The terminology section is dedicated to the most frequently asked questions. It is useful to know for understanding, all terms are deciphered in a simple and understandable language.
Buy and Sell - Buy and Sell are the main types of Forex trading orders when you enter directly "from the market".
- Buy order (buy) is an immediate instruction to the broker to buy an asset;
- Sell order (sell) - to sell.
CFD — alternative trading in the Forex market. If ordinary trading is an investment, then CFD is a contract for difference, which is an agreement to exchange the difference in the price of an asset from the time the contract was opened to its end.
The advantage of CFDs is that even without owning certain assets, you will still benefit from any market movements. The cost of such trading depends on the underlying asset. The longer the market price rises, the more your profit will increase.
Bid and Ask (Bid and Ask) — the value of the currency instrument.
- Bid - the price that the buyer is willing to spend;
- Ask - the price at which the seller is willing to sell the currency.
When purchasing a currency, the buyer and seller must come to the most suitable price for both, only then the transaction will be completed. Trading in the financial market is a negotiation.
The difference between Bid and Ask is usually very small. Thus, in order to establish a suitable price, the parties announce their Bid and Ask and trade until the transaction is completed.
Demo account — a free demo mode of a real account, ideal for beginners in the foreign exchange market. Learn and practice trading skills without fear of losing money. Make mistakes and develop new strategies.
The demo version is convenient because it does not require registration and is not limited in number.
You can create several demo accounts and use different tactics on each to see in detail their differences and advantages.
The only condition is that some dealers may close such a virtual account if it is inactive for a long period, it can be 30 days or more.
ECN account - a special dedicated network for the formation of orders for the purchase or sale of currency at market prices.
Advantages of this network:
- — the most favorable prices for assets;
- — low commissions;
- — minimum or zero spreads;
- — no requotes;
- -unlimited number of orders.
high and low (High and Low) - the maximum and minimum price indicator for a certain period of time (according to the principle of fractality).
High and Low can be of several types: an indicator during the day (week, month, year, etc.), an indicator of one bar, a period consisting of several candles.
Sell limit and Buy limit - pending orders that allow you to sell assets more expensive than the current price, and, accordingly, buy cheaper than the current prices offer.
Sell stop and Buy stop - orders to sell assets at a price below the set price, and to buy at a price above the set one.
Very often, newcomers to the financial exchange confuse stop and limit, which leads to problems and difficulties in studying the trading market.
It must be remembered that a Buy stop is a purchase more expensive than the current price level, and a sell stop is a sale cheaper.
- stop it is set in anticipation of a “breakout” that prices will continue to rise or fall;
- limit - on the "rebound".
short and long (Short and Long) — the type of positions used in the Forex market. Long – a long position, opened in case of an increase in the price of the used currency pair. A short is a short trade that opens when the price moves up for a long time.
In fact, these are slang concepts and you should not focus on them so as not to get confused.
stop loss is the function of an order limiting losses. With its help, you can avoid the unpleasant consequences of unsuccessful trading and unjustified risks.
By setting a stop loss, you will know your maximum loss of this order, and you will be able to choose the strategy that is most suitable in this situation. Stop loss works as insurance against large losses, allowing you to get only that small difference between the levels of the stop you set and its market price in case the market goes against the take profit.
To place an order, you should decide: what kind of loss are you ready to incur, and for this you should first figure out which trading strategy suits you best and the instrument in which you are going to invest.
stop out — closing by the broker of unprofitable positions that have a certain balance of funds on the account, set for the stop out level.
When starting to work on the stock exchange, check the broker's stop level. Especially if you are new to trading in the financial markets. To avoid closing positions, try not to open many orders at the same time and keep an eye on the free margin so that it is at least 300% on the balance.
Use stop loss to control trades, do not keep them open if they are obviously unprofitable. Allocate your money wisely, and don't let yourself lose more than you can afford.
take profit - an order that determines the level of profit in advance and fixes it. With its help, you can set the value of automatic closing of positions when the specified value in points is reached.
If you cannot constantly be at the computer, then such an order will be an indispensable assistant for you. After all, in your absence, the market can dramatically change positions and a transaction predicting losses will suddenly become profitable. Then take profit will fix it until the price returns to the stop loss again.
Stock — securities for trading on the stock exchange. Stocks in financial markets allow you to earn on changes in their value without actually selling or buying them.
If you think that stock prices will increase, then open a deal to purchase, if they decrease, then you need to sell them.
For trading, of course, it is worth using stocks only of popular or familiar companies, it is advisable not to consider risky securities or little-known and popular ones for training.
Look at the movement of stocks on the market, choose the ones that suit your budget (taking into account the spread and volatility).
Even though the stock market is easier to predict than the currency market, be careful and careful in your decisions. A competent approach to the choice of stocks is one of the main success factors.
Antimartingale - a trading strategy in which the volume of positions increases with their profitability and decreases with losses. To work correctly with this strategy, you need to be able to accurately determine the entry points to the Forex market.
The main conditions for a successful strategy are: to make small parts of the deposit in a position, to place them at a large distance from the entry price, to increase positions as income increases.
Arbitration - related trading operations aimed at making a profit due to the difference in position prices. One of the types of risk-free trading.
The disadvantage of such operations is that they occur in the shortest possible time and you need to be able not to miss such a moment.
The most common type of arbitrage is between exchanges on asset price differences. But do not flatter yourself, this is strictly monitored and such a gift appears very rarely, the lucky one is the one who managed to notice that, for example, on one exchange, this asset costs 30% cheaper.
The task is to buy it there and sell it here as quickly as possible. Fortunately, the exchanges themselves are trying to smooth out this difference as soon as possible.
bars — a kind of graphical display of prices for a certain period of time. Bar charts are usually used by professional traders, for example, those who trade on VSA.
The bar itself looks like this (the display can usually be switched on any chart): a vertical line and 2 horizontal ones (lower and upper shadows, as well as opening and closing).
breakeven — moving the slop-loss of open positions in the direction of the expected take profit. For example, you have a sell trade open and the price is falling, so your stop can be moved lower and if the price suddenly starts to rise, you will fix the profit that you allocated by moving the stop.
Outset - this is a situation on the chart, in which the price fluctuates in the "corridor" for a long time, without determining its exact direction of movement. Usually, during the appearance of a pronounced flat trend, traders try not to trade and wait out the uncertainty when the price leaves the flat trend, or they use flat strategies.
Bonus — additional funds created by the broker in addition to your deposit account. This is usually done only to encourage their first users.
The main advantage of bonuses is the ability to use them along with your cash together. That is, you can, following the terms of the exchange, trade a much larger amount than it was when replenishing the deposit.
Broker is a company or individual licensed to work with the foreign exchange market, providing intermediary services between a client and a bank or exchange. Your success in the financial market depends to a large extent on choosing the right broker if you decide to trade with leverage.
Be sure to pay attention to the history of the company, the speed of execution of orders. A good broker is interested in you making more transactions and getting the maximum benefit, since his salary also depends on this.
Bulls and Bears - slang term for traders. Bulls are traders who, when opening a buy position, expect prices to rise. They put on long positions, their main goal is to buy the currency at the lowest price. For further sale at, inevitably, a rising price and getting a decent profit on this.
Bears, on the other hand, operate in short positions. They are buying up a currency that is predicted to depreciate in the near future and cause the exchange rate to fall. After they return the purchased shares to investors with a commission, which also brings a good profit.
Intraday trading - one of the types of trading strategies in the Forex currency market, which is considered one of the most profitable. Represents trading during the day, without transferring transactions to the next day.
Since many traders do not like to wait a long time using long-term trading, the intraday strategy is the best option. This trading tactic can be safely recommended to beginners.
Volatility — the price range of the trading session from the minimum to the maximum. May change over different time periods.
It depends on several factors: players, the number of transactions, the state of currencies and speculation. It can be used to calculate risks and deduct the best time to buy or sell.
Volatility is a great assistant when working on the Forex exchange, the main thing is to learn how to properly understand it.
If you are a beginner, then pairs with medium volatility (all major currencies) are more suitable for you.
Waves - movement in the foreign exchange market, allowing you to determine the further direction of the price. One of the reasons for the formation of waves is the confrontation between "bulls" and "bears".
There is a method of technical analysis based on waves, in each tactic a different number of waves is distinguished, for example, in the Eliot theory there are 5 of them. builds waves only approximately. For a more accurate analysis, the waves are always drawn by hand.
Takeaway - a situation in which the stops of traders were affected, but the price continued to move in the direction you need. Unfortunately, there is no way to completely avoid a run, you can only minimize the risks by protecting stops, for example.
Grail - a system of work in the Forex currency market, which ensures constant profit and absolutely excludes losses.
It is officially believed that there are no grails at all and the existence of such a system is in question. But you also need to take into account that there are many different high-quality and profitable strategies that accelerate the deposit with the help of risk and money management.
Therefore, as a rule - each trader has his own grail and the grail - this does not mean working without stops (many beginners confuse this), the grail in general can be called the system that never fails, even in a volatile market and trading on it in In general, it always shows a confident plus, even in the presence of stops.
GEO - price gap in the Forex market (when the price jumps a large number of points at a time). Gaps usually form when the market closes on Friday and opens on Monday, but in principle it can happen on any other day.
Frequent gaps occur in stocks and cross rates, major pairs are the least affected.
Of course, the gap is not a permanent phenomenon, but it happens and some traders even manage to make money on it. Orders collected over the weekend collapse at the open of the market and create this jump.
In simple terms, the gap is the difference between the offered price and the one for which they really want to buy an asset. It is precisely because of this dissonance that such gaps arise, usually due to too much demand or supply.
Obviously, there are those who seek to close such races in order to take profits for themselves. If you understand the trading strategy on gaps, you can make good money.
Devaluation - depreciation of the currency. It cannot be avoided, therefore, one must learn to foresee it by using it to one's advantage.
In the currency market, devaluation occurs constantly. When the exchange rate depreciates, you should learn how to create profitable trades for sale. Analyze the market, monitor the economic state of the currency, be careful, and earnings will not keep you waiting.
Deposit — funds deposited into the trading account. The level of earnings depends on the size of the deposit.
What should be the initial deposit?
If you choose an initial deposit of $1,000, then this will only allow you to work with minimal volumes and accounts, a deposit of $5,000 usually brings more tangible earnings, and a deposit of $10,000 will help you earn even more, and this is the optimal level. investments for risk-free trading.
But for a beginner, the minimum amount of 1000 is suitable, since there is a high probability that the initial deposit will be lost, because beginners have no experience with the Forex exchange.
Therefore, it makes no sense to start trading high amounts at once, you need to supplement the deposit gradually - as you gain experience.
Divergence is the discrepancy between the readings of the indicators and the price chart. There are two types of divergence:
- - the price is growing, the indicator readings are decreasing;
- - the price falls, the readings increase.
There is also a hidden divergence, when the price continues to fall or continues to increase. The phenomenon of divergence is one of the constant ones, and by the way, you don’t need special experience to notice it, it can be seen on the chart with the naked eye — if there is an indicator, of course.
You also need to know that you should not take into account only divergence when opening your positions in the market, but it helps very well to track the end of a trend or current movement, for example, before a correction.
Divergence cannot be seen on a bare chart, only indicators can help with this, for example, the best and most convenient MACD option with standard settings
Diversification - represents trading in several different markets, distributing capital between them in order to reduce price risks.
There are several types of diversification: by trading systems, by trading accounts and by trading instruments. Sometimes it is more beneficial to open several small accounts than one big one. Do not deposit large amounts, this can lead to the risk of losing everything at once.
Dividend - income from shares acquired by the trader. When you buy shares, you become a co-owner of the company whose shares you own. Therefore, you are entitled to a portion of their profits. But, unfortunately, not every company offers dividend payments.
Therefore, first carefully read the terms and conditions of the company you are interested in. In addition, it is worth paying attention to the type of shares. Preferred shares give you more opportunities to receive dividends than ordinary shares. It is worth noting that payments are made within a few days and are taxed.
Dividends are received, for example, by the holders of Sberanka and Gazprom, but it’s not worth relying on them much, even though the company allocates a lot of funds for dividends, anyway, due to the large number of people, payments are very meager.
It is also worth considering that dividends are paid only once a year, so there is no particular sense in them.
Dealer - an intermediary of the Forex currency market, not related to individual entrepreneurs, opening transactions at his own expense and only with individuals. Dealers are needed to provide small deals to speculators.
Dealing center (DC) is a commercial organization that has licenses and permits to operate, which gives its clients the opportunity to engage in currency trading on the Forex exchange.
One of the main services of the dealing center is to provide access to the Forex trading platform for people with small capital. But it is impossible to acquire currency with its help for your own purposes.
Long term trading - a type of trading, the meaning of which is holding positions for a long time, sometimes even up to several years. The advantages of this strategy:
- - the presence of a large amount of free time;
- - minor investment losses;
- - more likely to make a profit.
But, when choosing a long-term trade, be prepared that it also has enough disadvantages, one of which is a very long wait.
Deposit per transaction - the amount that the brokerage office freezes in your account to secure the transaction, such an amount cannot be used for other purposes.
It is possible to calculate the margin using a simple formula: divide the amount of currency by the leverage.
It seems to some newcomers to the Forex exchange that it is difficult and incomprehensible, but, as you can see, there is nothing difficult about it. Knowing the formula, you will be able to accurately calculate the required amount of money for the initial deposit and what leverage is better to choose.
Lock - one of the specific trading tactics in the Forex market to reduce the risk of losing a deposit. It is mainly used by high-risk traders.
The castle is a pair of open positions of the same volume, but directed in opposite directions in order to get a small plus or, in extreme cases, just ZERO.
If the first position brings losses, then the second one will cover the loss of funds or help change the situation for the better.
It must not be forgotten that the key to success in using such tactics is the ability to close the lock in time.
It is necessary to calculate everything in advance when the necessary moment comes to close transactions and not make typical mistakes of newcomers to the foreign exchange market.
Also, as an overlap, they are usually not limited to just one transaction. If we consider that only risky or simply inexperienced traders use locks, then a very large number of opposite transactions are opened in the hope of not only breaking even, but at least making some money. As a rule, this is how the deposit is lost.
Indicator - if we consider the general concept, then this is a tool for indicating the mood of the current price rate and its location on the chart, and, if possible, shows an assumption of further developments.
There are several main types of indicators: indicators of market sentiment, its volume, Forex trend and oscillators.
- The volume indicator keeps track of the volume of transactions and amounts that were traded for the selected period of time;
- Trend indicators are the price direction on the chart. There is a trend up and down, as well as a flat;
- Oscillators are indicators that track the state of oversold or overbought markets.
If you are a beginner, then you should not use more than two indicators at a time, otherwise the calculation process will become very time consuming and lengthy. There are even specially created and properly configured indicator strategies.
insider - inside information. Inside Forex is the dissemination of secret information for large sums of money or simply "for your own", allowing you to make transactions in the right direction - knowing the outcome of events in advance.
Access to such information is either very expensive or not available to everyone. Insider information cannot be called illegal, as many believe.
Inflation - an increase in the price level relative to the currency. Forex inflation causes the price of a particular currency to rise against other currencies. There are two types of inflation: by pace and by cause. Inflation in the foreign exchange market leads to a decrease in stock prices of companies, which can lead to their complete fall.
cluster — a type of market analysis that includes monitoring the price bar, which shows the volume and levels.
Cluster analysis allows you to determine which market participants, sellers or buyers, have advantages in a given period of time.
Based on each formed bar held on the market, its cluster view allows a more detailed analysis of trading volumes and determines significant levels within each bar, if any.
So it is even possible to determine not only the levels, but also the possible further direction, and the most likely.
This type of analysis is usually used by professional traders, as it is very difficult to master.
Consolidation - this is a price fluctuation on the chart in a limited range. Usually, during consolidation, the number of transactions in the Forex market decreases, as traders are waiting for the price to exit the channel.
Consolidation has several types: ascending, lateral and descending.
Correction is a kind of price rollback, oppositely directed from the existing trend. The main distinguishing feature of the currency market correction is that the trend is more likely to continue.
At the moment of correction, the price can write out various graphical figures, such as: a diamond, a flag, a triangle, etc.
There are several reasons for price correction:
- — fast change of supply and demand;
- - a sharp jump from oversold or overbought;
- - the appearance of news leading to small changes.
You have to face a correction quite often, the main thing is to calmly continue working and monitor changes in your trading strategy in order to enter a trade to continue the trend when the correction is over.
You can determine the end of the correction using the Fibonacci grid.
You also need to be prepared for the fact that the correction can easily turn into a reversal and quickly pick up a trend change in order to enter from a rollback in the opposite direction, but only after mandatory confirmation, for example, from indicators.
Correlation - this is the relationship between the movements of trading assets, based on factors affecting this currency. Correlation is direct and mirror.
The straight line depicts the movement of assets in one direction, the mirror - the movement in the opposite direction from each other. You can use this relationship as one of the indicators for analyzing the state of the market.
Quotes — these are the fixed prices of the underlying asset, expressed in units of the quoted currency. There are several types of quotes: direct, reverse and cross-rate.
- A direct quote is an expression of the national currency in a foreign one, for example: GBP/USD
- Reverse quotation - expression of foreign currency in national (USD/JPY)
- A cross rate is the price of a currency, calculated on the basis of the ratio of two currencies used to thirds.
Knowledge of quotes and the ability to correctly apply it will always come in handy when working with currencies. For example: EURGBP = EURUSD / GBPUSD
Short term trading - a type of trading that allows you to quickly increase your capital. Using this strategy, you can clearly observe the result of the position. In addition, it is quite profitable.
One of the varieties of such trading is scalping.
With short-term trading, you have the opportunity to quickly understand some aspects of trading on the Forex currency market. But do not forget that this type of strategy is based on high risks and makes you constantly monitor the situation on the market.
Leverage is the amount that the broker lends to the trader for trading in large volumes, while taking your deposited amount as collateral.
It should be understood that this is not an ordinary loan, where you need to repay the borrowed amount with interest. The broker, as it were, helps you enter the market with a minimum amount by borrowing the missing, since it takes an average of at least 100,000$ to open one trade on the market, few people have that kind of money, especially beginners.
It is worth noting that using the service of leverage, you will not be in debt.
The brokerage company is aimed at making a profit, therefore, as soon as the amount of your margin approaches the amount of losses, the broker will automatically close such a transaction, and you will not go into the red.
Cryptocurrency — a kind of digital money based on cryptography. Crypto - from the word "encrypt". Fans believe that cryptocurrency is the currency of the future. But at the same time, it is “nothing”, it cannot be touched or “felt”.
The topic is very raw and risky. But experts or those who own insider information earn millions on this.
What is the original meaning of cryptocurrency?
- - Can't be faked
- - Cannot be deceived;
- - Kopeshny commissions;
- - Ultra-fast money transfers.
But at the moment (for 2019), all this is still in its infancy. Perhaps in 10 years the blog chain on which the crypto technology is based will become the basis for the entire economy as a whole, or it may go into oblivion.
Cross course - these are currency pairs that do not include US dollars, based on their exchange rate against the dollar.
There are two main types of cross-rate: yen and franc, Canadian dollar and pound sterling. It is possible to calculate the cross rate through the main exchange rates against the dollar.
The correct calculation will allow you to profit from the growing volatility. A noticeable price movement allows you not to resort to the use of indicators.
Major player - participants who bring huge amounts of money to the foreign exchange market.
These include corporations, industrial structures, pension funds. The Forex market exists thanks to the constant competition between such strong participants. They are able to manage the market and move it in the right direction.
Small traders can't influence the price, so they need to learn to adapt and not bid on things they don't understand. Study the market and choose a reliable broker that can help you get out of any situation.
Well - this is the exchange rate set in the Forex market during trading. Most often it is used by large companies when concluding transactions.
An exchange rate is created for currency pairs to express the value of one currency in terms of another. This value is influenced by many factors such as the trade deficit and trade balance.
The Forex rate is an important basis for the economy in the country and it is determined in the market through trading. To succeed on the stock exchange, you must constantly monitor its changes.
Liquidity is the demand for the asset at the current price. Liquidity is higher where it is easiest to sell or buy an asset.
There are low-liquid, illiquid and highly liquid objects.
It is important not to forget that liquidity tends to change during the day, so you need to constantly monitor its changes in order to be able to earn.
Its level also depends on the season, the number of weekends and holidays in the month. If you observe low liquidity in the currency market, then refrain from creating positions.
False breakdown - one of the frequent phenomena in the Forex market. It is a deceptive movement, where, having broken through the level, the price goes in the opposite direction.
There are many types of false breakouts, but here are the common ones: breakout of high and low levels, breakout of the high and low of the candle, bullish or bearish, breakout in the consolidation zone, as well as breakout of figures.
Trading at the time of a false breakout, you can also earn money if you reveal the intention of a major player during the time, since it is they who lead the crowd to their own feet while hiding their intentions. Here you just need to be careful.
Locating - the same as the castle. This is not even a trading technique, but simply a chance to break even. Locking implies the opening of two oppositely directed transactions with the same volume.
The advantage of this trading method is that with its help you can hedge a losing trade or, in extreme cases, reach at least zero. Also, this method allows you to stop the growing loss.
But, of course, there are also disadvantages: it is not always and even possible to say, with rare exceptions, it is worth doing even then by an experienced trader. Since confusion is possible, even if you have one trade open for one pair.
Lot - a means of measuring trading operations of the Forex currency exchange.
One lot is equal to one hundred thousand currency units.
Basically, only large companies can use whole lots in trading.
For individuals, there are several lot options: mini lot and micro lot.
Majors - These are the most popular major Forex currency pairs, they account for more than eighty percent of the entire exchange. These currencies are representatives of the world's largest economies.
There are four main majors: US dollar, euro, Japanese yen and British pound sterling. International foreign exchange transactions using a major currency account for more than 85% of all transactions in the Forex currency market.
Margin — this is the collateral paid to the broker for the acquisition of credit necessary for the conclusion of transactions. The size of the margin is determined depending on the size of the leverage.
Margin can be free, it is free funds that can be used in new transactions. Also, the increase in the broker's requirements and the locking of positions in the Forex market can influence the value of the margin.
Before starting work, carefully study the features of margin trading.
Margin call — closing of your transactions by the broker in case of refusal to deposit additional funds to continue the work of open orders and the balance approaches zero.
Try not to reach the margin call level, if you see that positions are suffering losses, close them before the balance is close to twenty or thirty percent of the initial funds deposited.
It is worth remembering that different brokers have different levels of margin calls, this should be clarified even before trading.
Market maker — a bidder belonging to the major players and influencing the price of a particular instrument. The market maker sets the price to buy and sell, getting paid for the difference between these prices. Its role is important when the market is not liquid.
Martingale - tactics used in strategies. Its essence is to double the next one after each losing trade until there is a profit. After making a profit, everything starts all over again and so the whole process goes in cycles.
A popular method of trading in the Forex market. Such a trading scheme is based on the possible and probable development of events.
Martingale includes several different types. Such trading is one of the most profitable, but there are some nuances:
- — to trade martingale you need a very large deposit;
- - absolutely everyone who trades on martingale sooner or later drains the deposit, but this is normal.
For example: 1 dep - not merged, 2 - not merged, 3 - not merged, 4 - merged. And again we start from the beginning: 1 dep - not merged, 2 dep - merged, 3 - not merged. And in this difference lies the same profit.
In general, martingale is dangerous, but profitable if the strategy itself is profitable, in which martingale is used. Usually it is used to accelerate deposits, the technique is risky, but if there is a large percentage of success, then you can try.
Metatrader 4 (mt4) is an innovative platform created for trading in the Forex market.
MT4 is installed on a computer or smartphone and various trading operations are performed in it: technical analysis, opening and maintaining transactions, etc. You can also install various experts in it: indicators, advisers and scripts to test trading strategies.
The program is absolutely free and every broker provides it on their website, you can also download it on the developer's website.
Metatrader 4 is constantly being improved and updated, and it is not for nothing that it is considered one of the best, and most importantly, universal trading terminals on the modern market.
Metatrader 5 (MT5) is a more flexible version of the MT4 program. Many people confuse and believe that MT5 is an updated version of MT4 and you need to switch to it as soon as possible, but this is not so.
MT5 is more made for analysis, there is a larger number of TFs, tools are more conveniently implemented and a number of some other interesting functions. Significantly improved stability and responsiveness compared to MT4. Restarting, opening windows, working with experts, etc. are very fast.
Therefore, choosing MT5 or MT4 is purely a matter of taste, feel free to choose the program that seems more convenient to you.
It is also worth considering that all popular indicators and advisors are written exclusively for MT4, in order for them to work on MT5, they will have to be rewritten, and this will sometimes cost a lot of money.
MT5 is needed only to solve some specific tasks, for example, for developers or for more detailed analysis.
But MetaTrader 5 also has its drawbacks. Perhaps the main one is the impossibility of simultaneously opening two opposite positions. And such a strategy is very often used by some speculators of the foreign exchange market.
Multiplier is an investor calculator with which you can manage risks and profits on PAMM accounts. This tool shows how the invested amount changes with each price change. It contains a lot of settings, you can change the level of risk and see how the profit changes.
Volume — the number of contracts involved in trading operations. It helps to determine in which direction the movement of the trades of the majority of traders in the Forex market is directed.
By volume, you can calculate the right time to enter and exit the transaction, as well as control the moment of increased volatility.
It is much easier to work in the foreign exchange market with volumes, you see what is happening and draw conclusions that allow you to correctly decide what to do with the selected assets.
However, analysis by volume is one of the most complex and requires a lot of concentration.
There are two types of volume determination: analysis of indicators and assessment of the futures market. Analysis of the exchange based on volume is one of the best options for you to make a profit.
Order — an order to a broker to buy or sell a currency. With it, you can also control losses and fix profits.
You can use an order to buy or sell assets at the current price, or to order them to be purchased later at a specified price. There are several types of orders: Buy Sell, Sell Limit Buy Limit, Sell Stop Buy Stop.
It is important to be able to use the right order at the right time.
Rollback - a constant phenomenon that occurs during a trend. The price cannot go all the time in one direction, it makes rollbacks in the opposite direction from the trend direction.
As a rule, most experienced traders do not jump on the departing train, but wait for the price to pull back in order to enter at the best price. This is the perfect trade.
Pending order — an order type that allows you to buy or sell an asset at a specified price.
There are 2 types of such orders:
- Sell Limit and Buy Limit — rebound orders;
- Buy Stop and Sell Stop - breakout orders.
Also, pending orders can be closed by setting their lifetime (usually such a function is available in trading terminals).
offshore - a company located in an offshore zone, that is, without a tax regime. The main advantages of offshore are the absence of taxes, a simple registration procedure, protection from raiders, confidentiality. There are three types of offshore zones, each of them has its own advantages and disadvantages.
Pamm account - this is an investment account, to which, in addition to the trader's deposit, it is possible to credit investors' funds, unlimited in number.
It works like this: the trader has a good strategy, but there is not much money to deposit. He opens a pamm account and attracts investors. He makes good money himself and makes money for others.
In case of profit, it is divided between the owner of the PAMM account and investors in accordance with their investments and the coefficient set by the trader. Usually it's 50/50.
But % varies and usually the larger the amount invested, the more the investor receives and the less the trader receives - this is how traders encourage investors to invest more amounts.
Patterns — graphical models formed on the price chart. They help to analyze the market and its movement.
There are several types of patterns: reversal, "head and shoulders", "inverted head and shoulders", "double top", "double bottom", "brilliant".
Patterns: continuations, "flag", "pennant", "triangle".
Overbought - such a moment is formed during a strong uptrend, when the price is literally "pressed" upwards. At such moments, they also say that the price is “overheated”, which means it is overbought and a reversal or at least a rollback should be expected.
Oversold is the opposite of overbought. When the price is pressed down for a long time, they say that the market is strongly oversold and it would be time to at least rollback. Oversold is detected in the same way as overbought, but vice versa.
Pipsovka is a slang term for scalping. A trading tactic in which transactions last a few minutes and bring little income. This, of its kind, is a very fast opening and closing of trading positions.
But, oddly enough, this is a rather complicated trading method, you need to catch minor changes in currency quotes in order to make a profit. And not all brokers allow pipsing, few people are interested in it.
Pipsing is now popular in cryptocurrency trading, where special robots track pumping coins and make small transactions during this pump.
pyramiding is the correlation of strategies with each other to reduce risks. The basic principle of the pyramiding tactic is hope, since most people using this method do not bet at all. stop loss.
Pyramiding can also be called trading with a grid of orders, this option is good without leverage, for example, on cryptocurrency. When you buy a certain number of coins on every possible day and sell everything at the time of the dump.
Support - an emerging area on the chart, which is formed after the second touch of the price. As soon as the price has touched a certain area more than once and bounced off, it means that there is an important level in this place that the price cannot break through.
Thus, this level becomes a "support" for the price. Every time the price approaches this level, it tends to bounce from it again and again.
Why is there a rebound? The simple principle of the “crowd” operates here, not only you, but also thousands of other traders look at the chart, and they all also think that the price will bounce and place limit orders in the hope of making money.
But it should also be taken into account that the more often the price approaches the level, the weaker it becomes. The older the time frame, the stronger the support level and vice versa.
Briefcase - this is a kind of way to distribute your investments by collecting various best strategies and trading tactics, as well as the trading instruments themselves, assets. All this is called an investment portfolio.
Breakdown - this is a sharp overcoming of the price of important levels set by traders. There are two types of breakdown: false and true. The true one is just a real breakdown of the level.
slippage - this is the difference at the time of opening a transaction between the desired (set) and the actual one. It looks like this: you bet pending order or enter from the market, and the broker may open a deal at a completely different price.
Slippage depends on many factors, one of the main ones is market volatility.
Conditions for slippage to occur:
- — setting positions at market prices;
- — when closing a position with a pending order;
- — entry into a position using a pending order.
Unfortunately, slippage often causes losses, to reduce them, study the trading conditions, choose the right broker specializing in short-term trading, try not to open positions during high market volatility.
Paragraph (Pip) - the minimum segment of the movement of any asset on the Forex exchange. This concept is necessary for calculating profit or loss. This was done more for convenience, because on the charts the price movement in any direction (up or down) is measured exactly in points.
The word "PIPS" is more of a business term that traders like to use.
To calculate the point size, no special formula is needed, just click on the chart and hold down the left mouse button and drag in the desired direction, you will count n ~ number of points, the figure is displayed in real time.
The only thing to consider is that on all pairs (regardless of the number of symbols in the price) - not all are accepted for 1 pip. This can be clarified with the broker itself, with those support.
reversal – global trend reversal. It is a common occurrence that beginners usually cannot immediately distinguish between a normal correction and a trend reversal. You need to learn to understand the market and respond to a change in trend in time.
Requotes - a trading nuance that occurs at the time of trading with certain brokers, where the user cannot fix a certain price in order to open or close a transaction. Before opening a trade with real money, check with your broker for the availability of a requote.
Of course, you can avoid it by using limit orders in your work. Then requotes will not be able to prevent you from closing the deal at the right price.
There are companies that offer special types of accounts for managing orders at market prices, then no price changes threaten you.
Rollover - this is a type of operations with accounts, which includes the movement of an open position to another day.
There are two types of rollovers: open and closed..
Also, rollovers include: the results of past trades, applications for depositing and withdrawing funds, contain the latest news from brokers' websites.
These transactions consist of two parts: unrealized losses and gains; swap points.
Submit an order to withdraw your profits in time, otherwise you will be able to withdraw it only after the next rollover.
Free Margin – part of the funds on the deposit, which is not used at the moment, is suitable for opening new positions. Calculating the free margin is quite simple, just subtract the normal margin from the deposit amount. Also, in any trading terminal, all information on the account is always displayed.
Swap - a kind of operation that includes the movement of open positions through the night.
There are positive and negative swaps. Positive is the accrual of commission, negative is its write-off.
If there is no swap in the transaction, then it will be compensated by an additional commission. The formation of a swap depends on changes in the exchange rate. But each broker determines its own meaning of this operation, since it is an integral part of each transaction.
scalping - a type of trading in which a trader makes a small profit in a very short period of time.
The advantages of this strategy:
- - high opportunity to earn income;
- - gaining trading experience;
- — earnings with low volatility;
But there is also a drawback:
- - Very high risk.
Smart contract - a special program aimed at monitoring the fulfillment of all conditions of the contract. They are a digital code that allows you to directly exchange various types of assets, purchase goods and services.
A smart contract includes several types of objects: the parties to the contract, the object of the contract and its conditions.
There are three types of such programs:
- - automated;
- - automated, with a paper copy;
- - made on paper, with automated elements.
Demolition of stops - a type of manipulation in the Forex currency market, where the stops of ordinary speculators are knocked out in order to take money from them. This manipulation is done by large companies to get a large amount of profit, forcing the exchange to move further by triggering unprotected stop orders.
Advisor - an automated assistant (robots) in working on the Forex currency market.
Expert Advisors differ in several parameters: the level of automation and the principle of trading. Each parameter is divided into subspecies.
Automation level includes: automated type of advisors, semi-automatic and scripts.
The principle of trading is divided into: trend trading, multi-currency trading, Martingale trading and pipsers.
Some types of advisors are available for free.
Resistance – a level on the chart that is difficult for the price to overcome the first time.
Crossing this level is possible only if breakdown. Always pay attention to the resistance line and learn to identify them, this will help you accurately determine the state of the Forex market at the moment.
Spread - represents the difference between the price of buying a currency and selling it.
The size of the spread is determined by the liquidity of the market, the situation on the exchange and separately by each broker, but, as a rule, it does not have a large value.
There are several types of spread: floating and fixed.
Floating usually starts from 0, fixed has a clearly set value, although at times of high volatility the broker often likes to widen the spread, this must be remembered. It is also worth remembering that a transaction in which the exchange rate exceeds the spread is considered profitable.
Supply and demand - The Forex currency market, like any other market, is subject to a system of supply and demand. Trade is impossible if there is no demand (buyers) and supply (sellers).
In general, this is a specific concept, since there is its analysis method with the definition of supply and demand zones on the chart. Trading in these zones is not difficult, but you need to be able to correctly identify these zones.
To determine whether we find a sharp jump up or down on the price chart, this is the beginning of the zones. The correct definition will allow you to correctly conduct your strategies and make a profit in the currency market.
Medium term trading - a trading strategy that allows you to make a profit in a short period of time, when a transaction lasts up to several days.
Features of this strategy:
- - a short duration of time;
- - significant profit;
- -opening a trade on the trend.
Advantages of medium-term trading:
- - getting a good profit;
- - does not take much time;
- - ideal for beginners (golden mean between short-term and long-term).
Cup is a tool that displays information about the best prices on the market, volumes and active orders. There is a trading glass of prices in almost every terminal, for example, in MT4 and MT5.
The glass implies two types of operations: market operations and trade requests. Using this tool, you can detect an unexpected trend reversal and exit the trade in time.
But keep in mind that this is a very specific tool and not everyone is able to understand how to navigate it.
Timeframe (TF) is a way to measure time on price charts. Basically, only integer periods are used: 1 minute, 5, 15, 30, 1 hour, 4, 1 day, week and month.
The rest can already be found only in more professional trading terminals, but they do not make much sense. For successful trading, it is generally enough to use 3-4 TFs.
Technical analysis - a type of analysis of the Forex market using only a price chart, which includes the study of price changes, determining their direction using technical tools, such as:
- fibonacci
- Channels
- lines
- indicators, etc.
The main motto of technical analysis:
- all factors that can affect the price are already included in it;
- price movement depends on trends;
- the rules go around in circles.
Tasks of technical analysis:
- determining the state of the market;
- studying the direction of the asset;
- determining the best entry point.
Teak – a one-time change in the price of an asset by a market maker. There are several types of tick: zero, ascending and descending. There are special tick indicators that can show price changes within a bar and tick speed.
What is the difference between Tick and TF? Time difference. The minimum TF is considered to be 1 minute or 60 seconds, tick - short-term fluctuations of the asset, approximately once every 1 second.
Crowd - the bulk of traders (small speculators), which conducts unsystematic trading, not owning the situation, opening and closing transactions based on a false understanding of the market movement.
trading pair - this is essentially 1 asset, consisting of a base and quoted. This was done just for the forex market, so that you can speculate not only on an increase, but also on an increase in prices. When closing a position (fixing a profit or loss), they change places.
There are certain indicators of currency pairs:
- time indicator of activity;
- lot price;
- price movement;
- volatility.
All pairs are divided into: main (major) and cross-rates (exotic), there are also metals, goods and crypto assets paired with the most popular currencies, such as the US dollar or the Russian ruble.
Trading session - the period of activity of one or more exchanges, usually several exchanges are traded at once during one session.
There are 4 main trading sessions: Pacific, Asian, European and American.
Working with each of the sessions is individual, as they have their own characteristics and advantages. Some assets are most active only at certain times, and some can be traded around the clock.
Trading signals is a service offered by signal providers to be notified of the right time to enter the Forex market.
Signal types:
- manual entry signals;
- signals of automatic position openings.
To use the services of trading signals, subscribe to the signal providers. Pay attention to reviews and choose reliable suppliers, because your profit depends on it.
Point of entry - the accepted place on the price chart for the conclusion of the transaction.
Trader - a modern profession, which is a participant in the foreign exchange market who profits from trading.
Traders are divided into groups:
- using special indicators;
- influencing market behavior;
- using their own method of analysis;
- based on their intuition;
- Forex advisors.
Also, among them, groups can be distinguished based on psychological characteristics: sprinters and marathon runners.
Traders can be either an individual or part of a brokerage company.
trailing stop - floating stop loss, whose task is to catch up with the price (when it moves towards the expected Take Profit) with a predetermined step in paragraphs. Trailing stop is used as a limiter for price changes in a losing direction. That is, if the price falls below the level you set, then this instrument will close the order.
trend - the direction of price movement during a certain period of time. Can be raised, lowered and move sideways.
Levels - the main decisive price zones on the chart. If the price cannot break through some price barrier more than once when moving up, it becomes resistance, if when moving down - support.
There is also the concept of "Pivot Points", this is translated as the Growth Point, they are calculated on the basis of special indicators. Approaching such points, the price bounces up.
As a rule, the main levels are always built on the highest TF. The older the TF, the stronger the level. The price never breaks through strong levels at once.
Averaging - this is an opportunity to open a new deal, with a loss-making first one. Such an attempt can significantly reduce losses.
But trading with averaging has its big drawbacks: there are very high risks of losing a deposit, since averaging, as practice shows, does not end with just one closed deal, traders throw in a grid of counter orders to recoup, which leads to a drain on the deposit.
fibonacci is a popular technical instrument of the Forex market based on a numerical sequence. Many strategies are based on this level. Fibonacci numbers predict the value of the price after the correction. They are often used to determine the end of a correction or the start of a reversal.
There are several types of Fibo tools:
- Fibonacci grid (the most popular);
- Time zones;
- Extension;
- Fan;
- Arcs.
Figure - This is a graphical display of movements built by the price in a certain sequence. Figures are constantly formed on the charts and it is not difficult to determine them even with the naked eye. They are used to determine the direction of the trend and the magnitude of the movement.
There are two types of patterns: trend continuation and reversal patterns. Skills in the ability to identify figures on the chart will help determine the further price movement and make a profit on successful transactions.
Flat - he is outset, the state of the market when the price moves in a certain price channel.
fractal - minimums and maximums for a certain period of time. The most popular indicator for determining fractals: Zig-Zag (it is included by default in MT4 and MT5 programs)
Fundamental analysis – analysis of the economic state of the market that affects the exchange rate. It makes it possible to determine in which direction the trade will move in order to make a profit.
Hedging - a broader concept of overlapping loss-making transactions through transactions with other assets and, as a result, the investor goes to at least zero or a small plus.
hedge fund is an investment company that is not regulated by regulatory enactments and makes a profit by managing the assets of clients invested in it. But such companies have enough disadvantages. For example, a hedge fund very often receives low returns and is rather an unjustified investment of money.
Securities - the type of commodity most suitable for trading in the stock market than in the Forex market.
Thorn - an illogically substantiated phenomenon on the price chart in the form of candles with small bodies and very large shadows. Beginners are advised to avoid entering trades if spikes are observed - sharp price jumps up / down.
Equity - this is the amount in your account at a given time, the balance from the original deposit.
Equity is calculated using a special formula: balance + floating profit - floating loss.
This indicator is very convenient for account control. You can notice the movement to a loss in time and prevent serious losses of funds.
Japanese candles - an indicator that looks like a candlestick and displays changes on the chart. Used in technical market analysis. It expresses a combination of a linear and interval chart. These indicators put emphasis on the closing price of the trading session. They have a large number of combinations and interpretations.
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