Some of the most commonly used terms in financial trading
A trait some Traders have who immediately take action once they have a strong bias on the direction of where price is heading.
Traders who use fundamentals, sentiments, and technicals to get an understanding of the market. They use the information gathered to predict where price may go.
One currency increasing in value against the currency paired against it. If the values goes up, the demand strengthens.
Simultaneously buying and selling the currency across various financial markets to profit from small movements in price between the different markets.
A bullish market pattern that consists of equal highs and higher lows. You can identify this pattern near areas of resistance resembling an ascending triangular shape. The low will consistently get higher but the high will continually reach the same level until price finally bursts through.
7:00pm-4:00am EST. During this session, price tends to consolidate. Certain currencies such as the JPY, AUD, and NZD tend to move during this time.
The offer of a price where traders can buy the base of a currency pair. This price is higher than current market price and the opposite of the bid price. If the price is 1.25040/45, the ask is the “45” part, which is the price the market will sell to you at (1.25045). You can buy the base currency for 1.24045.
Australia’s currency. AUD/Aussie Dollar.
An indicator used to measure the strength of a trend and indicate if it is trending or ranging. It has a range from 0-100 with 100 indicating a very strong trend. The value from 0-20 shows no sign of true trends, if the number is over 25 then the market is trending.
NOTE: This indicator does not help with finding the direction of a trend, it just identifies the strength of a trend.
A country’s imports minus their exports determines the balance of trade. It’s the value difference.
Canada’s Central Bank. Their job is to maintain the wellbeing of the economy via their monetary policy. (Keeping price stable & managing inflation).
London’s Central Bank. Their job, like most central banks is to maintain the wellbeing of their economy via their monetary policy. (Keeping price stable & managing inflation).
Japan’s Central Bank. . Their goal is to continually make sure price remains stable (monetary policy). Based on the Bank of Japan Act, it is a juridical person established and is not a government agency or a private corporation.
A chart consisting of four points to represent the high, low, open, and close of price per bar. The vertical line showing the high and low, the horizontal point to the left showing the open, and the horizontal point to the right to show the close.
The first currency in a currency pair. In the currency pair GBP/USD, GBP is the base currency.
An analysis of price going down. When a trader is bearish on a pair, they think the market will be heading down. A trader is a bear in the market when placing or holding short positions.
A bearish candlestick formation consisting of 2 candlesticks. A bullish candle followed by a bearish candle that ENGULFS the previous candle bringing price further down, which indicates there are more sellers than buyers in the market.
The price where traders can sell the base of a currency pair. It is the opposite of the ask price. It is the price where the market is prepared to buy the currency pair from you at. If you’re looking to sell a pair that shows 1.2040/45, the market is prepared to buy the currency pair from you at 1.2040; which subsequently is the price you’re selling at.
An indicator used to determine volatility, and if price is overbought or oversold. The bands are outside of the price and they widen as volatility increases; while tightening if price and volume starts to die down.
The summary of the total positions taken by a trader.
Coming out of the market with the same balance going in, by neither profiting or losing money. Equal gains to losses.
A sharp movement above or below the support or resistance area. When validated it indicates a strong and fast move in the direction price broke through. Breakouts are great to spot when using the rectangle tool to box in price while it is consolidating.
An agreement that stabilized currencies by linking all of them to the United States Dollar (fixed exchange rate), 44 countries were linked to the United States Dollar. It came to an end in 1971 once President Richard Nixon stopped the Gold Standard (US Dollar linked to Gold) which allowed central banks to print money without it being linked to Gold.
A middleman whose job is to execute buys and sells in the market for their clients (traders).They receive a commission/fee for matching buyers and sellers against each other.
An analysis of price going up. When a trader is bearish on a pair, they think the market will be heading up. A trader is a bull in the market when placing or holding long positions.
A bullish Japanese candlestick formation consisting of 2 candles. A smaller bearish candle followed by a bullish candle that ENGULFS the previous candle bringing price higher up. This formation indicates there are more buyers than sellers in the market.
A trader placing a long position on a trade.
An order placed below the current market price that activates as price comes down to the entry point. Buyers place limits with the expectation of price retracing and pushing to the upside.
An order placed above current market price that activates once price rises above the predetermined entry price.
The result of traders taking long positions causing price to push up and sellers to lose their momentum as price goes into the opposite direction.