BASIC TERMINOLOGY

LEVERAGE UP TO 1:1000

FXC clients have the freedom to choose the leverage up to 1:1000 in the registration form. When the clients would like to change the leverage, they can simply contact our support and we will change the leverage as the client want.

Using leverage means that you can trade positions larger than the amount of money in your trading account.
Leverage is expressed as a ratio, for instance 1:100, 1:500. 1:1000 etc. It easily means, that for every 1 USD you invest, FXC broker will lend you 1000 USD.

For example, in 1 lot of EURUSD currency FX pair, the contract is worth 100.000 USD times the price (for example 1,15).
To open the 1 lot contract without leverage and to earn from the currency pair movement, you need to invest 100.000 USD times actual price. Because of the leverage 1:1000, that FXC is allowing you, you can open the 1 lot position just with 100 USD times actual price.

Example:

Symbol: EURUSD

Actual price: 1,15649

Leverage: 1:1000

1 lot = 100.000 USD

Calculation of 1 lot:

Step 1:              100.000 x 1,15649 = 115.649 USD

Step 2:              115.649 / 1000 = 115,649 USD

It means, to open 1 lot position, you need to have a free margin of at least 115,649 USD available (plus spread – if the spread is for example 3 USD, then to add the calculation to the free margin).

Using leverage, you can potentially earn high profit from a small amount of investment, but you need to be aware, that you can also create loss faster, if your risk management is not careful enough. That is why the clients have the free choice to set up the leverage of their own wish.
For better risk management, we recommend asking our FXC support, how to get The FXCentrum Investment specialist manager, for advice or explanation.

Leverage is simply said, lowering the margin requirements for opening a trade position.

Maximum leverage on the instruments depends on the leverage account set up and account type.
Maximum leverage for Equities and ETF´s is 1:5 in any account type.

NEGATIVE BALANCE PROTECTION

Negative balance protection protects you from not owing any money to the broker, because of using the leverage or other services.
Simply said, you cannot lose in the market more money, then what you invested.
If such situation will appear because of the high volatility or market open gap.

BALANCE

Balance is the sum of all of the closed positions.

For example, you deposit 1.000 USD , open a trade and see net profit of 135 USD.
You close the position.
Your position was +135 USD, so this amount will be added to your balance, and you will see the value of your balance is 1.135 USD.
Same applies to all of your closed positions, with profit and loss.

EQUITY (ACCOUNT VALUE)

Equity is showing the real account value in real time.

It means, that if you will close all of your positions in this exact second, then this will be the value of your balance.

For example, if the balance is 1100 USD, and equity (account value) is 1250 USD , it means, that you still have some positions opened. And if you will close that positions, then your balance will be 1250 USD.
It can even be multiple opened positions or just one. The calculation of the equity means, that the sum of all opened positions profit or loss, plus the value of balance, will be that result.

CREDIT

Credit is the currency amount of your deposit bonus provided from FXCentrum.
For terms and conditions about this bonus, please click this link https://fxcentrum.com/deposit-bonus-agreement/

MARGIN

Margin is the amount of the currency, that you have already invested from your balance.
The calculation includes the leverage (see the explanation about the leverage).

FREE MARGIN

Free margin is the amount of the currency, that you have still available to invest in the market.

Before clicking to open a trade on the FXC platform, you can see the margin that it will take from your free margin. That calculation is already included the leverage and the price of the instrument, depended on the amount of lots you set.

Free margin can be also negative, it means, that if you want to open a position that requires 500 USD of your margin, and your free margin is -300 USD, then you need to close opened positions worth of 800 USD margin,

or you can deposit 800 USD, to have a 500 USD free margin.

MARGIN LEVEL

Margin Level is the percentage (%) value based on the amount of Equity VS Used Margin.

Margin Level allows you to know how much of your funds are available for new trades.

The higher the Margin Level, the more Free Margin you have available to trade.

If the Margin level hits the value of 100%, it means that there is 0 of the currency available to invest.

If you want to know the exact currency value of which is available to trade, see the free margin.

SPREAD

Spread is the difference, between the BID (sell) and ASK (buy) price of the instrument.

This difference is charged immediately after buying or selling.

It means, that if the spread for EURUSD is for example 1 pips, which means 10 points, which is 10 USD, then after opening a position you immediately do not see 0 in the profit/loss column, but – 10 USD.

SWAPS

In a simple explanation, it is the interest, for holding the position overnight. It can be profit or deduction, depends on the instrument and the side (long, short).

If the position is opened, then it is charged at 0:00 CEST.

Swaps on FXC instruments are usually calculated daily, including weekends. Some instruments may have weekend swaps applied on Wednesday or Thursday.

When opening an information about the instrument, there are written long position and short position swaps for a day.

COMMISSIONS

Commissions are fees charged by the broker for opening and closing position.

It is a fee for entering and exiting the market to the broker as a service.

IN THE FXCENTRUM, COMMISIONS ARE ZERO FOR ALL ACCOUNT TYPES (except the ECN).

PIPS OR POINTS

In forex, pip is the measurement value of the currency pair.

It is the second last digit in the currency pair.

For example, if the EURUSD have a value of 1.15678, then the number 7 is the pip point.

If the value of the EURUSD will go to 1.15788, then the currency pair moved 1 pip up.

Some traders also use points as a measurement of the movement. Points are the last digit of the currency pair.

So, when we will take a look at the same movement as in the example, then it will be said that the pair moved 10 points. So, in this example of the currency pair, the movement of a one cent, is 100 pips, or 1000 points. 

CONTRACT VALUE

Different instruments have a different contract value in one traded lot.

Contract value is the calculation of the contracts x volume x real time price.

It is showing the amount of margin you must have to open that volume, without a leverage.

It is showing you the real contract value of the trade.

To see, how much margin it will take from our trading account, you can see the margin. 

VOLUME (LOT)

Trading is calculated in lots.

A lot is a measurement unit used for trading on the electronic platforms such as FXC trader or MT5.

For example, in 1 lot there is 100.000 units in forex currency pairs.

You can see that information anytime by clicking at the information button on the platform at the instrument. 

INSTANT EXECUTION

There are 2 types of trades that you can make.

Instant execution type means to open a trade at the exact time at the real, live prices.

Simply, to enter to the market immediately. 

PENDING ORDERS

Pending order is a special set up before opening a trade, that is available on FXC trading platforms.

It is a pre-setting of the order, to enter the market on a different price.

There are few types of pending orders and here are the simple explanations:

BUY LIMIT

You want to trade on the rise of the instruments price, but want to wait, when the price will go a little lower first.

For example: price of the gold is now 1800.

I want to go long for the instrument (Buy order). But I do not want to enter the price right now, because I think, the price will go down first and then up.

So, I can set up a Buy Limit order to 1790. It easily means, that if the price will fall to 1790, it will automatically make the enter of the market, for the buy (long).

If the price will not meet 1790, the execution will not be made, and my margin is not invested in the market.

SELL LIMIT:

It is the opposite of the buy limit.

If you want to trade on the fall of the instruments price, but want to wait, when the price will go a little up first.

For example, when the price of gold is 1790, I want to go short, but think the price will rise first, so I set up a Sell Limit order to 1800.

BUY STOP:

Stop pending orders are very popular in the trading strategies for breakouts, waiting for the trend confirmation or others.

It simply means, that you want to enter the market long (buy) after the price will move your direction, so long at this order. This kind of orders are usually used to set up, before some major economic data or events.

For example: Price of the gold is 1800.

I want to go long, but not at the exact time, so I can set up a buy stop order, that when the price will rise to 1805, then I want to enter the market.

SELL STOP:

It is the opposite of the buy stop. It means, that I want to enter the market to go short, but not at the exact price. I want to wait for the drop of the instrument and then to go short (sell).

For example: Price of the gold is 1800.

I want to go short, but not at the exact time, so I can set up a sell stop order, that when the price will drop to 1795, then I want to enter the market.

BUY STOP LIMIT:

Available only on MT5

SELL STOP LIMIT:

Available only on MT5

On FXC trader, when you set up the pending order, it will reserve the exact needed margin for that order.

Ask price.

Is the price, you enter the market when you go long, or exit the market when you go short. 

BID PRICE

Is the price, you enter the market when you go short, or exit the market when you go long. 

SYMBOL

Is the name of the instrument on the trading platform. Usually a ticker.

For example, Apple Inc. have a ticker AAPL.US

OPEN POSITION FOR LONG (BUY)

It is the expression, to buy the instrument for making a profit, when the price will go up.

Is to click Buy button in the order menu.

Green colour in the FXC trader and blue colour in the MT5. 

BULL MARKET

It is an expression to say, that the market trend is up.  Usually, it is expressing long term trend. 

OPEN POSITION FOR SHORT (SELL)

It is the expression, to buy the instrument for making a profit, when the price will go down.

Is to click Sell button in the order menu, with red colour. 

BEAR MARKET

It is an expression to say, that the market trend is down. 

Usually, it is expressing long term trend.

ROLLOVER

Rollover happens when a futures contract expires in the underlying market and the broker roll your trade to the next futures contract.

The rollover has 0 net cost to your open positions. Sometimes there is a small change in price between futures contracts, which is reflected in your open Profit or Loss.

However, this change is compensated by a Rollover booking to ensure 0 net cost of Rollover.

Please note that the price change can activate pending orders, which should be adjusted accordingly. 

MARGIN CALL

It is a notification to inform you, that you do not have enough margin to keep your positions opened, and you are close to a stop out level. To increase your margin and increase your margin level, you can deposit funds to your trading account, or close some of the opened positions.

Margin call notification is set to 50% of the margin level, and on ECN accounts to 100%. 

STOP-OUT LEVEL

The stop-out level refers to the margin level at which your open positions get automatically closed.

The stop-out level is reached when the margin level in the trading account is equal or falls below 30% of the required margin, and on ECN accounts 50%.

It is doing automatically until the margin level is above the stop out level. 

TAKE PROFIT (T/P)

It is a value when you want to automatically close the order. As the name refers, when to take the profit.

It is a set up that can be done before or after setting up the order. It refers to the exact price, pips movement, exact profit number or % profit. The exact price is not 100% guaranteed, it means that the order will be activated at that moment, when the price is met.

For example, you buy gold at 1800, and set up T/P at 1805, then the order will be in the market, until the price hits 1805.

T/P must be set up at the direction of your order.

I mean when you go long, it must be set up at a higher value then the actual price.

When you go short, then the T/P must be set lower than the actual price. 

STOP LOSS (S/L)

It is a value when you want to automatically close the order. As the name refers, when to stop the position from having more potential losses.

It is a set up that can be done before or after setting up the order. It refers to the exact price, pips movement, exact profit number or % profit.

It is one of the basic options for risk management. You are setting up the value, of where is the maximum limit that you are willing to risk on this exact trade.

For example, you buy gold at 1800, and set up S/L at 1795, then the order will be in the market, until the price hits 1795. S/L must be set up at the opposite direction of your order.

I mean when you go long, it must be set up at a lower value than the actual price.

When you go short, then the S/L must be set higher than the actual price. 

POSITIVE STOP LOSS
EXIT THE MARKET ONLY WITH PROFIT

Many people know that S/L is a set up to stop the trade in loss. There is a successful strategy to set up both Take profit and Stop loss in a positive value, so you can “lock” your position and to end only in profit.

To know how to do it, you need a certified personal FXCentrum manager, to show you how to do it.

For more information, please contact our support on email support@fxcentrum.com  or chat. 

TRAILING STOP

It is simply a moving Stop loss.

You can set up the pip value that will always represent the width between the actual price, and the Stop loss level.