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Forex Trading Terminology: What Newbie Traders Must Know

In the foreign exchange market, there is a lot of jargon that you are going to come across regardless of the level of education you have. Learning how to trade on the financial markets is a prerequisite for anyone who is interested in entering this industry, which is notoriously cut-throat yet has the potential to yield substantial profits. If you read this glossary, you may perhaps understand the terminology and catch up to the rest of the group, which would enable you to trade instead of reading. It should also help you avoid making rookie mistakes that could prevent you from seeking assistance in the future. If you don’t know what a word or term means, you might want to rethink your approach and ask yourself if you genuinely understand what you’re doing. With your MetaTrader 4 broker on good terms, trading will be more fun as a result of this explanation of the essential terms used in forex trading.

Technical analysts use “real-time charts” to track the movement of currency pairs and forecast their future course during active trading on an exchange. To help them identify trends and signals, traders utilize moving averages, RSI, candlesticks, and other indicators. Using a live chart, you may look over financial data and see how asset prices have changed over time. This might make it easier to find good offers. If you’d prefer, use the live charting features on a different trading platform’s website.

When trading currencies, the term “stop loss” will be used frequently. According to a MetaTrader 4 expert, a stop loss is a specified price or amount at which you’d want to sell your assets in order to protect yourself against a potential fall in the value of your investments. The phrase “target prices” will also be used frequently while discussing currency trading. You want to see these prices when you want to purchase, sell, go long, or go short. Use a stop loss and a target price to protect yourself from a sudden change in the market. Even if the market falls below your stop loss, you can still sell at the predetermined magic number and profit from the price decline. You can easily reenter at the old price and earn more profit if the market moves more than your aim.

“Margins and leverage” mean that the leverage enables you to trade with larger sums of money. You get a margin when you put money down to buy an asset and then borrow against it to boost your trading profit. If you borrowed $100 from yourself to buy a $1,000 stock, you would end up with $900 in your bank account and $100 in debt. When you trade using borrowed money, you are taking a risk. Your money could lose all or any of its value. On the other hand, if you used leverage to buy something for $1,000 but had to borrow money and took several risks, you would only have $100 in your hands. You would have made $1,000, though.

In forex, the “time frames for forex” are the span of time across which prices can be transacted. If your forex trading platform enables you to trade around-the-clock, every day of the week, you might find that the markets are available for trading for considerably longer than that. These time frames will also vary depending on the type of trade you are making. If you’re considering a short-term trading strategy, you might just need a little window of time on the markets. However, if you wish to break a trend or employ a trading method that may be profitable for several months, you will probably need to keep onto your holdings for a lot longer.

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