Regardless of your degree of education, you will encounter a great deal of foreign exchange industry jargon. Anyone looking to join this infamously competitive yet potentially lucrative business must first acquire the necessary skills to trade on the financial markets.
Reading this glossary will give you a better chance of understanding the terminology, allowing you to trade instead of reading like the rest of the group.
Also, you won’t have to worry as much about making those rookie errors that would make you reluctant to ask for help in the future. You should probably reevaluate your strategy and ask yourself if you truly comprehend the task at hand if you find yourself confused by unfamiliar words or phrases.
With a solid grasp of the key concepts in forex trading and a cordial relationship with your MetaTrader 4 broker, trading will become an enjoyable experience.
While currency pairings are actively trading on an exchange, technical analysts utilize “real-time charts” to monitor their movement and predict their future direction. Indicators such as moving averages, relative strength indexes (RSIs), and candlesticks are used by traders to assist them detect trends and indications.
Looking at financial data and seeing how asset prices have changed over time is possible with a live chart. Finding good deals can become easier as a result of this. If you’d rather not use this trading platform’s live charting services, you can always visit another one.
The phrase “stop loss” will appear often in currency trading. An expert on MetaTrader 4 says that a stop loss is a predetermined level below which you should sell your assets to hedge against a possible decline in their value.
The term “target prices” will also pop up a lot when people talk about trading currencies. When longing or shorting, buying or selling, you want to see these prices.
To safeguard yourself from unexpected market shifts, set a target price and a stop loss. Selling at the predetermined magic number allows you to profit from price declines even if the market goes below your stop loss.
If the market goes up or down more than you expected, you can simply go back in at the previous price and make a bigger profit.
“Margins and leverage” is shorthand for the fact that leverage allows you to trade with larger sums of money. A margin is the amount of money you put down to buy an asset, and then you borrow against it to increase your trading profit.
For example, if you borrowed $100 to buy a $1,000 stock, you would have $900 in your bank account and $100 in debt. Using borrowed money to trade is risky because your money could lose all or part of its value.
On the other hand, if you used leverage to buy an item for $1,000 but had to borrow money and took multiple risks, you would only have $100 in your hands—but you would have made $1,000.
What are the “time frames for forex” in forex? Well, if your forex platform allows you to trade all day, every day, you might find that the markets are open for trading for much longer than that.
The time frames will also vary depending on the type of trade you’re making. For example, if you’re thinking about a short-term strategy, you might only need a little window of time on the markets.
On the other hand, if you want to break a trend or use a trading method that could be profitable for several months, you’ll likely need to hold onto your holdings for much longer.
