“Forex is the exchange of one currency for another. Understanding forex trading terminologies is crucial in learning how to trade these currencies. All forex traders need to clearly understand a huge number of terms associated with trading and the markets. Outlined below is a comprehensive list that explains and defines popular forex trading terms.”
Leverage is the ratio of the amount used in a transaction to the required deposit. It is the capital that you borrow from brokers for the short term which enables you to control a big position with relatively small capital. 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 wants.
Trading is calculated in lots. Lot is a measurement unit used for trading on electronic platforms such as FXC trader or MT5. For example, in 1 lot there are 100.000 units in forex currency pairs. You can see that information anytime by clicking on the information button on the platform at the instrument.
Balance is the sum of all of the closed positions. For example, you deposit 1.000 USD, open trade and see a 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. The same applies to all of your closed positions, with profit and loss.
Equity is showing the real account value in real-time. It means that if you 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 open. And if you close that position, then your balance will be 1250 USD. It can even be multiple open positions or just one. The calculation of the equity means that the sum of all open positions profit or loss, plus the value of balance, will be that result.
Credit is the currency amount of your deposit bonus provided from FXCentrum. For terms and conditions about this bonus, please click this link.
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 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 already included the leverage and the price of the instrument, depending on the number 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 800 USD margin, or you can deposit 800 USD, to have a 500 USD free margin.
Margin Level is the percentage (%) value based on the amount of Equity versus the 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 which is available to trade, see the free margin.
Spread in forex 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 EUR/USD 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. Forex companies do not charge commissions; they make their money through spreads. Some of the factors that influence the size of the spread are the demand for the currency, its volatility and the size of your trade.
In a simple explanation, it is the interest, in holding the position overnight. It can be profit or deduction, depending on the instrument and the side (long, short). If the position is opened, then it is charged at 0:00 CEST. Weekend swaps (3day swaps) are calculated on Wednesday or Thursday, depending on the instrument. When opening information about the instrument, there are written long position and short position swaps for a day.
Commissions are fees charged by the broker for opening and closing positions. It is a fee for entering and exiting the market to the broker as a service. On FXCentrum, commissions are zero for all account types (except the ECN).
In forex trading, pip is the measurement value of the currency pair. It is the second last digit in the currency pair. For example, if the EUR/USD has a value of 1.15678, then the number 7 is the pip point. If the value of the EUR/USD goes to 1.15788, then the currency pair moves 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 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 one cent is 100 pips or 1000 points.
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 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.
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 the market immediately.
Is the price, you enter the market when you go long, or exit the market when you go short.
Is the price, you enter the market when you go short, or exit the market when you go long.
Is the name of the instrument on the trading platform. Usually a ticker. For example, Apple Inc. have a ticker AAPL.US.
It is the expression, to buy an instrument for making a profit, when the price will go up. Is to click the Buy button in the order menu. Green in the FXC trader and blue in the MT5.
It is the expression, to buy an instrument for making a profit, when the price will go down. Is to click the Sell button in the order menu, with red.
It is an expression to say that the market trend is up. Usually, it expresses a long term trend.
It is an expression to say that the market trend is down. Usually, it is expressing a long term trend
Rollover happens when a futures contract expires in the underlying market and the broker rolls 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.
It is a notification to inform you that you do not have enough margin to keep your positions open, 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%.
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 done automatically until the margin level is above the stop-out level.
Take Profit: A market order or value used to automatically close a profitable position once it reaches a certain level. As the name refers to when to take the profit. It is a setup 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, if 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 in the direction of your order. I mean when you go long, it must be set up at a higher value than the actual price. When you go short, then the T/P must be set lower than the actual price.
It is a market order or value used to automatically close a losing order or position once it has reached a certain level. As the name refers, when to stop the position from having more potential losses. It is a setup 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 the maximum limit that you are willing to risk on this exact trade.
For example, if 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 in 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.
Many people know that S/L is a setup 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 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 email email@example.com or chat.
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.
This refers to the purchase of an asset or a currency pair with the expectation that its market value is set to rise. If you were to ‘buy’ GBP against USD for instance, you would be betting that the British pound sterling is going to outperform the US Dollar. If you buy Dow Jones 30 or US30, you would be betting that the price of the stock index is going to rise.
A short position is the sale of an asset or a currency pair, with the expectation that its market value is set to fall. If you were to ‘sell’ GBP against USD for instance, you would be betting that the US Dollar is going to perform more strongly than the British pound sterling.
A trading strategy that relies on economic, social and political data to predict the outcome of a currency pair.
A range of techniques using chart patterns (of past performance) to forecast the future price movements of an asset.
They are financial services organizations that provide forex traders access to a platform for executing forex transactions. They serve as intermediaries between interbank currency facilities and traders.
An increase in the value of an exchange rate
A decrease in the value of an exchange rate
Involves the use of various strategies to help control and reduce financial risk. An example is putting a stop-loss order which helps in potentially minimizing losses on a trade.
They are one of the most important concepts in technical analysis. Traders that adopt technical analysis strategies analyze only price-moves since they believe that the price reflects the available fundamental information; support and resistance trading has a powerful impact in that analysis.
Pending order is a special setup before opening a trade, that is available on FXC trading platforms. It is a pre-setting of the order, to enter the market at a different price.
There are a few types of pending orders and here are the simple explanations.
You want to trade on the rise of the instrument’s price, but want to wait, when the price will go a little lower first.
For example, the price of 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 falls to 1790, it will automatically enter 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.
It is the opposite of the buy limit. If you want to trade on the fall of the instrument’s price, but want to wait, when the price will go up a little 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.
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 in your direction, so long at this order. These kinds of orders are usually used to set up, before some major economic data or events.
For example: Price of gold is 1800. I want to go long, but not at the exact time, so I can set up a buy stop order, when the price will rise to 1805, then I want to enter the market.
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 go short (sell).
For example: Price of gold is 1800. I want to go short, but not at the exact time, so I can set up a sell stop order, when the price drops to 1795, then I want to enter the market.
Available only on MT5
Available only on MT5
On FXC trader, when you set up the pending order, it will reserve the exact needed margin for that order.