The idea is to buy a currency with rising interest rate while selling a currency with falling interest rate. The profits are derived from the growing differential between the two rates. The JPY is relatively very popular for Carry Trade due to its extremely low interest rates across the years (usually interest rates are at or near 0). JPY is efficient against currencies with rising interest rates.
- Governmental bank whose job is to manage and run the monetary policy in the country, while at the same time maintaining the currency's strength and stability.
CFD (Contract For Difference) - Is a type of a derivative that is commonly traded in the financial market. Besides this, it is referred to as a contract between two parties (the buyer and the seller), and according to this contract, the seller is obligated to pay the difference (current value minus contract value) to the buyer, while in the case of a negative difference, the buyer will settle instead.
- An excellent, easy to use tool, mainly for beginners. It defines the price movement inside a channel, helping us to identify trends.
- A commercial bank is a financial institution that serves as an intermediary party between the depositor and borrower for the sake of earning the profit. Besides this, the commercial banks follow the guidelines of the central bank and implement the monetary policy.
Commodity Block Currency
- The currencies of countries that rely heavily on commodity exports are often very sensitive to price fluctuations in these commodities. These countries’ currencies are called commodity block currencies. A good example of a commodity block currency is the Canadian dollar which is known to be highly correlated to the oil price, on which the Canadian economy is largely dependent.
- Copied traders (on copy trading or social trading platforms) make their trades available to other traders or investors who have selected and allocated funds to these copied traders. When selected copied traders execute trades, these trades are usually copied to the copying traders’ trading accounts with either preset fixed position sizing (fixed) or proportional position sizing (pro rata).
- eToro, the world’s largest social broker, offers a unique way to invest in different financial markets and popular investors via their next-generation investment product, CopyFunds.
A CopyFund is an investment vehicle that bundles together a collection of financial assets or instruments. These assets or instruments are picked according to a specific predetermined investment strategy. Each CopyFund’s performance and composition is monitored frequently by eToro’s analysts who rebalance and/or change the specific CopyFund if necessary.
eToro offers two types of CopyFunds:
Top Trader CopyFunds comprising the best performing and most sustainable traders on eToro.
Market CopyFunds that bundle together different financial instruments (e.g. stocks, commodities, ETFs, etc.) under one chosen market strategy.
- Copying traders (on copy trading or social trading platforms) automatically copy the trades of copied traders who make their trades available to other traders or investors who have selected them and allocated funds to them. When selected copied traders execute trades, these trades are usually copied to the copying traders’ trading accounts with either preset fixed position sizing (fixed) or proportional position sizing (pro rata).
- The term correlation is generally used in statistics, but in the forex market it helps us understand the mutual relationship between Forex currencies, commodities, and indices.There can be a positive or negative correlation between trading instruments.
Positive Correlation: There is a positive correlation when the prices of both instruments move in the same direction. For instance, the EUR/USD & GBP/USD have a positive correlation.
Negative Correlation: There is a negative correlation when the prices of both instruments move in opposite directions. For instance, the EUR/USD & USD/JPY have a negative correlation.
CPI (Consumer Price Index)
- A monthly report that measures the average change in the prices paid by urban households for a basic basket of consumer goods and services. CPI is a good indicator of the level of inflation in the market.
Cross Hair - In the trading platform (MT4), a crosshair is a very helpful tool to know the parallels of the selected point in a chart (Date, Time & Price) or to know the number of pips between two points. The scroll button on the mouse or Ctrl+F can be used to activate the tool.
- Currency is a generally accepted medium of exchange which is issued and circulated by the government and the central banks. This can be in the form of coins and paper. Credit /debit cards are considered an advanced form of currency,and are generally referred to as plastic money.
Cross Currency Pairs
- Currency pairs which do not include the US dollar, e.g.. GBP/CHF.
- A cryptocurrency is a digital or virtual currency which is usually created by computers performing painstaking mathematical computations and thereby converting electricity into long strings of code that have monetary value. This computing is done in a distributed network and is called cryptocurrency mining. Blockchain technology is commonly employed to control cryptocurrency mining and transactions.
- A currency future is a futures contract to exchange a certain currency for another on a specific date in the future at a specific exchange rate which is determined on the purchase date. Currency futures are derived financial instruments based on the underlying exchange rate(s). Currency futures are frequently used by exporters, importers, investors, travellers, and international firms to hedge themselves against exchange rate fluctuations.
- Two currencies that are simultaneously used in a trade (one is bought and the other is sold).
- A day trader enters and exits trades within the same trading day. This means that no trades are left open until the next day, all trades are closed before the market’s daily close.
- In forex trading terms, a dealing desk forex broker is one who acts as a market maker and takes the other side of its clients’ trades. In many cases, a dealing desk broker will not absorb all of its clients’ trades internally but will pass on some trades to its liquidity providers.
– A free trading account for practice (with no real money transactions involved). Fantastic for beginners who wish to get familiar with Forex trading. Nowadays most brokers allow their users to open demo accounts in order to try their Forex trading platforms
before depositing real money.
Depth of Market
- Depth of market measures the aggregated value (at different price levels) of the open buy and sell orders in a certain financial instrument (for example, the EUR/USD currency pair). Depth of market is a good measure of the liquidity and depth of a financial instrument.
– A derivative is an agreement between two or more parties whose value is driven by an underlying financial security or asset. It aims to mitigate the risk faced by investors in the shape of variations in forex exchange rates, bonds, stocks, indexes, and commodities.
- A common type of candlestick. It is characterized by a lack of body and with long shadows. Usually it resembles a cross/inverted cross. In many cases, Dojis alert traders to a change in the balance of power in the market between buyers and sellers.
- The Dollar Index is an index that measures the value of U.S. Dollar against the basket of peers currencies. Its ticker symbol is USDX, DXY. It incorporates six currencies to calculate the index using weighted geometric mean. Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP), Canadian Dollar (CAD), Swedish Krona (SEK), Swiss Franc (CHF).
Donald Trump - Donald John Trump is the 45th elected President of the United States of America. He earned a degree in economics from the Wharton School of the University of Pennsylvania back in 1968. Formerly, he was a businessman, politician, and television personality. Being a President of largest economy, he is in focus of investors around the globe for the future prospects of U.S. financial and economic systems.
- The dot plot shows forecasts the actions of the sixteen members of the FOMC (Federal Open Market Committee). It is published after each FED meeting over the period of one year. The dot plot has become on the most focused news releases as it gives a pretty clear idea about the next steps of FED officials.
- Double Bottom is a technical analysis term. It refers to the chart pattern that resembles a ""W"". It's formed when a price drops and rebounds consecutively from a particular level. This pattern is bullish in nature as it demonstrates a weakness in a selling trend and pre-indicates a potential buying trend in the market. It is exactly the opposite of a double top pattern.For example, if Gold prices drop and rebound from $1260 twice. That makes $1260 a double bottom level, which means that we may see another pullback or buying behavior if the prices test this level in the future.
- Double Top is a technical analysis term and it refers to the chart pattern that resembles an ""M"". It's formed when the prices peak and drop consecutively from a particular level. The pattern is bearish in nature as it demonstrates the weakness in a buying trend and pre-indicates a potential selling trend in the market.For example, Gold prices peaked and crashed at $1270 twice. That makes $1270 a double top level. This means that we may see another drop, or a sell behavior if the prices test $1270 in future.
- Dovish refers to a tone in speech which demonstrates a particular action. Specifically, it's associated with a situation where policy makers aim to increase the money supply by lowering the interest rates, the reserve rates, and/or expanding the open market operations. Consequently, a dovish tone used by a central bank weakens the currency.
- A trend whose general direction is down. Also referred to as a bear trend.
- A drawdown in investment terms refers to a peak-to-trough decline in the price of a financial instrument during a specific period of time.
Dynamic Support - Dynamic support refers to the bottom barrier of a trend or a level at which a current downtrend is expected to stop as the price finds “support”, but this support is not static and keeps adjusting itself to fluctuations in the market. Trend indicators, including Moving averages, Bollinger bands, and Ichimoku are a few examples of a dynamic support and resistance.
- The European Central Bank
- ECN stands for ‘electronic communication network’. An ECN broker connects its clients’ trades directly to the liquidity offered by its liquidity providers. The ECN automatically matches the clients’ orders and executes them at high speeds.
ECN brokers pass on their clients’ trades directly to their liquidity providers and are therefore not market makers. Spreads offered by ECN brokers are typically very competitive.
- An important feature of your trading platform. It presents a roundup of all significant economic announcements and releases, as well as other fundamental events taking place around the world which might impact on the market.
- The economic data of a country or region is assimilated by evaluating different leading and lagging economic indicators and by paying attention to speeches, comments, and press releases by central bank members.
Government organizations often handle the release of interest rate decisions and other economic indicators. Some of these events are highly anticipated by speculators and traders who participate in the forex, commodities, stock, and other markets.
Events that may cause substantial market volatility include interest rate decisions, other monetary policy decisions, gross domestic product (GDP) numbers, trade balance figures, consumer price index (CPI) numbers, oil production and consumption figures, unemployment rates, and income statistics.
- A common trading pattern. An identification of Elliot Wave allows the trader to predict trends with high probability. The pattern is built of 8 waves. The first 5 build one trend and the following 3 belong to an opposite trend.
- End-of-day trading is a trading approach that typically requires less screen time than scalping, day trading, and other short-term trading strategies. End-0f-day trading involves opening trades (and in certain cases, closing trades) at, or close to the end of the trading day. Traders who engage in this type of trading usually pay much attention to price action patterns on the daily chart. End-of-day trading can be very profitable, despite taking much less time to perform than many day trading strategies.
Engulfing Bar - In the study of candlesticks, an engulfing bar is formed when a small candle is accompanied by a large candle in the opposite direction and it overshadows or engulfs the previous candle. It demonstrates the weakness in a trend and pre-indicates a potential reversal in the market. There are two types of engulfing bars: bullish engulfing and bearish engulfing bars.
Enter Trade - Starting trading activity by opening a position (buying or selling a currency pair).
Ethereum (ETH) - Ethereum is a decentralized payment network, facilitating anonymous transactions without the need of a bank. In addition, ethereum supports the functionality of assorted applications on network infrastructure. ETH is the second most valuable cryptocurrency.
- In the Forex market, an exchange rate refers to the rate at which one currency can be exchanged for another currency. For example, the $1.0600 exchange rate for the EUR/USD means that one has to pay 1.0600 dollars to purchase one Euro.
Exit Trade - Ending trading activity by closing a position.
- The expert adviser is an add-on in our trading software called Metatrader 4. It follows algorithmic trading rules and enters a trade automatically once certain conditions are met.
Exponential Moving Average -
In the technical analysis, an exponential moving average (EMA) is a trend indicator that is identical to the Simple Moving Average with the only difference that it gives more weight to the most recent prices. In the forex trading, the 100 & 200 periods EMA's are broadly used by traders to identify the market trends.
- Fictitious breakouts. These happen when the price breaks a support or resistance level but turns back to its previous direction right after.
- The Federal Reserve, the central bank of USA
- Fiat currency refers to a legal tender currency which is issued by the government but has not been backed by any physical commodity. The exchange rate of fiat money depends on the demand and supply factor. E.g. better economic conditions will lead towards stronger currency in the market.
- Considered by us as the most popular technical indicator in Forex. It indicates changes in the balance of power between the sellers and buyers. With the help of Fibonacci ratios you can foresee whether the market will be bullish or bearish. Remarkable pivots are 38.2%, 50% and 61.8%.
- In finance, financial instruments are the assets that have monetary value and can be traded. For example, checks, bonds, and bills of exchange. However, in the world of forex, the financial derivatives such as future contracts and options are known as the top financial instruments.
- Fundamental economic policy conducted by governments for the benefit of their economies.
FOMC (Federal Open Market Committee) - FOMC is an abbreviation of Federal Open Market Committee. It's a subsidiary of the central bank of the U.S. named FED (Federal Reserve) and charged with the responsibility of controlling the money supply through open market operations, aiming to achieve the benchmark inflation, unemployment rate, and economic growth.
- FX is a short form of Foreign eXchange and it refers to the market in which currencies are traded.
Forex Signals - A forex signal refers to a recommendation to enter a Buy/Sell trade on a particular currency pair, commodity or an index at a specific price and time by a signal provider that can be a forex trader or an analyst. Learn How to use our Forex Signals here.
Forward Contract -
A forward contract is a non-standardized contract and an obligation to buy or sell a particular security at a predetermined price at a specified time in the future. It aims to mitigate the risk faced by investors in the shape of variations in forex exchange rates, bonds, stocks, indexes, and commodities. It's also a "forward outright".
- Analyzes economic, political and social events in an effort to determine present and future economic trends. In other words, the fundamental approach analyzes the sources of price movements in currencies.
Futures Contract - A futures contract is a type of derivative that refers to the legal contract and an obligation to buy or sell a particular security at a predetermined price at a specified time in the future. It aims to mitigate the risk faced by investors in the shape of variations in forex exchange rates, bonds, stocks, indexes, and commodities.
- A group of the most industrialized countries in the world. The associates in the G8 are: USA, Japan, England, Germany, France, Italy, Russia and Canada.
Gaps - Gaps refer to the area where the price of a currency, stocks, indexes or a commodity moves sharply bullish or bearish, leaving no sign of trading in between candlesticks or the bars on the chart of that security. It is normally caused by a sudden change in fundamentals in the market.
GDP (Gross Domestic Product)
- The total value of all goods and services produced in the market (excluding imports). GDP helps to measure the standard of living in the market. Negative data implies a weakened economy.
- A buying action. The trader buys a currency pair, hoping its value will increase.
- Can be written as 'gold forex' or 'forex gold' (SEO).
- A selling action. The trader sells a currency pair, hoping its value will drop.
- Greenback is a slang term used for the "Paper U.S. Dollar", but traders often use it to refer the USD in forex trading. According to etymology, back in 1861 - 1862, during the American Civil War, the U.S. government issued a currency note printed in green on its back and since that time, it's called Greenback.
- A hanging man is a bearish reversal pattern that is formed after the bullish trend and can be seen in candlestick patterns. The formation of a candle is identical to the hammer - it has a long lower shadow (wick), small upper body and little or no upper shadow (wick). It shows the weakness in a bullish trend and symbolizes a potential selling trend in the market. However, the major difference between a hammer and hanging man is that the hammer is followed by a bearish trend while a hanging man is followed by a bullish trend.
- Haruhiko Kuroda is the Governor of the Central Bank of Japan, renamed "Bank of Japan" as of March 20, 2013. He formerly served as a president and chairman of the Asian Development Bank from February 2005 to March 2013. In addition, he also served as Vice Minister of Finance from 1997 to 2003.
- Hawkish refers to a tone in speech which is associated with a situation where policy makers aim to decrease the money supply by increasing the interest rates, reserve rates and expanding the open market operations. Consequently, a hawkish tone from a central bank strengthens the currency.
Head and Shoulders
- Considered as a relatively reliable and accurate chart pattern for long term trading. Built of 3 peaks, while the second peak (the head) is the highest (or lowest, in case of an upside head and shoulders). The other 2 peaks are about the same height - the shoulders. A head and shoulders pattern is a good sign to go short (or to go long, in the case of an upside head and shoulders).
- Hedging is the process of managing trades solely to mitigate the risk of loss due to market fluctuations. For example, selling & buying of EUR/USD if the trend is reversed.
- Chinese bank for loans. The largest commercial bank in the world (by market capitalization).
- An increase in the prices of goods and services in the market. Due to inflation, a soda can that used to cost 10 cents 20 years ago, costs 1 dollar today. Inflation weakens a currency's performance. The central bank is responsible for controlling inflation through the manipulation of interest rates and the money supply.
- The market rate at which the buyer (or borrower) has to pay the seller (or loaner) for continuing to hold the currency. Interest rates impact the performance of all currencies in the Forex market. Rising interest rates cause currencies to strengthen, falling interest rates cause currencies to weaken.
- A trading strategy for very short terms. Dynamic activity in which traders open and close positions in a matter of hours up to a single day tops.
- In the study of the candlestick trading strategy,
an inverted hammer is a bullish reversal pattern that's formed after a bearish trend in the market. It's exactly opposite to "Hammer" as it has a long upper shadow (wick), small lower body and little or no lower shadow (wick), so it resembles an "Inverted Hammer". Besides that, it exhibits the weakness in a selling trend and signifies a potential buying trend in the market.
- Investing refers to the allocation of money into different trading instruments (forex, commodities, and indices), with the goal of making a profit.
- An investor is a person who invests or allocates money into different trading instruments (forex, commodities, and indices), with the objective to achieve a profit.
– Janet Yellen is the Chair of the central bank of the United States named "Federal Reserve
" or FED since the 3 Feb 2014. She is an American economics and served as a Vice Chair of FED in 2010 to 2014. She earned her Ph.D. in economics from Yale University in 1971. Being a chair of the FED, she influences the monetary policy to control price stability and economic growth in the United States.
Kiwi (NZD) - Kiwi is a slang term used for the New Zealand Dollar (NZD). It originates its name from the "Kiwi" which is embossed on the back of New Zealand's coin
- The percentage of money you are allowed to "borrow" from your broker in order to open a position. Think of it as a "loan" from your broker. It helps traders to trade higher volumes with smaller amount of money. The more you leverage your money, the higher the potential for profit and the risk of loss from trades.
– Line charts present general price movement over a period of time. The line connects the assets closing prices along the chosen period. However, it is less recommended for use than other types of charts.
– Litecoin is a peer-to-peer digital currency that facilitates rapid, low-cost international monetary transactions. As a cryptocurrency, LTC is the fifth largest in terms of market cap.
- Refers to the volume of the trades in the market. It is the ability to exchange currencies without really affecting the price of the pair. The more liquid a currency pair is, the less impact buy and sell actions will have on its price.
- A quote of a currency pairs' rates offered in real time.
Long Term Trading
- Trading positions that last from a week up to few months. Long term trading is considered as an investing strategy. Long term traders usually base their trades on fundamental analysis, high capital amounts and very low leverage.
Loonie (CAD) - Loonie is a slang term used for the Canadian Dollar (CAD). It originates its name from the "Loon" which is embossed on the back of Canadian coin.
- The standard trading unit that traders transact. Micro Lot – The smallest tradable lot size: 1,000 units of the currency. Mini Lot – A smaller lot size: 10,000 units of the currency. Standard Lot - 100,000 units of the currency.
MACD (Moving Average Convergence/Divergence)
- A technical indicator that measures an average of the average prices (The average between EMA and SMA) over different periods of time. MACD helps to determine trends.
- The most widely traded currency pairs in the world. The major currency pairs are those in which trading volume is highest. The major currency pairs are comprised of eight currencies: EUR, GBP, AUD, NZD, USD, CAD, CHF and JPY.
- A common type of candlestick characterized by a full body, with no shadows.
- The deposit required for trading at a certain amount. Greater margin increases your buying power as well as your exposure to potential losses.
- The demand for additional funds by a broker to cover opened positions which are floating in the loss. Usually, brokers give a margin call at 20% and 10%.
Mario Draghi - Mario Draghi is the president of the European Central Bank since the 1 November 2011. He is an economist who also worked at Goldman Sachs from 2002 to 2015. Besides this, he obtained a Ph.D. in economics from the Massachusetts Institute of Technology (MIT) in 1976. Being a president of the ECB, he influences the monetary policy to control price stability in the Eurozone.
Mark Carney - Mark Joseph Carney is the Governor of the Central Bank of the United Kingdom, named "Bank of England" since July 1, 2013. He is an economist and formerly has served as the Governor of the Bank of Canada from 2008 until 2013. Besides this, he obtained a masters and doctoral degree in economics from St Peter's College, Oxford, back in 1993 and 1995 respectively.
Market Leaders Forex Trading Course
– The ultimate course for beginners and newcomers. Probably the most popular, professional, friendly and comprehensive online Forex trading course
on the net. A true window to Forex trading for anyone who wishes to join this gigantic market and learn to trade like the pros. Written by our experts, it is responsible for introducing thousands of new Forex traders around the world to trading. Its goal is to prepare you in one weekend for this opportunity.
- The chance for future price changes in the market's currency.
- In forex trading, a micro lot refers to 1/100th of a standard lot (100,000) or 1,000 units of the base currency. Usually, this is the smallest trading volume that one can trade in the forex market.
- In forex trading, a mini lot refers to 1/10th of a standard lot (100,000) or 10,000 units of the base currency. The pip value is equal to $1 for the mini lot.
- Momentum trading is the process of engaging high-volume directional markets to realize profitability. Momentum trading strategies are typically applied to trending products.
- Controls how much of your money you risk when you enter a trade. A good money management approach is to always risk a fixed percentage of your equity, not higher than 10% per position. Smart money management is exactly what prevents us from losing all of our capital at once.
- An affective technical indicator which connects price averages over different periods of time. It points out a possible trend's direction.
MPC (Monetary Policy Committee)
- Is a branch of the Central Bank of the United Kingdom named BOE (Bank of England) and charged with the responsibility of controlling the money supply through interest rates and open market operations, aiming to achieve the benchmark inflation, unemployment rate, and economic growth.
NFP (Non Farm Payrolls)
- The change in the number of employees in the market over the past month. It indicates the market's general economic condition.
No Dealing Desk
- No dealing desk is a form of forex trading where traders are matched directly with liquidity providers. Under no dealing desk, a trader is able to work with a variety of liquidity providers to get the most competitive bid/ask spreads.
Open Market Operations - Open Market Operations (OMO) is a tool of monetary policy that refers to the buying and selling of bonds and government securities in the open market to control the money supply in the economy. For instance, a Central Bank buys the government securities if it intends to increase the money supply in the economy and vice versa.
- A trade execution
- Market conditions of excess buying. It signals that the momentum is about to change in favor of the sellers.
- Market conditions of excess selling. It signals that the momentum is about to change in favor of the buyers.
- OTC markets are decentralized, with trade facilitated via a network of dealer-agents. Products native to OTC markets are traded without having to adhere to a standardized exchange. The forex is an example of an OTC marketplace.
– A popular technical indicator for predicting upcoming trends. Its location compared with the market price determines whether to go long or to go short (buy or sell). Parabolic SAR is affective in volatile markets and works well on strong trends.
Pending Order is an option in the Metatrader4
that allows traders to place the instructions in the software to permit it to execute trades once the specific market conditions is met. There are four types of Pending Orders; Buy Limit, Sell Limit, Buy Stop and Sell Stop.
- Philip Lowe is the Governor of the Central Bank of the Australia, renamed "Reserve Bank of Australia" as of Sep 18, 2016. He is an Australian economist and formerly served as the deputy governor under Stevens from 2012. In the year 1994, he received his doctorate degree from the Massachusetts Institute of Technology (MIT).
In the study of candlesticks, the pinbar is a single candlestick that hints the traders about a possible reversal in the market. A pinbar has a small body, but a long wick usually two times the size of a candle's body and by nature, it's a reversal candle.
- The smallest price units in a price quote. It is the fourth number after the decimal in most price quotes. A 1 pip change is a price movement of 0.0001 .
Political Risk (Polirisk)
- The extent of exposure to political risks that can increase governmental instability and affect investor activity and a currency's performance.
Pound (GBP) - Pound is the monetary unit of the United Kingdom, symbolized as £ (GBP) and originated from the value of a weight (pound) of silver.
Price Action -
In the study of technical analysis, the Price Action is a trading strategy that includes reading charts, candlesticks, swings (high & low), support and resistance to predict the future price and trend. It helps traders identify the buy/sell trading levels in order to profit in forex trading.
- "Priced in" refers to a situation in which all the publicly available information, forecasts, and predictions have already been taken into account by an asset. However, the market can reverse in the wake of other factual information.
- An important element in Forex. One of the main keys for success in Forex is to eliminate emotions while trading. An experienced trader knows how to trade while in a proper state of mind.
QE (Quantitative Easing)
- An expansionary monetary policy, where a central bank intends to increase the money supply in the economy by purchasing government securities and bonds from the market, aiming at economic growth.
Quote (Counter) Currency
- In contrast to the base currency, a second currency in the forex pair is called the quote currency. This is also referred to as the ""secondary currency"" or ""counter currency"". In the USD/CAD, the USD is a base currency while the CAD is a quote currency.
If the USD/CAD is quoted at $1.3300, this means that one has to pay 1.3300 Canadian dollars to purchase one U.S.. Dollar.
– A price recovery which follows after a period of declines.
Ranging (Flat) Trend
– A sideways trend which represents uncertain market conditions. Neither of the market forces (sellers or buyers) is dominant.
RBA (Reserve Bank of Australia) - The Central Bank of Australia, established on 14 January 1960 and governed by Philip Lowe. Its headquarter is in Sydney, New South Wales, Australia. Besides being a Central Bank, it's charged with the responsibility of price stability and economic growth.
- A period of sustained economic contraction. Recession is influenced by fundamental socio-economic factors, like industrial production, GDP and more.
Rejection Candle - In candlestick trading strategies, the rejection candle refers to a pinbar, hammer, inverted hammer, shooting star or a hanging man candlestick pattern that signifies a potential reversal in a trend. The rejection candle has a potential to divert a bullish trend into a bearish trend and a bearish trend into a bullish.
Reserve Bank of New Zealand (RBNZ) - The Reserve Bank of New Zealand (RBNZ) is the central bank of New Zealand. It was established in 1934 and is governed by Graeme Wheeler. Like other central banks, the RBNZ receives a lot of attention from forex traders and stock market investors. This is because it's charged with the responsibility of controlling the money supply through monetary policy, aiming to achieve the benchmark inflation, unemployment rate, and economic growth.
Reserve Rates - The tool of monetary policy, according to which every commercial bank is required to keep the certain portion of its deposits with the central bank to avoid liquidity risk. The higher reserve rates, the more decreases in the money supply in the economy and vice versa.
- The upper barrier of a trend (Buyers' ceiling). The level at which a current uptrend is expected to stop as the price rise encounters “resistance”.
- A monthly report on the sales of retail goods and merchandise in a country.
Reversal Patterns - In the forex market, a reversal refers to a change in the direction of a price trend, whereas the reversal pattern is a formation of the support and resistance, reversal candlesticks and various chart patterns that have or can cause a reversal in the price trend of a currency pair. For instance, in the candlestick analysis, the hammer, inverted hammer, shooting star and test bar are the few examples of a reversal pattern.
- Ripple is an exclusively digital real-time settlement system. As an asset, it is the third largest cryptocurrency in terms of market cap with 100 billion tokens in circulation. XRP is known for its high liquidity and speed of transaction.
- Foreign exchange risk management allows the trader to define himself as a trader in terms of risk vs. odds. Smart risk management puts under control the levels of risks that the trader wishes to take throughout his trading. Risk management should determine your Forex trading strategies
. It is designed to preserve the value of your currency inflows and investments, while enabling you to manage your initial trades.
RSI (Relative Strength Index)
- A technical indicator that works on a 0 to 100 scale. The area below 30 signals a buying opportunity and the area above 70 signals a selling opportunity.
Safe Haven - The term safe haven refers to the situation when an investor looks for the safer assets to invest in at times of uncertainty in the market. As a result, we see a sell-off in the stock markets and increased demand for bullion & safe haven currencies.
Safe Haven Currency - At times of uncertainty in the forex market, investors trigger the safe haven appeal by investing in Gold and other forex currencies. The most popular safe haven currencies are the Japanese Yen and the Swiss Franc. The major haven currency pairs are USD/JPY & USD/CHF.
Sanctions - Sanctions refer to the actions taken by a country or countries against other countries for political reasons, resulting in a loss of business and diminishing appeal of related currencies.Sanctions refer to the actions taken by a country or countries against other countries for political reasons, resulting in a loss of business and diminishing appeal of related currencies.
– A very frantic strategy for short, intraday trades. Based on openings of many positions, when the earnings potential from a single position is small, but the total earnings potential from a lot of winning positions simultaneously is high. A Scalping Strategy
helps to reduce risks, but its disadvantages are the need for high trading capital and the high number of spreads you will have to pay your brokers.
Sell Limit – A sell limit order is a type of pending order that allows a trader to put instructions in the trading software (MT4), to purchase a security at a specified price. It's placed above the CMP (current market price) if a trader expects that the price will plunge back after soaring to a specific trading level. Here, the trader aims to sell at high to buy at a lower price.
Sell Stop – A sell stop order is a type of pending order that allows a trader to put instructions in the trading software (MT4), to purchase a security at a specified price. It's placed below the CMP (current market price) if a trader expects that the price will plunge further on the breakage of a certain level.
Sentiment Analysis – A study to predict a crowd psychology or herding behavior to determine the direction of the price movement of a security. The crowd psychology is often derived from an expectation of an outcome. This type of trading strategy is called Trading the Market Sentiment.
Shinzo Abe - Shinzō Abe is the 57th and 63rd Prime Minister of Japan since 26 December 2012. He resigned on 12 September 2007 for health reasons and he is honored to the longest serving PMs in Japanese history. Besides this, has he introduced a "Three Arrow" policy named Abenomics for fighting the deflation and economic growth in Japan.
Shooting Star - In the Candlestick Trading Strategy, a shooting star is a bearish reversal pattern that is formed after a bullish trend in the market. It's identical to "Inverted Hammer" as it has a long upper shadow (wick), small lower body and little or no lower shadow (wick). Besides this, it exhibits the weakness in a buying trend and signifies a potential selling trend in the market.
Short Entry - Short entry is a slang term that is used in the forex trading to signify a sell position. It is also used as "going short" in a trade. Likewise, the "Long entry" or "going long" are used for the buy positions.
Short Sell -
Short selling is a financial term that refers to selling in advance. In the forex trading, It's a market position where the trader has sold a currency which is not owned by him. It helps investors to take profit from any news, speculation or analysis by selling a currency in advance to buy it back at lower prices. The difference between the selling price and buying price is considered as profit or loss for a trader, depending on the closing price.
Short Term Trading
- Trading strategies focused on short periods (day trading up to a couple of weeks top).
Signal (Market Alert)
- Trading alerts coming from the market. Forex Signals
services allow the trader to follow and copy trading actions and executions from experienced traders, with a high percentage of successful trades. FX Leaders offer our users FREE market alerts on the different currency pairs!
- Slippage is the difference between the desired price levels for a trade and the actual levels in which the trade was executed. Costs associated with slippage can be substantial, increasing in highly volatile or illiquid markets.
SNB (Swiss National Bank) - Swiss National Bank is the central bank of Switzerland and began business activities on 20 June 1907. The current chairman is Thomas Jordan. Its headquarters are in Bern and Zurich. Besides being a central bank, it's charged with the responsibility of price stability and economic growth. Swiss National Bank is the central bank of Switzerland and began business activities on 20 June 1907. The current chairman is Thomas Jordan. Its headquarters are in Bern and Zurich. Besides being a central bank, it's charged with the responsibility of price stability and economic growth.
Social trading - Social trading is the act of one trading account automatically copying the trades of separate account. The separate account is known as the signal provider. Signal providers makes their strategies available for copy on a free, subscription or purchase basis.
Soft Currency - Soft currencies are currencies that fluctuate wildly as a result of instability. Developing nations often have soft currencies. In an attempt to combat rate fluctuations, they are often “pegged” to more globally prominent currencies.
Speculation - Speculation is the process of predicting future prices and entering into a trade which has a significant risk of loss but also the potential for profit. The investor attempts to benefit from the short-term fluctuations in the market as a result of macroeconomic and political events around the globe.
Spinning Top - In candlestick patterns, the spinning top refers to a type of candle that has a small body, but long shadows (wicks). This demonstrates indecision or a neutral sentiment on the part of buyers and sellers upon the continuation of the trend.
Spoofing - Spoofing is a form of identity fraud where a perpetrator attempts to access a system by pretending to be the primary user. Spoofing is common in cyberspace, typically in the form of email or URL scams.
Spread - The spread is the difference between the bid and ask price of a currency, commodity or index. We can also define it as the difference between a buying and selling price. Hence, it's known as the brokers profit.
Standard lot - In forex trading, a standard lot refers to the 100,000 units of a base currency. For example, one standard lot of the EUR/USD means the investors have bought 100,000 Euros.
Statistical Arbitrage - In financial markets, the statistical arbitrage is also known as StatArb. In contrast to the simple arbitrage, the traders make the decision to buy or sell based on the mis-pricing of assets. The traders use mathematical modeling techniques or different trading strategies to identify the price inefficiencies in the market.
Stephen S. Poloz - Stephen S. Poloz is the Governor of the Central Bank of the Canada, renamed "Bank of Canada" as of June 3, 2013. He has Ph.D. and graduated from the University of Western Ontario and Queen's University. He is the 9th Governor of the Bank of Canada.
Sterling (GBP) - Sterling is a slang term used for the British Pound. If you are wondering why it's named sterling, it's because a coin of the British Pound once weighed one troy pound of sterling silver, giving it the nickname of "Sterling".
Stochastic – A technical indicator that shows oversold and overbought areas on the chart. The area below 20% surface implies oversold conditions and the area above 80% surface implies overbought conditions. Stochastic is considered as a relatively good buying and selling alerts provider.
Stochastics - Stochastics are a tool for technical analysis. Classified as oscillators, they compare the periodic closing price of a security to its trading range over a given period of time. Stochastics are calculated automatically via software trading platform and are used to determine whether a security is being overbought or oversold.
Stock Index –
The stock index is an average value of diverse stock prices listed and traded on the stock markets. It is considered as one of the main indicators to gauge the performance of the overall stock market of an economy. For instance, the S&P 500 is a stock index that represents the performance of the NYSE (New York Stock Exchange).
Stop Loss –
A stop loss is a specific number of ticks, pips or amount of money risked on a given trade. A stop loss order is placed upon the market at a price where the trade is deemed to have failed, effectively closing out the position.
Stop Loss Order - An exit trade order, which automatically closes an open position at a specific price, specified in advanced by the trader. A Stop Loss limits potential losses should the market go against you.
Supply/ Demand Ratio
- The difference between the supplied amounts of goods and services and the demand for them. As the demand rises or the supply drops, the value of goods or services (e.g.. currency) goes up.
- The bottom barrier of a trend (Sellers' floor). It is the level at which a current downtrend is expected to stop as the price finds “support”.
Swaps – Swap is a fee that is charged by a broker from the client on the overnight positions. A forex swap is the interest rate differential in the two currency pairs that an investor is trading, and it is determined according to either your position that is long or short. For instance, if a currency pair has a positive swap value, you are earning interest by holding that position each day. If the swap value is negative, you are being charged that much for holding that position. This is based on the difference in interest between the two currencies in the pair, as well as the current price of that pair.
– A short term trading strategy usually lasting from a couple of days to a week. The goal of this strategy is to ride on existing market trends and to take as much advantage of them as you can, in order to make relatively quick profits, while reacting fast to changes in market behaviors.
Swissie (CHF) – Swissie is a slang term used for the Swiss franc (CHF).
- The 3 letters used to identify a currency. These represent the country of origin and the name of the currency, e.g.. USD (US dollar); EUR (euro), JPY (Japanese Yen).
- A take profit is the number of ticks, pips or amount of money a specific trade is intended to make. A take profit order is placed upon the market at a desired price level, effectively closing out the trade. A take profit is also known as a “profit target.”
Take Profit Order
- An exit trade order, which automatically closes an open position at a specific price, specified in advanced by the trader. When the price reaches this rate the trade closes at a predefined profit.
- The technical approach uses tools, technical indicators, formulas and patterns on charts, in order to predict future trends and changes in currencies. It analyzes the trends and not the reasons why they happen.
The Bretton Woods Agreement - Bretton Woods was the monetary framework introduced in 1944 outlining a new global financial system. Under Bretton Woods, currency valuations were pegged to the price of gold and the United States dollar was designated the world’s reserve currency. It was abandoned in 1973, through a mass floatation of many global currencies.
Theresa May - The Prime Minister of the United Kingdom and Leader of the Conservative Party since 11 July 2016. She preceded by David Cameron, ex-prime minister of the UK who resigned after the Brexit. She has been a Member of Parliament since 1997.
Thomas Jordan - Thomas J. Jordan is the chairman of the governing board of the Central Bank of the Switzerland, named SNB (Swiss National Bank). He was elected chairman on April 18, 2012. In 1993, he completed his Ph.D. degree in economics and business studies from the University of Bern.
- Traders can choose to look at the trading charts in different time frames. For example, say you choose to look at a 30 minutes chart - it means that each single candle represents the trading activity over a 30 minutes period. The most popular time frames are 15 minutes, 1 hour and 1 day frames.
- Your capital available for use in trades on the online trading platform. Trading Book
- A self-compiled journal for managing and following your trading activity, while writing down actions, thoughts, results and anything which can improve your future trading.
- Online software provided by the broker. Forex trading platforms
are used for trading transactions, executing orders and managing your account. That is why it is important to choose the right broker.
In the forex market, a trend refers to a long term, medium term, and short term direction of a price of a currency pair. For instance, the EUR/USD traded at $1.3990 back in May 2014 and continued in a downward trend for more than 2 years to trade at 1.0348 in Jan 2017. Moreover, a trend can be upward, downward or sideways.
- One of the simplest, most basic tools for the trader's usage on the trading platform. It connects a group of price rates throughout a chosen time frame (either price lows or highs). The more points it connects, the more stable and reliable a trend it will indicate.
- A trend whose general direction is up, it is also called a bull trend.
Vladimir Putin - Vladimir Vladimirovich Putin is the 2nd and 4th President of Russia since 7 May 2012. He was born on 7 October 1952 and studied law at the Saint Petersburg State University, graduating in 1975. Earlier, he had served as the Prime Minister of Russia two times from 1999 to 2000 and again from 2008 to 2012.
- Volatility is the degree of price fluctuation present in a financial instrument's trading range over a distinct period of time. High levels of volatility are commonly associated with a higher degree of risk.
- A xeno currency is a currency that trades in marketplaces outside of its native locale. For instance, a United States dollar being traded in the United Kingdom is an example of a xeno currency.
- Yield is the amount of income returned on an investment. It may be calculated in terms of an interest rate or dividend received from holding a security for a specific period of time. In most instances, yield is represented as a percentage of the total investment cost.
- A yield curve is a graphical representation of interest rates at distinct points in time. Yield curves are used in many fashions, mostly to quantify economic performance.
YTD (year to date)
- YTD is the period of time from the current year’s beginning to the present date. YTD can be expressed in terms of a calendar or fiscal year.