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All the Basic Concepts You May Encounter While Trading in the Fx Market

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Arbitrage

Arbitrage is the purchase and sale of an asset in order to profit from a difference in the asset's price between markets.

Band

It refers to the highest and lowest level of price movement in the specified time period.

Base Currency

The base currency is the currency against which exchange rates are generally quoted in a given country.

Basis Points

Basis points (BPS) refers to a common unit of measure for interest rates and other percentages in finance.

Bid

It refers to the purchase price of the investment instrument in the market by the customer.

Buying Rate

It is the standard price in the market determined for the investor to purchase the investment instrument of their choice.

Broker

A broker is an individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.

Bearish Markets

Bearish markets follow a downward trend as investors sell riskier assets such as stocks and less-liquid currencies such as those from emerging markets..

BOE (Bank of England)

Abbreviation for Bank of England.

Bullish Market

A bull market is a market that is on the rise and where the economy is sound.

BOJ (Bank Of Japan)

Abbreviation for Japanese Central Bank.br

Broker

A broker is an individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.

Bundesbank

German Central Bank.

Buy Limit

A buy limit order is an order to purchase an asset at or below a specified price.

Buy Stop

A buy stop order instructs a broker to purchase a security when it reaches a pre-specified price.

Buy Limit

With a buy limit order, the brokerage platform will buy the stock at the specified price or a lower price if it arises in the market.

Base Currency

The base currency – also called the transaction currency - is the first currency appearing in a currency pair quotation.

Compound Interest

Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

CAD

The Canadian dollar is the currency of Canada.

Candlestick

A candlestick chart is a style of financial chart used to describe price movements.

Carry Trade

A carry trade is a trading strategy that involves borrowing at a low-interest rate and investing in an asset that provides a higher rate of return.

Cross Rate

A cross rate is the currency exchange rate between two currencies when neither are the official currencies of the country in which the exchange rate quote is given.

Core Inflation

Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors.

Chart

These are the forms that allow the analysis by revealing the price fluctuations on the horizontal and vertical plane as date and price levels.

Commission

It is the fee demanded by the brokerage firm from investors per transaction other than Spread. There is no such application in the Forex market.

Currency Convertibility

Currency convertibility is the ease with which a country's currency can be converted into gold or another currency.

Central Bank

It is an authorized institution that determines the national monetary policies of the countries and provides information and suggestions to the state by constantly examining the economic analysis.

Capital Market

A capital market is a financial market in which long-term debt or equity-backed securities are bought and sold.

Custodian Bank

A custodian bank, or simply custodian, is a specialized financial institution responsible for safeguarding a firm's or individual's financial assets.

Consumer Price Index

A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households.

Divergence

TA divergence in forex occurs when the price and the indicator fail to simultaneously make higher highs or lower lows.

Demand

The state of being ready to sell the investment tool at the current price.

Day Trading

Day trading is the act of buying and selling a financial instrument within the same day or even multiple times over the course of a day.

Dealer

An individual or firm acting as a principal, rather than as an agent, in the purchase and /or sale of securities.

Deflation

Deflation is a decrease in the general price level of goods and services.

Demo Account

An account funded by fake money to place fictitious trades.

Derivative Financial Instruments

Refers to the fact that the value of the financial asset used for investment is directly dependent on a different financial asset.

Devaluation

A devaluation is an official lowering of the value of a country's currency within a fixed exchange-rate system.

EA(Expert Advisor)

It is an expert advisor appointed by the brokerage firm you chose to support you, especially when starting to trade in the Forex market.

Exotic Pairs

Exotic pairs usually consist of a major currency alongside a thinly traded currency or an emerging-market economy currency.

Economic Indicators

Economic indicators include various indices, earnings reports, and economic summaries.

ECB(European Central Bank)

Abbreviation for European Central Bank.

Exchange Risk

It expresses the risk of loss arising as a result of the uncertainty in exchange rates caused by the changes in global financial environments.

Floating Exchange Rate System

A floating exchange rate is a regime where the currency price of a nation is set by the forex market based on supply and demand relative to other currencies.

FED (Federal Reserve System)

Abbreviation for Federal Reserve System.

Financial Instrument

A financial instrument is a monetary contract between parties.

Forex Market

The forex market is the market in which participants can buy, sell, exchange, and speculate on currencies.

Forward

A currency forward is a binding contract in the foreign exchange market that locks in the exchange rate for the purchase or sale of a currency on a future date.

FOMC (The Federal Open Market Committee)

The Federal Open Market Committee.

Fundamental Analysis

Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements; health; and competitors and markets.

GNI (Gross National Income )

Gross National Income (GNI) is a measurement of a country's income. It includes all the income earned by a country's residents, businesses, and earnings from foreign sources.

Inflation

Inflation is when prices rise over a designated time period. The inflation rate is the percent increase. It will lowers your standard of living.

Interbank Rates

The interbank rate is the benchmark rate to determine the value of dollar and sets the direction for open market rates.

Jobber

A trader who buys and sells, often frequently, to seize short-term market opportunity.

Key Points

It refers to the support and resistance levels in the continuous currency trend determined as a result of chart analysis.

Knocking

It means that the investment instrument or the exchange rate touches both the support and resistance points twice.

Long Position

A long—long position—refers to the purchase of an asset with the expectation it will increase in value—a bullish attitude.

Leverage

Leverage is an investment strategy of using borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment.

Liquidity

Liquidity refers to how active a market is. It is determined by how many traders are actively trading and the total volume they're trading.

Long

A long refers to the purchase of an asset with the expectation it will increase in value—a bullish attitude.

Lot

A standard lot is the equivalent of 100,000 units of the base currency in a forex trade.

Macro Economy

A large-scale economic system

Maintenance Margin

It is the minimum amount of equity that an investor must maintain in the margin account after the purchase has been made.

Margin

Margin is the money borrowed from a brokerage firm to purchase an investment. It is the difference between the total value of securities held in an investor's account and the loan amount from the broker.

Margin

It is the amount required to enter the intended position and transaction in the Forex market.

Market Maker

A dealer in securities or other assets who undertakes to buy or sell at specified prices at all times.

Market Price

It is the generally accepted transaction price in the case of supply-demand balance in the market..

Matatrader

It is the most used trading platform that facilitates transactions in the Forex market.

Micro Economy

The microeconomic perspective focuses on parts of the economy: individuals, firms, and industries.

Micro Lot

A micro lot is 1,000 units of the base currency in a currency pair.

Mini Lot

A mini lot is a currency trading lot size that is one-tenth the size of a standard lot of 100000 units - or 10000 units.

Moving Average

Moving average is a calculation to analyze data points by creating a series of averages of different subsets of the full data set.

Money Market

The money market refers to trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders.

Net Position

The value of one's investment position, calculated as the position's market value less the initial cost of entering that position.

OHLC (Open-High-Low-Close)

An open-high-low-close chart (also OHLC) is a type of chart typically used to illustrate movements in the price of a financial instrument over time.

Ounce

The ounce is the name of several different units of mass, weight, or volume used in most British derived customary systems of measurement.1 ounce is equal to 437.5 grains or 28.349 grams.

Open position

An open position is a trade that has been entered, but which has yet to be closed with a trade going in the opposite direction.

Parity

Parity occurs in the Forex market when two currencies are of equal value.

Parity

Parity refers to the exchange rate between the currencies of two countries making the purchasing power of both currencies substantially equal.

Pip

A pip is the smallest price move in a forex or CFD exchange rate.

Pivot Point

A forex pivot point is where a trader believes that the sentiment in the market is about to turn.

Profit

Refers to the profit and earnings from investments.

Pound

Pound, unit of avoirdupois weight, equal to 16 ounces, 7000 grains, or 0.45359237 kg.

Producer Price Index (PPI)

A producer price index is a price index that measures the average changes in prices received by domestic producers for their output.

Quote Currency

The quote currency, commonly known as "counter currency" is the second currency in both a direct and indirect currency pair and is used to value the base currency.

Resistance

Resistance refers to a level where an uptrend reverses as a sell-off happens.

Recession

A recession is a significant decline in activity across the economy lasting longer than a few months.

Revaluation

It refers to the appreciation of the national currency of the country compared to other countries' currencies.

Reserve Currency

A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves.

Risk

It expresses the possibility of decreasing or losing the capital put forward to gain profit during transactions in the market.

Sell Limit

It refers to the sales order in which foreign currency or other investment instruments are made at prices above the market price.

Short Position

The Short Position is a technique used when an investor anticipates that the value of a stock will decrease in the short term, perhaps in the next few days or weeks.

Support

Support describes a price level where a downtrend pauses due to demand for an asset increasing.

Sell Price

It refers to the selling off price of the investment instrument decided to trade in the Forex market.

Sell Signal

A sell signal is anything that alerts a trader to sell an asset.

Scalping

Scalping is a trading style that specializes in profiting off small price changes, generally after a trade is executed and becomes profitable.

Sell Stop

Sell Stop is the price level set by the trader when they wish to sell an asset in the future.

Short

To short forex means to sell high then buy low and is often used by traders to hedge currency exposure or simply to profit from forecasted analysis.

Slippage

Slippage occurs when a trade order is filled at a price that is different to the requested price.

Speculation

In the world of finance, speculation, or speculative trading, refers to the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major value.

Spike

The sudden large movement on the Forex market due to an imbalance of liquidity is called a spike.

Spot Price

The spot price is the current price in the marketplace at which a given asset—such as a security, commodity, or currency—can be bought or sold for immediate delivery.

Spot Market

The spot market is where financial instruments, such as commodities, currencies and securities, are traded for immediate delivery.

Spread

Spread is the difference between the bid (sell) price and the ask (buy) price of a currency pair.

Standard Lot

A standard lot is the equivalent of 100000 units of the base currency in a forex trade.

Stop Loss

A stop-loss is designed to limit an investor's loss on a security position.

Stop Out

It is the level at which all of a trader's positions are automatically shut because their margin has decreased to the point whereby it cannot support a continuing open position.

Swap

Swap refers to an exchange of one financial instrument for another between the parties concerned.

Swing Trading

Swing trading is a speculative trading strategy in financial markets where a tradable asset is held for one or more days in an effort to profit from price changes or 'swings'.

Take Profit Level

An instruction level to close a trade at a specific rate, if the price is going in your favour,

Take Profit

Take profit is a trading command which allows profit to be fixed to a certain amount when the price reaches a certain level.

Technical Analysis

Technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.

Tick Chart

A tick in the context of forex tick charts is the change in price of a forex pair caused by a single trade.

Trade Balance

The balance of trade, commercial balance, or net exports, is the difference between the monetary value of a nation's exports and imports over a certain time period.

Trader

A trader is an individual who engages in the buying and selling of financial assets in any financial market, either for himself or on behalf of another person or institution.

Trailing Stop

A trailing stop is a modification of a typical stop order that can be set at a defined percentage or dollar amount away from a security's current market price.

Trend

It expresses the general direction of movement of the investment instrument or index in a positive or negative sense.

Turnover

Turnover is the total money value of all executed transactions in a given time period.

Upward Trend

It refers to the steady upward trend of the prices in the market.

Volatility

Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security.

Volatility

Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security.

Volume

The total amount of transactions that traders conducted in a specific market.