Forex

The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another. 

Limit Order

A limit order is an order to buy below the current price, or sell above the current price.
For example, if EUR/USD is trading at 1.2952 / 55 and you believe that price is expensive,
you could place a limit order to buy at 1.2945.
If executed, this will give you a long position in EUR/USD at 1.2945, which is 11 pips better than
if you had just bought EUR/USD with a market order.

Stop Order

A stop order is an order where you buy above the current market price or sell below the current market price,
and is used if you are away from your desk and want to catch a trend. If EUR/USD is trading at 1.2952 / 55,
you could place a stop buy order at 1.2970. In case the market moves up to that price, your order will
execute and open a long position. If market continues in the same direction (trend),
the position will bring you profit.

Stop Loss

A trade that is made in order to set a limit to the loss made by an adverse price movement. Market crashes can be exacerbated by the widespread use of stop loss strategies, in particularly where the trades are automated.

Currency

Any kind of money - coins, paper money, wampum - that’s used as a medium of exchange. When referring to forrex trading currencies are USD, JPY, EUR, etc. Currency is paper money and coin issued by a government or central bank, which circulate as the legal medium of exchange.

Position

An interest in the market, either long or short, in the form of open contracts.

Long Position

When somone opens a position expecting the price to go higher. If EUR/USD is 1.27 and you think it will get to 1.28 or higher then you open a long position.

Short position 

When somone opens a position expecting the price to go down. If EUR/USD is 1.27 and you think it will get to 1.26 or lower then you open a short position.

Trend

simply the direction of the market, usually broken down to three categories: major, intermediate and short-term trends. Three directions are also associated with a trend;that is, uptrend, downtrend, and a sideways trend.

This entry was posted on Saturday, November 4th, 2006 at 12:48 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.