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Forex Training Coimbatore - India
What is FOREX?
The simple sense of Forex (Forex currency exchange, Foreign Exchange) is simultaneous purchase and sale of the currency or the exchange of one country's currency for the one of another country. The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.
Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study. The foreign exchange market is the largest financial market in the world, with the equivalent of over $1.9 trillion changing hands daily; more than three times the aggregate amount of the US Equity and Treasury markets combined.
Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 3 pips. In the EUR/USD price of 1.3022 a pip would be the '2' at the end. So the bid/ask quote of EUR/USD might be 1.3022/1.3025.
The main enticements of currency dealing to private investors and attractions for short-term Forex trading are:
* 24-hour trading, 5 days a week with non-stop access to global Forex dealers.
* An enormous liquid market making it easy to trade most currencies.
* Volatile markets offering profit opportunities.
* Standard instruments for controlling risk exposure.
* The ability to profit in rising or falling markets.
* Leveraged trading with low margin requirements.
* Many options for zero commission trading.
What is Leverage?
Leverage is the ability to gear your account into a position greater than your total account margin. For instance, if a trader has $1,000 of margin in his account and he opens a $100,000 position, he leverages his account by 100 times, or 100:1. If he opens a $200,000 position with $1,000 of margin in his account, his leverage is 200 times, or 200:1. Increasing your leverage magnifies both gains and losses. If he opens a $500,000 position with $1,000 of margin in his account, his leverage is 500 times, or 500:1.
What is Spread?
Spread is different price between Bid and Ask. The difference between the sell quote and the buy quote or the bid and offer price. For example, if GBP/USD quotes read 1.4200/03, the spread is the difference between 1.4200 and 1.4203, or 3 pips.
What is Pip?
Pip is a small amount on price movement. Exp : GBP/USD : 1.4000 change to 1.4001 so movement pip is 1 pip.
What is Lot?
Lot is same name with Volume. The standard unit size of a transaction. Typically, one standard lot is equal to 100,000 units of the base currency, 10,000 units if it's a mini, or 1,000 units if it's a micro.
What is Take Profit?
Take Profit is setting stop trading after we got a profit. Exp : Buy GBP/USD position at price 1.4300 and price move up to 1.4320 and if set take profit at 1.4320, you already got profit 20 pips.
What is Stop Loss?
Setting for stop trading if got loss. Exp : Buy GBP/USD position at price 1.4300 and price move down to 1.4280 and if set stop loss at 1.4280, you loss 20 pips.
What is Balance?
Totals all your money deposit to your trading account.
What is Margin?
Money that you need to use for open or maintain position. Amount of margin required is depend on how much you use lot to trade.
Margin calculation : LOT * CONTRACT SIZE * CURRENT MARKET PRICE / LEVERAGE
Example Calculate Margin :
GBP/USD : 1.5020 (current market price)
Lot : 1.0
Contract size : 100,000
Leverage : 1:200
So, 1.0(lot) * 100,000(contract size) * 1.5020(current market price) / 200(leverage)
- 1.0 * 100,000 = 100,000 * 1.5020 = 150,200 / 200 = $751 margin use.
What is Equity?
Equity is Balance - Floating
What is Free Margin?
Free Margin that mean you can use for trading or maintain your open positions.
What is Margin Level?
Margin Level calculate in percentage from your free margin level.
What is Buy Stop?
Buy Stop is pending order that you can place and park your order above current market price
Exp : EUR/USD current market price 1.3525, you can place your buy stop position above current market like 1.3530. When market going up to price 1.3530, it automatically open your buy stop position to buy position.
What is Sell Stop?
Sell Stop is pending order that you can place and park your order below current market price
Exp : EUR/USD current market price 1.3525, you can place your sell stop position below current market like 1.3520. When market going down to price 1.3520, it automatically open your sell stop position to sell position.
What is Buy Limit?
Buy Limit is pending order that you can place and park your order below current market price
Exp : EUR/USD current market price 1.3525, you can place your buy limit position below current market like 1.3520. When market going down to price 1.3520, it automatically open your buy limit position to buy position.
What is Sell Limit?
Sell Limit is pending order that you can place and park your order above current market price
Exp : EUR/USD current market price 1.3525, you can place your sell limit position above current market like 1.3530. When market going up to price 1.3530, it automatically open your sell limit position to sell position.
Margin Call
A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the customer.
Step Out
Step Out mean your position will close automatically after your margin is not enough to cover your loss if market moved again your position.
What is Gap?
Refers to two types of situation: A bid of the current quotation that is higher than the ask of the preceding quotation, and an ask of the current quotation that is lower than the bid of the preceding quotation. It’s sometimes always happen on Monday when market open.
What is Spike?
Spike is an Error Quote from broker server.
Spike is an error quote with the following characteristics:
a) a significant price gap;
b) in a short period of time the price rebounds with a price gap;
c) before it appears there is no rapid price movement;
d) before it appears there is no important macroeconomic indicators and/or corporate reports.
Usually a broker gets error quotes from information systems. Error quotes mainly appear because of two reasons:
1. Technical failure.
2. A separate deal, often mistaken, made in the information system. e.g. one of the sellers sells a lot at a price much lower than the current one (e.g. by mistake). One of the buyers buys this lot immediately. Nobody can buy anything at this price any more but as there was a deal at this quote thus the quote appears in the information system. On real accounts deals are not executed at the Error quotes. If they are executed they will be annulled and the spike will be deleted from the quotes archive. Deals are not annulled on demo accounts.
What is Slippage?
The difference between the order price and the executed price, measured in pips. Slippage often occurs in fast moving and volatile markets, or where there is manual execution of trades.
What is Maximum Deviation?
Maximum Deviation is setting for allow enter market with different price that we set for buy or sell in cases market movement to fast.
What is Swap?
An exchange of streams of payments over time according to specified terms. The most common type is an interest rate swap, in which one party agrees to pay a fixed interest rate in return for receiving a adjustable rate from another party.
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