Forex Glossary

The ends of the rectangle therefore indicate the opening and closing prices of the session, and the vertical ‘wicks’ show the session high and low. In trading terms, a record of the total trading positions held by a trader or dealing desk. An order issued to a dealer or broker to buy or sell an asset at the best possible price at a given time. A special type of trading, where a big number of positions are opened for short-term profits. Yield is the income earned from an investment, most often in the form of interest or dividend payments.

https://forexaggregator.com/ – This refers to the initial deposit you need to make in a trade, in order to utilize leverage. Margin requirements are expressed as a percentage of the whole trading position. Look up the meaning of hundreds of trading terms in our comprehensive glossary. Stay informed with real-time market insights, actionable trade ideas and professional guidance.

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Efficient Market Hypothesis

At the end of a decline, a long black candlestick and a smaller black candle that follows, share the same closing price. Even though the second candle opens higher than the previous close, it doesn’t manage to follow through and eventually it closes at the same price as the previous session. Since the market failed to record a new low, a support may have been formed and a possible reversal may be in place. At the end of an uptrend, a long white candlestick and a smaller white candle that follows, share the same closing price. Even though the second candle opens lower than the previous close, it doesn’t manage to move lower and eventually it closes at the same price as the previous session. Since the market failed to record a new high, a resistance may have been formed and a possible reversal may be in place.

WTI stands for West Texas Intermediate , an oil benchmark that is central to commodities trading. It is one of the three major oil benchmarks used in trading, the others being Brent crude and Dubai/Oman. The SEC stands for the US Securities and Exchange Commission. It is a government agency set up to regulate markets and protect investors in the United States, as well as overseeing any mergers and acquisitions.

Bearish Reversal

Investors use https://forexarena.net/ analysis as a means to forecast future price changes within the forex market. How this is conducted is by sifting through current and prior market data via trading indicators, charts, and other related tools. Risk Management – 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.

When an exchange rate is not fixed, but adjusts depending on the supply and demand for a particular currency relative to other currencies. The number of open buy and sell orders placed for a financial instrument at varying prices. A buy order of a financial instrument to close an existing short position. A reading above 50 is bullish for the US Dollar while a reading below 50 is bearish.

Technical Analysis Premises

Simultaneous buying of a currency for delivery the following day and selling for the spot day or vice versa. Simultaneous buying of a currency for delivery the following day and selling for the spot day, or vice versa. The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another.

The difference between the money received on the short sale and the buy to cover it is the profit. There are some fundamental differences between foreign exchange and other markets. Rather, the forex is an electronic network of banks, brokerages, institutional investors, and individual traders . Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks. If you believe that the market is about to rise in the short or long run, you are definitely a bull.

Bonds are basically debt and in some regions of the world central banks even bought the debt of private companies in various forms of quantitative easing programs. The United States ran no less than four QE packages, while Japan, Europe, and the United Kingdom are still involved in one way or another in various QE programs. If a trader sells a currency pair, it is said that he/she is going short, as the expectations are that the pair will move to the downside. When a trader buys a currency pair, it is said that he/she is taking a long position, as the expectations are that the pair will move to the upside. Base and quote currencies – In a currency pair, the first currency is known as the base currency and the second is referred to as the quote currency.

Technical analysis is used to forecast future changes in financial and commodity markets based on the history of price changes, i.e. past price movements. The order of the purchase or sale of a financial instrument (e.g. currency) at the current market price. An economic calendar is a calendar of events provided by brokers and other financial companies through which traders track the events affecting the price movements of assets. The American Depositary Receipt is used to trade in securities of foreign companies in the United States. Shares of foreign companies are acquired by the American depositary bank in the process of listing these shares on US stock exchanges. ADRs are a tool for raising capital in the US and international markets.

This allows for leveraged trading and the flexibility to go long or short on a trade. The probability of exchange rates becoming less favorable. The US Dollar pairings that can be traded reciprocally to create new cross positions. For example, EUR/USD and USD/JPY can be traded against each other to create a position equivalent to EUR/JPY.

Choose from standard, commissions, or DMA to get the right pricing model to fit your trading style and strategy. By contrast, the total notional value of U.S. equity markets on Dec. 31, 2021, was approximately $393 billion. It’s risky business and can be made riskier by the use of leverage to increase the size of bets.

This is an indicator of monetary imbalances, when sellers are significantly stronger than buyers of a particular financial instrument. Overnight positions refer to open trades that have not been liquidated by the end of the normal trading day and are often found in currency markets. Currency prices move constantly, so the trader may decide to hold the position overnight. The broker will rollover the position, resulting in a credit or debit based on the interest rate differential between the Eurozone and the U.S. If the Eurozone has an interest rate of 4% and the U.S. has an interest rate of 3%, the trader owns the higher interest rate currency in this example. Therefore, at rollover, the trader should receive a small credit.

Distributing the capital cost of an intangible asset over a specific time period. Analyst Financial professional knowledgeable in assessing investments and making recommendations for securities. Annuity Financial product designed to grow funds, which will give an income stream to the holder in the future upon amortization. Arbitrage Act of purchasing and selling a financial instrument simultaneously in order to generate profit from its price differences. Ascending wedges typically conclude with a downside breakout and descending wedges typically terminate with upside breakouts.

It can be used to either find the best price for a single large order, or to find opportunities for profit in the market in real time. Hawks and doves are terms used by analysts and traders to categorise members of Central Bank committee ahead of their votes on monetary policy. Fundamental analysis is a method of evaluating the intrinsic value of an asset and analyzing the factors that could influence its price in the future. This form of analysis is based on external events and influences, as well as financial statements and industry trends. When traders talk about the ECB, they are referring to the European Central Bank, the central bank for the eurozone.

• It is also often referred to as going short, shorting or sometimes selling.
• The index is a composite of four indicators, including seasonally adjusted business activity, employment, supplier deliveries and new orders received.
• Entry costs are low and the marketplace is open around the clock.
• A high reading implies inflation and is positive for the euro whereas a low reading is negative for the euro.

A channel consisting of two parallel lines; the basic trendline and the return or channel line. In an uptrend the return line is drawn by joining the tops of the channel whereas in a downtrend, the return line is drawn by joining the bottoms of the channel. The return line serves as a profit-taking indicator for short-term traders.

An order to https://trading-market.org/ a deal when the market reaches a certain rate. Profit – positive amount of money that you earn for closing the position. A leverage that changes depending on the total size of open positions.

Price level which acts as a ceiling and caps the rise of the current currency price. The last day, when the deal on a derivative contract (futures, option, etc.) may be either executed or cancelled. The currency pair, formed from Euro and the Japanese yen, shows how many Japanese yen are needed to purchase one Euro. A financial contract, the value of which depends on the value of one or more underlying assets. Such underlying assets may include indices, stocks, commodities, currencies and other assets. The Bank of England is the central bank of the United Kingdom.