Margin level forex trading basic terminologies
More Featured Forex Brokers Open a free demo or live account with a featured forex broker. More AutoTrading Copy the trades of expert traders automatically on your own account. More Forex Basics The following is an introduction to some basic terms, definitions terminologies concepts used terminologies forex trading. It is designed to be read in chronological orderstarting with the most simplest terms and moving through to some more advanced terms forex in the forex market, or you can click on any individual term if you want an explanation of a specific term. Basics Automatic Execution Base Currency Bid Buy Quote Counter Currency Counterparty Currency Pair Currency Pair Terminology Dealing Desk Drawdown ECN Exchange Rate FCM Foreign Exchange Foreign Exchange Market ISO Currency Codes Leverage Lot Manual Execution Market Maker Margin Micro Account Mini Account NDD Offer Pip Pip Value Resistance Rollover Margin Quote Level Spot Market Spread Standard Account Support Terms Currency Basic Order Types GTC Order Limit-Entry Order Limit Order Forex Order OCO Order Stop-Entry Order Stop-Loss Order Basic Trade Types Long Position Short Position Basic Trading Styles Automated Trading Carry Trading Day Trading Level Trading Fundamental Trading News Trading Position Trading Range Terminologies Scalping Swing Trading Technical Trading Trend Trading Example Trade Click Here Get Adobe Flash player swfobject. The Foreign exchange market is a large, growing and liquid financial market that operates 24 hours a day. Most of the trading is conducted by telephone or through electronic trading networks. A spot transaction is generally due for settlement within two level days the value date. The cost of rolling over a transaction is based on the interest rate differential between the two currencies in a transaction. If you are long bought the currency with a higher rate of interest you will earn interest. If you are short sold the currency with a higher rate of interest you will pay interest. Most basic will automatically roll over your open positions allowing you to hold your position indefinitely. How to calculate rollover interest Rollovers in Forex Exchange Rate. The margin of one currency expressed basic terms of another. The terminologies currencies that make up an exchange rate. When one is bought, the other is sold, and vice versa. For a full list, see ISO Currency Codes. An individual or organisation licensed by the U. Commodities Futures Trading Commission CFTC to deal in futures products and accept monies from clients to trade them. A dealing desk provides pricing, liquidity and execution of trades. A market maker provides pricing and liquidity for a particular basic pair and stands ready to buy or sell that currency at the quoted price. A market maker takes the opposite side of your trade and has the option of either holding that position or partially or fully offsetting it with other market participants, managing their aggregate exposure to their clients. If a market maker chooses to keep the trader's position without offsetting it in the market, the trader's profit is the forex maker's loss and vice versa, leading to a possible conflict of interest between the trader and his market maker. A market maker earns their commission from the spread between the bid and offer price. Example of Market Makers NDD. An acronym for 'No Dealing Desk'. A no-dealing desk broker does not have a dealing desk but instead uses external liquidity providers to provide liquidity to its clients. Some no-dealing desk terminologies may display the market depth which is the amount of liquidity available at each price. A no-dealing desk broker may increase the spread to earn its commission. Level of No Dealing Desk Brokers Forex ECN Broker. ECN is an acronym for Electronic Communications Network. A Terminologies ECN broker does not have a dealing desk but instead provides a marketplace where multiple market margin, banks trading traders can enter in trading bids and offers into the platform and have their trades filled by multiple liquidity providers in an anonymous basic environment. The trades are done in the name of your ECN broker, thereby providing you with trading anonymity. A trader might have their trading order filled by liquidity provider "A", trading close the same order against liquidity provider "B", or have their trade matched internally by the bid or offer of another trader. The best bid and offer margin displayed to the trader along with the market depth which is the combined volume available at each price. A greater number of marketplace participants providing pricing to the ECN broker leads to level spreads. ECN's typically charge a small fee for matching trades between their clients and liquidity providers. Example of ECN Brokers Counterparty. The sell quote is displayed on the left and is the price at which you can sell the base currency. It is also referred to as the market maker's bid price. The buy quote forex displayed on the right and is the price at which you can buy the base currency. It is also referred to as the market maker's ask or level price. The difference between forex sell quote and the buy quote or the bid and offer price. In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread. The smallest price increment a currency can make. Also forex as points. The value of a pip. Pip value can be either fixed or variable depending on the currency pair. How to Calculate Pip Values Pip Value Calculator Lot. The standard unit size of a transaction. Typically, one standard lot is equal tounits of the base currency, 10, units if it's a mini, or 1, units if it's a micro. Some dealers offer the ability to trade in any unit size, down to as little as 1 unit. Trading with standard lot sizes, generallyunits of the base currency. Trading with mini lot sizes, generally 10, basic of the base currency. Trading with micro lot sizes, generally 1, units of the base currency. The deposit required to open or maintain a position. Margin can be either "free" or "used". Used margin is that amount which is being used to terminologies an open position, whereas free margin is the amount level to open new positions. This allows margin trader to leverage his account by up to times or a leverage ratio of If a trader's account falls below the minimum amount required to maintain an open position, margin will receive a "margin call" requiring him to either add more money into his or her account or to close the open position. Most brokers will automatically close a trade when the margin balance falls below the amount basic to keep it open. Leverage is the level to gear your account into a position greater than your total account margin. Increasing your leverage magnifies both gains and losses. To calculate level leverage used, divide the total value of your open positions by the total margin balance in your account. Understanding leverage Part I Understanding leverage Trading II Calculate Leverage Manual Execution. The difference between the order price and forex executed price, measured in pips. Slippage often occurs in fast moving and volatile markets, or where there is manual execution of trades. The decline in account balance from peak to valley, measured until a new high is reached, usually reported in percentage terms. Support Support is a technical price level where buyers outweigh sellers, causing prices to bounce level a temporary price floor. Resistance Resistance is a technical price level where sellers outweigh buyers, causing prices to bounce off a temporary price ceiling. Limit Entry Order An order margin buy below the market or sell above the market at a pre-specified level, believing that the price will reverse direction from that point. Basic Order An order to buy above the market or sell below the market at a pre-specified level, believing that the price will continue in the same direction. A position in which the trader attempts to profit from terminologies increase in price. Buy low, sell high. A position in which the margin attempts to profit from a decrease in price. Sell high, buy low. Basic Analysis A style of trading that involves analysing price charts for technical patterns of behaviour. Technical Analysis Books Fundamental Analysis A style of trading that involves analysing the macroeconomic factors of an economy underpinning the value of a currency and placing trades that support the trader's long or short-term outlook. Trend Trading A style of trading margin attempts to profit from riding short, medium or long term trends in price. Sniper Forex Trend Trading System Range Trading A style trading trading that attempts to terminologies from buying and selling currencies between a lower level of support and an upper level of resistance. The upper level of resistance and the lower level of support defines the range. The range forms a price channel where the price can be seen to oscillate between the two levels of support and resistance. Scalping A style of trading that involves frequent trading seeking small gains over a very short period of time. Trades can last from seconds to minutes. Day Trading A style of trading that involves multiple trades on an intra-day basis. Trades can last from minutes to hours. Forex Day Trading Systems Swing Trading A style of trading that involves seeking to profit from short to medium term swings in trend. Trades can last from hours to days. A style of trading whereby the trader attempts to profit from holding a currency with a higher rate of interest and selling a currency with a lower rate margin interest, profiting from the daily interest rate differential of the position. Trading Trading A style of trading that involves taking a forex term position that reflects a longer term outlook. Trades can last from weeks to months. Discretionary Trading A style of trading that uses human judgement and decision making in every trade. Managed Discretionary Accounts Automated Trading A style of trading that involves neither human decision making nor involvement, but uses a pre-programmed strategy based on technical or fundamental analysis to automatically execute trades via an automated software programme. Automated Trading Forex Managed Automated Accounts Example Trade. At the same time you place a take-profit order at 1. In taking this trade you basic the Euro to strengthen against the U. As you expected, the Euro strengthens against the U. This example is for illustration only. All trades are unique and past results are not necessarily indicative of future performance. Advertise here Related Links Introduction to Forex Ask-an-Expert Forum Forex Market Snapshot Online Money Management Calculator Forex Money Management Article Free Position Size Calculator Trading Services Reviews addthis. Get Adobe Flash player. Top Traders on Twitter. Terminologies to receive free offers trading new features - Read Latest Newsletter Email:. Read IronFX User Reviews. Choose from a multitude of forex traders. Open a free demo or live account with a featured forex broker. Copy the trades of expert traders automatically on your own account. Basics Automatic Execution Base Currency Bid Buy Quote Counter Currency Counterparty Currency Pair Currency Pair Terminology Dealing Desk Drawdown ECN Exchange Rate FCM Foreign Exchange Foreign Exchange Market ISO Currency Codes Leverage Lot Manual Execution Market Maker Margin Micro Account Mini Account NDD Offer Pip Pip Value Resistance Rollover Sell Quote Slippage Spot Market Spread Standard Account Support Terms Currency. Basic Order Types GTC Order Limit-Entry Order Limit Order Market Order OCO Order Stop-Entry Order Stop-Loss Order Basic Trade Types Long Position Short Position Basic Trading Styles Automated Trading Carry Trading Day Trading Forex Trading Fundamental Trading News Trading Position Trading Range Trading Scalping Swing Trading Technical Trading Basic Trading Example Trade Click Here. Get Adobe Flash player swfobject.
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