Maybank forex trading platform

Glossary of forex trading terms

Forex Trading Terminology: 15 Must Know Terms,#2 Currency pair

One of approximately five times during the forex trading day when a large amount of currency must be bought or sold to fill a commercial customer’s orders. Typically these times are In trading, a trader will “take a long position” or “go long,” and in forex trading, since buying and selling currency pairs taking a long position means that the trader will buy the base High frequency trading (or HFT) is a form of advanced trading platform that processes a high numbers of trades very quickly using powerful computing technology. It can be used to either Bid – the price trader is eager to BUY a certain instrument; Ask - the price trader is eager to SELL a certain instrument; Pip – the smallest price movement in percentage; Spread – The most important terms related to Forex trading are presented in this glossary: Method of recording and outlining the financial dealings, income/earnings, and operations of an entity. ... read more

An economic indicator is a government inform which shows the performance of a specific economic field. Gross Domestic Product, Consumer Price Index, or Retail Sales are critical samples of that.

Economic indicators usually affect the price of the currency of the given country. Entry Order An entry order represents an order to sell or buy at a time when the prevailing market price meets the specified price in your order. European Session The trading hours in the old continent are from GMT to GMT and includes countries such as England, Spain, Germany, France, and Russia.

Europeans love trading euros and pounds. Exotic Pairs Exotic pairs include currency pairs that are not among the Top 10 most traded currencies. The currencies are extremely volatile and thus are a reserve for seasoned forex traders. They include Turkish lira, Czech Koruna, and Mexican peso. Exposure Whenever a trader or a company undertakes a financial transaction that is denominated in a foreign currency, the fluctuating forex rates pose a risk. This risk is termed exposure to the market.

False Breakout False breakout refers to a situation when there is a temporary movement in price below or above the resistance or critical support levels and then later retreating to the side where it started. For a breakout trader entering a trade after the price breaks, they can easily be trapped after reversal of the price leading to triggering odd stop-loss orders. Federal Reserve Federal Reserve refers to the US central bank established in to offer the nation a flexible, safer, and a stable financial and monetary system.

It is responsible for monetary policy, financial system stability, regulation of financial institutions, and bank regulation. It also provides financial services to US financial institutions, the government, and official foreign institutions. Forex Prime Time The busiest hours to trade are known as the Forex prime time. It is the time with the highest volume in trading and the smallest spreads in the market. Prime time happens as it is when most traders are connected to buy or sell currencies.

It goes from London, and New York are opened at the same time, which is from the American opening at GMT until the London close at GMT. FED FED is the Federal Reserve Bank, which is the US central bank. The FED is a group of entities comprising 12 regional central banks in various cities in the US. It promotes moderate long-term rates, high rates of employment, sustainable economic growth and preserving the purchasing power of the US dollar.

Fisher Effect The Fisher Effect is a theory of economics that delineates the relationship between inflation and two different interest rate types, nominal and real. It is attributable to Irving Fisher and has been used by economists and traders for a better understanding of economic factors.

Fundamental Analysis Fundamental analysis is a form of analysis that looks at the market through the lens of socio-economic and political factors that affect the rates of currencies. The value of currencies, like any other instrument, is determined by simple demand and supply for it. Hammer Hammer is a price pattern belonging to candlestick charting occurring when an asset trades at a lower value compared to its opening worth but manages to regain its price within the span and closes nearer to the opening value.

Hawkish It is a nickname for somebody who is optimistic regarding an economic topic such as jobs report, the economy of a country, or a favorable resolution in a discussion. Also, Hawkish is a person who believes that higher interest rates are needed to control rapid inflation or unsustainable economic growth. It is a trading strategy that an investor employs to reduce risks associated with market volatility.

An investor will take two independent positions that counterbalance each other, thus reducing the chances of losses if there are price fluctuations. Heikin Ashi Heikin-Ashi method is an easy and seamless way to read candlestick patterns. It removes all unwanted data hindrances and focuses on the reversals and core trends. High-Frequency Trading HFT HFT refers to the process of employing computer-based programs that run complex algorithms to enhance trade speed.

Regularly high-frequency trading will use arbitrage, market making, and momentum trading strategies through prediction or detection of changes in direction and depth of order flow. Indicative Quote Indicative quote is the price offered by dealers or brokers on a particular debt instrument, which is not backed by a guarantee that a trader is ready to accept the said rate for selling or buying.

Inflation Inflation refers to the increase in the general prices of goods and services in a given period in time, which reduces the buying power of money.

As the prices of goods increase, the purchasing power of every unit of the currency tends to decline. For instance, if five US dollars could buy three bars of chocolate in and now can only buy one, then it means there has been inflation. Usually, inflation results from the imbalance between the growth of the cash supply and the economic expansion rate.

Initial Margin IM The purchase price percentage in the derivatives market that a trader should cover using collateral or cash for a margin account is termed as an initial margin.

Intervention In the Forex market, an intervention is an action taken by central banks to affect the value of currencies directly. It happens when the bank enters the market and sell or buy vast amounts of the given money. It can also happen as a coordinated central bank action, and it is when several banks act at the same time. Like the move that six banks did in Leading Indicator It is a set of statistics that together are considered to anticipate future economic activity.

The most important leading indicators include: Gross Domestic Product GDP , Unemployment report, Consumer Price Index, Producer Price Index, Retail Sales, PMI reports, Consumer Confidence, and Durable Good Orders.

It enables traders to trade bigger lots by getting more cash from your broker. Leverage varies from broker to broker and flexibility. For instance, if leverage is , it means you can easily trade up to times more than your capital. Limit Orders It is a restrictive order that set the price and duration the trader want to execute. So, it guarantees the price, but not the execution as the broker should find somebody who wants to buy or sell the unit at the same price.

Experts recommend always to place limit orders to defend your positions. Liquidity Liquidity in forex denotes the trading capability of a particular currency pair when faced with a demand. It is indicative of the active state of the market and determined by the number of active traders and the total traded volume.

Long In trading, Long refers to a position a trader can take which if the market price of an asset increases, they will be able to make a profit. Long Term Trading Long term trading refers to a type of trading where a transaction is held for an extended span, while a trader assesses the various influencing factors related to a currency pair. Major Pairs Major pairs are those currency pairs comprising the USD as the base or counter currency as well as one of EUR, CHF, GBP, CAD, NZD, AUD or JPY.

For starters, major pairs are preferable because they provide low transaction costs and adequate liquidity, thus avoiding massive slippage. Margin Call It is the worse nightmare for a trader. It happens once the investor loses all the funds of his account. So, the broker should request him for additional money or collateral to maintain a position or even his account.

Also, when a position moves against the trader and it put in danger his account. Market Maker A market maker is a dealer that buys and sells a particular asset in large amounts for purposes of facilitating liquidity. It refers to a financial intermediary that is ready to buy and sell assets through continuous quoting of Ask and Bid prices that are open to traders on the trading platform.

Market Order It is buying or selling order a trader places to be executed at the current spot price. It will guarantee the execution but not the price. The trader will get into the market, but he could also have a bad surprise as the order can be filled in a negative rate for the investor. Momentum The momentum indicator is a Forex leading indicator which attempts to measure the rate of change in a pair. it can also be applied in other markets such as stocks, futures or cryptocurrencies among others.

Money Management Money management in Forex denotes the rules used by traders for increasing their trading capital through reducing the risks and improving the profits. Mechanical Trading Mechanical trading systems are part of Forex trading strategies used to generate trade signals, which a trader follows irrespective of the market events.

Discretion is not required in arriving at the trading choices. It is an economic indicator that is related to US employment. Open Order Open orders are orders that await their execution in the market due to certain unfulfilled conditions.

Order Flow Order flow refers to anticipating price movements based on the number of orders in the markets. Pip A pip is the smallest measure of a pair. It usually is represented as the fourth number in a pair. When the unit moves up to 1. To the downside, when a pair moves from 1. Pivot Point The pivot point, also called just pivots, refers to technical tools that traders use to identify the price movement and understand market sentiment. They are applied in identifying trend reversals, trading ranges as well as market sentiment.

Position A position is the quantity of currency or commodity that a trader has. This can be either short or long and can be a profitable trading style, which traders would do good to know about. Profit It is the money you actually make. Theoretically, it represents the difference between the cost price and the sale price, when the sale price is greater than the cost price. It can happen either in long or short positions.

Pullback In a trend, a pullback is a movement where the price gets a retracement before continuing in the previous direction. It happens either in bullish or dovish trends, and it shows a healthy trend. Quantitative Easing QE Quantitative easing refers to a situation whereby the central bank uses unconventional policies to stimulate the economy when conventional policies seem not to work. by issuing and buying bonds and other assets from the market. The measures increase the price of bonds while at the same time, driving down the yield.

Quote Quote currency is the secondary currency in a currency pair. It is the foreign currency in a direct quote and domestic currency in an indirect quote. Rally When you hear somebody talking about a rally, it is saying that a continuing upside movement is happening with healthy and robust conditions. It can also be an improvement in price after a period of decline, but most of the time, it represents a long and healthy run to the north. Range A range occurs when the price action moves in determined highs and lows that are capping extensions from those levels in a prolonged extension of time in the giving timeframe.

Rate It is actually the spot price that is shown in a chart or trading platform. Also, it can be the price of any currency in terms of another when you are dealing with it. Recession Recession refers to the contraction in economic activity, with the GDP rate declining in two or more sequential quarters.

If GDP continues to decline, then that is an indication of recession, which will necessitate looking at other macroeconomic indicators to support the claim.

Resistance A resistance level is a price that acts as a ceiling and tends to cap gains in a pair. It also identifies selling zones where traders are waiting for the price to open positions that would send the cross down.

It is the opposite of support. Risk One of the most critical factors in Forex. In investments, risk management is everything as it will protect your portfolio. Risk is the exposure you have to uncertain and adverse changes. However, the risk is useful in investments as it provides you with opportunities associated with volatility. Risk-to-Reward Ratio The risk-to-reward ratio is a calculation that shows traders what they are risking and what are the potential rewards of the risks taken.

Traders can use this ratio to manage their accounts and make wise trading decisions. Safe Haven Currencies Haven currencies are currencies whose risk of losing value is minimal.

The financial instruments are expected to increase or retain their value even when there is a lot of global uncertainty in the economy or geopolitics. Some of the currencies considered safe-haven include the US dollar USD , Swiss franc CHF , and Japanese Yen JPY. Short Short is the opposite of going long and it means that the trader will take a position and make profits if the asset price drops. After the price declines, you buy back an asset cheaper to repay your debt and leave some extra money in your pocket.

Short Squeeze A short squeeze occurs typically when there is a lot of demand relative to the supply of specific financial security. In forex trading, a short squeeze will occur following a sharp move resulting in a reversal. In essence, what happens is that because of excess demand, the prices increase rapidly, leaving traders in short positions trying to close their positions by buying. Slippage It is the difference between the price asked and the price obtained in a market order.

It usually happens due to changing market conditions. Slippage is reduced in limit orders, but it can occur with frequency in market orders. Spread In trading, the spread is the difference that exists between the asking and bidding price of a given currency pair. This difference is also known as bid-ask-spread. The spread refers to the transaction cost for every transaction carried out by the broker.

Stop Loss It is your lifeguard as stop losses provide you with an exit in case your strategy was wrong, and the market is going against you. Stop-loss is an order placed to sell when a determined price is reached. Being familiarized with major terms used in Forex trading will form feedback you may constantly refer back to. To prevent you from browsing dozens of websites and glossaries, we have put all the baseline Forex trading terms in a single article. The explanations are provided in the most newbies-friendly manner.

All you need is to learn everything you can and get going. Most beginners think that the financial market is nothing but a wonderland where everyone gets a chance to grab a piece of a pie. Well, that is not the way it works. Forex is a marketplace that strict financial and economic paradigms. It is a kind of science featuring its unique rules, terms, and techniques used to generate revenues. Mastering those techniques is impossible without the learning curve like in any other science.

Knowing the basic terms of Forex trading will prevent you from feeling stranded once you have entered the trading platform. It is actually the first terminology you will be introduced to when trading for the first time. The term refers to the process of trading currencies. It means that a trader buys and sells one currency about another. Example: let's say you have a certain amount of USD. You want to buy EUR with a certain amount of dollars you have.

The first one EUR refers to the currency you want to buy. It is also known as the base currency. The second one USD refers to the one you have. It is called the quote currency. When buying an asset, you will need to spend the amount of quote currency needed to cover the value of 1 base currency. The key goal is to "catch" the best possible price to buy or sell an asset.

When it comes to buying, bid refers to that ultimate price tag every trader is waiting for. When we say "the best", we mean the highest price a trader is ready to pay. Unlike the bid, Ask is the best possible price tag to sell an asset.

As a result, when we say "the ask price", we mean the lowest cost of the asset a broker is aimed to sell. The term used to describe the lowest price movement. When we use this term in reference to a particular currency pair or asset cost, we mean the 4th decimal place. That it goes up and reaches the level of 5. The spread is the difference between the bid and ask price. The higher that difference is the higher revenue a broker gets.

Now, we have learned enough to get involved in the trading process. The following terms used in Forex trading are generally used under real-life trading conditions.

You will need them to launch the process and start trading. In this particular section, we will explain Forex terminology that refers to opening and closing positions. Once a trader has entered the market with the aim of buying or selling an asset, the position has been opened. If you want to leave the market, you close the position. The key trading terms here are:. Sounds pretty easy, doesn't it? Well, the situation might get out of hand every second. Especially when considering today's market uncertainty.

Under such circumstances, the only tools that may help a beginner trader include:.

Being familiarized with major terms used in Forex trading will form feedback you may constantly refer back to. To prevent you from browsing dozens of websites and glossaries, we have put all the baseline Forex trading terms in a single article. The explanations are provided in the most newbies-friendly manner.

All you need is to learn everything you can and get going. Most beginners think that the financial market is nothing but a wonderland where everyone gets a chance to grab a piece of a pie.

Well, that is not the way it works. Forex is a marketplace that strict financial and economic paradigms. It is a kind of science featuring its unique rules, terms, and techniques used to generate revenues.

Mastering those techniques is impossible without the learning curve like in any other science. Knowing the basic terms of Forex trading will prevent you from feeling stranded once you have entered the trading platform. It is actually the first terminology you will be introduced to when trading for the first time.

The term refers to the process of trading currencies. It means that a trader buys and sells one currency about another. Example: let's say you have a certain amount of USD. You want to buy EUR with a certain amount of dollars you have. The first one EUR refers to the currency you want to buy. It is also known as the base currency. The second one USD refers to the one you have. It is called the quote currency. When buying an asset, you will need to spend the amount of quote currency needed to cover the value of 1 base currency.

The key goal is to "catch" the best possible price to buy or sell an asset. When it comes to buying, bid refers to that ultimate price tag every trader is waiting for. When we say "the best", we mean the highest price a trader is ready to pay. Unlike the bid, Ask is the best possible price tag to sell an asset. As a result, when we say "the ask price", we mean the lowest cost of the asset a broker is aimed to sell.

The term used to describe the lowest price movement. When we use this term in reference to a particular currency pair or asset cost, we mean the 4th decimal place. That it goes up and reaches the level of 5. The spread is the difference between the bid and ask price. The higher that difference is the higher revenue a broker gets. Now, we have learned enough to get involved in the trading process. The following terms used in Forex trading are generally used under real-life trading conditions.

You will need them to launch the process and start trading. In this particular section, we will explain Forex terminology that refers to opening and closing positions. Once a trader has entered the market with the aim of buying or selling an asset, the position has been opened. If you want to leave the market, you close the position. The key trading terms here are:. Sounds pretty easy, doesn't it? Well, the situation might get out of hand every second.

Especially when considering today's market uncertainty. Under such circumstances, the only tools that may help a beginner trader include:.

A trading technique lets a trader define the position that is considered as a loss. Once you have reached that position, the order is closed automatically. The tool may come in handy in case of an unpredictable price movement. The situations when it goes in the opposite direction to the trade are common. Another efficient tool to prevent beginners from huge losses right at once. It is used to set a fixed price upon your decision to take the profit instantly.

The good thing about the features is that the target price can be set in advance before you enter the market. Picking up the right trading strategy is vital. But defining your particular trading style is even more important.

It will depend on your ability to predict the price and market movement. So, you need to decide whether you are "a bull" or "a bear".

If you believe that the market is about to rise in the short or long run, you are definitely a bull. Being a "bullish" trader means expecting the rapid price increase in the nearest future. Bulls usually fight with their horns thrown upwards the tactics are associated with the market rise. If you believe that the market and price will drop down, you are a bear.

The term refers to the way wild bears fight. They traditionally move their claws downwards when trying to beat the opponent. The movement describes the potential market fall.

This is where a short-selling strategy might work out. Read more about the short selling. We have learned some basic Forex terms for beginners. At least, you won't stare like a stuck pig at new terminology.

You just keep on learning and good luck! Stay tuned to our comprehensive knowledge base. This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Baseline Terms Used in Forex Trading Most beginners think that the financial market is nothing but a wonderland where everyone gets a chance to grab a piece of a pie. Beginner Forex Trading Terms To make a good and hassle-free start, you need to learn at last the following: Currency Pair — a term used when buying and selling one currency concerning another; Bid — the price trader is eager to BUY a certain instrument; Ask - the price trader is eager to SELL a certain instrument; Pip — the smallest price movement in percentage; Spread — the difference between the Bid and Ask.

Now, let's have a closer look at all of the above-mentioned terminologies in forex trading. Currency Pair It is actually the first terminology you will be introduced to when trading for the first time. Bid The key goal is to "catch" the best possible price to buy or sell an asset.

Ask Unlike the bid, Ask is the best possible price tag to sell an asset. Pip The term used to describe the lowest price movement. Spread The spread is the difference between the bid and ask price. Important Terms in Forex Trading Process Now, we have learned enough to get involved in the trading process. The key trading terms here are: Entry — the process of engaging with the broker when selling or buying assets; Exit — the process of closing the position no matter if a trader made a profit or loss.

Under such circumstances, the only tools that may help a beginner trader include: Stop Loss A trading technique lets a trader define the position that is considered as a loss. Take Profit Another efficient tool to prevent beginners from huge losses right at once. Are you a Bull or a Bear? A Bull If you believe that the market is about to rise in the short or long run, you are definitely a bull.

A Bear If you believe that the market and price will drop down, you are a bear. Also read about: Best Forex Books for beginners; 7 Best Trading Movies; This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

Basic Forex Terms to Get Started - Trading Glossary,Sign in to Client Area

Bear Market. The opposite of a bull market, the term “bear market” is used to describe the price of an asset, currency, or security that is in decline. “Bear market” can also be shortened to simply The most important terms related to Forex trading are presented in this glossary: Method of recording and outlining the financial dealings, income/earnings, and operations of an entity. Represents a tiny measure of the change in a currency pair in the forex market and is short for point in percentage. It can be measured in terms of the quote or in terms of the underlying Swing Trading: Swing trading consists of combining technical signals and indicators in order to select promising trades that should reach an objective over a time span of a couple of days. Bid – the price trader is eager to BUY a certain instrument; Ask - the price trader is eager to SELL a certain instrument; Pip – the smallest price movement in percentage; Spread – In trading, a trader will “take a long position” or “go long,” and in forex trading, since buying and selling currency pairs taking a long position means that the trader will buy the base ... read more

Glossary of Trading Terms. At least, you won't stare like a stuck pig at new terminology. Bond A debt instrument released by a firm or government, which seeks to generate capital to fund their activities or projects by borrowing. They place their buy orders around those levels, as they believe that the price will again fail to break below. Stock Security exhibiting ownership of an individual or group in a firm.

Hedging requires the trader to make two independent investments that work to balance each other out, glossary of forex trading terms. Exposure Whenever a trader or a company undertakes a financial transaction that is denominated in a foreign currency, the fluctuating forex rates pose a risk. Ask Price Refers to the market price at which traders can buy currencies. Otherwise known as DAX An uptrend signals a bullish sentiment, i. If you place a buy limit order it becomes a bid, before any other trader sells and fills your order at this certain price. Offer Ask Price of the offer, the price you buy for.

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