 Forex the dictionary. The dictionary of terms contains all necessary definitions on currency market Forex.
Ask - the rate on which the bank sells base currency, for example, at quotation EUR/USD = 1.2726/29 at the rate 1.2729 (ask) is carried out sale of euro by bank and, accordingly, purchase of euro by the client.
Bear - the person, selling short an exchange rate.
Bear market, Bearish - the market, described reduction of prices.
Bid - the rate on which the bank buys base currency, for example, at quotation EUR/USD = 1.2726/29 at the rate 1.2726 (bid) is carried out purchase by bank of euro and, accordingly, sale of euro by the client.
Bull - the person playing on increase of an exchange rate./p>
Buy - a choice of type of operation, you wish to buy quoted currency.
Change order - the instruction on opening or closing of a position, accommodation, removal or change of a level of the warrant.
Chart - the stream of quotations presented in the graphic form and consisting of bars/candles.
Currency - the name of currency pair.
Fundamental analysis - a method of forecasting of the future direction of movement of the prices, based economic forces. Movement in market FOREX is set with fundamental factors. These are key macroeconomic parameters a condition of the national economy, influencing on participants of the currency market and a level of rates of exchange. These factors are studied with the fundamental analysis.
In other words, the fundamental analysis is engaged in an estimation of a situation from the point of view of political, economic and financial-credit policy.
Here the information on discount rates of the central banks, an economic rate of the government, possible changes in a political life of the country, and also every possible hearings and expectations are important.
The fundamental factors influencing rates of exchange:
- Parameters of economic growth (a total national product, volumes of industrial production, etc.)
- A condition of trading balance, a degree of dependence on external sources of raw material
- Growth of monetary weight in a home market
- A rate of inflation and inflationary expectations
- A level of the interest rate
- Solvency of the country and trust to national currency in the world market
- Speculative operations in the currency market
- A degree of development of other sectors of the world financial market, for example a securities market competing to the currency market.
To spend the fundamental analysis uneasy. The matter is that the same factors render in various conditions unequal value on the market or can from solving to become absolutely insignificant. Thus, the success of the trader in true carrying out of the fundamental analysis in much depends on knowledge and understanding of laws of the financial markets, skill to compare among themselves at times absolutely untied at first sight events.
Good Till Cancel (it is good is not cancelled yet) the limit-warrant - the order on purchase/sale of currency for a determined price or it is better, operating while it will not be executed or cancelled by the client.
Hedging is very useful tool for those who knows how it is correct it to use. This opening of a position in an opposite direction on the same currency pair. Usually opposite positions close each other. In many trading platforms, both positions remain active. For example, you have bought GBP/USD. You can hedge this a position, having opened a position on sale GBP/USD. Both these positions will remain active instead of closing each other. Hedging gives the trader of more opportunity to watch for where the market goes. It is important, that you completely knew, how it works and how correctly to use it, before to place the hedged order. Hedging gives additional opportunities to clients, and, undoubtedly, is rather demanded function.
The credit shoulder is a parity between the sum of the mortgage and extra means allocated under it: 1:50, 1:100, 1:200. The credit shoulder 1:100 means, that for realization of the transaction it is necessary for you to have on the trading account at the broker the sum of 100 times smaller, than the sum of the transaction. An example: you buy 1,0 lot USD/JPY. At a credit shoulder 1:200 necessary margin will make $500, at 1:100 - $1000, and at 1:50 - $2000, but cost of item from it does not change.
Limit order is an order which is carried out during the moment when the market price has concerned the price ordered by the trader. Performance of these orders is under supervision of dealers and will hold good, while the trader did not liquidate them. As the order cannot be executed, while the market price has not reached desirable size, it can be or to not be executed. For example, if you wish to buy GBP/USD, but not earlier, than the price will decrease up to 1.6860, you should put buy limit order on 1.6860. If the price has not decreased to this mark, the order remains outstanding, but will hold good, while you have not cancelled it.
Long - the Long position - purchase of the tool counting upon increase of a rate. With reference to currency pairs: purchase of base currency for currency of the quotation. It is operation at which we expect lengthening a following position. I.e. we have bought below (at the low price) and now we wait for its increase for sale.
Margin - demanded cash security for maintenance of the open positions.
Marginal trading - carrying out of trading operations with use of a credit shoulder when the client has an opportunity to make transactions for the sums considerably exceeding the size of its own means.
Margin Call
Margin Level = 10 % for LiteForex. Margin Level = 1 % for Marketiva Forex
In case of if the current condition equity the trader becomes less than the necessary mortgage for maintenance of its positions in the market, the dealer has the right to close everything, or some positions of the trader. This condition also refers to as condition Margin Call. Matgin Call comes at ML=equity/margin*100. Reception Margin Call means, that you not in a condition to support the positions. It can occur or owing to essential reduction of your account, or by virtue of the superfluous open position. Both that, and another is inadmissible. Close the positions until when you will be compelled to make it.
Market order is a market warrant on purchase or sale of any concrete currency on a current market price. Under usual market conditions of the warrant are carried out automatically, within 2-5 seconds.
Order - the order on opening or closing of a position at achievement by a level of the warrant.
Sell - a choice of type of operation, you wish to sell quoted currency.
Short - a short position - sale of the tool counting upon downturn of a rate. With reference to currency pairs: sale of base currency for currency of the quotation. We all over again have sold under the high price, and then we wait for reduction of the price for the repayment back.
Spread - a difference between the left and right parties of the quotation (between bid and ask).
Stop-loss order - the order on purchase or sale of currency under the fixed price or is worse. This warrant is usually exposed for restriction of losses in case the market has moved in a direction, the return expected.
Stop-loss - restriction of losses.
Stop order is an order which is put for fixation of the certain prize or loss by closing a position. For example, if you have bought GBP/USD on the price 1.6864 and the price has risen up to 1.6880, giving you profit, you can wish to fix profit on a case of falling of the price. In this case you can put stop-loss order on sale at the price, say, 1.6870. It assumes, that if the price will fall up to this level, your position will automatically be closed with profit. Similarly to it, you can put stop-loss order on 1.6854, limiting thus potential losses on a case of the further falling of the price.
Swap - the Swap of the transaction - Opening a position, you receive percent under the deposit which is on your account at a market-maker in US dollars, but lose percent under the credit in other currency for the sum of the open position. The difference between the credit and depositary rate defines, whether you receive or from you will take percent. Swaps arises only in the event that the position is not closed within day. The size a swap of rates undertakes from the table, quantity swap rates of equally difference between currencies by date of closing a position and opening of a position.
The technical analysis is a statistically-mathematical analysis of the previous quotations with forecasting the subsequent prices.
Initial data for the technical analysis are the prices - the maximum and lowest price, the price of opening and closing for the certain period of time and volume of operations. Any factor influencing the price - economic, political or psychological - is already considered by the market and included in it.
The technical analysis leans on three assumptions:
1. Movement of the market considers all.
2. The prices move is directed.
3. The history repeats.
The given kind of the analysis represents a series of the schedules displayed in a trading platform. Schedules precisely show a direction of movement of the prices, or a so-called trend, during the real moment of time. The majority of fine and average players in the financial markets is based on the technical analysis.
Traling stop
When you expose Traling stop (for example, on X items) there is a following: the terminal does not undertake any actions until while the position will not leave in profit on X items (the specified size of Traling stop). After that the terminal exposes stop-loss on distance X of items from the current price (in this case - at a level of break-even). At reception of the quotation at which distance between current by and exposed stop-loss, will exceed X items, the terminal sends a command on change of Traling stop on distance X of items from the current price. I.e. stop-loss "follows" to the current price for distance X of items. Thus, Traling stop is the certain algorithm of management stop loss - "movement after by in profit". Attention! Traling stop works only when your trading terminal is started and connected to a server through the Internet.
Trend - a direction of movement of the prices.
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