Forex Vocabulary


A means of exchange in the form of paper, metal or digital money. A Graphical representation of price using a candlestick, bar or line chart. 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. A pending order to buy at a predefined price higher than the market price, in anticipation that the market will continue to rise.


  • A light-volume market that produces erratic trading conditions.
  • The points serve as trailing stop loss and trailing take profit.
  • An individual who studies graphs and charts of historical data in an attempt to find trends that will help predict the direction and magnitude of a particular investment product.

A market maker is an individual or institution that buys and sells large amounts of a particular asset in order to facilitate liquidity. A company’s liabilities are the debts and obligations represented on its balance sheet. A hedge is an investment or trade designed to reduce your existing exposure to risk.

Ascending Trend Line

Dynamic activity in which traders open and close positions in a matter of hours up to a single day tops. 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 third candle is a small white body formed below the hammer’s body showing signals that the market is not willing to move lower.

current market price

The then rises steeply again to the head before more profit taking causes the the price to drop to around the same level as the shoulder. A further modest rise or level will indicate a that a further major fall is imminent. A system for global after hours electronic trading in futures and options developed by Reuters for CME and CBOT for use in conjunction with various exchanges around the world. The settlement of a futures contract by receipt or tender of a financial instrument or currency. Reflects the impact of foreign exchange changes on the future competitive position of a company.

Commodity Block Currency

In, correlation is a statistic that shows the rate at which two assets change together. Correlations between assets can be positive – when they move together – or inverse – when they move in opposite directions. Consumer Confidence is a survey conducted and released by the Conference Board and it reflects consumer attitudes and confidence.

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Micro lot refers to 1,000 units of the base currency within a pair. This is an alert that notifies you that you need to make an additional deposit in order to increase your margin to keep remaining positions active. A lot is a standardised quantity of the currency you are choosing to trade with, with one lot equalling 100,000 units of a particular currency. The amount of a set currency currently available for active trading.

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It uses the’s opening, closing, high and low prices. Just like support levels, resistance levels are also a crucial tool in a technical trader’s toolbox. While support levels are based on previous lows, resistance levels track previous highs at which the price had difficulties to break above. An order type designed to lock in profits or limit losses. A trailing stop order will close the order if the price moves in the wroing direction by a predermined precentage or amount. The trailing stop will keep the trade open as long as the price is moving in the investor’s favor.

technical analysis

He supported that a 40-month cycle was present in the stock markets. A buy signal is generated when price moves above the most recent high whereas a sell signal is in place when it moves below the last low. Near the end of an uptrend, a final gap known as exhaustion gap will appear on the price chart to alert the end of the trend and the beginning of a brief, narrow sideways movement. A breakaway gap to the downside this time, will end the sideways movement and signal a trend reversal. The price pattern, isolated by the two gaps, is known as Island Reversal.

Terms & Expressions of Forex Trading – the Language of Success

The bars are placed next to each other making up a chart – a visual representation of the asset’s price movements. Account Balance is the amount of money a trader has in their trading account. “Aussie” is a popular nickname for the Australian dollar or AUD – the Commonwealth of Australia’s official currency.

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They analyze charts or graphs depicting an asset’s historical prices to forecast the asset’s future movement. 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. When bulls buy at the ask price , their position is immediately in a loss that equals the bid/ask spread. Even though currencies are traded on the Forex market, we’re not able to buy or sell single currencies. Each time we place a trade in the market, we have to trade on currency pairs.

Fed Monetary Policy Report

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.

The broker would then quote the next best available price, seeking the trader’s confirmation to fill the order. A continuation price pattern, when prices are trading in a confined area between two parallel flat lines. Even though it is expected to break out in the direction of the prevailing trend, it is not unusual to break out in the opposite direction. If volume information is available, it may hint in the break out direction well before it happens, as price movement tends to be higher or heavier in the direction of the breakout.


In the course of an uptrend, as defined by consecutive higher tops and higher bottoms, the presence of a lower top warns for a potential reversal. A decisive break of the neckline signals the end of the prevailing uptrend and the beginning of a downtrend. If volume is available, then heavy volume should accompany the breakout below the neckline.

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