Currency Terms and Definitions

Currency Terms and Definitions

The markets are made of crowds of people that speculate, hedge, trade, invest or gamble in the markets. Since people have memory, they remember certain price-levels where the price had difficulties to break below in the past. Cross pairs, on the other hand, include any two major currencies except the US dollar. Unlike major pairs, cross pairs have higher transaction costs and, at times of lower liquidity, traders can face slippage.

When a price heads off in one direction only to be followed very quickly by a move in the opposite direction. For example, EUR/USD may break technical resistance at a price, trade 10 or so points higher than a few minutes later have fallen 30 or more points.

forex vocabulary

The emphasis is focused on the third support and resistance levels as potential reversals. Also, the fourth support and resistance levels play a key role in accelerating markets in both upward and downward directions. The traditional way of trading forex was ‘over the counter’, meaning traders made forex transactions over the telephone or on electronic devices. This is a non-failure swing to go short.

A long black candle drives the market lower, well into the long white candle’s body and more specifically, below its mid-point -Indicating a bearish reversal. A technical Indicator developed by Patrick Mulloy in an attempt to produce less lag than the traditional moving average calculations and hence more sensitive to market changes. A technical analysis tool developed by Richard Donchian. It plots the highest high and lowest low of the last n candlesticks. It is used to measure volatility and identify support and resistance levels.

This is a non-failure swing to go long. It is subdivided into 5 khoums.

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The number of contracts multiplied by the market price of the underlying financial instrument. In time cycles analysis, the Nominality principle states that there exists a nominal set of harmonically related cycles that affect all markets. When traders have direct access to the interbank market and there is no dealing desk involved in their transactions.

Each time we place a trade in the market, we have to trade on currency pairs. Currency pairs consist of two currencies – the first one is the base currency and the second one the counter-currency. Forexpedia is the forex vocabulary original online forex glossary started by made specifically for forex traders. Understanding forex trading vocabulary is crucial to learning how to trade currencies and follow the financial markets.

An entry is when a trader decides to open a position, either by buying or selling a financial instrument. If a forex vocabulary currency pair has a certain price, say EUR/USD 1.3000, the broker will not sell the EUR/USD to you at 1.3000.

Get the latest breaking foreign exchange trade news and current updates from active traders daily. blog posts feature leading edge technical analysis charting tips, forex analysis, and currency pair trading tutorials.

It is a straight line connecting successively higher bottoms during an uptrend or successively lower tops during a downtrend. Trendlines are used to open long Bitcoin Trading positions during an uptrend and short positions during a downtrend. On the other hand, violation of the trendline is an early warning for a reversal.

Real money Traders of significant size including pension funds, asset managers, insurance companies, etc. They are viewed as indicators of major long-term market interest, as opposed to shorter-term, intra-day speculators. Realized profit/loss The amount of money you have made or lost when a position has been closed.

  • Order book A system used to show market depth of traders willing to buy and sell at prices beyond the best available.
  • A Japanese candlestick pattern signaling a bearish reversal.
  • In a downtrend, volume should be heavier as selling pressure increases.
  • It is subdivided into 100 laari.
  • Gross domestic product (GDP) Total value of a country’s output, income or expenditure produced within its physical borders.
  • Part of the MT4 Client Terminal interface.

It is subdivided into 100 centesimos. Japanese Candlestick bullish pattern. A long black candle forms in the direction of the downtrend. The next candle is a hammer that opened higher and tested lower prices levels but eventually rejected as shown by the long lower shadow.

The bid price represents how much of the quote currency the broker is willing to pay to buy the base currency from you. The ask price represents the amount of quote currency the broker is willing to accept to sell you the base currency. Exinity Limited is a member of Financial Commission, an international organization engaged in a resolution of disputes within the financial services industry in the Forex market. Exinity Limited () is regulated by the Financial Services Commission of the Republic of Mauritius with an Investment Dealer License bearing license number C .

A decisive break of the neckline signals the end of the prevailing downtrend and the beginning of an uptrend. Foreign Exchange Rate quoted for 1 unit of the foreign currency. Foreign currency represents the base currency where the domestic currency corresponds to the quote currency.

Flat or flat reading Economic data readings matching the previous period’s levels that are unchanged. Follow-through Fresh buying or selling interest after a directional break of a particular price level. The lack of follow-through usually indicates a directional move will not be sustained and may reverse. FOMC Federal Open Market Committee, the policy-setting committee of the US Federal Reserve. FOMC minutes Written record of FOMC policy-setting meetings are released three weeks following a meeting.

In equity markets, most traders are long in anticipation of rising prices. Each time you enter into a trade, you have the pay transaction costs for that trade. While most brokers don’t charge commissions and fees on placing trades nowadays, the bid/ask spread remains the main cost to Forex traders.

Cross pairs are also usually more volatile than major pairs. Examples of cross pairs include EUR/GBP, EUR/CHF and AUD/NZD. An example of a currency pair is the EUR/USD pair. When we buy the EUR/USD pair, we’re actually buying the euro and selling the US dollar.

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forex vocabulary

A technical analysis price pattern, where price action is contained within two upward sloping parallel lines. The basic line is drawn through the bottoms, whereas the return line is drawn through the tops. Step by step programming instructions on how to carry out trading orders in electronic financial markets. Discipline and emotion- free trades are the advantages of this type of trading.

forex vocabulary

Gold (gold’s relationship) It is commonly accepted that gold moves in the opposite direction of the US dollar. The long-term correlation coefficient is largely negative, but shorter-term correlations are less reliable. Gold certificate A certificate of ownership that gold investors use to purchase and sell the commodity instead of dealing with transfer and storage of the physical gold itself.

It is guaranteed even if there’s gapping in the market. Gunning/gunned Refers to traders pushing to trigger known stops or technical levels in the market. See the carry trade strategy.CCI (Commodity Channel Index)A cyclical technical indicator that is often used to detect overbought/oversold states of the market.