Forex Glossary
Essential Terms for Navigating the Forex Market: Your Comprehensive Guide to Key Concepts and Definitions
Ask Price: The price at which a trader can buy an asset.
Asset: Any financial instrument or property that can be traded.
Bid Price: The price at which a trader can sell an asset.
Bull Market: A market condition where prices are rising.
CFD (Contract for Difference): A financial contract that pays the differences in the settlement price between the opening and closing trades.
Commission: A fee charged by a broker for executing a trade.
Derivative: A financial instrument whose value is derived from another asset.
Diversification: The practice of spreading investments across various assets to reduce risk.
Equity: The value of an investment after deducting any liabilities.
Expert Advisor (EA): An automated trading system on platforms like MetaTrader.
Forex (Foreign Exchange): The global market for trading currencies.
Fundamental Analysis: Analysing economic, financial, and other qualitative and quantitative factors.
Gap: A price level on a chart where no trading occurred, usually due to market volatility.
Green Candle: A candlestick indicating that the closing price is higher than the opening price.
Hedging: A strategy to offset potential losses in one asset by investing in another.
High: The highest price reached during a specific period.
Inflation: The rate at which the general level of prices for goods and services rises.
Interest Rate: The amount charged by lenders to borrowers for the use of money.
JPY (Japanese Yen): The official currency of Japan and a major currency in forex trading.
Just-In-Time: An inventory strategy that aligns production and demand.
Kijun-sen: A line used in Ichimoku analysis, representing the average price over a specific period.
Keltner Channel: A volatility-based envelope set above and below an exponential moving average.
Leverage: Using borrowed funds to increase the potential return on an investment.
Liquidity: The ease with which an asset can be converted into cash without affecting its market price.
Margin: The collateral required to open and maintain a leveraged position.
Market Order: An order to buy or sell an asset at the current market price.
Net Profit: The total profit after all expenses, taxes, and costs have been deducted.
NFP (Non-Farm Payroll): A monthly report on U.S. employment, excluding farm workers, government employees, and a few others.
Open Position: A trade that has been executed but not yet closed.
Order Types: Different ways to execute trades, such as market orders, limit orders, and stop-loss orders.
Pips: The smallest price movement in a currency pair, typically the fourth decimal place.
Portfolio: A collection of financial investments held by an individual or institution.
Quote: The current price of an asset, expressed in terms of another currency.
Quoting Convention: The standard method of expressing a currency pair.
Risk Management: Strategies to minimise financial losses in trading.
Rollover: The process of extending the settlement date of an open position.
Spread: The difference between the bid and ask price of an asset.
Stop-Loss Order: An order placed to sell an asset when it reaches a certain price to limit losses.
Technical Analysis: Analysing price movements and market trends using charts and indicators.
Trading Platform: Software used to trade financial markets.
Uptrend: A market condition characterised by rising prices.
USD (United States Dollar): The official currency of the United States and the world’s primary reserve currency.
Volatility: The measure of price fluctuations in a financial market.
Volume: The total number of shares or contracts traded for a specified period.
Withdrawals: The process of taking funds out of a trading account.
Wedge Pattern: A technical analysis pattern indicating potential reversal or continuation.
XAU/USD: The trading pair representing gold against the U.S. dollar.
XRP: A cryptocurrency used for digital payments, associated with the Ripple network.
Yen: The currency of Japan, often traded in forex markets.
Yield: The income generated from an investment, typically expressed as a percentage.
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