Forex Vocabulary

This is a notification which alerts you that you need to deposit more money in your trading account, to ensure that there is sufficient margin to keep existing positions open. The theory holds that human behavior changes during different phases of the moon. Also a 28-day or 20-day cycle exists in the stock markets. In the financial markets, latency refers to time units required for a trade order to be sent and executed by the broker’s server.

Initial https://forexarena.net/ is the minimum capital you need to have in your trading account to be able to open a position. The required amount of money is “locked” for as long as the trade is open. A market index is a notional portfolio of financial assets in which the constituent securities represent a portion of the financial market. The value of the index is determined by the prices of the underlying assets.

Lock – refers to the opening two positions for one specification, one instrument and the same size in various directions. For instance, both buying and selling EUR/USD at the same time is a good example of locking a position. Foreign Exchange or Forex, FX – is the international market exchange. It is basically the buying of one currency and selling of another at the same time.

Intermediate Trend

For example, assume that the interest https://forexaggregator.com/ in Europe is 5% and the interest rate in the United States is 0%. According to interest rate parity theory, this relationship shows that the Euro is expected to depreciate against the U.S. dollar by approximately 5%. In other words, to convince an investor to invest in Europe while its currency depreciates, the European interest rate has to be about 5% higher than the U.S. interest rate. If the difference between the interest rates is not equal to the expected change in exchange rates between the two currencies, then there is an opportunity for profit. For exchange contracts, it is the day on which the two contracting parties exchange the currencies that are being bought or sold. For a complete description, please see the chapter on trading.

Gann considered the 45 degrees line as the most important in representing long-term trendlines. When enabled, all indicators and objects will be in the background whereas the price chart will be in the foreground. Projecting the flagpole at the breakout point, a price target may be calculated.

Options

Short selling is the act of selling an asset that you do not currently own, in the hope that it will decrease in value and you can close the trade for a profit. In trading, the quote is the price at which an asset was last traded, or the price at which it can currently be bought or sold. Quantitative easing is an economic monetary policy intended to lower interest rates and increase money supply. It saw an increase in profile and use after the 2008 financial crash and subsequent recession.

Net change is the difference between the closing price of the current trading session, compared to the closing price of the previous trading session. Net change can be positive or negative, as it represents whether the markets are up or down on the previous day. A trader’s investment capital is the portion of financial resources they have available for trading. A fiat currency is a national currency that is not pegged to the price of a commodity such as gold or silver. The value of fiat money is largely based on the public’s faith in the currency’s issuer, which is normally that country’s government or central bank. The Federal Reserve bank, or the ‘Fed’ for short, is the central bank in charge of monetary and financial stability in the United States.

Surinam Dollar

Greater volatility indicates a greater level of uncertainty in market expectations. 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. Standard lot – In forex trading, a standard lot refers to the 100,000 units of a base currency.

A long position refers to buying an asset because you expect its price to rise. A line chart is a price chart that connects multiple price points using one continuous line to show an asset’s price history. In MT4 trading history, gross profit is the sum of the money earned in profitable trades.

For example, in the USD/GBP pairing, the GBP is the quote currency. When a trader decides to keep a position open overnight and carry it over into the next trading day. Relates to when an investor borrows at a lower-than-average interest rate in order to buy assets that can potentially produce higher interest rates.

An entity that provides credit intermediation to one or more parties to a trade based on pre-agreed terms and conditions governing the provision of such credit. The Prime Broker can also offer subsidiary or allied offerings, including operational and technology services.. Located within the Equinix Secaucus NJ campus, features direct interconnections to massive financial services and electronic trading ecosystems. It is one of the three commonly known lot sizes; the other two are mini-lot and micro-lot. An individual or institution which acts as a market maker in a given asset class. This means that the liquidity provider will act as the both the buyer and seller of a particular asset, thus making a market.

Reserve Bank of New Zealand – The Reserve Bank of New Zealand 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. In the forex trading, the 100 & 200 periods EMA’s are broadly used by traders to identify the market trends.

When a dealer quotes a bid and ask price for Foreign Exchange transactions to a customer. The buying or selling of Foreign Exchange amounts resulting from the execution of an order. A market condition in which trading volume and liquidity are low and in which bid and ask quotes are usually wider than normal. The date by which an executed order must be settled by the transfer of instruments or currencies and funds between buyer and seller. The method of settling under which only the differences in the traded currencies are settled at the close.

• A lot is a standardized measure of quantity for a tradable asset.
• It refers to an instruction to buy or sell a specific instrument at a certain price.
• A current account surplus is positive for the country’s currency whereas a low balance is viewed as negative.

Bank interest rate is the interest rate charged by a central bank to its domestic commercial banks when lending them money. The account balance shows the total amount of money you have in your trading account. It is only affected when you deposit more funds in your account, close a position, or leave a position open overnight. In the end, buyers buy at the ask price, and sellers sell at the bid price.

A https://trading-market.org/-free type of trading where the same instrument is bought and sold simultaneously in two different markets in order to cash in on the difference in these markets. Short, or shorting, refers to selling a security first and buying it back later, with anticipation that the price will drop and a profit can be made. Any person who commits capital with the expectation of financial returns is an investor.