Forex Glossary

In https://forexdelta.net/, it is the strategy of exploiting price disparities in currency markets. Hanging Man – 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 , small upper body and little or no upper shadow . 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. It aims to mitigate the risk faced by investors in the shape of variations in forex exchange rates, bonds, stocks, indexes, and commodities.

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 scroll button on the mouse or Ctrl+F can be used to activate the tool. According to etymology, the word originally is driven from “deerskins” which was used as a medium of exchange back in 1700’s.

Stocks, bonds, gold, oil, currency pairs and the PAMM are especially popular among investors. This is a special, mathematically calculated graph, which helps the trader to find the most advantageous moment for opening trades and predict future price movements. Buying or selling CFDs or futures contracts in exchanges for currencies of governments and/or cryptocurrencies. It is the current value of the account fluctuating with every tick if a client has opened positions.

Reversal

The Forex market is open around the clock and offers traders to profit not only on rising prices, but also on falling ones. However, there is another reason why a large number of traders feel attracted to the Forex market – leverage. Underlying instrument / assetIt could be an instrument such as foreign currency, bonds, or shares or stocks or a commodity such as gold, crude oil, coffee, or even sugar. Whatever the underlying asset involved, it is by nature valuable on its own and very easy to sell. Such condition of the Forex account when the open positions are forcedly closed by the Company at current prices. A Sell Stop is a Stop Order that is placed BELOW the current Bid price and is not activated until the market Bid price is at or below the stop price.

While support levels are based on previous lows, resistance levels track previous highs at which the price had difficulties to break above. Most traders don’t follow movements in pipettes, even though some brokers use them in their trading platform. Today, pipettes are mostly used to measure the bid/ask spread, where a tenth of a pip is needed.

The width of the diagram reflects the volume for the same period. The sum of trade , net factor income and net transfer payments . A current account surplus is positive for the country’s currency whereas a low balance is viewed as negative. A contract that specifies the price that a currency can be bought or sold at, or on a set future date. Future contracts are often used by investors to hedge against risk. In Technical Analysis, price is considered the most reliable indicator.

Detrended Price Oscillator

A breakout of the triangle has minimum measuring implications – equal to the height of the pattern. The principle of contrarian trading assumes that when the larger majority of the traders agree on the direction of the market then they are usually wrong. It is a calculation method that yields 4 resistance and support levels. It makes use of the High, Low and Close price of the previous day. The belief that the market or a specific financial instrument will rise.

• Leading indicators can be useful to help forecast the timing, magnitude, and duration of future economic and business conditions.
• It can sometimes also be referred to as a fixed exchange rate, or pegging.
• It is the difference between the lowest price of a period and 13-period exponential moving average.
• For example, one standard lot of the EUR/USD means the investors have bought 100,000 Euros.

The https://traderoom.info/ that a debtor will not repay; more specifically the risk that the counterparty does not have the currency promised to be delivered. The act of performing a transaction that closes out a position. The risk attached to a transaction by virtue of its association to a particular country. This involves examination of economic, political and geographical factors of a particular country.

Bullish

In many cases, Dojis alert traders to a change in the balance of power in the market between buyers and sellers. Bid Price – 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 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.

The Market Watch is the section in the Digibits Window that displays the quotes of major currencies and crosses and allows access to Digibits charts. A market maker is a person or firm authorized to create and maintain a market in an instrument. The aggregate amount of customer cash pledged against the aggregate Open Position. The margin pledged is a function of Maximum Trading Leverage Ratio. The lower the leverage, the higher the Margin needed to carry the position. Maintenance MarginThe minimum margin, which an investor must keep at Digibits to maintain an open position.

One of the most popular and widely used technical analysis techniques in the stock and Forex markets is support and resistance. See the list of CFD brokers.CommissionBroker commissions for operation handling. Since the market is unregulated, fees and commissions vary widely among brokers. Most forex brokers make money by marking up the spread on currency pairs. Others make money by charging a commission, which fluctuates based on the amount of currency traded.

When we buy the EUR/USD pair, we’re actually buying the euro and selling the US dollar. Similarly, when we sell the EUR/USD pair, we’re actually selling the euro and buying the US dollar. A specific order entered by the client to close out a position if the price moves in the opposite direction of the position by a certain amount of pips. In most cases Stop Orders are executed as soon as the market reaches or goes through the Customer set Stop Price level.

What is a Two-Way Price?

Leverage – use of borrowed capital, allowing the Forex trader to gain access to larger sums of capital. This can heighten profits and losses and should be used wisely. They place their buy orders around those levels, as they believe that the price will again fail to break below. In other words, a support level is a previous low at which the price has a large chance to retrace and move up. Just like other assets, the forces of supply and demand determine the value of a currency relative to another currency.

There exists the opportunity for clients to lose more than the margin that they initially pledge to open and maintain a position. The expiration date is the date of the settlement of the futures / options contracts. The other entity or party with whom the exchange deal is being transacted. The Client can be an Individual, Money Manager, corporate entity, trust Forex account, Co-Owner or any legal entity that has an interest in the value of the Forex account. Describes a currency increasing or strengthening in response to a market reaction. Size of exposure of a single customer to a market related movement.

For example, in EUR/USD, EUR is the base, with one Euro equivalent to the stated price. An order issued to a dealer or broker to buy or sell an asset at the best possible price at a given time. When a market is making a clear, sustained move upwards or downwards, it is called a trend. Identifying the beginning and end of trends is a key part of market analysis.

CPI stands for consumer price index, an average of several consumer goods and services that are used to give an indication of inflation. When a market, instrument or sector is on an upward trend, it is generally referred to as a bull market. Bulls are speculators who believe that a market, instrument, or sector is going on an upward trajectory. This belief puts them at odds with bears, who take a pessimistic view on a market’s direction.

Risk management practices usually take on the form of related strategies and tools that work to limit the financial risk as much as possible. While not strictly a “robot” per se, a forex trading robot does refer to a piece of software that is designed to operate as a guide. It’s automated and should help determine when you should either buy or sell a currency pair. A term used to describe any exchange rate that is currently not fixed. A floating exchange rate tends to fluctuate dependent on the supply and demand of a particular currency relative to other currencies.

Aggregate Risk

The BlackBull Markets site is intuitive and easy to use, making it an ideal choice for beginners. During trading hours Bid/Ask prices change as new incoming prices are received. An order placed to close a position when a certain price is reached. A Technical Analysis tool based on the Linear Regression Trendine and the specified number of Standard Deviations.

Foreign exchange venues comprise the largest securities market in the world by nominal value, with trillions of dollars changing hands each day. The forex market is the largest, most liquid market in the world, withtrillions of dollarschanging hands every day. It has no centralized location, and no government authority oversees it.

A technical oscillator that plots the difference between MACD and the Signal Line. The major difference between the calculation methods is the weight attached to the most recent prices. Divergence between the oscillator and price hints at reversals. Overbought/Oversold levels are not easily spotted on the Momentum Oscillator since it is unbounded. Hence, visual inspection is used instead, to identify extreme readings above and below the 100-line.

A low-risk savings certificate with a fixed interest rate and maturity date. Monthly economic report, based on a survey of about 400 purchasing managers in China. A reading above 50 indicates expansion of the manufacturing sector and the economy in general, whereas a reading below 50 indicates contraction. It is comprised of four exchanges – CME, CBOT, NYMEX and COMEX. An order to carry out a transaction at, or lower than, a specified price, the word ‘limit’ referring to the specified price.

If a resistance level is “broken” the technician will conclude that the price movement of the instrument will continue to go higher. High volatility usually follows major events or economic reports as the volume of trading spikes, and is liable to cause slippage. Scalpers and short-term traders will use elevated volatility to make fast profits, but this demands careful risk management. A safety feature for the EMS which creates an emergency exit for currencies which become the singular focus of various adverse forces.

A https://forexhero.info/ is the expression of a market commitment, or exposure, held by a trader. Profit or loss on a position can only be realized once it has been closed. An open position is a trade that is still able to generate a profit or incur a loss.