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Leverage
Leverage is the ratio between the amount of the margin and the borrowed funds allocated for it: 1:100, 1:200, 1:500. The leverage of 1:100 means that a trader is required to have an amount in the trading acount which is 100 times less than...
Stop out
Stop out is an order generated by the server to force close a position in a trading account when the Margin level reaches 10% or less. To become familiar with the Stop out conditions, please follow "For traders" - "Trading conditions" - Acc...
Scalping
Scalping is a differential trading method designed to profit form small price changes. It can be applied in any market, but it is especially effective on Forex as the most liquid and dynamic market.Scalping is a trading strategy that involv...
Quotation
The term “to quote” is most likely to have come from the French verb "coter" which means to mark/label with numbers. The quote is the value of one currency unit denominated in terms of another currency.For example, the EUR/USD rate is 1.275...
Cross rates
Cross rates are often used during the operations in the world market. What is it?Cross rate is the exchange rate between two currencies which results from their rate in relation to the rate of a third currency. As a rule, cross rates with t...
Broker
Broker is a professional market participant that carries out transactions with a particular set of tools either on behalf of and on account of the client, or in its own name and on the client's account on the basis of commutative contracts...
Futures contracts
Futures contract is an agreement or a contract to buy or sell a certain amount of a specific commodity at a predetermined price at a specified time in the future. What is the futures contract?Futures contract is the obligation to buy or sel...
Intraday trading
Day trading is a market strategy which has been increasingly popular due to advancements in the computer network technology. It involves speculation on short-term fluctuations of market prices. Positions are frequently opened and closed, so...
Liquidity
Liquidity is the state of the market or the degree to which a definite security can be quickly bought or sold without significant losses in the price. In the banking sector, this term describes the ability of a bank to execute current payme...
Margin call
Margin call is the broker's requirement for the client to deposit additional funds or securities for a short sale or a "purchase with leverage" type of transactions which were carried out using the broker's credit and led to current losses....
Order
Order is a command to execute a certain operation in the account. The types of orders vary, depending on the market and the instrument. Moreover, different brokers offer different sets of available order types. These sets may include (espec...
Margin
Margin is a sum of money which is to be available in the account in order to open a trade.
Non-market quote
Non-market quote is the price level inside the gap. It represents several price ticks of similar value which form a price gap. It is directly related to the quotes that appear due to the price noise. This price level occurs aimid the lack o...
Free margin
Free margin is the funds which are not used for the security of the open positions. It is calculated by the following formula: Free margin = Equity – Margin.
Spread
Spread is the current difference between the buy price and the sell price of a currency pair or CFD.
Base currency
Base currency is the first currency appearing in a currency pair. Its value is determined by the price of the currency quoted against it. For example, if the EUR/USD currency pair rate is 1.3525, then the euro is the base currency and it is...
Point
Point (pip) is the smallest change in the currency price in the last digit of a quote (i.e. the last digit of a decimal).
Stop Loss order
Stop loss, or safety order, is an order placed with a broker to automatically close a position when the price reaches a certain level. You can set the safety order to minimize losses in case of unexpected market moves.Stop loss is an order...
Contract for difference
Contract for difference (CFD) is the contract enabling one of the parties to conduct a speculative operation with a certain financial asset without physical delivery.
Pipsing
This trading approach is used for gaining profit from intraday currency fluctuations. Some traders open more than 200 deals a day while holding a position open for just several minutes. Of course, the profit from each position is rather sma...
Hedging
Hedging is the parctice of protecting client's funds from unfavorable price fluctuations by opening a position in a contrary or opposing market. Hedging: ensures protection from possible losses by the time of forward deal settlement; provid...
Take Profit order
Take profit is meant for closing a position as soon as the price of a financial instrument starts moving in the right direction. The order is always connected with a specific open position or a pending order.
Pending order
A pending order is placed when opening a trading position. A pending order is an instruction to the broker to buy or sell a currency pair when the price reaches the pre-defined level mentioned in the order.There are four types of pending or...
Balance
Balance is a cumulative financial result of all completed transactions and deposits/withdrawals of funds to/from the trading account.
Account history
Account history is a record of all the activity in the trading account, including completed transactions and non-trading operations.
Trading platform
Trading platform is a software product by MetaTrader 4 which allows clients to get real-time information about trading in financial markets (to the extent determined by the company), perform technical analysis, conduct trading operations, s...
Client log file
Client log file is a file created by the trading platform which instantly records all requests and orders sent by the client to the dealer. ...
Server log file
Server log file is created by the server. It records all requests and orders the dealer receives from the client as well as the processing results with pinpoint accuracy.
Normal market conditions
Normal market conditions meet each of the following requirements: absence of noticeable breaks in quotes supply on the trading platform, absence of rushing price dynamics, and absence of essential price gaps.
Transaction volume
Volume of trading operation is the number of lots multiplied by the lot size.
Open position
Open position is a result of the first part of a fully completed transaction. Opening a position, a client accepts the following obligations: to execute the opposite deal of the same volume and to keep the equity level no lower than 10% of...
Market opening
Market opening is the time when markets open for trading after the weekend, holidays or after the interval between trading sessions.
Quotes feed
Quotes feed is the sequence of quotes for each trading instrument on the trading platform.
Expert advisor
Expert advisor is a program developed for managing a trading account written in MetaQuotes Language 4. The program sends requests and orders to a server through the client's trading platform.
Spike
Spike - see Non-market quote
Contract specification
Contract specifications are the basic trading terms such as spread, lot size, minimal transfer amount, minimum possible change in the trade volume, initial margin, margin for locking positions, etc. for each instrument.
Force majeure
Force majeure refers to events that could not be foreseen or prevented. As a rule, these are natural disasters, wars, terrorist attacks, government actions, actions of the executive and legislative authorities, hacker attacks, and other ill...
Obvious error
An obvious mistake occurs when a dealer is opening/closing a client’s position or executing a client’s order at a price that significantly differs from the one quoted at this particular moment. This term also refers to some other dealer’s a...
Indicator
Indicator is a signal of some trend changes in the market. You can use different indicators of technical analysis when working on the foreign or stock exchanges, but it is not recommended to use more than three. To understand indicators bet...
Index
Index, or a stock index, is a composite indicator of prices of assets belonging to a particular group (securities, commodities, derivatives), a so-called stock basket.As a rule, the readings of indices are not as important as the index chan...
Gap on the chart
A gap is a discontinuous space on the price chart which may appear during rapid price changes. On the chart, a gap looks like an area where the price moves sharply up or down, which creates a space between the closing level of one trading p...
PAMM account
PAMM (Percentage Allocation Management Module) is a trading account designed for trust management of investors' funds. The PAMM account enables beneficial cooperation between account managers and investors. With the PAMM system, profits and...
Conversion arbitrage
Conversion arbitrage operations are buying/selling transactions with a currency or CFD between the company and the customer, which implies making at least two opposite buy/sell trades of equal volumes.
Candlestick shadow
The distance between the candlestick body and the maximum day price in the form of a vertical line is called the candlestick upper shadow (uwakage). The distance between the candlestick body and the minimum price is also depicted as a line...
Chapter 1. Introduction
Until the 1970s, the exchange rate of a particular currency was determined by the country's gold reserves. That was due to the fact that global markets were regulated by the gold standard. Each currency had its equivalent in a troy ounce. H...
Chapter 2. Forex market participants
It is vital to understand what part a private investor plays in the global currency exchange market before starting trading forex. Giving an insight into the types of forex participants, as well as their influence on the market, will help y...
Chapter 3. Currency designation in the Forex market
In the physical retail market, we sell goods for money. How does it work in the forex market, where the money is a commodity? It is simple: in the Forex market, we trade one currency against the other. It means that several units of one cur...
Chapter 5. Forex quotes
When we buy something in a shop, a price tag shows us the price of an item in the domestic currency. For example, we pay $12 for a book which is common practice for us.In the Forex market, we always trade one currency against another. There...
Chapter 6. Buy and sell price of currency pairs and spread
Until now, talking about quotes, we have intentionally used only spot (current) Forex exchange rates to make our website easier to understand. However, a Forex quote consists of two rates (prices) - the sell rate (bid) and the buy rate (ask...
Chapter 7. Cross currency pairs
The trading operations on Forex are carried out not only against the US dollar. We intentionally have not touched on these operations until now to make the content more intelligible. The currency rates, which do not include the US dollar, a...
Chapter 8. Trading sessions
Despite the fact that Forex operates within 24 hours, there are certain time frames during which it can be more or less active in relation to transactions with different currencies. It can be explained by the working hours of the world’s ma...
Chapter 9. Forex market and exchange offices
Forex trading is aimed at making money on currency speculations. We have been describing the currency market above but avoided such topics as what starting capital is needed to work on Forex and what profit can be expected. In this chapter...
Chapter 10. Margin trading
In the previous chapter we compared work on Forex with the opportunity to earn from the buy/sell operations at an exchange office. It is obvious that Forex has a range of advantages that allow traders to take significant profit in a short t...
Chapter 11. Margin requirement
Each time a trader opens a position through an online broker (dealing company), the part of funds on his account becomes frozen. This part is called a security deposit and used for a guarantee that a trader will never lose more than he has...
Chapter 12. Interest rates and swaps
We have already clarified that margin trading supposes the usage of the loan capital, when a trader borrows assets from his broker to carry out operations on Forex. For better understanding of this chapter, let us study the principle of cas...
Chapter 13. Profits of Forex market players
As we have already mentioned, an individual trader gets access to Forex by means of a broker or a dealing company. Traders earn money via currency speculations. In other words, they close positions at a higher price compared to the price of...
Chapter 14. Calculation of profit and loss
We have thoroughly considered the basic terms used on Forex and the main principles of margin trading. It is the time to study how to calculate profit and loss of the opened trades. We know that a trader enters the international currency ma...
Chapter 15. Difference between forex trading and gambling
There are many articles on the internet in which trading on Forex is compared to gambling in casinos, and in particular, to roulette. The authors of these articles bring out different proofs, citing mathematical extracts from the theory of...
Chapter 17. Stock exchanges and stock indices
Even though this section is devoted to forex education, we will also touch on the stock exchanges and stock indices. At first glance, it seems that the chapter is not related to Forex, but, in fact, it is. Currency rates are interrelated wi...
Chapter 18. Commodity currencies on Forex
As we have already found out from previous chapters, the currency price is determined by a great variety of factors, such as: economic, political and some others. All listed factors concerning each country separately influence its national...
Chapter 19. George Soros: The story of one trader
Like in every sphere of life, there are outstanding persons on Forex, whose names went down in history. George Soros is one of the most successful traders in the forex history. His career began from the establishment of the Quantum Fund in...
SAR (Parabolic Stop and Reverse)
The next technical analysis indicator which should be paid attention to in the process of Forex education is the Parabolic Stop and Reversal System (PSAR). This indicator was developed by the famous trader Welles Wilder, who contributed muc...
Japanese candlesticks (II)
We will consider a number of patterns which comprise of two or more Japanese candlesticks. It should be noted, that they are of limited use on Forex as they presuppose that the closing price of the prior trading period and the opening price...
Basic questions about trading conditions
Can I trade CFDs on American shares in a demo account? A demo account does not provide CFDs trading. In order to trade CFDs, you should open a live account According to the website, a 6% annual interest rate is accrued on th...
