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Trading Glossary

Ask price The buy price. The price you pay when buying a financial instrument Aussie The nickname of the Australian Dollar (AUD) Balance The funds in your trading account, not including any open positions Base Currency The currency at which a price is quoted against. For example, the Euro is the base currency in the EURUSD currency pair. The base currency is always the first currency of the pair Basis point 0.01% Bear market A market in which prices have fallen by over 20% Bid price The sell price. The price you will receive upon selling a financial instrument. Blue-chips Shares of well-known, reputable, large companies Bollinger bands Bollinger Bands are volatility indicators used in technical analysis to measure high and low prices in relation to price action Broker The middleman who acts between buyers and sellers to facilitate trading Bull market A market in which prices have risen more than 20% Buy limit An order to buy at, or below, a specified price Buy stop An order to buy at a specified price above the market Cable Nickname of the GBPUSD currency pair. This is due to the exchange rate in the past being transmitted across the Atlantic through an (underwater) cable Candlestick chart Candlestick charts are a method of plotting price action that has been widely adopted by contemporary traders. Originated in Japan. Chart A visualization of market data Chart pattern In technical analysis, chart patterns are certain formalized shapes that traders try to identify CFD A Contract For Difference (CFD) is a way to trade the markets without actually having to buy the underlying instrument. Commission A fee charged by brokers for executing an order. Typically, the commission is calculated as a percentage of the volume of the transaction Commodities Products such as oil, natural gas, platinum, and coffee. CPI (Consumer Price Index) A monthly economic indicator that tracks the changes in the price of goods and services typically purchased by consumers Currency pair Currencies are always valued relative to one another. For example, GBPUSD. In this case the GBP is known as the base currency whereas the USD is known as the variable currency Day trader Someone who buys or sells a financial instrument within one trading day ECB The European Central Bank (ECB) is the central bank of the 19 European Union countries that have adopted the Euro ETF An Exchange-Traded Fund (ETF) is a security that tracks an index or basket of assets and can be bought or sold on a stock exchange Entry Order An Entry Order is an order to open a position when an asset’s price reaches a predefined level Exponential Moving Average (EMA) Exponential Moving Averages trace an asset’s average price over a given number of periods with more weighting given to recent prices Equity Equity is your balance plus any open profit or, if you’re making a loss, your equity is your balance plus any open loss Fibonacci retracement Is a method of technical analysis for determining support and resistance levels Floating loss The unrealised loss of an open position Floating profit The unrealised profit of an open position Forex market The Forex market (short for the foreign exchange market) is the world’s largest financial market. With 12approx. USD 5 trillion traded every day, it’s about ten times larger than the combined global stock markets and it’s open 24 hours a day five days a week Free margin Free margin is the money in your account that is not involved in any open positions and can be used to make a new trade Fundamental analysis Fundamental analysis involves looking at the ‘fundamentals’ in order to seek out profitable trades. The fundamentals include everything from a company’s financial statements through to industry news and the wider economic picture Futures Contracts that allow buyers and sellers to agree upon a price for an asset to be exchanged at a specified later date Guppy The nickname of the Japanese Yen (JPY) Hedging Hedging is a strategy that involves taking more than one position to reduce risk. For example, if you were buying EURUSD you might consider selling EURAUD at the same time Ichimoku cloud An advanced indicator from Japan for spotting price trends Index A measure of the changes in a portfolio of stocks Kiwi The nickname of the New Zealand Dollar (NZD) Leverage Leverage is when you are effectively provided with more funds in order to make larger trades – allowing you to make bigger potential profits, but also losses Liquidity If a financial instrument is liquid it means it can be bought and sold quickly and easily Long position Every time you buy an instrument you are deemed to have a long position Lot A standard unit of trading. Its value is the equivalent of EUR100,000 Loonie Loonie is the market nickname of the Canadian Dollar (CAD) MACD MACD is a popular technical indicator used to show changes in the momentum, direction and duration of an underlying asset’s price action Margin The amount required by your broker to open and hold a trade Margin call A margin call is when a broker asks a trader to deposit funds into their trading account in order to continue being able to guarantee open positions Margin level The margin that a trader has available to open further positions. Expressed as a percentage, it is the ratio of equity to used margin Market order An instruction to buy or sell a financial instrument at the current market price Micro lot A Micro lot is a hundredth of a lot, in Forex trading a micro lot represents 1,000 units of the base currency in a pair Mini lot A Mini lot is a tenth of a lot, in Forex trading a mini lot represents 10,000 units of the base currency in a pair Momentum Momentum is the rate at which a price can accelerate, either positively or negatively. Non Farm Payrolls – NFP NFP is an economic indicator released in the U.S. It tracks the changes in the number of employed people. Open position A trade that has been opened and remains in the market Option An Option is a financial instrument that gives one the right, though not the obligation, to buy or sell a given asset at a certain price on a specified date. Order An Order is an instruction from a trader to a broker to buy or sell a specified security Oscillator Indicators that plot the output of an indicator between two extreme values are called Oscillators. Oscillators are employed by traders to identify overbought and oversold conditions Parabolic SAR A technical indicator that is used in trending markets to determine potential entry and exit points and is also employed to set trailing stop-losses Pending order A Pending Order is an instruction to buy or sell a financial instrument at a specified price that has not yet been reached Period In trading a Period is a standardised unit of time used in the monitoring of an asset. Depending on the time frame, it will often refer to one, five, 15 or 30 minutes, one or four hours, one day, one week and one month respectively Pip A Pip is the smallest unit of measurement of a currency pair Pip value Pip Value relates to the value of each pip in a given trade, which is converted into a trader’s account currency Pivot point Pivot Points are technical indicators used to predict short-term movements in price action Portfolio A Portfolio is a group of different financial assets held by an investor Producer Price Index – PPI This is a leading economic indicator which tracks the changing prices of goods and services sold by producers on a monthly basis Price action Price Action is merely the term for describing how prices are moving over a given period on a chart Price channel A Price Channel is the price action that takes place between two parallel lines on a chart Rally A Rally refers to a large upward movement in prices Resistance level Resistance is the level at which the market hits a ceiling which is difficult to penetrate Retracement When price action moves in the opposite direction of the prevailing trend it is regarded as a Retracement Risk capital The amount of capital a trader is prepared to lose, either in a trade, or in a trading account Rollover A Rollover is a position that is kept open overnight without it being settled and which results in the transfer of interest (swap) between trader and broker RSI (Relative Strength Index) A very popular momentum oscillator used in technical analysis to determine whether an asset is overbought or oversold. Scalping A strategy in which traders look to profit from small changes in price by rapidly opening and closing a large number of positions. Sell limit An order to sell a financial instrument at, or above, a specified price Sell stop An order to sell an instrument at, or below, a specified price Sentiment Sentiment is the general and often intangible feeling surrounding a given financial instrument, market or economy Short position/selling This is when you sell a financial instrument Signals Signals is the term given to indications of where to buy or sell when you are trading Simple Moving Average (SMA) Simple Moving Averages represent an asset’s average price over a given period of time Spike Spikes are relatively large, though short-lived, positive or negative movements in price action. Spot rate In Forex trading the spot rate is the current rate at which a given currency pair can be bought or sold Spread The difference between the bid and offer Stochastic oscillator Is an indicator used in technical analysis to track bullish and bearish divergences, as well as oversold and overbought conditions Stock Also known as a share or equity, a Stock is a tradable security which grants the purchaser ownership of a fraction of a corporation Stop loss An order to close a position at a specified price in order to limit losses Support level Support is the level at which the market finds a floor which is difficult to penetrate through Swap The interest either paid or earned when you rollover a trade overnight Swing trading Swing Trading is a relatively short-term investment style that attempts to capitalize on short-term trends that may last for up to several days Swissy The Swissy is the market nickname for the Swiss Franc (CHF) Take profit An order to close a position at a given price in order to realize the profit Technical analysis The art of looking at charts and analyzing patterns and trends to predict future price movements. Because Technical Analysis involves a lot of looking at charts, traders who use it are often referred to as ‘chartists’ Trade balance An economic indicator that tracks the monthly changes in the difference between the value of goods and services imported and exported Trailing stop Trailing Stops are dynamic stop-loss orders that react to changes in the underlying price Trend A Trend is the prevailing direction that a certain asset or market is moving in Trend line Trend Lines are drawn beneath uptrends and above downtrends to mark their respective support and resistance levels Variable currency The currency at which a price fluctuates against. For example, USD is the variable currency in the EURUSD currency pair Volatility Volatility is a measure of how rapidly prices are changing over any given

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