Shorts Traders who have sold, or shorted, a product, or those who are bearish on the market. Sidelines, sit on hands Traders staying out of the markets due to directionless, choppy or unclear market conditions are said to be on the sidelines or sitting on their hands. Simple moving average SMA A simple average of a pre-defined number of price bars. For example, a 50 period daily chart SMA is the average closing price of the previous 50 daily closing bars. Slippage The difference between the price that was requested and the price obtained typically due to changing market conditions. Slippery A term used when the market feels like it is ready for a quick move in any direction. Sloppy Choppy trading conditions that lack any meaningful trend and/or follow-through.

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Some of the most common underlying assets for derivative contracts are indices, equities, commodities and currencies. Devaluation When a pegged currency is allowed to weaken or depreciate based on official actions; the opposite of a revaluation. Discount rate Interest rate that an eligible depository institution is charged to borrow short-term funds directly from the Federal Reserve Bank. Divergence In technical analysis, a situation where price and momentum move in opposite directions, such as prices rising while momentum is falling. Divergence is considered either positive or negative ; both kinds of divergence signal major shifts in price direction. Positive/bullish divergence occurs when the price of a security makes a new low while the momentum indicator starts to climb upward.

Stop order A stop order is an order to buy or sell once a pre-defined price is reached. When the price is reached, the stop order becomes a market order and is executed at the best available price. A stop order will be filled at the next available price once the stop level has been reached. Placing contingent orders may not necessarily limit your losses.

Stops building Refers to stop-loss orders building up; the accumulation of stop-loss orders to buy above the market in an upmove, or to sell below the market in a downmove. Strike price The defined price at which the holder of an option can buy or sell the product. Support A price that acts as a floor for past or future price movements.

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Maturity The date of settlement or expiry of a financial product. Medley report Refers to Medley Global Advisors, a market consultancy that maintains close contacts with central bank and government officials around the world. Their reports can frequently move the currency market as they purport to have inside information from policy makers.

  • Day trader Speculators who take positions in commodities and then liquidate those positions prior to the close of the same trading day.
  • Deal A term that denotes a trade done at the current market price.
  • Principals take one side of a position, hoping to earn a spread by closing out the position in a subsequent trade with another party.
  • Day trading Making an open and close trade in the same product in one day.
  • In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.
  • Dealer An individual or firm that acts as a principal or counterpart to a transaction.

Sell Taking a short position in expectation that the market is going to go down. Settlement The process by which a trade is entered into the books, recording the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another. Short-covering After a decline, traders who earlier went short begin buying back. Short position An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short. Short squeeze A situation in which traders are heavily positioned on the short side and a market catalyst causes them to cover in a hurry, causing a sharp price increase.

The accuracy of the reports has fluctuated over time, but the market still pays attention to them in the short-run. Systems that automatically buy and sell based on technical analysis or other quantitative algorithms. MoM Abbreviation for month-over-month, which is the change in a data series relative to the prior month’s level. Momentum A series of technical studies (e.g. RSI, MACD, Stochastics, Momentum) that assesses the rate of change in prices.

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Negative/bearish divergence happens when the price of the security makes a new high, but the indicator fails to do the same and instead moves lower. Divergences frequently occur in extended price moves and frequently resolve with the price reversing direction to follow the momentum indicator. Divergence of MAs A technical observation that describes moving averages of different periods moving away from each other, which generally forecasts a price trend.

A macro trade’s holding period can last anywhere from around six months to multiple years. Manufacturing production Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only measures the 13 sub-sectors that relate directly to manufacturing. Manufacturing makes up approximately 80% of total Industrial Production. Margin call A request from a broker or dealer for additional funds or other collateral on a position that has moved against the customer. Market maker A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial product. Market-to-market Process of re-evaluating all open positions in light of current market prices.

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Sovereign names Refers to central banks active in the spot market. Spot market A market whereby products are traded at their market price for immediate exchange. Settlement of spot transactions https://forexarena.net/ usually occurs within two business days. Spot trade The purchase or sale of a product for immediate delivery . Square Purchase and sales are in balance and thus the dealer has no open position.

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Sterling A nickname for the British pound or the GBP/USD (Great British Pound/U.S. Dollar) currency pair. Stock index The combined price of a group of stocks – expressed against a base number – to allow assessment of how the group of companies is performing relative to the past. Stop entry order This is an order placed to buy above the current price, or to sell below the current price. These orders are useful if you believe the market is heading in one direction and you have a target entry price. Stop-loss hunting When a market seems to be reaching for a certain level that is believed to be heavy with stops.

Rate of Change for Forex Trading

Day trader Speculators who take positions in commodities and then liquidate those positions prior to the close of the same trading day. Day trading Making an open and close trade in the same product in one day. Deal A term that denotes a trade done at the current market price. Dealer An individual or firm that acts as FX Primus Forex Broker a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

Dealing spread The difference between the buying and selling price of a contract. Delivery A trade where both sides make and take actual delivery of the product traded. Delta The ratio between the change in price of a product and the change in price of its underlying market. Derivative A financial contract whose value is based on the value of an underlying asset.

Dividend The amount of a company’s earning distributed to its shareholders – usually described as a value per share. DJIA or Dow Abbreviation for the Dow Jones Industrial Average or US30. Dove Dovish refers to data or a policy view that suggests easier monetary policy or lower interest rates.

Momentum players Traders who align themselves with an intra-day trend that attempts to grab pips. The Rate-of-Change indicator, which is also referred to as simply Momentum, is a pure momentum oscillator that measures the percent change in price from one period to the next. The ROC calculation compares the current price with the price “n” periods ago. The plot forms an oscillator that fluctuates above and below the zero line as the Rate-of-Change moves from positive to negative.

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Downtrend Price action consisting of lower lows and lower highs. Currencies forex Sector A group of securities that operate in a similar industry.

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Support levels A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Suspended trading A temporary halt in the trading of a product. Swap A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate. Swissie The nickname for the Swiss franc or the USD/CHF (U.S. Dollar/Swiss Franc) currency pair. Macro The longest-term trader who bases their trade decisions on fundamental analysis.

Using The Roc To Detect Divergence And Volume Analysis

If stops are triggered, then the price will often jump through the level as a flood of stop-loss orders are triggered. Stop loss order This is an order placed to sell below the current price , or to buy above the current price . By setting stop loss orders against open positions you can limit your potential downside should the market move against you. Remember that stop orders do not guarantee your execution price – a stop order is triggered once the stop level is reached, and will be executed at the next available price.