Forex and stock market terms
This section contains basic terms related to trading on the Forex currency exchange; they will help a novice trader quickly understand the essence of the work.
Forex terms characterize the main points of the foreign exchange market; there are not many of them, so before starting work it is advisable to read their description, after which the trading process will become clearer and simpler for you. Each term given is described in as much detail as possible with examples of its use in practice.
Forex trading instruments.
The main instrument used to make a profit from trading on the Forex currency exchange is
currency pairs.
They are the object of purchase or sale transactions; traders do not go into detail describing what is being bought or sold for what; usually the operation has a simpler form, for example, a purchase transaction on EURUSD with a volume of 1 lot.
Which, in normal recording, means we bought 100,000 euros for American dollars.
In the quotation, for abbreviation and ease of recording, ISO codes accepted in the global banking system are used.
Scalping on Forex (scalping).
There are a huge number of options for trading strategies on the Forex exchange, but any of the traders will tell you that the most profitable of them is scalping, which allows you to make a million out of several thousand dollars.
Scalping is a trading strategy in which maximum profitability is achieved through the use of high leverage. It is characterized by a short duration of transactions and a fairly high risk.
timeframe in forex trading (Timeframe)
Trading on the Forex currency exchange takes place using a special trader terminal, while price movements are displayed on charts of currency pairs, each of which has two lines.
The vertical one, which displays the price value, and the horizontal one, separated by time intervals (timeframes).
Timeframe – time period characterizing price movement. Designed to simplify and unify the display of data in various trading terminals.
Very often, novice traders mistakenly assume that the name of the time frame in trading characterizes the duration of the time period, but in fact it is the period of one candle.
Support level.
As a rule, the price of a currency pair moves with some regularity, sometimes going up, sometimes going down, and no matter in which direction the trend moves, there is always a conditional boundary at which the price turns in the upward direction. In trading, it is usually called a support level or line.
Support level – a line on the chart of a currency pair’s movement drawn along significant price lows in a specific time period. Characterizes the price level at which the market enters an oversold state and the price moves upward.
Technical analysis.
Attempts to trade at random very quickly end in drawdown or loss of the deposit, after which the novice trader thinks about how to predict price movements using a scientific approach. methods of technical analysis of the Forex market can help solve such a problem .
Technical analysis is a method of assessing the current market situation based on the analysis of statistical data on the history of price movements of a currency pair and the volume of transactions performed.
Trading session Forex (trading session).
It is usually said that Forex trading is carried out 24 hours a day, excluding holidays and weekends. But besides this, there is also a division into trading sessions. Opening hours, which will coincide with working hours on the main financial exchanges.
Trading session is a period of time during which the exchange platform operates and trading is conducted.
What is Forex Trading?
Lately, Forex trading has become quite a popular topic; in no other area of business can you get such a large profit in a short period of time.
Most novice traders are attracted by the opportunity to work without leaving home and the availability of training materials.
Trading forex is speculative trading on a currency exchange, through a special trading platform, to make a profit on the difference in exchange rates.
To earn money, you do not need a large amount of funds; an increase in transaction volumes occurs through the use of broker leverage.
Trailing stop.
It is not always the case that a position with an established stop loss order can be closed at a loss when the trend reverses; if you wish, you can save the profit gained by moving the stop loss to the break-even zone. Moreover, it is not necessary to do this, only in manual mode; a control script called trailing stop has been specially developed for these purposes.
Trailing stop is one of the functions of the trader’s terminal, the launch of which allows you to move a previously established stop loss order following the movement of the price of a currency pair.
Forex trend.
This term is often identified with the concept of trend; in some ways they are similar, but in others there are differences.
Forex trend - in most cases, characterizes the general mood that has developed in the foreign exchange market and takes into account a fairly long time period.
It is advisable to take this factor into account when opening medium-term and short-term transactions; this approach will help to avoid mistakes in choosing the direction of transactions, and therefore reduce the number of unprofitable orders.
There are several options for dividing trends in Forex:
Financial betting.
The variety of stock exchange speculation is simply amazing in the number of options offered, in addition to division by type of assets (currencies, stocks,
metals, commodities), there is also a division by methods of conducting transactions. Sometimes they resemble bets in a casino or bookmaker.
Financial betting refers to one of the types of such transactions; its essence lies in the fact that the trader must guess the value of an asset after a certain period of time.
For example, you claim that the price of gold in an hour will be higher than at the moment, if your forecast is confirmed, you receive a reward, if unsuccessful, you lose most of the bet.
Trend Forex
Very often in trading recommendations you can find advice to trade only with the trend. What is a Forex trend and how to use it when choosing the direction of transactions.
Trend Forex is the preferred direction of movement of the exchange rate over a certain time period (timeframe). Shows where the price of a currency pair is currently moving.
It is characterized by such indicators as strength, duration, speed and dynamics.
Futures.
Most people perceive Forex as an opportunity to trade currencies, on the one hand this is true, but on the other hand, almost all
dealing centers offer their clients a lot of equally interesting tools to choose from.
Futures are one of such instruments; it is quite difficult to predict where the exchange rate will go; the exchange rate of a currency unit is influenced by a huge number of factors, while with futures everything is much simpler.
A futures is a contract for the purchase of a certain type of asset, and this asset can be commodities known to you such as corn, oil, gas, wheat, gasoline.
Upward trend in trading, and ways to determine it
The price movement of a currency pair always has its own direction, which is the basis for choosing in favor of short or long transactions.
If over a certain period of time the rate of the base currency only increases, we can talk about the presence of an upward trend in Forex.
Upward trend is an increase in the price of a currency pair over a certain time period; it is formally believed that in such a situation, each subsequent minimum and maximum price will be higher than the previous one.
For example, first the price of the EUR/USD currency pair rose to 1.1215, then dropped to 1.1200, then rose again to 1.1220 dollars per euro.
In relation to other markets, an upward market trend implies an increase in the price of the underlying asset, for example, in the stock market this will be an increase in the price of securities.
Downward trend (downward trend on the chart of a currency pair)
There are many external and internal reasons why the exchange rate of a certain currency depreciates, and if this currency is the first in the Forex currency quote, then this phenomenon causes a downward trend.
Downward trend – characterizes the area of the market in which the base currency in the currency pair is depreciating.
If you look at the chart of a currency pair during the formation of a downward trend, the rate curve will be directed predominantly in a downward direction.
Moreover, this concept is applicable only in relation to a certain time period, since the same price movement trend may not always be observed on different time frames.
Fundamental analysis.
In Forex, there are two options for market analysis - technical and fundamental, and if the first is enlightened by a lot of books and articles, the second is usually covered much worse.
Fundamental analysis – analysis of external factors that may affect the movement of exchange rates. Typically, these are changes in the economy, social and financial system of the country that issued the currency in question, as well as external factors that can cause an increase or decrease in demand for a given monetary unit.
ForexCopy (Forex copy).
There are several options for how to make money on Forex without putting in much effort, one of which is to use the Forex copy system.
ForexCopy (Forex copy) is a system for copying transactions of professional traders, when used, the trading instrument, time and direction of the transaction are copied.
In this case, the trader can independently set the scaling of the operations carried out.
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