Trading Terminology

Basic trading terms and concepts.

Any beginner who wants to become a trader needs to know what professional terms mean. You need to learn the basics of the market. It's best to start with simple, well-developed market terms so you can move forward with confidence and not be afraid of new, previously unknown words.

An active trader's vocabulary must be extensive.

In addition to these basic concepts of the international Forex market, many others should be studied and carefully considered by future traders to feel confident and achieve the desired results in trading!




Ask

Ask - the price in the quote at which the customer can buy the trading instrument. This offer price.

Asian trading session

Asian trading session - a time when the open Asian marketplace. This session is quite specific, trade is conducted at night or early in the morning. First of all, trading-oriented to Tokyo.

Algorithmic trading

Algorithmic trading - trading advisors, black boxes, which uses mathematical models and uses automatic development for dealing with changes in market conditions. In real time, positions are opened and closed. In this case, the trader does not accept in trade participation. The use of algorithmic trading is characteristic of various financial institutions but is also available for retail exchange players.

Arbitration

Arbitration - a kind of profit on the difference in prices. earnings method is based on the difference in prices of the two markets, the counter operations for capitalization. This is a possible sale of the tool with a high price on any stock exchange and the buy of the same instrument in a place where its cheaper cost.

Advanced trading signals

Advanced trading signals - in addition to developing a trading plan. This technical analysis figures, with which to detect the point in market conditions, the top or point of incidence.

Balance

Balance - the amount the trader funds available on the trading account. This is the amount in the account at the current time without considering the open positions.

Bid

Bid - the price in the quote at which the client can sell the trading instrument. The bid is the price the market demand.

Broker

A Broker is a company or organization that is the mediator between the buyer and the seller. The broker regulates the trade of many customers and receives income from their trading activities, as well as charges commission.

Bull market

Bull market - is an optimistic trade, which appears a massive buy of various types of trading instruments and a rise in prices occur. The rise in prices provokes all the players for the acquisition of the asset to earn that contributes to the emergence of the upward trend. Bull mood refers to the positive mood of investors - their rapidly growing confidence in the dynamics of the asset shortly. Such feelings provoke traders to buy.

Bull

A bull is a trader, speculator or investor, counting on an increase in the price of an asset, and trading when the price rises.

Bear

Bear - a trader who plays for lowering rates and quotes, expecting to profit from the sale of the asset.

Bear market

A bear market is a market of pessimism, prices are falling and large sales of trading instruments. Falling prices provoke investors to sell, thereby increasing the downward trend of the market. Reduced prices for 20% or more, which lasts more than two months is the start of a bear market. Bearish sentiment guides traders to sell. The bearish reversal occurs when a bull (rising) market begins to move entirely in the opposite direction.

Back Testing

Back Testing is the process of testing the automated trading system, advisor or trading robot based on historical data to determine its performance in the marketplace. Such testing is going on in the substituted different data - the market parameters for re-testing procedures to improve the initial data.

Base currency

Base currency - the base currency in a currency pair that which is first in the pair. Quoted is the one that is located in the second place in the currency pair. The volume of trading is expressed in units of the base currency.

Bond

A bond is a security with a fixed income. The issuer of the bond borrows the funds of the depositors and agrees to pay a certain percentage to pay off the debt, within the agreed time.

Blue share

Blue share - shares of highly liquid companies recommended for trading.

Breakthrough

A breakthrough is an increase in the price of an instrument above or below the level of resistance or support. In the case when the price breaks through the resistance level, it is transformed into new support. When it falls below the support level, it becomes resistance.

Broker Fee

Broker Fee - remuneration for trading operations with securities. Its size depends on the volume (quantity) of securities traded volume on the foreign exchange market, and the value of traded assets. The commission can be fixed and floating.

Currency

Currency - the monetary unit of the state. Is used to designate units international coding system.

Currency exchange

The currency exchange is a market for buying or selling national trading instruments and currencies, with the difference in exchange rates between them.

Cross rate

Cross rate is the ratio of two currencies, which is determined based on their rate to the dollar, as a third currency. In other words, it is a currency instrument in which there is no USD dollar, for example, GBP / JPY.

Carry trade

The carry trade - a strategy for the sale of an instrument or a currency with a low-interest rate and the purchase of the proceeds to higher-yielding currencies. That is, it is earning on the difference in interest rates of the two currencies. Leverage allows you to increase profitability depending on the tactics.

Commodities

Commodities - standardized goods that are traded in the markets. For example, oil, gold, silver, wheat and others.

CFD

CFD is a contract for difference. It is a derivative of stocks, futures, currencies and indices. Commercial contract - a business transaction between the depositor and market maker in terms of which one party to the transaction sells other difference between the initial and the final price of the tool. CFDs for metals are an interesting tool for storing and multiplying investor capital.
Of course, in such leaders contracts are precious metals. For example, the gold, which has a high level of liquidity, and is a reliable tool that provides security and protection against inflation. This is not only a reliable tool, which protects against the crisis but also a tool that lets you properly allocate risks. Therefore CFD on metals is an excellent option to save and multiply the income of the trader.

Correction

Correction - a period when the price moves in a direction that is opposite of the main trend, with a probability of the continuation of the main motion.

Candlestick chart

A candlestick chart is a method of displaying prices, or rather, its dynamics on a chart. Each candle is a time interval for which you can follow the dynamics of the instrument. It consists of a body and a shadow, a line from above and from below the body of a candle. Candles are painted in different colours, it all depends on the growth or fall of the price on the time interval.

Deposit

Deposit of funds to a trading account means the transfer of funds to a trading account from the side of the trader (client). That is a transfer from an account with a bank or other payment systems to an account of a brokerage company. Deposit funds the client makes through the personal account on the site, created after the registration process, the company selected broker.

Diversification

Diversification - the purchase of various financial assets to minimize investment risks. For example, different currencies or securities of different economic sectors.

Dealer

Dealer - Reseller producing the buy or sale transactions on its behalf. The main source of dealer profit is the difference between the speculative buying and selling prices of tools and with the help of exchange rate fluctuations.

Derivative

Derivative - this term means a financial instrument that has no value, but is determined by the value of another asset, index, etc. The derivatives market has grown significantly in recent years and is estimated by the amounts in quadrillion dollars.

Dealing

Dealing - connecting link between traders and liquidity providers. This department allows us to determine the level of liquidity, forms a market for its customers and manages the open position of the company.

Deal

Deal - a trading transaction for the buy or sale of a financial asset.

Exchange

An exchange is an organization that has legal personality and is active to create a wholesale market of securities, currency and other market assets. An exchange organizes the process of exchange trading and regulates trading with certain rules. An exchange offers brokers the necessary conditions - connection to the server, which sets the flow of price quotations.

Expiration date

Expiration date - the date of expiry of the trading instrument, it is the last day for exercising the option or futures contract.

European trading session

The European trading session is the second session of each working day. European trading area is between 8 and 16 hours in winter and 16 in summer and 7 according to GMT.

Equity

Equity - the number of funds on the trading account including open positions. That is the balance of funds on the trading account, which is shown in the deposit currency, taking into account the open trading positions. In other words, the concept of equity means the trade balance of the account at the moment, plus current income or loss on open trades.

Economic Indicators

Economic Indicators - data and reports that come out periodically for individual regions and countries. The output of important economic events contributes to increased volatility as to the news release, and immediately after they are released.

Economic Calendar

Economic Calendar - news calendar used for monitoring economic data to the output of news on a particular region. The publication dates are sorted by importance and degree of influence on the market.

Exponential Moving Average EMA

Exponential Moving Average EMA is the average line calculated by the formula for tracking the average price of an asset on a chart. EMA monitors the average price for a certain number of periods and responds well to new data. Two popular periods are 12 and 26.

Forex

Forex - a global market, the international market for the exchange of foreign currencies. Prices in the forex market are determined based on supply and demand for foreign currency instruments - these or other world currencies.

Flat

Flat - lateral price movement, that is, the lack of a stable trend.

Fixation

Fixation - the closing of the transaction to generate income or restrictions on further financial losses.

Fundamental analysis

Fundamental analysis - market analysis method that focuses on the impact of the external aspects of the tool rates (currency or asset). This technique implies that the instrument is overvalued or undervalued, so it is corrected in the direction of the true price. First of all, the fundamental analysis examines the economic factors, social and political events of the important aspects. Also more important are the macroeconomic indicators - data on unemployment, inflation, GDP.

Futures

Futures - a derivative financial instrument, an exchange contract for the purchase or sale of a basic asset. At its conclusion, the seller and the buyer, agree only on the price level and the deadline. Futures contracts allow traders to agree on the price of the instrument: the buyer opens a long position in anticipation of growth, and the seller chooses a short, in the hope of falling prices. Futures are traded on an exchange and are often used by speculators.

Free Margin

Free Margin - free funds on the trading account, which are not involved in providing margin requirements. They can be used to open new positions.

Graphic figures

Graphic figures - figures that are the pricing model, and that traders successfully used to predict future market dynamics. This is a fairly popular technical indicator to predict future price movements.

GTC

GTC (Good till cancelled) - order to the broker to open a position on the trading instrument, valid until cancelled. Valid for an unlimited period of execution or cancellation.

GAP

Gap - the gap in the price chart due to strong price movement. Typically, it occurs when the market opens.

Hedging

Hedging - Method of reducing the risks of open market transactions by using one or several tools, which have an inverse correlation.

Intraday trading

Intraday trading - is trading when the transaction for the buy and sale of a foreign currency or other asset is within one trading day. At the same time, traders do not leave positions open for the next day.

Indices

Indices - virtual portfolios, which reflect the market conditions or economic sector. Indices are the arithmetic mean of several stocks of different companies. For example, the SP500 - tracks the cost of 500 US shares of leading companies in the country. The value of the index demonstrates the dynamics of all the shares that it includes.

Indicator

Indicator (technical indicator) is a mathematically calculated parameter that converts the price and volume of a financial asset, together or separately. This tool is displayed on the chart and can predict future price changes. Forex indicator gives the player the chance to make the right trading decisions concerning market entry or exit, as well as a better understanding on the choice of position, to further generate income in the market. To date, there are many forex indicators.

Internet trading

Internet trading - trade in currency and other trading tools on the Internet.

Investments

Investments - investing funds to generate profits in the buy of company shares, in assets of enterprises or foreign exchange portfolios.

Long

A long position or Long - buying the base currency for quoted currency or other trading instruments in anticipation of rising prices.

Leverage

Leverage - the amount of money that is provided by a broker, bank or organization to ensure the output transactions in the trading platforms for trading.
For the client to be able to trade in the forex market, it must be placed on the brokerage account of a certain amount of money.
Trading in the market, being a party to the market at the expense of the loan in the principal (the broker). Thus, the total number of funds in the transaction exceeds the funds invested by the trader.
Classic level of leverage of 100 to 1. With leverage, the client gets a chance to trade a much larger volume, open positions in larger amounts and at the same time, without putting their capital at serious risk.

Liquidity

Liquidity is the multiple versatile requests for the buy and sale of an asset. This market concept reflects the level of ease of sale or buys of an asset in the market. The higher the level of liquidity, the easier it is to buy or sell a tool and, therefore, to earn. High liquidity is high market activity and a significant volume of transactions. At this time, the trader can buy or sell financial instruments at market price without the complexity.

Lot

Lot - a unit of measurement of the volume of a currency pair or other assets, that is, the standard size of the position on the trading instrument. In the currency market, 1 lot equals 100,000 units of the base currency, the commodities market is measured in barrels, ounces, bushels and tons.

Lock

Lock or lock- hedging, ie opening on one instrument two positions with different directions but with the same dimensions (volume). Thus, freeze the current profit or loss.

Low price

Low price - the lowest price for a certain period. In quotations, the minimum price of the day is indicated.

Margin

Margin - financial support margin requirements necessary to maintain open positions. Calculated for each trading instrument, given the leverage. This is money that is needed to be on the trader's account to maintain open trades.

Margin trading

Margin trading - trading with leverage, which increases the number of transactions that significantly exceed the size of the trader's deposit.

Margin call

Margin call - a signal that the margin level has fallen below a fixed value, for example, 20% of the required margin. In other words, it is a warning from the broker that the client needs to deposit to the account to further it could have guaranteed to maintain open positions or open new positions.

Market maker

Market maker - a major broker or bank, which acts as the counterparty for all transactions. He makes a profit on the spread difference between the bid and ask. He manages the market position by opening orders following the orders of the clients.

Market Order

Market Order - An order to buy or sell an asset at the current market price. It is implemented when the trader submits an order to buy or sell.

Overnight

Overnight - transfer to the next working day of the open position.

Option

An option is a financial instrument that provides the opportunity (right) to buy or sell the instrument at a fixed price and on a fixed date in the future. The option, which gives the right to buy is called a call, to sell the put.

Order

Order - an order (instruction) sent by a trader to a broker for certain purposes: buying, selling, creating and changing and cancelling orders.

Order for closing

The order for closing is an order to the broker to close the position. It is necessary to fix profits and prevent losses. The order can automatically close open positions, at a time when the price of an asset reaches a certain price. This order is aimed at takу profit and prevent financial losses, which can be a threat to an equity trader.

Order to open

Order to open - an order to the broker to open a position. Pending order automatically opens a position when the price reaches a specified price level.

Oscillator

Oscillator - technical indicator, which shows the trend and its extreme zones (trend levels) help to determine overbought and oversold conditions of an asset on the stock exchange.

Penny Stock

Penny Stock - the share price is less than $ 5 per share. Speculation is such a high-risk stock, as stocks do not have a solid reputation in the market.

Pulse

Pulse - a measure, which increases the volume of purchases or sale of the asset and the dynamics of its price. When there is a powerful impulse, then most likely it will continue to move in the same direction.

Pending order

A pending order is an order to buy or sell a trading instrument, at a time when certain conditions are met in the market and certain price levels are reached. Pending orders are of two types: limit and stop orders.

Point, Pips

A Point, Pips - the minimum change in the price of a trading instrument. For example, in the EURUSD currency pair, the pips will be the fourth digit after the comma 0.00010

Price channel

Price channel - two lines on the chart, located in parallel, and between which the price moves. The price channel is determined by a straight line that connects 3, or more, of the minimum and another line that connects 3, or more, the maximum. The lower one acts as a support, the upper line forms a resistance.

Quote

Quote - the information in the table on the current price of the asset expressed the Ask price and the Bid.

Quotes feed

Quotes feed - quotes for each trading instrument coming to the trading platform of the liquidity provider.

Range

Range - the difference between the maximum and minimum prices in the selected period.

Reversal

Reversal - a complete change in trend direction. If the trend was up, then the turn will be the beginning of a downward trend. If the trend is downward, then turn indicates the beginning of an uptrend.

Re-quote

A Re-quote is a proposal to a trader when opening a deal, another price. They arise when the broker uses pre-processing of transactions before opening and is unable to confirm the trade on a particular buy or sale price. Bowl found in volatile markets, during the release of important economic news. As a rule, requotes offer a worse price than a trader would like and is associated with an increase in the Ask price and a decrease in the Bid.

Resistance

Resistance is the price level at which sales are possible with the probability of spreading the uptrend. Similarly, support levels, successfully broken level of resistance turns into support: it is formed if investors are confident that prices will not rise.

Short

Short position - the sale of a trading instrument or base currency for quoted, in anticipation of a price reduction.

Swap

Swap - the difference in interest rates on loans of two currencies. Credited or deducted from your account when transferring an open trading position to the next day. The fee for the transfer of the trader's position on the next day.

Stop out

Stop out - forced the automatic closing of open positions of the trader in case of exceeding the limits of the maintenance margin requirements and the lack of funds to maintain open positions. The positions will be closed at the current market price.

Spot trade

Spot trade - buying and selling a trading instrument with delivery in one banking day.

Support

Support - the price level, which, as a rule, there is a buy with a possible reversal of the downtrend. If the support level breaks, it becomes resistance. This level occurs if traders are confident that prices will not go down.

Swing Trading

Swing Trading - trading method, designed for short-term operations. With it, you can earn income on short-term trends, which last for several days.

Scalping

Scalping - a rather extreme trading strategy focused on short-term price changes. The rapid opening of a large number of trading operations, during the session, allows traders to make a profit. You can trade in manual mode or use automatic trading systems.

Spread

Spread - the difference between the bid and ask.

Stop Loss

Stop Loss is a pending order to close a deal at a specified price. This type of order is used to limit losses.

Stochastic

Stochastic - a momentum indicator, which is actively used in technical analysis to track the overbought and oversold market. Calculated based on the closing price ratio to a range of highs and lows for a fixed number of periods.

Share

The share is one of the types of securities that are traded on the market. The share gives the right of ownership to own a share of the enterprise and also gives the right to receive income and parts of assets. The most popular types of shares are common and preferred.

Trendline

Trendline - draws a straight line on the price chart, connecting points on the chart at minimum price levels or maximum prices, to display support and resistance levels. This line shows the current market situation, and when the price breaks through the line, this is a warning: it is possible to change the global trend.

Tick

Tick - a single quotation of a trading instrument, a tenth of a pip.

Ticker

Ticker - unique identification number given to every opening position or pending order on the trading platform.

Trader

Trader - a member of the exchange market, performing operations for profit.

Trend

Trend - price direction, stable and directed price change in a certain direction.

Take profit

Take profit- pending order for a closing position and income when the specified trader price level.

Technical analysis

Technical analysis - graphical method of market analysis, which examines the dynamics of asset prices on the chart.
This method is based on three postulates:
- all the data about the tools already included in the price;
- the price moves in accordance with the trend: up or down;
- history tends to repeat itself, and the reaction of investors is no exception.

Trading advisor

Trading advisor (robot) - algorithmic trading systems (strategies), with which you can automate the trading process in the platform. They work in automatic mode, open and close transactions themselves, based on the program code, and input data.

Turning Point

Turning Point - a technical indicator that is actively used to predict short-term price fluctuations.

Trailing stop

Trailing stop - automatic algorithm for controlling the stop-loss order. This order is set at a distance from the market price for a few pips and automatically moves behind the price at the specified distance and step. It works on the principle that if the price changes direction, an order to close a deal with some profit.

Volatility

Volatility - the value showing the degree of variation of the exchange rate (price change range) for a fixed time interval.

Withdrawals

Withdrawals - to withdraw funds from the trading account, the trader is required to enter the Personal Cabinet and produce output procedure previously filling out a withdrawal request.
The amount requested by the client is derived from the client's trading account. Today, there is an option to withdraw money as a bank transfer, and with the help of modern electronic payment systems.
Among the most popular and possible ways to pay for the purpose of adding or withdrawing funds are used:
- debit and credit cards;
- the bank transfers;
- the third-party payment services;
- electronic payment systems;
- cryptocurrency.


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