ADX (Average Directional Index) – A technical tool for measuring a trend’s strength. This index works on a 0 to 100 scale. 0 indicates no trend at all. The closer the result is to 100, the stronger and more significant the trend is. ADX doesn’t indicate a trend’s direction, but only its power.
Algorithmic Trading – Algorithmic trading is a process of trading with the help of computer programs which follows certain commands to open and close trades. Algorithmic trading avoids human emotions and enhnces the speed at which a trade can be executed. In our Mt4 platform, the Expert Advisor is an example of algorithmic trading.
Arbitrage – In finance, an arbitrage is a process where a trader purchases an asset at lower prices and sells it at higher prices in another market. The trader makes a profit due to the difference between buying and selling prices.
Ask Price – Also known as the Offer Price (appears as the second part of a Forex quote). The price at which the market is ready to sell a particular currency pair. This is the price a trader must pay to buy the base currency.
Bar Chart – A common type of graphic representation of the price actions in Forex. Each bar is built of 4 points: Opening price, closing price, highest and lowest price for the time frame it represents
Barack Obama – Barack Obama served as the 44th President of the United States of America from the year 2009 to 2017. He graduated from the Columbia University in 1983 and later joined Harvard Law School in 1988. Earlier, from 2005 to 2008, he served in the U.S. Senate representing Illinois, which is a state in the midwestern region of the United States. He was the first African-American president of the United States.
Base Currency – The first currency in the forex pair is termed the ‘base currency’. It’s also referred to as the “”primary currency””. For example, in the EUR/USD, the EUR is a base currency and the USD is a quote currency.Let us understand this through an example. If the EUR/USD is quoted at $1.0600, this means that one has to pay 1.0600 USD to purchase one Euro.
Bearish Market – A pessimistic market characterized with falling prices. In a bear market there are more sellers than buyers. Ben Bernanke – The former head of the FED (USA central bank) since 2006. Considered as controversial, mainly thanks to the global economic crisis which started in the U.S. but solid.
Bid Price – The price at which the market is ready to buy a particular currency pair. It appears as the first part of a Forex quote and is the price a trader receives when they sell the base currency.
BOJ (Bank of Japan) – The central bank of Japan, established on 27 June 1882 and governed by Haruhiko Kuroda. Besides this, a nickname of the BOJ is Nichigin. Like other central banks, the BOJ is also a center of focus for forex traders and stock market investors as it’s charged with the responsibility of controlling the money supply through monetary policy, aiming to achieve the benchmark inflation, unemployment rate, and economic growth.
Bollinger Bands – Technical indicators for measuring market volatility. Built of a band which includes 3 lines: Center, Top and Bottom. The center line connects the average prices over a period of time. The supporting lines define the band between the peaks and lows across the presented period. Bollinger bands are good for identifying upcoming trends.
Bullish Engulfing – In the study of Candlesticks, a bullish engulfing pattern is formed when a small bearish candle is followed by a large bullish candle that overshadows or engulf the previous candle. It demonstrates the weakness in a selling trend and pre-indicates a potential buying trend in the market. For instance, the sellers are exhausted and buyers are likely to enter the market.
Buy Stop – A buy stop order is a type of pending order that allows a trader to put instructions in the trading software (Mt4), to purchase a security at a specified price. It’s placed above the CMP (current market price) if a trader expects that the price will soar further on the breakage of a certain level.
Candlestick Chart – The most popular chart used in Forex. It is a nicer, more graphical version of the bar chart. Built of candle shaped sticks. Green (or white) candles indicate uptrends and red (or black) candles represent downtrends. Each candle shows the open, close, high and low prices for the specific time frame. Carry Trade – A trading strategy that focuses on the interest rates of the currencies traded. The idea is to buy a currency with rising interest rate while selling a currency with falling interest rate. The profits are derived from the growing differential between the two rates. The JPY is relatively very popular for Carry Trade due to its extremely low interest rates across the years (usually interest rates are at or near 0). JPY is efficient against currencies with rising interest rates.
CFD (Contract For Difference) – Is a type of a derivative that is commonly traded in the financial market. Besides this, it is referred to as a contract between two parties (the buyer and the seller), and according to this contract, the seller is obligated to pay the difference (current value minus contract value) to the buyer, while in the case of a negative difference, the buyer will settle instead.
Positive Correlation: There is a positive correlation when the prices of both instruments move in the same direction. For instance, the EUR/USD & GBP/USD have a positive correlation.
Negative Correlation: There is a negative correlation when the prices of both instruments move in opposite directions. For instance, the EUR/USD & USD/JPY have a negative correlation.
Cross Hair – In the trading platform (Mt4), a crosshair is a very helpful tool to know the parallels of the selected point in a chart (Date, Time & Price) or to know the number of pips between two points. The scroll button on the mouse or Ctrl+F can be used to activate the tool.
Currency – Currency is a generally accepted medium of exchange which is issued and circulated by the government and the central banks. This can be in the form of coins and paper. Credit /debit cards are considered an advanced form of currency,and are generally referred to as plastic money.
Demo Account – A free trading account for practice (with no real money transactions involved). Fantastic for beginners who wish to get familiar with Forex trading. Nowadays most brokers allow their users to open demo accounts in order to try their Forex trading platforms before depositing real money.
Donald Trump – Donald John Trump is the 45th elected President of the United States of America. He earned a degree in economics from the Wharton School of the University of Pennsylvania back in 1968. Formerly, he was a businessman, politician, and television personality. Being a President of largest economy, he is in focus of investors around the globe for the future prospects of U.S financial and economic systems.
Dot Plot – The dot plot shows forecasts the actions of the sixteen members of the FOMC (Federal Open Market Committee). It is published after each FED meeting over the period of one year. The dot plot has become on the most focused news releases as it gives a pretty clear idea about the next steps of FED officials. Double Bottom – Double Bottom is a technical analysis term. It refers to the chart pattern that resembles a “”W””. It’s formed when a price drops and rebounds consecutively from a particular level. This pattern is bullish in nature as it demonstrates a weakness in a selling trend and pre-indicates a potential buying trend in the market. It is exactly the opposite of a double top pattern.For example, if Gold prices drop and rebound from $1260 twice. That makes $1260 a double bottom level, which means that we may see another pullback or buying behavior if the prices test this level in the future.
Double Top – Double Top is a technical analysis term and it refers to the chart pattern that resembles an “”M””. It’s formed when the prices peak and drop consecutively from a particular level. The pattern is bearish in nature as it demonstrates the weakness in a buying trend and pre-indicates a potential selling trend in the market.For example, Gold prices peaked and crashed at $1270 twice. That makes $1270 a double top level. This means that we may see another drop, or a sell behavior if the prices test $1270 in future.
Dovish – Dovish refers to a tone in speech which demonstrates a particular action. Specifically, it’s associated with a situation where policy makers aim to increase the money supply by lowering the interest rates, the reserve rates, and/or expanding the open market operations. Consequently, a dovish tone used by a central bank weakens the currency.
Dynamic Support – Dynamic support refers to the bottom barrier of a trend or a level at which a current downtrend is expected to stop as the price finds “support”, but this support is not static and keeps adjusting itself to fluctuations in the market. Trend indicators, including Moving averages, Bollinger bands, and Ichimoku are a few examples of a dynamic support and resistance.
Economic Calendar – An important feature of your trading platform. It presents a roundup of all significant economic announcements and releases, as well as other fundamental events taking place around the world which might impact on the market.
Elliot Wave – A common trading pattern. An identification of Elliot Wave allows the trader to predict trends with high probability. The pattern is built of 8 waves. The first 5 build one trend and the following 3 belong to an opposite trend.
Engulfing Bar – In the study of candlesticks, an engulfing bar is formed when a small candle is accompanied by a large candle in the opposite direction and it overshadows or engulfs the previous candle. It demonstrates the weakness in a trend and pre-indicates a potential reversal in the market. There are two types of engulfing bars: bullish engulfing and bearish engulfing bars.
Fiat Currency – Fiat currency refers to a legal tender currency which is issued by the government but has not been backed by any physical commodity. The exchange rate of fiat money depends on the demand and supply factor. E.g better economic conditions will lead towards stronger currency in the market.
Fibonacci – Considered by us as the most popular technical indicator in Forex. It indicates changes in the balance of power between the sellers and buyers. With the help of Fibonacci ratios you can foresee whether the market will be bullish or bearish. Remarkable pivots are 38.2%, 50% and 61.8%.
Financial Instrument – In finance, financial instruments are the assets that have monetary value and can be traded. For example, checks, bonds, and bills of exchange. However, in the world of forex, the financial derivatives such as future contracts and options are known as the top financial instruments.
FOMC (Federal Open Market Committee) – FOMC is an abbreviation of Federal Open Market Committee. It’s a subsidiary of the central bank of the U.S named FED (Federal Reserve) and charged with the responsibility of controlling the money supply through open market operations, aiming to achieve the benchmark inflation, unemployment rate, and economic growth.
Forex Signals – A forex signal refers to a recommendation to enter a Buy/Sell trade on a particular currency pair, commodity or an index at a specific price and time by a signal provider that can be a forex trader or an analyst. Learn How to use our Forex Signals here.
Foward Contract – A forward contract is a non-standardized contract and an obligation to buy or sell a particular security at a predetermined price at a specified time in the future. It aims to mitigate the risk faced by investors in the shape of variations in forex exchange rates, bonds, stocks, indexes, and commodities. It’s also a “forward outright”.
Fundamental Analysis – Analyzes economic, political and social events in an effort to determine present and future economic trends. In other words, the fundamental approach analyzes the sources of price movements in currencies.
Futures Contract – A futures contract is a type of derivative that refers to the legal contract and an obligation to buy or sell a particular security at a predetermined price at a specified time in the future. It aims to mitigate the risk faced by investors in the shape of variations in forex exchange rates, bonds, stocks, indexes, and commodities.
G 8 – A group of the most industrialized countries in the world. The associates in the G8 are: USA, Japan, England, Germany, France, Italy, Russia and Canada.
Gaps – Gaps refer to the area where the price of a currency, stocks, indexes or a commodity moves sharply bullish or bearish, leaving no sign of trading in between candlesticks or the bars on the chart of that security. It is normally caused by a sudden change in fundamentals in the market.
GDP (Gross Domestic Product) – The total value of all goods and services produced in the market (excluding imports). GDP helps to measure the standard of living in the market. Negative data implies a weakened economy.
Hanging Man – A hanging man is a bearish reversal pattern that is formed after the bullish trend and can be seen in candlestick patterns. The formation of a candle is identical to the hammer – it has a long lower shadow (wick), small upper body and little or no upper shadow (wick). It shows the weakness in a bullish trend and symbolizes a potential selling trend in the market. However, the major difference between a hammer and hanging man is that the hammer is followed by a bearish trend while a hanging man is followed by a bullish trend.
Haruhiko Kuroda – Haruhiko Kuroda is the Governor of the Central Bank of Japan, renamed “Bank of Japan” as of March 20, 2013. He formerly served as a president and chairman of the Asian Development Bank from February 2005 to March 2013. In addition, he also served as Vice Minister of Finance from 1997 to 2003.
Hawkish – Hawkish refers to a tone in speech which is associated with a situation where policy makers aim to decrease the money supply by increasing the interest rates, reserve rates and expanding the open market operations. Consequently, a hawkish tone from a central bank strengthens the currency.
Head and Shoulders – Considered as a relatively reliable and accurate chart pattern for long term trading. Built of 3 peaks, while the second peak (the head) is the highest (or lowest, in case of an upside head and shoulders). The other 2 peaks are about the same height – the shoulders. A head and shoulders pattern is a good sign to go short (or to go long, in the case of an upside head and shoulders).
Inflation – An increase in the prices of goods and services in the market. Due to inflation, a soda can that used to cost 10 cents 20 years ago, costs 1 dollar today. Inflation weakens a currency’s performance. The central bank is responsible for controlling inflation through the manipulation of interest rates and the money supply.
Interest Rate – The market rate at which the buyer (or borrower) has to pay the seller (or loaner) for continuing to hold the currency. Interest rates impact the performance of all currencies in the Forex market. Rising interest rates cause currencies to strengthen, falling interest rates cause currencies to weaken.
Inverted Hammer – In the study of the candlestick trading strategy, an inverted hammer is a bullish reversal pattern that’s formed after a bearish trend in the market. It’s exactly opposite to “Hammer” as it has a long upper shadow (wick), small lower body and little or no lower shadow (wick), so it resembles an “Inverted Hammer”. Besides that, it exhibits the weakness in a selling trend and signifies a potential buying trend in the market.
Leverage – The percentage of money you are allowed to “borrow” from your broker in order to open a position. Think of it as a “loan” from your broker. It helps traders to trade higher volumes with smaller amount of money. The more you leverage your money, the higher the potential for profit and the risk of loss from trades.
Line Chart – Line charts present general price movement over a period of time. The line connects the assets closing prices along the chosen period. However, it is less recommended for use than other types of charts.
Liquidity – Refers to the volume of the trades in the market. It is the ability to exchange currencies without really affecting the price of the pair. The more liquid a currency pair is, the less impact buy and sell actions will have on its price.
Long Term Trading – Trading positions that last from a week up to few months. Long term trading is considered as an investing strategy. Long term traders usually base their trades on fundamental analysis, high capital amounts and very low leverage.
MACD (Moving Average Convergence/Divergence) – A technical indicator that measures an average of the average prices (The average between EMA and SMA) over different periods of time. MACD helps to determine trends.
Majors – The most widely traded currency pairs in the world. The major currency pairs are those in which trading volume is highest. The major currency pairs are comprised of eight currencies: EUR, GBP, AUD, NZD, USD, CAD, CHF and JPY.
Mario Draghi – Mario Draghi is the president of the European Central Bank since the 1 November 2011. He is an economist who also worked at Goldman Sachs from 2002 to 2015. Besides this, he obtained a Ph.D. in economics from the Massachusetts Institute of Technology (MIT) in 1976. Being a president of the ECB, he influences the monetary policy to control price stability in the Eurozone.
Mark Carney – Mark Joseph Carney is the Governor of the Central Bank of the United Kindom, named “Bank of England” since July 1, 2013. He is an economist and formerly has served as the Governor of the Bank of Canada from 2008 until 2013. Besides this, he obtained a masters and doctoral degree in economics from St Peter’s College, Oxford, back in 1993 and 1995 respectively.
Market Leaders Forex Trading Course – The ultimate course for beginners and newcomers. Probably the most popular, professional, friendly and comprehensive online Forex trading course on the net. A true window to Forex trading for anyone who wishes to join this gigantic market and learn to trade like the pros. Written by our experts, it is responsible for introducing thousands of new Forex traders around the world to trading. Its goal is to prepare you in one weekend for this opportunity.
Micro lot – In forex trading, a micro lot refers to 1/100th of a standard lot (100,000) or 1,000 units of the base currency. Usually, this is the smallest trading volume that one can trade in the forex market.
Money Management – Controls how much of your money you risk when you enter a trade. A good money management approach is to always risk a fixed percentage of your equity, not higher than 10% per position. Smart money management is exactly what prevents us from losing all of our capital at once.
NFP (Non Farm Payrolls) – The change in the number of employees in the market over the past month. It indicates the market’s general economic condition.
Open Market Operations – Open Market Operations (OMO) is a tool of monetary policy that refers to the buying and selling of bonds and government securities in the open market to control the money supply in the economy. For instance, a Central Bank buys the government securities if it intends to increase the money supply in the economy and vice versa.
Parabolic SAR – A popular technical indicator for predicting upcoming trends. Its location compared with the market price determines whether to go long or to go short (buy or sell). Parabolic SAR is affective in volatile markets and works well on strong trends.
Priced In – “Priced in” refers to a situation in which all the publicly available information, forecasts, and predictions have already been taken into account by an asset. However, the market can reverse in the wake of other factual information.
QE (Quantitative Easing) – An expansionary monetary policy, where a central bank intends to increase the money supply in the economy by purchasing government securities and bonds from the market, aiming at economic growth.
If the USD/CAD is quoted at $1.3300, this means that one has to pay 1.3300 Canadian dollars to purchase one U.S. Dollar.
RBA (Reserve Bank of Australia) – The Central Bank of Australia, established on 14 January 1960 and governed by Philip Lowe. Its headquarter is in Sydney, New South Wales, Australia. Besides being a Central Bank, it’s charged with the responsibility of price stability and economic growth.
Rejection Candle – In candlestick trading strategies, the rejection candle refers to a pinbar, hammer, inverted hammer, shooting star or a hanging man candlestick pattern that signifies a potential reversal in a trend. The rejection candle has a potential to divert a bullish trend into a bearish trend and a bearish trend into a bullish.
Reserve Bank of New Zealand (RBNZ) – The Reserve Bank of New Zealand (RBNZ) is the central bank of New Zealand. It was established in 1934 and is governed by Graeme Wheeler. Like other central banks, the RBNZ rececives a lot of attention from forex traders and stock market investors. This is because it’s charged with the responsibility of controlling the money supply through monetary policy, aiming to achieve the benchmark inflation, unemployment rate, and economic growth.
Reserve Rates – The tool of monetary policy, according to which every commercial bank is required to keep the certain portion of its deposits with the central bank to avoid liquidity risk. The higher reserve rates, the more decreases in the money supply in the economy and vice versa.
Reversal Patterns – In the forex market, a reversal refers to a change in the direction of a price trend, whereas the reversal pattern is a formation of the support and resistance, reversal candlesticks and various chart patterns that have or can cause a reversal in the price trend of a currency pair. For instance, in the candlestick analysis, the hammer, inverted hammer, shooting star and test bar are the few examples of a reversal pattern.
Safe Haven – The term safe haven refers to the situation when an investor looks for the safer assets to invest in at times of uncertainty in the market. As a result, we see a sell-off in the stock markets and increased demand for bullion & safe haven currencies.
Safe Haven Currency – At times of uncertainty in the forex market, investors trigger the safe haven appeal by investing in Gold and other forex currencies. The most popular safe haven currencies are the Japanese Yen and the Swiss Franc. The major haven currency pairs are USD/JPY & USD/CHF.
Sanctions – Sanctions refer to the actions taken by a country or countries against other countries for political reasons, resulting in a loss of business and diminishing appeal of related currencies.Sanctions refer to the actions taken by a country or countries against other countries for political reasons, resulting in a loss of business and diminishing appeal of related currencies.
Sell Limit – A sell limit order is a type of pending order that allows a trader to put instructions in the trading software (Mt4), to purchase a security at a specified price. It’s placed above the CMP (current market price) if a trader expects that the price will plunge back after soaring to a specific trading level. Here, the trader aims to sell at high to buy at a lower price.
Sell Stop – A sell stop order is a type of pending order that allows a trader to put instructions in the trading software (Mt4), to purchase a security at a specified price. It’s placed below the CMP (current market price) if a trader expects that the price will plunge further on the breakage of a certain level.
Shinzo Abe – Shinzō Abe is the 57th and 63rd Prime Minister of Japan since 26 December 2012. He resigned on 12 September 2007 for health reasons and he is honored to the longest serving PMs in Japanese history. Besides this, has he introduced a “Three Arrow” policy named Abenomics for fighting the deflation and economic growth in Japan.
Short Entry – Short entry is a slang term that is used in the forex trading to signify a sell position. It is also used as “going short” in a trade. Likewise, the “Long entry” or “going long” are used for the buy positions.
SNB (Swiss National Bank) – Swiss National Bank is the central bank of Switzerland and began business activities on 20 June 1907. The current chairman is Thomas Jordan. Its headquarters are in Bern and Zurich. Besides being a central bank, it’s charged with the responsibility of price stability and economic growth. Swiss National Bank is the central bank of Switzerland and began business activities on 20 June 1907. The current chairman is Thomas Jordan. Its headquarters are in Bern and Zurich. Besides being a central bank, it’s charged with the responsibility of price stability and economic growth.
Speculation – Speculation is the process of predicting future prices and entering into a trade which has a significant risk of loss but also the potential for profit. The investor attempts to benefit from the short-term fluctuations in the market as a result of macroeconomic and political events around the globe.
Spinning Top – In candlestick patterns, the spinning top refers to a type of candle that has a small body, but long shadows (wicks). This demonstrates indecision or a neutral sentiment on the part of buyers and sellers upon the continuation of the trend.
Spread – The spread is the difference between the bid and ask price of a currency, commodity or index. We can also define it as the difference between a buying and selling price. Hence, it’s known as the brokers profit.
Statistical Arbitrage – In financial markets, the statistical arbitrage is also known as StatArb. In contrast to the simple arbitrage, the traders make the decision to buy or sell based on the mispricing of assets. The traders use mathematical modeling techniques or different trading strategies to identify the price inefficiencies in the market.
Stephen S. Poloz – Stephen S. Poloz is the Governor of the Central Bank of the Canada, renamed “Bank of Canada” as of June 3, 2013. He has Ph.D. and graduated from the University of Western Ontario and Queen’s University. He is the 9th Governor of the Bank of Canada.
Sterling (GBP) – Sterling is a slang term used for the British Pound. If you are wondering why it’s named sterling, it’s because a coin of the British Pound once weighed one troy pound of sterling silver, giving it the nickname of “Sterling”.
Stop Loss Order – An exit trade order, which automatically closes an open position at a specific price, specified in advanced by the trader. A Stop Loss limits potential losses should the market go against you.
Supply/ Demand Ratio – The difference between the supplied amounts of goods and services and the demand for them. As the demand rises or the supply drops, the value of goods or services (e.g. currency) goes up.
Swaps – Swap is a fee that is charged by a broker from the client on the overnight positions. A forex swap is the interest rate differential in the two currency pairs that an investor is trading, and it is determined according to either your position that is long or short. For instance, if a currency pair has a positive swap value, you are earning interest by holding that position each day. If the swap value is negative, you are being charged that much for holding that position. This is based on the difference in interest between the two currencies in the pair, as well as the current price of that pair.
Take Profit Order – An exit trade order, which automatically closes an open position at a specific price, specified in advanced by the trader. When the price reaches this rate the trade closes at a predefined profit.
Technical Analysis – The technical approach uses tools, technical indicators, formulas and patterns on charts, in order to predict future trends and changes in currencies. It analyzes the trends and not the reasons why they happen.
Theresa May – The Prime Minister of the United Kingdom and Leader of the Conservative Party since 11 July 2016. She preceded by David Cameron, ex-prime minister of the UK who resigned after the Brexit. She has been a Member of Parliament since 1997.
Thomas Jordan – Thomas J. Jordan is the chairman of the governing board of the Central Bank of the Switzerland, named SNB (Swiss National Bank). He was elected chairman on April 18, 2012. In 1993, he completed his Ph.D. degree in economics and business studies from the University of Bern.
Time Frame – Traders can choose to look at the trading charts in different time frames. For example, say you choose to look at a 30 minutes chart – it means that each single candle represents the trading activity over a 30 minutes period. The most popular time frames are 15 minutes, 1 hour and 1 day frames. Trading Account – Your capital available for use in trades on the online trading platform. Trading Book – A self-compiled journal for managing and following your trading activity, while writing down actions, thoughts, results and anything which can improve your future trading.
Trading Platform – Online software provided by the broker. Forex trading platforms are used for trading transactions, executing orders and managing your account. That is why it is important to choose the right broker.
Trend – In the forex market, a trend refers to a long term, medium term, and short term direction of a price of a currency pair. For instance, the EUR/USD traded at $1.3990 back in May 2014 and continued in a downward trend for more than 2 years to trade at 1.0348 in Jan 2017. Moreover, a trend can be upward, downward or sideways.
Trend Line – One of the simplest, most basic tools for the trader’s usage on the trading platform. It connects a group of price rates throughout a chosen time frame (either price lows or highs). The more points it connects, the more stable and reliable a trend it will indicate.
Vladimir Putin – Vladimir Vladimirovich Putin is the 2nd and 4th President of Russia since 7 May 2012. He was born on 7 October 1952 and studied law at the Saint Petersburg State University, graduating in 1975. Earlier, he had served as the Prime Minister of Russia two times from 1999 to 2000 and again from 2008 to 2012.