Commons Forex Trading Terms for Beginners: Guidance (2022)

Commons Forex Trading Terms

Equity :

The safe part of the client’s account, taking into account open positions, which is tied to the balance and floating value (gain/loss) with the following formula: Balance (balance) + Floating rate (floating rate) + Swap (exchange), i.e. funds available in the client’s account is deducted from the amount required for open positions, plus the income for the current open positions.

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Free margin (free margin) :

Funds, which are not used for the security of open positions. It is calculated by the following formula: Free Margin = Equity – Margin.

 

Margin (Limit) :

The mandatory equity that investors must deposit in order to guarantee a position is equal to 1% (when leverage – 1:100) of deposited open positions.

 

Margin level (margin level) :

Determines the condition of an account. It is calculated by the following formula:(Equity/Margin )* 100%.

 

Base currency (base currency) :
The unit of currency in which an account, balance, commission fees and payments are addressed and calculated.

 

Balance (balance) :

Total financial results from perfectly completed transactions and deposits/withdrawals to/from accounts.

 

Broker :

Firms that provide crediting services and trader support.

 

bulls :

Traders who depend on currency exchange rate escalation.

 

bull market :

A market that tends towards an ever-increasing exchange rate.

 

Currency pairs (currency pairs) :

The two currencies that make up the exchange rate of foreign currencies. For example, EUR/USD.

 

Rising trend :

Each time the highest value curve appears, compared to the previous exchange rate. The lowest point of the curve is connected by a straight line – the trend line.

 

Intraday trade :

Trading that is geared towards making a profit within a single day.

 

Dealing :

Cashless currency trading.

 

Dealing center :

Companies that provide access to financial markets.

 

Account history (account history) :

Complete list of transactions and non-trading activities.

 

Client :

Physical and legal parties who carry out activities with the company.

 

Client terminal (Client terminal) :

The MetaTrader 4.xx software product allows clients to get information about trading financial markets in real time (the quantity is determined by the company), perform technical analysis of the market, carry out activities, place/change/cancel orders and receive messages from dealers and companies.

 

Trend lines (trend lines) :

This line is a straight line, with a positive slope, drawn on the graph past the low points when the trend is up, and with a negative slope, drawn at the high points when the trend is down. This line determines the current trend. Trend lines usually give a signal of a change in trend.

 

Client log files :

A file created by the client terminal, which records all requests and orders sent from the client to the dealer with an accuracy of 1 second.

 

Server log files :

file created by the client terminal, which records all requests and orders received from the client to the dealer, as well as the processing results, with an accuracy of 1 second.

 

Trading margin :

By using borrowed money to buy securities, in the hope of getting increased profits.

 

Market-makers :

Large banks and financial firms that provide liquidity by accepting trades in other currencies, securities or future contracts.

Initial margin (initial margin):

Initial deposit of collateral required to enter into a position as collateral for future performance.

 

Non-trading operations (non-trading activities) :

Depositing or withdrawing funds from a trading account, or adding credit.

 

Normal market conditions (normal market conditions) :

Market conditions that meet the following requirements:

– the absence of a real disconnect with the trading platform quotes;

– the absence of too sudden price dynamics;

– no price gap is too big;

 

Trade operations volume :

The number of lots is multiplied by the lot size.

 

Open position (open position) :

The first part of the complete transaction results; at the opening position, the client has the following obligations:

– Close the reverse trade by the same amount;

– Maintain equity of not less than 10% of the required margin.

 

Market opening :
Re-opening of trading after weekends, holidays or after rest intervals during the trading session.

 

Pending orders (waiting orders) :

The client instructs the dealer to buy or sell when the price reaches the order level.

 

Complete closed transaction (perfectly closed transaction) :

It consists of two opposite and equal trading operations (opening and closing positions): buying followed by selling or selling followed by buying.

 

Quote threads :

A block of numeric data that describes the meaning of prices at a given time period.

 

Pips (points) :

The smallest unit of price for a foreign currency, also called points.

 

Lot Size (lot size) :

The amount of asset, product or base currency specified in the contract per one lot.

 

Developer (developer) :

“MetaQuotes Software Corp.” is a trading platform developer.

 

Accounting currency :

The unit of currency in which deposit and withdrawal operations are performed.

 

Range (range) :

The distance between the support level and the resistance level.

 

Swap :

Money resources that are reduced or added to the client’s account to pass positions overnight.

 

advisor :

This type of trading account management algorithm is in the form of a program based on MetaQuote Language 4. This program sends requests and orders to the server using the client terminal.

 

Spike :

See “Non-market quoting”.

 

Contract specifications :

The most important trading terms (such as spread, lot size, minimum trading operation quantity, trading operation volume change, movement, initial margin, locking margin, etc.) for each instrument.

 

Spreads :

The difference in pips between the Bid price and the Ask price.

 

Account (account) :

A special personal account opened by a client in the company. This account is used to offset the obligations of the client and dealer, which arise from the deal under the current agreement.

 

ticker :

A special identification number assigned to each opening position or pending order in the trading platform

 

Trading operations (trading transactions) :

When the Client buys or sells any instrument.

 

Trading platforms :

A collection of software and technical resources that support financial market trading information received in real time; processing trading transactions, taking into account the mutual obligations between the client and the dealer, and taking into account the conditions and limitations. According to current regulations, the trading platform consists of a “Server” terminal and a “Client” terminal

 

Trading Account (trading account) :

A special private stock taking activity registered on the trading platform, in which closed transactions, open positions, non-market transactions are fully reflected in it.

 

Transactions :

Trading activity in which money resources move from the base currency to the demanded currency and vice versa.

 

Traders :

People who trade currencies on the Forex market for profit.

 

Trends :

General direction of price movements.

 

Order level (Order level) :

Order price.

 

Support level (support level) :

The lowest limit of the channel.

 

Resistance level (rejection level) :

Channel highs.

 

Figure :

Price change for 100 pips. For example, a change in the price of EUR/USD from 1.3770 to 1.3870 0 means that the figure is rising.

 

Force major circumstances :

Events that cannot be predicted or prevented. Which includes: Natural disasters; war; terrorism activities; government actions, actions of government authorities, both executive and legislative; hacker attacks, and other unlawful acts against servers.

Hedging :

Operations that protect assets or liabilities against fluctuations in foreign exchange rates.

 

Price before non-market quote :

Closing price per minute, before minutes with non-market quotes. Price Gap – occurs when:

–The current Bid price is higher than the previous Ask price;

–The current Bid price is lower than the previous Ask price.

 

Market opening price gap:

Occurs when:

–The market Opening price is higher than the previous market closing price;

–The market opening price is lower than the market closing price;

 

Real error :

The client’s position at the time of opening/closing or the client’s order at a price significantly different from the current bid price per bid instrument at the time of processing. Or the activity or inactivity of dealers related to the mispricing of the current market price.

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