Review Category : Trading Platforms

Why Would Anyone Trade Forex?

For any investor who has most of his/her assets in traditional investment venues (e. g., stocks, bonds or real estate), investing some funds in forex may be appropriate. Forex is global and its pricing actions do not closely correlate to those of any other major investment class. It doesn’t stop every afternoon; you can trade at midnight, if you want to. In forex there are no prohibitions against selling short. In fact, the fees are the same for a buy or a sell order; and, generally speaking, those fees are lower than the cost of trading in either the stock or bond markets. Many forex trading accounts offer very high leveraging abilities. It’s not that uncommon to be given the right to trade at a ratio of 200:1, if you want to go that high. Lastly, in some countries, taxes on forex profits are minimal.
Many forex traders use moving averages to help them in spotting forex trading opportunities. If you’re going to do “day trading”, using exponential moving averages may be more profitable.

The Benefits Of Trading Forex

Within the realm of potential investment venues, forex is a bit unique. First of all, it’s very global, involving over 80 currency pairs that are being traded around the clock. Second, you can trade when you want. Forex trading sessions don’t end in the afternoon. They just roll on to the next time zone. There are also no limitations on short selling and the relative cost of executing trades is very reasonable. Lastly, most accounts come with high leverage ratios. It’s common to be granted 100:1 financing and 200:1 isn’t that uncommon, either. Of course, if you don’t manage your capital well (i. e., use stop losses), you could lose everything. So, only use high leverage for short bursts of day trading.

Leverage In Trading Forex

Properly used, leveraging your trades in forex can be a boon to your bottom line. When thinking about leverage, keep the following in mind. For really short-term trading (i. e., under 1 hour), using a 100:1 (or more) leverage ratio is probably appropriate. For “swing trading” (i. e., trades that are anywhere from 1 to 48 hours long), reduce your leverage ratio down to 50:1 or lower. For “trend trading” (which hopefully doesn’t last more than a week), go even lower: 30:1, maximum. And, always use stop losses! In this fashion, the chances of your position getting barbequed by a price spike are minimal, particularly if you’re watching the global economic calendar and aren’t attempting to front-run any major news announcement.

Forex Makes Investments More Profitable

One potentially profitable way to trade the AUD/USD, on a very short-term basis, is to open up a 15-minute chart and put 2 exponential moving averages (“EMAs”) on it. Make the first EMA 8-periods long. If things are volatile, make the second EMA 32-periods long. (If things are mellow, make it only 20-periods long.) Now, add all of the following to the chart: 1) a “Linear Regression” (to see the trend clearly); 2) an “Awesome Oscillator” (to watch momentum build and dip); and, 3) a 5-period, “Fisher Transform” (which should act as an EMA crossover trading signal confirmation). Trade only when the 8-period EMA has crossed over the longer period EMA and you are entering a period of increasing momentum.

 

 

 

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How Can Foreign Exchange Rates Markets Make You Money

Becoming a successful trader of foreign exchange rates takes time, but anyone can pull it off. All you really need is determination and some spare time to do research and practise “paper trading”. The internet has almost everything you need to learn, for free. Start with reading the monetary policy section of the websites of the world’s leading banks. [Don’t forget Governor Kuroda and crew (at “boj.or.jp/en”) because they are turning the AUD/JPY into a work of forex art.] Zero in on the websites of the “big 5” (Barclays, Deutsche, Citi, UBS and HSBC) and read up on their forex forecasts and recommendations. Since they, collectively, control over 50% of this $5.3 trillion/day market, they may know what they’re talking about. Don’t forget to sign up for a “demo account” and start practising some winning strategies. It’s a lot of fun and you since you’re not using your own money, totally painless.

Be careful with your use of leverage. For a beginner, anything over a ratio of 50:1 spells trouble.

Foreign Exchange Rates Markets Change Their Value
In forex, the price of a currency pair can change if either of the 2 currencies involved have a reason to move. This could be due to a national development (e. g., a change in monetary policy by a central bank) or it could be due to local pressures (e. g., flooding of a key area, adversely impacting export commitments) or it could be due to something nebulous (like the fear of an event that is scheduled to occur the next day, leading to a “risk-off” environment throughout the entire market). Most of the time, price changes are orderly. However, there are times when a “surprise” occurs and price spikes erupt. This is why you need to have stop losses.

Foreign Exchange Rates Markets Can Be Traded On Leverage

In forex, it’s customary for a trading account to come with a degree of leverage not normally seen in other major investment markets. For instance, a leverage ratio of 100:1 (meaning that $1 in a cash deposit is control $100 of a trading position) is quite common and 200:1 (meaning that $1 in cash is controlling $200 in a trading position) is not that uncommon. Actually, you can have access to even higher leverage ratios if your bank or broker is willing to allow you access to “CFDs” (“Contract for Differences”). However, be aware that, unless you have a lot of experience trading on a margin (e. g., trading in futures), successfully trading in excess of 100:1 – consistently – is difficult.

Foreign Exchange Rates Markets Can Be Traded For Profit

It may be far better for you to just consider some form of leveraged day trading, involving the use of 2 or more moving averages. For instance, trading the AUD/USD, on a 15-minute chart that has a pair of 10- period and 20-period exponential moving averages on it plus a “Linear Regression” (to keep the trend in mind), an “Awesome Oscillator” (to make sure you know when momentum is rising/falling) and a “Fisher Transform” (to target entry/exit points) is not that hard. “Cherry pick” the trades (i. e., only trade those with strong momentum). Start with leveraging yourself 100:1. Use the 20-period moving average as a stop loss (i. e., if the price crosses over that line, get out).

 

 

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Are Foreign Exchange Rates Markets A Safe Bet?

In the investment world, there’s really no such thing as a “safe bet” and this is true of trading foreign exchange rates as much as in any other capital market. However, that’s not to say that you cannot increase your chances of success. In fact, you can. If you look at a currency pair’s monthly and weekly charts, you can see trends forming and evolving. If you examine such charts with either a “Zig Zag” indicator or “Bollinger Bands®”, you can see obvious areas where a “buy the dip” or “sell the top” trading strategy could work. Then, if you place an “Awesome Oscillator” or a “Stochastic RSI” indicator on the same chart, you can flush out momentum trends. Finally, throw a “Know Sure Thing” indicator up on the chart. Now, you should be able to see all critical trade entry and exit points.
If it’s so easy, why isn’t everyone trading forex? Well, if you were a bank, would you really invite anyone to eat your profit pie?

Why Foreign Exchange Rates Trading Is Inherently Difficult

For centuries, forex trading has been the prerogative of a bunch of primarily European banks involved in international trade and finance. As any annual report of HSBC will indicate, it’s been very profitable. For this and some other reasons, the banks involved haven’t been exactly chomping at the bit to open the gates of what they consider to be their private profit plantation. Thus, reports about forex almost don’t exist in the mainstream media and when they do, most readers don’t understand what’s happening (e. g., “How can a whale in London lose $6 billion?”). All this adds up to a state of ignorant bliss for most investors, which can be quite an impediment if you want to trade forex successfully.

The Dangers of Foreign Exchange Rates Trading

For some, the idea of conducting significant due diligence or research – before trading forex – is not appealing. Having successfully traded stocks, such investors feel that they can easily move over to forex and make just as much money (if not more, since forex accounts are more highly leveraged than normal stock or bond trading accounts). So, without even opening up a single “demo account”, they jump into trading a highly volatile currency pair, with a leverage ratio just this side of Armageddon, right before the weekend – only to discover that they’ve lost “everything” by Monday morning. Why? They didn’t use an “Average True Range” indicator to check volatility or deploy stop losses – essential ingredients of any profitable forex trade.

How To Make Foreign Exchange Rates Trading Pay

Research pays off in forex because this is a very complicated – and very global – market that represents a “zero sum game” (“winner takes all”) situation. It may not be fun, but you really should do your “homework” before risking any of your money. Study central bank monetary policy. Understand why everyone trading any AUD-related currency pair almost stops breathing right before Governor Stevens says anything in public. Get on the internet and read the forex research reports published by Barclays, HSBC, Westpac and ANZ (ANZ even has forex-related videos at “anz.com/business/investment_banking”). Read the news at “fxstreet.com”, “forexlive.com” or “efxnews.com”. Or, if you really want to get into it, visit “fxww.com” and watch a former bank dealer trade his own account.

 

 

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Inherent Flaws That FX Traders Start Out With

FX

While emotions can be the biggest strength of human beings, when it comes to FX trading, they are actually a hindrance. However, emotions are an intrinsic part of every individual. The traders that are unable to rein in their emotions in the forex market thus end up losing out in the end. This is possibly why the number of traders that drop out of the forex market is so high.

Unfortunately, most new traders do not even realise that they are emotionally reacting to movements in the FX market. The trick to counter the drawbacks of these emotions is to know what they are capable of and identifying them before they can do any damage. Consider the following.

Greed

The most potent attraction of the FX market is that it has the potential to help individuals make a lot of money in a very short amount of time. However, just because the market is capable of doing this does not mean that it will do it for everyone, irrespective of whether they merit it or not.

Therefore, when new traders enter the market, they do so expecting to become rich without meriting it. This amounts to greed and makes them desperate in every trade they make.

Dread

Dread or the fear of something bad happening in the future is a part and parcel of living. In FX trading, however, it can lead to all types of mistakes. Traders can easily find themselves making decisions that are not backed up by facts. Fear can also prevent a trader from actually taking advantage of promising situations in the market.

Pride

Pride is good in life but not when it comes to intangible entities like the FX market. Even so, many traders start seeing the market as their enemy because it does not take the direction that they want it to take.

When this happens, the trader starts focusing on trying to beat the market as opposed to just using it to make his profits. A certain sense of objectivity can be crucial here because it would allow the trader to accept that the market is only influenced by various market dynamics.

Impatience

Impatience is closely related to greed described above. While it is true that the market has the capacity to make anyone rich, it must also be kept in mind that this is only possible if the trader puts in the required amount of work to deserve it.

Typically, big profits only become possible around the second or third year of an FX trader’s stint in the market. The reason for this is that the first two years are usually spent learning the basics of FX trading and gaining experience in the real thing.

In the first year, the trader spends a considerable amount of time trying out various strategies and methods while the second year is spent on refining his knowledge base of the market. In fact, it is considered to be good if a trader can break even in the first year of his FX trading career.

 

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Standards For Choosing Australian Forex Brokers

Australian Forex Brokers

Standards For Choosing Australian Forex Brokers

The foreign exchange market does not have a central marketplace, so it is required of forex traders to trade through Australian forex brokers.  There is a wide range of forex brokers to choose from and you should take time to study, assess and compare the options available to find a broker that suits your needs.

Location of Broker

In this technological era very few people visit brick and mortar offices.  However, the location of your forex broker is of importance because of regulations and possible educational opportunities.  A broker that is situated in a country where there is little or no regulation may be a bigger risk than one that is situated in a country where there is regulatory requirements.  If you deal with a regulated broker, you have some recourse if there is a problem with your broker.  You will be able to contact the authorities, file a complaint and hope that you reach a resolution.  The location of your broker may also offer you the opportunity to attend workshops and seminars that could aid in your learning process.

Regulation

Reputable Australian forex brokers should have programmes, services and rules that will protect the integrity of this market.  They should protect you from manipulation, abusive practices and fraud.  In Australia, forex brokers should be registered with the Australian Securities and Investments Commission.  These affiliations should be visible on the broker’s website.  Do not be fooled by fancy websites as this does not guarantee that the broker is reputable.

 Year Established

The year your broker was founded may confirm its durability and professionalism.  All brokers start out as new companies, but if your broker has been around for a number of years, it has gained some credibility.  Badly managed or fraudulent brokerages will not be able to remain in business for very long.

Currency Pairs on Offer

There is a range of currency pairs available for trading, but attention is placed on a few of them only.  The ones that receive the most focus are the ones that trade with the most liquidity.  The major currency pairs normally have more predictable ranges and movements.  Brokers often offer a huge range of currency pairs, but you must ensure that they offer the pair you are most interested in.

Minimum Deposits

Standard accounts suit experienced, professional traders.  With this account, you trade in 100,000 unit lots.  A single pip movement in a pair is $10 for the EUR/USD pair.  An initial minimum deposit of $10,000 is normally applicable to a standard account, but some brokers accept less.

Trading Platform

You should ensure that the trading platform offered by your broker is pleasant to the eye, easy to use, and offers a range of fundamental and technical analysis tools.  The most important factor to check is the ease of entering and exiting trades.  Well designed software will have buy and sell buttons in plain view and some of the better ones even come with a panic button that allows you to close all your open positions immediately.  A badly designed software interface could lead to extremely costly mistakes, such as adding to a position instead of closing it, by mistake.  Other factors you have to consider are the order entry types, strategy builders, trading alerts, customisation options and automated trading options.

Finding an Australian forex broker may be a time consuming task, but you should offer up the time now rather than have problems later.

 

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Foreign Exchange Melbourne sees Gains

Foreign Exchange Melbourne

The AUD is stronger than many in foreign exchange Melbourne expected as Monday closed. This is a direct result of Chinese data in the manufacturing arena. Plenty has happened besides the AUD gain though like the Euro increase with strong PMI data and the USD potential should the Fed back up their mid 2014 quantitative easing talks. With plenty to happen Monday for all countries the market is certainly a flurry of activity, with some better than expected results and others with a few more worries on their hands.

Foreign Exchange Melbourne Rally for AUD

Australia has plenty to worry about in the future with the election over and the new government officials needing to make some serious changes. Despite the trouble on the horizon, much is positive for foreign exchange Melbourne based on Chinese data. The AUD outperformed other currencies for the start of the last full week in 2013s September month. The HSBC made a report on China manufacturing which outshined much of the PMI reports thus far. Activity for September rose up to 51.2. This was better than the expected 50.9. China is certainly strong and getting stronger. Since China trades with Australia the most due to the mining sector Australia has it has been a great relationship. Unfortunately it may not last since there are other issues on hand. The Reserve Bank of Australia is looking to cut interest rates in order to help push Australia’s economy. Yet there is still speculation on USD movements that could make the AUD/USD change from long to short. At the moment though, all news points to foreign exchange Melbourne keeping the upper hand in the AUD/USD pairing.

Europe is also showing favourable data for the world to see. The Eurozone PMI was released just hours after China’s indicating the manufacturing and service industries are growing rapidly, more so than the past 2 years. German and French PMI results show the same thing, which has helped the euro gain. Add in the ECB stimulus and the euro has nowhere to go but up according to the experts.

Foreign Exchange Melbourne Eye’s on USA

Now that Monday in New York has arrived and it is getting closer to afternoon, the Fed will have some announcements to make. The Fed policymakers are set to talk about possible quantitative easing, as well as FOMC information. Last week saw a decline in the USD after the announcement that QE would not happen until 2014. The week ended on a boost with one policymaker saying quantitative easing could happen much sooner than investors believe. Most spokespeople for the Fed believe early to mid 2014 will definitely see the tapering on stimulus.

They also feel this is the better option to cutbacks now since the economy is set on a path of recovery. Tuesday could see a change in foreign exchange Melbourne in which the USD gains a little of what it lost after Chinese data releases. Even the afternoon for Monday could swing the AUD/USD in favour of the USD depending on how investors take the Fed talks.

 

 

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THB Underperforming Regional Peers in Asia

Thailand

The Thailand Baht is expected to appreciate its value versus the US dollar in the near term. However, most forex trading systems reflect that FX data for Thailand will underperform its regional peers like the Philippine Peso and the Malaysian Ringgit due to modest economic growth, diminishing external balances and greater policy uncertainty.

Economic activity has been sluggish in Thailand caused by the local credit crunch, expiry of stimulus measures and lack of investor confidence. Barclays forex trading systems noted a gradual recovery in the nation as the Bank of Thailand maintains a loose monetary policy.

Forex Forecast

Referring to Goldman Sachs’ forex trading systems, their analysts have come to forecast the USD/THB at 33.00, 32.50 and 32.00 for 3, 6 and 12-month period forecast, respectively. EUR/THB was forecasted at 45.5, 45.4 and 44.8 in 3, 6, and 12-month forecast period, respectively. The current valuation of Goldman Sachs for the USD/THB is 36.7.

The broker’s rationale for its forecast is THB has come under some pressure, partly as a result of Thailand’s deteriorating current account balance. The forecast data was revised down as near-term pressure on the Thai currency will persist over the next few months given the prospect of Fed tapering, and until they notice confirmation of an improvement in the third quarter balance of payments print.

Growth Model

Policy makers now confront an economy in recession as growth dynamics have been performing poorly. Previously, theThai economy posted three quarters of double digit Q/Q growth after the economic highs experienced last 2012. The strong growth of 2012 was fuelled by a fast build up of household debt. The Thai central bank has reigned in credit growth this year. Another growth risk is the government’s enormous spending during the second half of 2012 which however was replaced by austerity measures. The pullback in stimulus through the first car and home buyer schemes has had a significant impact on industrial production, resulting in a heavier pull on the manufacturing and construction sectors. Lastly, Thailand’s external trade had a crisis and it also battled against supply shocks in its agriculture industry and primary sectors.

GDP growth is likely to slow significantly in 2013. Hence, Barclays economists are cutting its growth forecast to 2.5% for 2013, which puts us significantly below the central bank’s projection of 4.2%. They expected growth in private consumption, which benefitted significantly from government measures in 2012, to slow to 2.7% Y/Y and investment to post only 3.9% growth, down from 13.2% in 2012. However, their forex trading systems did not factor in the slowdown to last long and therefore forecast growth will bounce back to 5.3% in 2014.

Thailand vs. Regional Peers

The THB has weakened in line with other Emerging Markets currencies. But Thailand’s economic vulnerabilities have not ensured such a sharp correction. Economists estimated Thailand’s current account to register a deficit in 2013, albeit a small one. The tourism industry remains one of the few bright spots. Thailand’s services revenue from tourism should remain a driver with more than 25 million tourists set to visit. For other sectors, exports of petrochemicals and autos have suffered at the margin recently. But forex trading systems data crunch expect modest improvements in coming months, as global demand picks up.

Strong growth in trading partners such as Myanmar, Cambodia and Laos should ensure their demand for Thai goods remains elevated. Barclays now forecast a current account deficit of USD3.8bn or minus 1.0% of GDP in 2013 and USD2.9bn or 0.7% of GDP in 2014. On the capital account side, Thailand may benefit from larger Japanese injections in the form of FDI, but with large equity and debt outflows already seen in first half of 2013. Overall balance of payments position will remain negative in 2013.

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50-Month High FX Trading In Argentine Peso

argentina

Based from Goldman Sachs FX forecasts for the ARS, the currency reached a 50-month high of 3% M/M in August as the Central Bank increased the managed ARS drift. As a result, the broker revised its forecasts for 3, 6, and 12-month USD/ARS to 6.15, 6.53 and 7.36 from earlier estimates of 5.75, 6.00 and 6.65, respectively. This implies EUR/ARS at 8.49, 9.14 and 10.30 in 3, 6 and 12 months, respectively. Goldman Sachs’ currently valued the USD/ARS at 3.35 and the EUR/ARS at 3.99. A slight tweak on the forecast, if the higher non-government inflation estimates are used, the undervaluation of the ARS virtually disappears.

FX trading analysts noted that the Central Bank looks confident in taking advantage of the opportunity set by the macro economic backdrop to mitigate the constant real appreciation of the ARS. The ARS/USD depreciation drift accelerated to a monthly average of 2.3% in July to August which is an annualised rate of 36% Y/Y which is considerably larger than the average of 1.36% in twelve months. USD has gained 22.3% versus the ARS in the last 12 months (up from 20.1% year-to-date). Additionally, the annual drift remained below the inflation rate of 25.2% in August, regardless of the acceleration of the depreciation in the bilateral parity. The enormous premium of 57% of the implied USD/ARS from blue-chip swap transactions translate to rising FX trading pressures.

Lawsuits and Industrial Production
The Central Bank of Argentina was tagged by Judge Griessa as an “alter ego” for some purposes in relation to a suit filed against it questioning the institution’s assets. The motion to dismiss was rejected. However, Deutsche Bank FX trading analyst believes that the decision does not seem to put risk on the Central Bank reserves. It is protected by a Court of Appeals decision last July 2011. The court accepted the reserves immunity of the Central Bank relationship with the government, provided that the assets are utilised for central bank purposes.

Meanwhile, industrial production declined by 0.6% M/M but advanced 1.2% Y/Y. Industrial growth was driven by car production at 13.7%, non-metallic minerals at 7.9%, food and beverages at 1.8% and chemical and plastic inputs at 1.6%. The remaining sectors possess negative growths led by metal mechanic at minus 9.5% and tobacco at minus 3.2%. The drop in August is in-line with consensus estimate of 0.6%. The indicators denote that the weak performance means deceleration in the car industry which is the key driver so far.

Monetary Policy

The Central Bank justifies monetary policy through quantitative targets on M2 money supply. FX trading analysts believe though in practice, it is subject to budgetary decisions, including debt servicing. The 2013 monetary program is sufficiently lax, with a M2 growth target of 27% Y/Y. The Central Bank intervenes heavily in the FX market. The Bank partially mops up the excess liquidity by issuing short-term notes (Lebacs and Nobacs).

The Central Bank has a weak track record for inflation control. Monetary policy is subordinated to fiscal priorities. The Bank transferred US$21.9B in reserves to the government in 2011 to 2012 and is expected to transfer another US$8B in 2013.

Inflation

Real GDP growth accelerated to 7.1% Y/Y or +2%Q/Q in second quarter of 2013, from 3% Y/Y in first quarter of 2013. Official data to be released with real GDP growth of 4.2% in 2013, up from 1.9% in 2012. This despite high frequency indicators are not consistent with these rates. The government might continue to
under-report inflation: official figures put headline inflation at 10.5%, while non-government estimates put it at 25%.

Balance of Payments and Risks

The monetary regulator’s trade protectionist strategy has led to a significant decline in imports. The positive contribution of the trade balance will be eroded owing to a growing deficit in the energy account.

Lastly, FX trading analysts are cautious on the overall performance of the economy, and legal injunctions in the US related to the debt ‘holdouts’.

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Effective Information – Forex and Strategies

forex

The Forex market is a massive financial market that is the pulse of the world economy. It can be exciting and a little daunting to consider the possibility of trading on the market. However, with a little help, it can be easy and you can be well on your way to experiencing financial freedom and success.

The first step in this journey is to understand that information is everything when it comes to the Forex. You want to make sure that the information you have is accurate and you want to be able to use that information effectively. This means that you are going to need to be able to narrow down the information you have available to you to only the information you need.

This can be a little confusing. It may help to know that the currency market is primarily an electronic market. This means that literally everything is recorded and when the market fluctuates every five seconds approximately that can add up to a large amount of data.

Tools

Every trader on the Forex is going to need to have a set of tools. They are going to need a good software programme, a good training programme and if they are going with a broker, a good broker. These tools will help to provide you as the trader with the information you need to make effective use of all the data that you will need to sort through to be successful.

There is a purpose to all of this data handling. It helps a trader to spot something called a trend. The Forex is filled with trends. Trends are patterns. It is a similar formula. When event A happens and time B passes, then the Forex will move in this way C, for D amount of time. If the information put into the formula is right, you get a successful set of trades.

Strategies

Determining the use for this information as well as putting it into practise on the market comes in the form of a strategy. Strategies are plans which tell traders what to order and how to set the orders into the software application. It also can help brokers figure out what the best approach to a situation might be given the particulars of the client.

Every trader is going to make use of a good strategy. In some cases, they are going to make use of a predetermined strategy. This is a Forex strategy that has already proven itself. However, true success comes from creating your own strategy. Successful traders have their own way of doing things and their own way of looking at information. Creating your own strategy is essential because every trader is different. What they are looking for as a trader is different and you need to be comfortable when you are dealing with such a fast paced market like the Forex. These are just some of the things you need as a trader. Check out training programmes for basic information.

 

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FX Glossary (O To Z)

Our three part tour of FX trading terminology now concludes with the letters O through to Z.

FX Trading Glossary (O To Z)

Offer Rate – The rate at which you can buy a currency from a market maker or dealer.

OCO Order (One Cancels The Other) – A distinct type of FX order where as soon as one order position is opened, the other is automatically cancelled.

Opened Position – A trade that is currently live in the market. An open position can be neutral, or have an unrealized profit or loss. That profit or loss will only be realized when the trader closes the position.

Over The Counter – Abbreviated as OTC, Over The Counter transactions refer to those that are not executed within an exchange.

Overnight Position – Many FX traders will refuse to keep positions open beyond the existing trading session. In the event they do, this is known as an overnight position which remains open when the trader logs on the following morning.

Pip – The smallest unit of movement within the FX market.

Profit & Loss (P/L) Account – An aggregation of all FX trading activity conducted by a trader over a period that will show a net profit or loss.

Position – Refers to an open trade of any direction. Positions will either tend to be long (when FX traders wish the price to rise), or short (when they wish the price to fall).

Rally – A price surge in the opposite direction to recent activity.

Range – The price range in a session relates to the difference between the high and the low. Ranges can be specified for many different periods – days, hours, minutes or even years.

Retracement – A brief period of reversed price direction to the prevailing FX trend. Even when the price is trending keenly in one direction, FX markets never move in a straight, inclined line. Rather, the trend is broken by periods of price retracement. Technical analysis can help determine when retracements are just part of an overall and intact trend.

Reversals – A change in the direction of the price.

Resistance – A vital technical analysis concept referring to a region that price action struggles to penetrate. Resistance areas are important to FX traders because they often represent price reversal points.

Risk Control – The technique through which FX traders maximize the use of their capital by trading in positions that offer a good risk/reward return.

Slippage – The difference in the price quoted by an FX broker and the price that the transaction is actually executed at.

Stop Loss – A crucial trading technique used to minimize FX trading losses and protect equity.

Scalper – A type of short term FX trader who looks to gain small profits within highly focused time frames.

Support – Support levels are regions that price historically has not fallen below. Support price areas are extremely important as they often represent potential turning points in price (upwards).

Short – A short position is taken when a trader believes the currency pair will fall in value. When shorting, we sell the currency pair first, and then buy it back at a later date (hopefully when the price has dropped).

Technical Analysis – A form of market analysis which amalgamates various currency trading information into chart form.

Trend – The general direction of movement that price action is taking. This can be an uptrend (upwards movement) or a downtrend (downwards price movement).

Whipsaw – Choppy and uncertain price movement which jerks up in one moment or candlestick, and down the next.

 

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