Traders Terms
Thanks to Knowledge to Action for this list of Trading Terms. I have added in my own comments to a term (it italics) for my own record. I throughly recommend you download their free eBook for Forex Trading. Its a very good read and packed full of great hints/tips. Download here=> Millionaire Forex Trader Secrets report
A
Account risk – The percentage of your account, you are willing to put on a trade. Knowledge to Action always recommends that you should only invest 1% of your current trading accounts funds. This makes a heap of sense!
Arbitrage- Simultaneous purchase and sale on different markets, of the same or equivalent financial instruments to profit from price or currency differentials.
Ask (also known as the offer) – The price the broker is willing to accept for a stock or currency.
B
Base Currency – The first currency in a currency pair. With Forex trading you trade in pairs. There is “Base” and “Terms”. E.g. EUR/USD
Bear Market- when the market is falling over a period of time.
Breakout – When price action breaks out from consolidation, support of resistance.
Bid Price (the opposite of the ask) – The price a broker is willing to pay for a stock or currency.
Bull Market- When the market is rising over a period of time.
Buy Stop – An order to buy a stock of currency which is entered above the current offering price.
Broker An individual or firm that charges a fee, spread or commission for executing buy and sell orders submitted by a
trader.
C
Contingent Order – An order whose execution is dependent on the execution of another order.
D
Daily Chart – Chart where the bars shown represent one day.
Daily Rolling Cash – Lets you roll your spread bet/trade over to the next day.
E
EoD – End of Day.
EMA- Exponential moving Average.
F
Fibonacci Numbers Used in Forex Trading
Forex – The foreign exchange market in which traders are able to trade on currencies.
FTSE – Financial Times Stock Exchange.
FTSE 100 a share index of the 100 most capitalised UK companies.
FTSE 350 – A share index of the 350 most capitalised UK companies. It consists of a combination of the FTSE 100 and the FTSE 250 which are the next largest 250.
G
Good for date meaning – The order will expire at the end of a date specified by the trader if it doesn’t trigger.
Good for the day (GFD) meaning – The order will expire at the end of the trading day of which it was placed if it doesn’t trigger.
Good till cancelled (GTC) meaning – The order will remain in the resting order column until it is either triggered or cancelled by the trader.
H
I
Indicators – An indicator is a mathematical calculation based on a stock or currencies price and/or volume. The result is used to predict future prices.
If done order – An instruction for a trade to be entered if specific conditions are met.
Intra-day trading – Trading within market hours as opposed to end of day, when the market is close.
L
LSE – London Stock Exchange.
Level – The price at which you want to enter or exit a trade.
Leverage – The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.
Long (long position) – Buying or speculating the price of a stock or currency will rise in value.
Limit Order – Used to take profit or get into a trade at a better price.
M
Margin – Collateral that the holder of a position has to deposit to cover the credit risk of the broker.
Margin Call – When the margin posted in the margin account is below the minimum margin requirement, the broker issues a margin call. The trader now either has to increase the margin that they have deposited, or they can close out their position.
N
NTR (Notional Trading Requirement) – Is another name for margin.
O
Offer Price (also known as ask price) – The price the broker is willing to accept for a stock or currency.
“Out of the Money” – Trade Term
OHLC Bar – Open High Low Close Bar.
Open Positions – What trade you are currently in.
OCO (One Cancels the Other) – An order that is linked to another order and will be cancelled if the other is triggered.
P
P&L – Profit and Loss.
Position Sizing – The amount of money being invested on a trade. Must always be 1% of trading account.
Price Action – The movement of a stock or currencies price.
R
Resistance- Where the price tends to find resistance as it is going up. This means the price is more likely to “bounce” off this level rather than break through it. Minimum 3 touches.
Resting Orders – Orders placed that are waiting to be triggered.
S
Short (short position) – Selling or speculating the price of a stock or currency will decrease in value.
Stop-Loss Order – An order placed with a broker to exit a trade to stop loss.
Spread – The difference between the bid and ask of a stock or currency.
Stake – The amount of pence or pounds you’re putting on a trade.
Support- A price level where the price tends to find support as it is going down. This means the price is more likely to “bounce” off this level rather than break through it. Minimum 3 touches.
T
Trade Risk – The difference between your entry level and stop-loss.
Trading Platform – The platform where you execute trades.
W
Wall Street – The original home of the New York Stock Exchange.
