The Difference Between Long and Short Trades

The Difference Between Long and Short Trades

Ascending wedges typically conclude with a downside breakout and descending wedges typically terminate with upside breakouts. Whipsaw Slang for a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Can be used to identify structure to price movements in financial markets. Elliot Waves come in two forms, impulse and corrective, and patterns made by them are analyzed to predict trends.

Forex Trading Vocabulary

A derivative is a financial product that enables traders to speculate on the price movement of assets without purchasing the assets themselves. Because there is nothing physical being traded when derivative positions are opened, they usually exist as a contract between two parties. A currency peg is a governmental policy of fixing the exchange rate of its currency to that of another currency, or occasionally to the gold price. It can sometimes also be referred to as a fixed exchange rate, or pegging. They are also commonly known as technical analysts, or technical traders.

Institutional investors are inclined to seek out liquid investments so that their trading activity will not influence the market price. An order given for an options or futures trade specifying a certain maximum (or minimum) price, beyond which the order (buy or sell) is not to be executed.

The currency of the Solomon Islands. The currency of Saudi Arabia. It is subdivided into 100 halalas.

Forex Trading Vocabulary

It’s a great thing because even if you’re on holiday when you don’t watch how the market and currency rates change, the software does it for you. We will take the USD/CHF currency pair.

A spread is the pip difference between the bid and the ask price of an underlying asset. As it is essentially the cost of making a trade, it is important for Forex traders to know what spreads are. To find the spread we minus the Bid (Sell) Price from the Ask (Buy) Price.

Moving Average

  • Funds are exchanged on the settlement date, not the transaction date.
  • Similarly, positive divergence between the price and the indicator implies price may change to the upside, while a negative divergence may hint for a reversal to the downside.
  • The currency of Curaçao and Sint Maarten (Dutch part).
  • Different currencies have different lot sizes available.
  • When it comes to stock market trading, the terms long and short refer to whether a trade was initiated by buying first or selling first.
  • Forex is one of the most active markets in the world, drawing consistent volume daily from international participants.

Take the time to get to grips with forex jargon because understanding forex vocabulary is an important step in a trader’s journey. an indicator that allows users to compare volatility and relative price levels over a period of time. Made up of a Simple Moving Average (SMA), an Upper Band (SMA plus two standard deviations), and a Lower Band (SMA minus two standard deviations). Momentum indicators that show subtle reversals in non-trending prices, and also indicate short-term overbought or oversold conditions.

The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff. Arbitrage channel – An"arbitrage channel" is the range of prices within which there will be no possibility to arbitrage between the cash and futures market. It sort of like a permanently open telephone line on speaker.

Since the market failed to record a new low, a support may have been formed and a possible reversal may be in place. At the end of an uptrend, a long white candlestick and a smaller white candle that follows, share the same closing price. Even though the second candle opens lower than the previous close, it doesn’t manage to move lower and eventually it closes at the same price as the previous session.

Forex Trading Vocabulary

The currency of Norway and Bouvet Island. The currency of Nicaragua. It is subdivided into 100 kobo.

Indicates the forecasted price movements for each of the eight currencies in the Currency Ranking service due to expected medium-term rate fluctuations. Forex Trading Vocabulary The relative strength for each currency is computed from a correlation between a Trading Model-generated forecast and the currency's price history.

A reading of 0 means that the latest closing prices is equal to the lowest price of the price range over the chosen time period. A reading of 100 means that the latest closing price is equal to the highest price recorded for the price range over the chosen time period. A Technical Analysis tool based on the Linear Regression Trendine and the specified number of Standard Deviations. It is attached on the chart by selecting the first price representing the beginning of the trend and then dragging the mouse to the second price in the direction of the trend.

Key Terms for New Forex Traders

Some currencies are typically only quoted against the US dollar, such as the Algerian dinar (DZD) and the Andorran franc (ADF). The exchange rate of the Algerian dinar against the Andorran franc is thus computed from DZD-USD and ADF-USD.

The currency of the Republic of Moldova. At the end of a decline, a long black candlestick and a smaller black candle that follows, share the same closing price. Even though the second candle opens higher than the previous close, it doesn’t manage to follow through and eventually it closes at the same price as the previous session. This is indicative of a possible bottom.

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