Assets

An asset refers to an economic resource, either tangible or intangible, that can be exchanged on markets. Examples of assets include stocks, bonds, currencies or commodities.

Base currency

The first currency quoted in a forex pair is called the base currency. This will always be quoted in relation to a second currency called the quote currency as you are always buying one and selling another.

Bond trading

Bond trading involves trading on fluctuations in the value of corporate or government bonds. These bonds are derived from money being lent to the institution for a fixed period of time.

CFDs

Contracts for difference (CFDs) are derivative products that allow you to trade on financial markets without ever having to own the asset. They allow traders to speculate on market fluctuations and trade by going short or long.

Commission

Commission is a form of compensation that the broker charges for making trades on your behalf.

Currency pairs

Since currencies are traded in pairs, a currency pair is the relative value of one currency again another currency in the foreign exchange market.

Day trading

This short-term type of investment strategy involves traders closing all trades before the market closes the same day.

Derivative

A derivative is a financial product that attains its value from the price of an underlying asset. Traders often trade on derivatives by either going short or long.

Foreign exchange

Foreign exchange (Forex) refers to the ability to trade on international currencies.

Japanese candlestick charts

Japanese candlesticks are used to indicate the price action during a given time frame. These candlesticks can be used to identify any patterns in order to make informed decisions.

Leverage

Leverage allows traders to trade on a much larger scale despite how small their initial deposit is. This has an impact on the amount of profit/loss the trader experiences.

Long vs short

Long refers to trading on the speculation that an asset’s market price increases. Going short refers to trading on the speculation that an asset’s market price decreases.

Margin

Margin refers to the investor’s small amount of capital that is required to open a new position. This is a percentage of the overall cost, that would be required if the product was to be purchased on the market.

MetaTrader

MetaTrader is an online trading platform that can be used by traders.

Open vs close

When a trader enters the market, they “open” their position. When they exit the market, they “close” their position.

Pip

Percentage in Point (Pip) refers to the change in value of a currency pair.

Scalp

This type of trading strategy involves traders quickly opening and closing a position and hopefully benefitting from small price movements, usually within a minute.

Shares

Shares, also known as stocks or equities are the units of the ownership of a company.

Technical analysis

Technical analysis makes use of previous, historical market patterns in order to make future price predictions. Often price charts and market statistics are used.

Trading platform

Trading platforms are computer programs or software that allow traders to process transactions.