The forex industry is made up of so many definitions that it's easy to forget a few along the way. Do you know your Loonie from your Loti? Can you tell your Shooting Star from your Evening Star? Take the time to get to grips with forex jargon because understanding forex vocabulary is an important step in a trader’s journey.
Since no forex education can be complete without a glossary of basic forex terms, we've compiled one which explains key words and phrases in the simplest way possible. This way, you'll never be lost or confused with forex terminology!
A Japanese candlestick pattern signaling a reversal. It consists of three candles. In a downtrend, a long black candle is followed by a Doji that gaps lower. A third candle, with a long white body gaps above the Doji’s high.
The lowest point a trader’s balance reaches below the Initial Deposit.
History of performed trades on a specific account on the MT4 platform.
A technical Indicator developed by Mark Chaikin. When the close price is above the mid-point of the daily range, then a positive number is returned implying buying pressure (accumulation). Similarly, when the close price is below the mid-point of the range, then a negative number is returned implying a selling pressure (distribution). The daily volume is multiplied by the above number to determine the weight of the price in the calculation of the indicator.
Calculation: [ (close – low) – (high – close) x volume] / (high – low)
In Elliott Wave Theory, there are waves that move in the direction of the trend of one larger degree.
A technical Indicator developed by Perry Kaufman to account for market volatility.
Estimated change of US employed people, excluding the farming and the government sector. Released by Automatic Data Processing, Inc. about two days before the official NFP report.
A Japanese candlestick bullish reversal pattern. Also known as Three White Soldiers. It consists of three long white candles with short or non-existent shadows. Each open is below the previous close. Each close is above the previous close.
Advance Directional Movement Index. It’s a technical indicator designed by Welles Wilder to determine the presence of price trend. A reading above 25 indicates the presence of a trend. Buy/Sell signals are provided by the crossing of +DI and -DI.
UAE Dirham. The currency of the United Arab Emirates. It is subdivided into 100 fils.
An Affiliate is a member of the corresponding Elite Assets Equity Partners' program, who directs online traffic to Elite Assets Equity and benefits from the trading of his referrals in accordance with the Hybrid Affiliate commission plan.
See AFN.
Afghani. The currency of Afghanistan. It is subdivided into 100 pul.
When a bank or financial body is exposed to forex contracts from a single customer.
See DZD.
Step by step programming instructions on how to carry out trading orders in electronic financial markets. Discipline and emotion- free trades are the advantages of this type of trading.
Lek. The currency of Albania. It is subdivided into 100 qindarka.
A technical Indicator designed by Dr. Bill Williams. It consists of 3 moving average lines: The Alligator’s Jaw (blue line) is a 13-period Smoothed Moving Average shifted into the future, by 8 bars. The Alligator’s Teeth (red line) is an 8-period Smoothed Moving Average shifted into the future by 5 bars. The Alligator’s Lips (green line) is a 5-period Smoothed Moving Average shifted into the future by 3 bars.
Armenian Dram. The currency of Armenia. It is subdivided into 100 luma.
A technical analysis tool developed by Dr. Alan Andrews. It is drawn by selecting 3 major consecutive tops and bottoms. The result is a line study of 3 parallel lines acting just like support and resistance.
Netherlands Antillean Guilder. The currency of Curaçao and Sint Maarten (Dutch part). It is subdivided into 100 cents.
Kwanza. The currency of Angola. It is subdivided into 100 centimos.
The simultaneous buying and selling of a financial instrument in different markets to take advantage of different pricing.
See ARS.
See AMD.
Argentine Peso. The currency of Argentina. It is subdivided into 100 centavos.
See AWG.
A technical analysis price pattern, where price action is contained within two upward sloping parallel lines. The basic line is drawn through the bottoms, whereas the return line is drawn through the tops.
An upward sloping line connecting two or more bottoms.
Trading activity between 11:00 pm (GMT+2) and 08:00 am (GMT+2).
The price at which a trader accepts to buy a financial instrument.
An item/resource of value.
Refers to portfolio diversification among stocks, bonds, commodities, cash and other asset classes.
The Average True Range is an indicator developed by Welles Wilder to measure volatility.
Wilder believed that high ATR readings occur at bottoms after a strong downtrend characterized by “panic” sell-off. Low ATR readings are usually found at tops and during periods of consolidation.
Trend reversals are usually accompanied by high ATR values, whereas sideways movements or weak trends are accompanied by low values.
The True Range is the greatest of the following:
The Average True Range is the moving average of the true range values.
Australian Dollar. The currency of Australia, Christmas Island, the Cocos (Keeling) Islands, Kiribati, Nauru, Norfolk Island and Tuvalu. It is subdivided into 100 cents.
Australian Dollar.
See AUD.
An MT4 chart setting, that when enabled, it sifts automatically to the left to display the new incoming price (I.e. candlestick).
A computer program that submits orders to electronic exchanges based on a set of pre-defined instructions.
See ADX.
A change in the labour pay excluding the farming sector. Released monthly by the Bureau of Labor Statistics.
See ATR.
A technical indicator (AO) designed by Dr. Bill Williams. It’s
the difference between a 5-period simple moving average and a
34-period simple moving average, applied to bar’s mid-point prices
(H-L)/ 2.
Buying opportunities arise when the AO crosses above
the zero line. Similarly, sell opportunities arise when AO crosses
below the zero line.
Aruban Florin. The currency of Aruba. It is subdivided into 100 cents.
See AZN.
Azerbaijanian Manat. The currency of Azerbaijan. It is subdivided into 100 qepik.
A feature of trading platforms that allow the testing of expert advisors on historical data. The results help traders and developers to assess the performance of their strategies.
See BSD.
See BHD.
See THB.
The amount of money in the account, excluding credit and the floating profit of currently open orders.
See PAB.
Convertible Mark. The currency of Bosnia and Herzegovina. It is subdivided into 100 fenings (or phenigs).
See. BDT.
Average outstanding loans provided to Japanese residents and businesses by domestic banks. Released monthly by the Bank of Japan.
A Bank of Central Banks, based in Basel Switzerland. It facilitates collaboration among its members and serves Central Banks in their pursuit for global monetary and financial stability.
The rate at which a country's central bank lends money to its domestic banks.
The major US Banks are examined under a number of conditions such as global recession and high unemployment, to assess whether they will be able to lend to households and businesses under three scenarios: severely adverse, adverse, and baseline. Released by the Federal Reserve.
The western technique for price charting, comprising of a vertical line representing the price range of a certain period. The highest point represents the high price and the lowest point on the vertical line represents the low price. A tick to the left represents the opening price whereas a tick to the right represents the closing price.
The current bar’s closing price is lower than that of the previous bar.
The current bar’s closing price is higher than that of the previous bar.
See BBD.
Unit of volume used contract sizes for Brent, Crude Oil and other petroleum products. One barrel is equal to 42 US gallons.
The first currency in a pair is called the base currency. For example, in USD/JPY pair, USD is the base currency.
The interest rate that a Central Bank will charge for lending to commercial banks.
One percent of one percent. Usually used for changes in Interest Rates where references are less than one percent. 1bp = 0.0001.
Previous month’s approved mortgages by the members of the British Bankers’ Association. Released monthly.
Barbados Dollar. The currency of Barbados. It is subdivided into 100 cents.
Taka. The currency of Bangladesh. It is subdivided into 100 poisha.
A trader whose outlook on the market or a specific financial instrument is negative. A trader who expects prices to fall.
The close of the candlestick is lower than the open price, revealing negative sentiment.
When the prices of certain financial instruments, or markets are declining.
A short-lived breakout below a bottom triggering a sell entry. After the false breakout, prices switch direction.
The belief that the market or specific financial instrument will fall.
Certain price formations that signal the end of an uptrend and the beginning of a downtrend.
The negative outlook towards a financial instrument or market.
A technical analysis oscillator developed by Alexander Elder. It is the difference between the lowest price of a period and 13-period exponential moving average. A buy signal is triggered when the Bears Power index is below zero and rising while a trend indicator (i.e. moving average) is pointing upwards.
A subfield of finance that attempts to explain traders’/investors’ decision making in the financial markets. It combines theories of Psychology and Finance. It is in contrast to Efficient Market Hypothesis.
See BYN.
See BZD.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a decline or near a support area. The candle has a long white body and very small or non-existent lower shadow, that is, Shaven Bottom. It reveals the determination of the bulls to push prices higher.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the top of an uptrend or near a resistance area. The candle has a long white body and very small or non-existent upper shadow, that is, Shaven Top. It reveals the determination of the bears to push prices lower.
See BMD.
Bulgarian Lev. The currency of Bulgaria. It is subdivided into 100 stotinki.
Bahraini Dinar. The currency of Bahrain. It is subdivided into 1000 fils.
The price at which a trader is prepared to sell a financial instrument.
Burundi Franc. The currency of Burundi.
See Bank of International Settlements.
A decentralized digital currency used for peer-to-peer transactions. It was introduced in 2009 by a programmer using the name Satoshi Nakamoto. The number of bitcoins in circulation will not exceed 21 million.
Bermudian Dollar. The currency of Bermuda. It is subdivided into 100 cents.
Brunei Dollar. The currency of Brunei Darussalam. It is subdivided into 100 cents (or sen).
Boliviano. The currency of Bolivia (Plurinational State of). It is subdivided into 100 cents (or centavos).
See VEF.
See BOB.
A technical indicator developed by John Bollinger. The upper band is drawn 2 standard deviations above a simple moving average and the lower band 2 standard deviations below the simple moving average. Bollinger Bands measure volatility and display price extremes.
A debt instrument, where the issuer borrows money from the buyer, with the obligation to repay the principal and predefined interest at the maturity date.
The annual interest divided by the value the bond was purchased.
See BAM.
See BWP.
A significant low on the price chart where buying pressure overcomes selling pressure.
A five-candle bearish reversal formation. The first candle is a long white body trading in the direction of the uptrend, showing the bulls’ strength. The second candle is white, and of a regular size gapping above-reaffirming the upward move. The third and fourth candles are white bodies of regular size, higher than the previous close. Finally, a long black body is formed that closes in the gap created by the first two candlesticks.
A five-candle bullish reversal formation. The first candle is a long black body trading in the direction of the decline, showing off the bears’ strength. The second candle is black, and of a regular size gapping below-reaffirming the downward move. The third and fourth candles are black bodies of regular size, closing lower than the previous close. Finally, a long white body is formed that closes in the gap created by the first two candlesticks.
The beginning of an upward/downward movement after a sideways price pattern. Breakaway gaps do not usually get filled, especially when accompanied by heavy volume.
Brent is considered one of the major benchmarks for crude oil pricing globally. It contains 0.37% Sulphur and has an API gravity of 38.06.
In 1944, representatives from 44 allied nations met in the town of Bretton Woods, New Hampshire USA, to discuss monetary policies in order to rebuild the international economic system. The delegates agreed to tie their currencies to gold and the US Dollar and maintain an exchange rate within a parity band of 1%.
A bearish pattern, it can also be called a megaphone or expanding triangle. Its Trendlines diverge, as opposed to all other triangles which converge.
An intermediary between the traders and the liquidity providers. It facilitates in the execution of clients’ orders.
See BND.
Bahamian Dollar. The currency of The Bahamas. It is subdivided into 100 cents.
Ngultrum. The currency of Bhutan. It is subdivided into 100 chhertum.
Number of building approvals. Released monthly by the Australian Bureau of Statistics.
The number of housing building permits approved in the previous month. Released monthly by the Census Bureau.
See BGN.
A trader whose outlook on the market or a specific financial instrument is positive. A trader who expects prices to rise.
The close of the candlestick is higher than the open price, revealing positive sentiment.
When the prices of certain financial instruments or markets are rising.
A short-lived breakout above a top, triggering a buy entry. After the false breakout, prices switch direction.
The belief that the market or a specific financial instrument will rise.
Certain price formations that signal the end of a downtrend and the beginning of an uptrend.
A technical analysis oscillator developed by Alexander Elder. It is the difference between the highest price of a period under study and a 13-period exponential moving average. A sell signal is triggered when the Bulls Power index is above zero and falling while a trend indicator (i.e. moving average) is pointing downwards.
Germany’s Central Bank.
See BIF.
A unit of measurement for agricultural commodities.
A Monthly report outlining the relative level of current business conditions and expectations for the next 6 months.
A monthly report excluding January. It’s a survey of the business outlook in the next 12 months.
A survey providing an early indicator of levels of activity in the New Zealand manufacturing sector. Also known as Performance of Manufacturing Index. Released monthly by Business NZ.
A pending order to buy at a predefined price lower than the market price in anticipation that the market will eventually rise.
An order to carry out a transaction at, or lower than, a specified price, the word 'limit' referring to the specified price.
To place an order to own a financial instrument.
A pending order to buy at a predefined price higher than the market price, in anticipation that the market will continue to rise.
A technical analysis indicator developed by Bill Williams. If the Momentum (Awesome Oscillator) and Acceleration (Accelerator Oscillator) are in sync then there is a very strong trend.
Green Zone : Both AO and AC are green; strong bullish trend.
Red Zone : Both AO and AC are red; strong bearish trend.
Gray Zone : Both Oscillators have different colors; in transition.
Price bars are painted to reflect the current zone.
Pula. The currency of Botswana. It is subdivided into 100 thebe.
Belarusian Ruble. The currency of Belarus. It is subdivided into 100 kopeks.
Belize Dollar. The currency of Belize. It subdivided into 100 cents.
It is the nickname used for the currency pair of GBPUSD. It is also used to refer to the British pound itself. Communication between Europe and North America was conducted through a transatlantic cable in the Atlantic Ocean.
See CVE.
Canadian Dollar. The currency of Canada. It is subdivided into 100 cents.
Monthly economic report, based on a survey of about 400 purchasing managers in China. A reading above 50 indicates expansion of the manufacturing sector and the economy in general, whereas a reading below 50 indicates contraction.
Released by Markit.
It gives a trader the right to buy a financial instrument at a specific price, before the expiration date.
It is a calculation method that yields 4 resistance and support
levels. It is used in pivot point level calculations. It makes use
of the High, Low and Close price of the previous day.
R4 = Close
+ (High – Low) * 1.1 / 2
R3 = Close + (High – Low) * 1.1 /
4
R2 = Close + (High – Low) * 1.1 / 6
R1 = Close + (High –
Low) * 1.1 / 12
PP = (High + Low + Close) /3
S1 = Close -
(High – Low) * 1.1 / 12
S2= Close - (High – Low) * 1.1 / 6
S3
= Close - (High – Low) * 1.1 / 4
S4 = Close - (High – Low) * 1.1
/ 2
See CAD.
A price charting method that originated in Japan in the 18th century. Merchants devised a system to predict future prices based on traders’ emotions. It makes use of all available prices; open, high, low and close. It consists of a rectangle (the body) which is white if the close is higher than the open, or black if the open is higher than the close price. A vertical line runs through the body representing the high at the top and the low price at the bottom.
A monthly report that shows the percentage of a country’s resources used by manufacturers, mines and utilities. A high reading is positive for the country’s currency whereas a low reading is negative. Released by the Federal Reserve.
Money used to acquire, improve or upgrade physical assets such as buildings, infrastructure, and equipment.
The appreciation in the value of capital assets.
The result of selling a capital asset at a lower price than the purchased price.
It is a tradeable certificate or permit (financial instrument) that allows the holder to emit 1 ton of CO2.
When an investor borrows at low interest rates so they can buy assets that are likely to produce higher interest rates.
A charge for the storage of physical commodities.
The amount of money going into and out of a business.
A market where delivery takes place immediately (almost) after the trade of financial instruments.
The market interest rate on overnight loans in Australia. Released monthly (except January) by the Reserve Bank of Australia.
The method of settling financial instruments by cash rather than physical delivery.
See KYD.
A monthly survey that reflects prevailing consumer attitudes, buying intentions and economic activity for the months ahead. Released by the Conference Board Inc. in the US.
See Chicago Board Options Exchange.
See Chicago Board of Trade.
See Commodity Channel Index.
See Certificate of Deposit.
Congolese Franc. The currency of the Democratic Republic of Congo. It is subdivided into 100 centimes.
A moving average type where more weight is assigned to the middle of the period (time span). Used in cycle analysis.
A state’s financial institution that oversees the monetary policy, commercial banking system, manages state’s currency so as to be attractive for international trade, manages inflation and interest rates.
A Central Bank buys or sells its currency in the foreign exchange market in order to raise or lower the value of its currency in respect to another currency. It does so with the primary goal of establishing a more competitive international trading environment.
A low-risk savings certificate with a fixed interest rate and maturity date.
See XOF.
See XAF.
See Contract for Difference.
See XPF.
See Commodities Futures Trading Commission.
A technical analysis oscillator developed by Marc Chaikin. It’s the difference between a 3-period EMA and a 10-period EMA of the Accumulation/Distribution Indicator. It generates buy/sell signals when crossing above/below the zero line.
A technical analysis tool, similar to the concept of a trendline. At times prices fluctuate between two parallel lines, the basic trendline and the channel or return line. Channels may be used to trigger buy/sell signals and calculate price targets. Once a breakout from the channel takes place, the price is expected to move a distance equal to the width of the channel.
A Graphical representation of price using a candlestick, bar or line chart.
An MT4 chart setting that when enabled, shifts the chart from the left window border to the shift label (a grey triangle in the upper part of the window) of the chart.
A technical analyst whose primary working tool is the price chart.
Swiss Franc. The currency of Switzerland and Liechtenstein. It is subdivided into 100 Rappen.
It is a futures and options exchange. Part of the CME Group.
The world’s largest options exchange.
One of the largest options and futures exchanges in the world.
The Chicago Purchasing Managers’ Index is a monthly survey where purchasing managers (in Illinois, Indiana and Michigan) are asked to rate employment, production, new orders, prices, supplier deliveries and inventories. A reading above 50 is bullish for the US Dollar while a reading below 50 is bearish. Released monthly by ISM-Chicago Inc.
See CLP.
A sideways market.
A monthly report that measures unemployment in the United Kingdom. Released by the United Kingdom's Office of National Statistics (ONS).
Funds in an account that are available for withdrawal or investment.
It is the process of reconciling purchases and sales of various financial instruments.
Part of the MT4 Trading Platform that allows traders to receive live incoming prices, open and manage orders, perform technical analysis, write, backtest and optimize trading robots, and develop indicators and scripts.
When a position is closed, the transaction has been completed – whether the position was long or short, or whether it was profitable or incurred losses.
Otherwise known as closing price, this is the final rate that a security is traded at on a specific day, candle or timeframe.
The final price at the end of a period (i.e. timeframe).
Chilean Peso. The currency of Chile. It is subdivided into 100 centavos.
See Chicago Mercantile Exchange.
One of the largest exchanges in the world. It is comprised of four exchanges - CME, CBOT, NYMEX and COMEX.
Chinese Yuan Renminbi. The currency of the People’s Republic of China. It is divided into 10 jiao and 100 fen.
An asset offered by the borrower to the lender to secure the loan.
See COP.
See Commodity Exchange.
An amount the trader is charged by the broker for facilitating a trade.
*The US Commodity Futures Trading Commission was created in 1974 with the aim of fostering open, transparent, competitive, and financially sound markets. By working to avoid systemic risk, the Commission aims to protect market users and their funds, consumers and the public from fraud, manipulation and abusive practices related to derivatives and other products that are subject to the Commodity Exchange Act (CEA).
*Source U.S. Commodity Futures Trading Commission
A natural resource or agricultural product. There are two broad types - hard commodities and soft commodities. Hard commodities include for example crude oil, gold, silver and iron ore. Soft commodities include for example wheat, rice, soybean and corn.
A country’s currency that is highly correlated with the price of a specific commodity.
A technical analysis oscillator developed by Donald Lambert. It compares the current typical price ([High + Low + Close] / 3) with a simple moving average over a selected period of time usually 14 or 20. The oscillator values are normalized by using a divisor based on mean deviation. The majority of the values (about 70%) fluctuate between -100 and +100. Buying opportunities are suggested above +100 and selling opportunities below -100 while the same levels may be considered as overbought and oversold by others.
It is a leading market for trading metals. Part of CME Group.
See KMF.
A Japanese candlestick pattern signaling a bearish reversal.
It forms at the top of an uptrend or near a resistance area.
It consists of four candlesticks.
The first two long black bodies confirm the strength of the downward movement. Third black candle is smaller. It gaps lower, recording a new low but also produces a relatively long upper shadow extending into the body of the previous Marubozu. The last session is a long black candle that completely (including shadows) engulfs the previous candlestick range thus recording a new low.
In Technical Analysis, price is considered the most reliable indicator. Chart patterns are filtered by indicators and confirmed by price. For example, price makes a new high in a buy setup or a new low in a sell setup.
See CDF.
The CPI is a measure of the change in the cost of a fixed basket of products and services. Released monthly by the US Bureau of Labor Statistics.
A US report that indicates the number of individuals on unemployment benefits. A high reading is negative for the US Dollar, whereas a low reading is positive. Released monthly by the US Department of Labor.
It is a financial derivative where traders have the opportunity to trade assets without owning them. The buyer and the seller enter into a contact where the seller agrees to pay the buyer the difference between the entry and the exit price provided the difference is positive. If the difference is negative, then the buyer pays the seller.
The month at which a futures contract expires.
The principle of contrarian trading assumes that when the larger majority of the traders agree on the direction of the market then they are usually wrong. A true contrarian will trade in the opposite direction.
A crude estimate of Expert Advisor’s backtesting.
See BAM.
Colombian Peso. The currency of Colombia.
See NIO.
A US economic indicator used to measure inflation based on measurement of price movements of a representative shopping basket of goods and services, excluding food and energy. A high reading is positive for the country’s currency whereas a low reading is bearish. Released monthly by the Bureau of Labor Statistics.
A US Monthly report that measures the change in the overall value of initial orders for manufactured goods except transportation items. Released by the Census Bureau.
Economic report, released monthly, that measures the average amount of money consumers spend on durable goods, consumer products, and services excluding food and energy. A high reading is seen as bullish for the country’s currency whereas a low reading is bearish. Released by the Bureau of Economic Analysis, Department of Commerce.
Change in the total retail sales excluding automobiles. Released monthly by the US Census Bureau.
A temporary interruption of the prevailing trend in the opposite direction.
In Elliott Wave Theory, a corrective wave is a wave against the trend. Waves 2, 4 and a-b-c are considered corrective.
The average cost of a “basket” of products and services.
See CRC.
Refers to quote currency. The second currency in a pair.
See Meeting Lines (Bullish), Meeting Lines (Bearish).
The interest rate as a percentage of the face value paid on a fixed income security -for example, bonds.
A buy order of a financial instrument to close an existing short position. Also known as short covering.
See Consumer Price Index.
Costa Rican Colon. The currency of Costa Rica. It is subdivided into 100 centimos.
The exchange rate between two currencies that do not involve the US Dollar.
Unrefined petroleum found in liquid form and composed mostly of hydrocarbons, organic compounds and small amounts of metal.
A weekly report that measures the change in Crude Oil stocks (i.e. barrels). It includes domestic and Customs-cleared foreign crude oil stocks held at refineries, in pipelines, in lease tanks and in transit to refineries.
Released by the Energy Information Administration.
Digital currency in which encryption is used to regulate the generation of units of currency. It operates independently of the traditional banking system. Bitcoin, Ethereum and Litecoin are the most popular cryptocurrencies.
See CUP.
Cuban Convertible Peso. The currency (the other currency is Cuban Peso) of Cuba. It is subdivided into 100 centavos.
Cuban Peso. The currency (the other currency is Peso Convertible) of Cuba. It is subdivided into 100 centavos.
A means of exchange in the form of paper, metal or digital money.
When a currency increases in value against another.
A contract that specifies the price that a currency can be bought or sold at, or on a set future date. Future contracts are often used by investors to hedge against risk.
The pair formed by two different currencies which are traded in a forex transaction. For example: EUR/USD.
Currency policy to fix a country’s currency exchange rate to that of another currency.
The sum of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). A current account surplus is positive for the country’s currency whereas a low balance is viewed as negative.
Cape Verde Escudo. The currency of Cape Verde.
A technical analysis tool that draws vertical lines at equal intervals on the price chart to forecast future cycles.
Cycle Theory is based on the following principles:
The independent public supervisory authority responsible for the supervision of the investment services market and transactions in transferable securities; carried out in the Republic of Cyprus.
See Cyprus Securities and Exchange Commission.
See CZK.
Czech Koruna. The currency of Czech Republic.
A graph that illustrates the intraday movements of a financial instrument.
See GMD.
See DKK.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the top of an uptrend or near a resistance area.
During the course of an upward movement, a long black candlestick closes below the midpoint of the previous long white candle. The black candle opens above the previous high.
Part of the MT4 Client Terminal interface. It displays information about a selected bar/candlestick. By simply placing the arrow on the desired bar/candle, the window will display the OHLC prices, the open time and date, volume and the corresponding values of any attached indicators/oscillators.
Deutscher Aktien Index (German Stock Index) is an index of 30 large German company shares.
A trade opened and closed within one day.
Failure to fulfil debt obligations.
It is the decrease of the average price of a representative number of goods and services. It is the opposite of inflation.
A Japanese candlestick pattern signaling a bearish reversal.
It forms during an established uptrend. It consists of three white candles each closing higher than the previous one. The last candlestick is a Doji or spinning top that gaps above the previous candlestick.
See Double Exponential Moving Average.
A technical oscillator developed by Tom DeMark to determine overbought and oversold conditions for the currency pair under study. A reading above 0.7 is considered overbought and a bearish reversal may be imminent. A reading below 0.3 is considered oversold and a bullish reversal may be in the making.
Calculation:
If High(i) > High(i-1) then DeMax(i) = High(i) – High(i-1) else DeMax(i) = 0
If Low(i) < Low(i-1) then DeMin(i) = Low(i) – Low(i-1) else DeMin = 0
DeMarker(i) = SMA(DeMax, N)/(SMA(DeMax, N)+SMA(DeMin, N))
A trading account which is funded with virtual money, giving the trader a chance to explore the markets and test the trading platform they're using before investing real money in a live trading account.
See MKD.
The reduction in a currency’s value.
When real GDP declines more than 10% or a recession that lasts 2 years or more.
The number of open buy and sell orders placed for a financial instrument at varying prices.
It is mostly a continuation pattern. It constitutes a pause in the market after which a decisive breakout will resume in the direction of the prevailing trend –i.e. a downtrend. It requires 4 data points, 2 highs and 2 lows. The lower side of the triangle connecting the lows is horizontal, while the upper side connecting the highs is sloping downwards. A breakout of the triangle has minimum measuring implications - equal to the height of the pattern.
A technical analysis oscillator developed to remove trend from price action, by using a centered moving average. Detrending makes it easier to identify time cycles. High prices above the zero line, correspond to cycle crests, where lows below the zero line correspond to cycle troughs.
The exchange rate of a currency pair expressed in terms of the foreign currency for 1 unit of domestic currency. The base currency represents the domestic currency whereas the quote represents the foreign currency. For example, USDEUR = 0.90120.
+DI (plus Directional Indicator) is paired with -DI (minus Directional Indicator) to generate buy/sell signals in the context of the Average Directional Movement Index (ADX). A crossing of +DI above -DI generates a buy signal. A crossing of +DI below -DI generates a sell signal.
Trading based on the trader’s experience and intuition, to decide whether to take a trade or not, under the current market conditions.
Usually at the end of a trend, prices move in the direction of the prevailing trend where the oscillator moves in the opposite direction.
Djibouti Franc. The currency of Djibouti. It is subdivided into 100 centimes.
See Dow Jones Industrial Average.
See DJF.
Danish Krone. The currency of Denmark, Greenland and the Faroe Islands. It is subdivided onto 100 øre.
See STD.
A Japanese candlestick formation that has equal (or almost equal) opening and closing price. It signals indecision.
A Japanese candlestick pattern. In a downward movement, a Doji gaps below a long black candle but fails to move substantially lower as it closes where it opened. It has possible bullish implications.
See DOP.
A technical analysis tool developed by Richard Donchian. It plots the highest high and lowest low of the last n candlesticks. It is used to measure volatility and identify support and resistance levels.
See VND.
Dominican Peso. The currency of the Dominican Republic. It is subdivided into 100 centavos.
A technical analysis reversal price pattern. After an established downtrend, the last bottom fails to move lower than the previous bottom and prices rise above the last top.
The use of two moving averages to generate trading signals. A buy signal is generated when the shorter moving average crosses above the longer moving average. A sell signal is generated when the shorter moving average crosses below the longer moving average.
A technical Indicator developed by Patrick Mulloy in an attempt to produce less lag than the traditional moving average calculations and hence more sensitive to market changes.
Calculation: DEMA(n) = ( 2 * EMA(n)) - (EMA(EMA(n)) )
A technical analysis reversal price pattern. After an established uptrend, the last top fails to exceed the previous top and prices fall below the last bottom.
It refers to the tone of language that policy makers use when referring to inflation. For example, a dovish statement implies that no drastic measures may be taken to raise interest rates.
A stock market index composed of 30 stocks of large American companies. It’s based on Charles Dow’s 1884 stock market average composed of nine railroad and two manufacturing companies. The index grew to include 30 stocks by the year 1928. It is used to gauge stock market activity and the country’s economic health.
Charles Dow’s idea of market behavior as published in a series of editorials in the Wall Street Journal during the early 1900’s.
Basic principles:
A Japanese candlestick pattern signaling a bearish continuation.
It forms during a downtrend.
It consists of three candlesticks. The first and second are long black candles with a gap in between them. The third is a white candle that opens in the real body of the previous candle and closes above the gap, filling it completely.
A Japanese candlestick pattern signaling a bearish continuation.
It forms during a downtrend.
It consists of three candlesticks. The first and second are black candles with a gap in between them. The third is a white candle that opens in the real body of the previous candle and closes within the gap without filling it completely.
A Technical Analysis tool where prices are trending downwards between two parallel lines. The basic trendline is drawn by connecting the tops of the price action and the channel (or return line) which is parallel to it. Channels act as support and resistance levels. The basic trendline (resistance) may be used for opening sell positions in the direction of the downtrend. The channel (or return) line may serve as target for closing a short position.
See Detrended Price Oscillator.
A Japanese candlestick that has a long lower shadow, while the opening is equal to the closing price near the high.
When the value of an investment drops, the length between its peak and its low is called the drawdown.
A Japanese candlestick pattern signaling a bearish reversal.
It forms at the top of an uptrend or near a resistance area.
It consists of multiple candlesticks.
At the end of an uptrend volatility tightens as the market is forming a topping pattern. Short bodies substitute the long white bodies. Finally, a long black candle breaks below the pattern with a gap to complete the pattern.
Consumer products such as house appliances, devices and equipment that usually last more than 3 years.
A US Monthly economic report, that measures the change of factory orders for durable goods. Released by the Census Bureau.
Algerian Dinar. The currency of Algeria.
See Expert Advisor.
See European Central Bank.
See EGP.
See Exponential Moving Average.
Monthly survey of manufacturers in New York State. Participants are asked to report changes on a variety of economic indicators- from the previous month and six months ahead. A reading above zero is good for the currency where a reading below zero is negative.
Released by the Federal Reserve Bank of New York.A Japanese candlestick pattern signaling a bearish reversal.
It forms at the top of an uptrend or near a resistance area.
It consists of two candlesticks.
A long black candlestick is formed at the top of an upntrend, preceded by a small white candlestick. The body of the small white candlestick is completely engulfed by the body of the long black candlestick.A Japanese candlestick pattern signaling a bullish reversal.
It forms at the bottom of a downtrend or near a support area.
It consists of two candlesticks.
A long white candlestick is formed at the end of a downtrend, preceded by a small black candlestick. The body of the small black candlestick is completely engulfed by the body of the long white candlestick.It’s a technical tool to draw a channel (uptrend or downtrend).
The distance between the two parallel lines (basic trendline and return line) is equal.See ETB.
See EUR.
A Japanese candlestick pattern signaling a bearish reversal.
A long white candlestick forms in the direction of the prevailing trend, signifying that the upward movement is still in force. The next session gaps above, forming a small candle, in this case a Doji that acts as an obstacle to further rise. A long black candle drives the market lower, well into the long white candle’s body and more specifically, below its mid-point -Indicating a bearish reversal.A Japanese candlestick pattern signaling a bearish reversal.
A long white candlestick forms in the direction of the prevailing trend, signifying that the upward movement is still in force. Next session gaps above, forming a small candle that acts as an obstacle to further rise. A long black candle drives the market lower, well into the long white candle’s body and more specifically, below its mid-point-Indicating a bearish reversal.
A type of Order execution available on MT5. Orders placed on the MT5 are sent to an exchange (i.e. liquidity provider) to be executed at current market offers.
It’s an annualized report that measures sales and prices of existing single-family homes in the US overall, and gives breakdowns for the West, Midwest, South, and Northeast regions of the country.
Released monthly by the National Association of Realtors.EMA takes into account all available prices in its calculation and assigns more weight to the most recent prices.
EMA = (Price current – EMA previous) * multiplier + EMA previous
Where multiplier = 2/Periods + 1
A monthly survey showing orders for immediate or future delivery, placed with manufacturers. It provides an indication of future business trends. Released by the Census Bureau.
A reversal pattern. During the course of an uptrend as defined by successively higher tops and higher bottoms, the last top fails to exceed the previous top and prices fall below the last bottom. This is a failure swing to go short. On the other hand, in the course of a downtrend, as defined by successively lower tops and lower bottoms, the last bottom fails to move lower than the previous bottom and prices rise above the last top. This is a failure swing to go long.
The current price at which an asset could be sold on the open market.
See FKP.
A Japanese candlestick continuation pattern. During a downtrend, a long black body is followed by three small candlesticks, formed between the previous candle’s range - triggering a pause in the market. The resumption of the downtrend is signaled by the presence of the fifth candle which is a long black body.
See Federal Reserve.
Report submitted semiannually to Congress containing discussions of "the conduct of monetary policy and economic developments and prospects for the future”, along with testimony from the Federal Reserve Board Chair.
See FOMC.
It is the central bank of the United States. It was established in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. The Federal Reserves’ responsibilities:
See Federal Reserve.
The Fed’s publication about current economic conditions and prospects across the 12 Federal Reserve Districts: Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
Released eight times per year by the Federal Reserve.
See FOMC Statement.
It is a technical analysis tool that is drawn between two major points - top and bottom. The arcs are drawn centered on the second point intersecting the line connecting the two major points at 38.2%, 50% and 61.8%. The theory holds that prices are expected to find support and resistance at the arcs.
A technical Analysis tool used to draw a channel with diagonal Fibonacci retracements. In an uptrend, draw the channel (or return) line by connecting at least two tops. Consequently, draw the basic up trendline through the widest swing (bottom), parallel to the channel line. In a downtrend, draw the channel line by connecting at least two bottoms. Consequently, draw the basic down trendline trough the widest swing (top), parallel to the channel line. Fibonacci retracements equal to 61.8%, 100%, 161.8% and 261.8% of the channel width, are drawn as potential retracement levels. During an uptrend, prices will find support at the diagonal Fibonacci retracements, once they break out below the channel. On the other hand, in the course of a downtrend, prices will find resistance at the diagonal Fibonacci levels, once they break out above the channel.
It is a technical analysis tool that is drawn between three points on the price chart. The first point signifies the beginning of wave 1, the second point the end of wave 1 and the third wave the end of wave 2. The tool, displays three lines at 61.8%, 100% and 161.8% the length of wave 1(i.e. the distance between the first and the second point). These lengths (i.e. expansions) are drawn starting from the end of wave 2 (i.e. third point). The theory holds that at these levels, (i.e. expansions) significant changes may be expected, for example, the end wave 3.
It is a technical analysis tool that is drawn between two major points - top and bottom. In an uptrend, it is drawn from bottom to top, displaying three lines at 38.2%, 50% and 61.8% (i.e. the vertical distance from top to bottom). The lines serve as potential support levels. In a downtrend it is drawn from top to bottom, displaying three lines at 0.382, 0.50 and 0.618 (i.e. the vertical distance from bottom to top). The lines serve as potential resistance levels.
They are attributed to Leonardo Fibonacci, an Italian Mathematician. Each number in the sequence is composed by the sum of the two previous numbers. The sequence is: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233 etc.
It is a technical analysis tool attached from bottom to top in a rising market and from top to bottom in a declining market. The horizontal lines show the Fibonacci Retracement levels (ratios): 0.236, 0.382 and 0.618. The levels serve as potential support and resistance. The ratios are derived by dividing any number in the sequence by:
It is a technical Analysis tool that is comprised of vertical lines spaced at Fibonacci intervals: 1, 2, 3, 5, 8, 13, 21, 34, 55, etc. The tool is placed on two points on the price chart to define the time interval unit. The theory holds that significant price changes are expected at the vertical lines, that is, time intervals.
See FJD.
The completion of an order.
When an investor has a very specific price they want to carry out a transaction at, they place a Fill or Kill order – this means that if the order is not filled at the desired price, it is terminated, or killed.
In the MT5 order window, a trader may set the order’s Fill Policy:
The price at which an order has been completed.
Applying Oscillator overbought and oversold levels in candlesticks analysis, premature patterns are ignored (i.e. filtered out) hence increasing the success probability of the candlestick patterns.
A monthly report that measures the average change in price of a basket of consumer goods and services in Eurozone, compared to the same period the previous year. A high reading implies inflation and is positive for the euro whereas a low reading is negative for the euro. Released by Eurostat.
Annualized change of the Gross Domestic Product (GDP), the economic output of a country.
It measures:
It reveals whether an economy is expanding or contracting.
An economic indicator gauging economic health, based on year-to-date private and public investments Released monthly (except February) by the National Burau of Statistics (China).
Fiji Dollar. The currency of Fiji. It is subdivided into 100 cents.
Falkland Islands Pound. The currency of the Falkland Islands(Malvinas). It is subdivided into 100 pence.
Continuation price pattern composed of a parallelogram with slanting sides against the trend and preceded by an almost straight-line move called a flagpole. The flagpole and the breakout of the parallelogram are accompanied by heavy volume.
The flag pattern causes a brief pause in the market that lasts less than 3 weeks.
Precedes the parallelogram part of the flag pattern. It’s an almost straight-line move (accompanied by heavy volume) called a flagpole. Projecting the flagpole at the breakout point, a price target may be calculated.
An a-b-c correction against the prevailing trend. It follows a 3-3-5 wave pattern.
When an exchange rate is not fixed, but adjusts depending on the supply and demand for a particular currency relative to other currencies.
It is responsible for conducting the nations (USA) monetary policy.
The FOMC (Federal Open Market Committee) Chair presents the current economic/monetary projections and provides additional context for the FOMC's policy decisions during a press briefing. It’s scheduled four times per year.
An FOMC tool to control inflation and short-term interest rates. Scheduled eight times per year. It is the interest rate at which banks and other depository institutions lend money to each other. Released by the Federal Reserve.
Minutes of the most recent meeting giving insights of the future of the US interest rate. Released eight times per year by the Federal Reserve.
Scheduled four times per year. During the conference the FOMC Statement is read and the Fed’s Chair answers press questions regarding the monetary policy. High market volatility is usually expected.
After each regular meeting, the FOMC issues a statement that summarizes the Committee's economic outlook and the policy decision at that meeting.
It’s a technical oscillator that measures the momentum of rallies and declines. It was developed by Alexander Elder. It makes use of the:
A positive difference shows that the bulls are in control. A negative difference shows that the bears are in control.
Force Index = Volume Today x (Close Today – Close Yesterday)
When enabled, all indicators and objects will be in the background whereas the price chart will be in the foreground.
See Forex.
Foreign exchange, or Forex for short, is the “place” where currencies are traded. In the forex market, currencies are traded in pairs. When a trader buys a currency, he or she is selling another currency at the same time. Currency trading is the exchange of one type of currency for another. The forex market has no physical location or central exchange as it is a global, decentralized market and trades 24 hours a day, 5 days a week.
A digital chart that plots the price movements of currency pairs, to help investors make informed trading decisions.
A trading strategy based on the notion that if you buy and sell (or sell and buy) a currency within a very short time frame, you are more likely to make a profit than you would with large price movements.
A system which gives out signals to traders to help them decide whether a specific time is suitable to buy or sell a currency pair.
A specific group of currencies which form a weighted average that can act as a measure to value an obligation.
The current exchange rate that a currency pair can be bought or sold at.
This refers to automated trading software which is designed to help determine whether to buy or sell a currency pair, at a given time.
See HUF.
Trend-following indicator developed by John Ehlers. It’s based on the Exponential Moving Average formula. The smoothing factor calculations are based on the current fractal dimension of the price series. Reactions to price changes are faster, while during consolidation periods it remains flat.
Developed by Bill Williams. Up fractals are used to identify tops, where down fractals are used to identify bottoms. Up fractals are comprised of 5 bars (minimum) where the highest high is preceded by two lower highs and is followed by two lower highs. Down fractals are comprised of 5 bars (minimum) where the lowest low is preceded by two higher lows and is followed by two higher lows.
A Japanese candlestick pattern signaling a bullish reversal. At the end of a downtrend, volatility tightens as the market is forming a prolonged bottoming pattern. Short bodies substitute the long black bodies and lower lows form the first part of this rounding bottom or frypan, that mark the lowest level of the bottom. The second part of the bottoming pattern is characterized by higher lows but the range of the bodies remain short- in sync with the low volatility. Finally, a break- out above the pattern with a gap, is necessary to complete the pattern.
A reversal pattern, similar to double top and double bottom, found in point & figure charts. It is characterized by a move in the congestion area of the pattern and a following move in the opposite direction.
The impact economic, political and environmental events have on prices in financial markets (interest rate announcements, unemployment rate, elections, etc.)
See Futures Contract.
An agreement between two parties - a buyer and a seller- where the seller agrees to sell an asset to the buyer at a predetermined price, date, quantity and quality.
A group of 20 countries represented at the highest level by heads of state/government and at the ministerial level by ministers of finance and central banks governors.
They meet to discuss global and economic issues.
The group consists of the following countries: Argentina, Australia, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, South Africa, Saudi Arabia, South Korea, Turkey, United Kingdom, United States of America, The European Union (represented by the European Council).
|
A technical analysis tool developed by W. D. Gann. To draw a Gann Fan, attach the tool at a major bottom/top and drag the mouse to the necessary length. The resultant Gann Fan consists of seven lines at the following angles:
Gann considered the 45 degrees line the most important line, where the market has some form of balance. Prices above the 45 degrees line indicate an uptrend, where below - a downtrend. During an uptrend, prices will find resistance at the lines above the 45 degrees line. When prices break below the 45 degrees line. then a possible reversal may be expected. Consequently, prices are expected to find support at the lines below the 45 degrees line. Similarly, in a downtrend the lines above the 45 degrees line will act as resistance, where the lines below will be support. |
|
A technical analysis tool developed by W. D. Gann. To draw a Gann Grid, attach the tool at an initial point on the chart. A second point is needed to set the cell grid size. The resultant Grid consist of multiple lines at 45 degrees angle. On the Gann Grid, there are three control points. By moving the first and the last points, the size of the grid cell may be set/modified. The middle point is used to move the Gann Grid on the chart keeping the dimensions intact. Gann considered the 45 degrees line as the most important in representing long-term trendlines. Based on Gann’s theory, prices:
|
A technical analysis tool developed by W. D. Gann. To draw an ascending Gann Line, attach the tool at a major bottom and drag the mouse to a higher bottom.
The resultant ascending trendline is drawn at an angle of 45 degrees.
To draw a descending Gann Line, attach the tool at a major top and drag the mouse to a lower top.
The resultant descending trendline is drawn at an angle of 45 degrees.
On the Gann Line, there are three control points. By moving the first and the last points the slope and the length of the line may change. By moving the middle point, the line may be moved without changing its slope and length.
According to Gann’s theory, prices:
It’s a technical analysis oscillator developed by Bill Williams. It consists of two histograms, above and below zero. The histogram above the zero line shoes the difference between the teeth (red line) and the jaw (blue line) of the Alligator. The histogram below the zero line show the difference between the lips (green line) and the teeth (red line) of the Alligator. A histogram bar is colored green when the value is greater than the previous bar’s value and in red color when the value is less than the previous bar’s value.
The Gator Oscillator helps to understand what the Alligator does:
Pound Sterling. The currency of United Kingdom of Great Britain and Northern Ireland, Guernsey, Isle of Man, Jersey. It is subdivided into 100 pence.
See GYD.
See GIP.
See XAU.
See GTC.
See HTG.
See GDP.
See PYG.
See GNF.
See GYD.
Before the continuation patterns of flags and pennants are formed, a steep and rapid price movement -a pole, is always present. After a pause in the market that takes the form of a flag or a pennant, a breakout occurs out of the pattern in the same direction as the pole. The measuring implication is equal to the length of the pole, hence half-mast.
The Halifax House Price Index measures the change in the house prices throughout the UK. It is released monthly as an annualized change. The change is calculated as an average for the latest three months compared with the same period, a year earlier.
It is released by the Halifax Bank of Scotland.
A Japanese candlestick pattern signaling a bullish reversal. The presence of a hammer at the end of a downtrend or decline, alerts for a possible bullish reversal. Traders enter the market with short positions, pushing prices even lower in the direction of the prevailing trend, to form the lower shadow. Eventually, the downward move is proven short-lived, as bulls take over the control and manage to close the session at the upper area of the candle. This forms the real body, whose length is 2-3 times shorter than the lower shadow.
See HSI.
The presence of a Hanging Man at the end of an uptrend or upward move, alerts for a possible bearish reversal. Traders enter the market with short positions, pushing prices lower against the direction of the prevailing trend, to form a long lower shadow. Eventually, the bulls take over the control and manage to pull the session higher at the upper area of the candle. This forms a small real body, whose length is 2-3 times shorter than the lower shadow.
A Japanese candlestick pattern signaling a bearish reversal. A small candlestick body of either color follows a candlestick of a long white body. The color of the small candlestick is not important. The bullish move is running out of steam as shown by the presence of the small candle which signals uncertainty, as it is contained by the previous long body. The weakness of the market to push prices higher and the presence of the pattern at the end of an upward move, signals possible bearish implications.
A Japanese candlestick pattern signaling a bullish reversal. A small candlestick body of either color follows a candlestick of a long black body. The color of the small candlestick is not important. The bearish decline is running out of steam as shown by the presence of the small candle which signals uncertainty, as it is contained by the previous long body. The weakness of the market to push prices lower and the presence of the pattern at the end of a decline, signals possible bullish implications.
A Japanese candlestick pattern signaling a bearish reversal. Just like Harami, a small candlestick body- (Doji in this case) follows a candlestick of a long white body. The bullish move is running out of steam as shown by the presence of the Doji, which signals uncertainty as it is contained by the previous long body. The weakness of the bullish market to push prices higher and the presence of the pattern at the end of an upward move, signals possible bearish implications.
A Japanese candlestick pattern signaling a bullish reversal. Just like Harami, a small candlestick body- (Doji in this case) follows a candlestick of a long black body. The bearish decline is running out of steam as shown by the presence of the Doji, which signals uncertainty as it is contained by the previous long body. The weakness of the bearish market to push prices lower and the presence of the pattern at the end of a decline, signals possible bullish implications.
In Time Cycles, the principle of Harmonicity states that two neighboring cycles are related by a small whole number- usually the number 2. For example, if a 20-day cycle exists then the shorter cycle will be a 10-day cycle where the longer one will be a 40-day cycle.
It refers to the tone of language that policy makers use when referring to inflation. For example, a hawkish statement implies that drastic measures may be taken to raise interest rates.
A Technical Analysis price pattern signaling a bearish reversal. It consists of three tops and two bottoms. The highest top is known as the Head where the top to the left is known as the Left Shoulder and the top to the right is known as the Right Shoulder. The line connecting the two bottoms is known as the neckline. A prerequisite of any reversal is the existence of a trend, an uptrend in this case. In the course of an uptrend, as defined by consecutive higher tops and higher bottoms, the presence of a lower top warns for a potential reversal. A decisive break of the neckline signals the end of the prevailing uptrend and the beginning of a downtrend. If volume is available, then heavy volume should accompany the breakout below the neckline.
Investors use hedging to protect themselves by reducing the risk that may be caused by adverse market movements. Hedging means making two opposing investments, minimizing the losses which could be incurred by price fluctuations.
Investment funds that invest in a wide range of assets to reduce risk.
It is a price charting technique that filters out noise.
It uses modified open, high, low and close prices:
Heiken Ashi makes trend identification, retracements and reversals easier:
Automated trading, placing a big number of trades on high volumes and speed.
The highest price that a financial instrument is traded during a specific timeframe.
Historical Data is used in charts, backtesting and Expert Advisors’ Optimization. They are stored in the History Center of the client terminal. Historical Data may be modified in the following ways:
Hong Kong Dollar. The currency of Hong Kong. It is subdivided into 100 cents.
Lempira. The currency of Honduras. It is subdivided into 100 centavos.
A Japanese candlestick pattern signaling a bullish reversal.
It forms at the bottom of a downtrend or near a support area.
It consists of two black candlesticks.
The decline continues to record lower prices as reflected by the presence of a long black candle. Next session is characterized by a smaller black body that is completely engulfed by the previous long black body, signaling weakness, setting the stage for a bullish reversal.
See HKD.
A method used in Point and Figure charts to calculate price targets. It applies to both 1-box and 3-box reversal charts. In horizontal count, the width of the congestion pattern determines the price target.
The annualized number (monthly x 12) of residential “housing units” on which construction has begun in the previous month. Released monthly by the Census Bureau.
Kuna. The currency of Croatia. It is subdivided into 100 lipa.
Hang Seng Index. A stock market index composed of 50 stocks of the largest companies in the Hong Kong Stock Market. It is used to gauge stock market performance.
Gourde. The currency of Haiti. It is subdivided into 100 centimes.
Forint. The currency of Hungary. It is subdivided into 100 filler.
See ISK.
A technical indicator rather than a complete system that is used to identify with “one look” at the chart, the direction of the market, entries (buy and sell) and support and resistance levels. It consists of 5 lines:
A Japanese candlestick pattern signaling a bearish reversal. While the market is in an uptrend or near a resistance area, the presence of a long black body signals an alert for traders. The second candle is a long black candle that opens at or near the first candles’ close. Both the second and third candles close lower than the previous candle’s close.
Rupiah. The currency of Indonesia. It is subdivided into 100 sen.
New Israeli Sheqel. The currency of Israel. It is subdivided into 100 agora.
See International Monetary Fund.
In Elliott Wave Theory, these waves move in the direction of the wave of one larger degree. For example, in a complete cycle (8 waves), impulse waves 1, 2 and 3 move in the direction of the wave of one larger degree. Also, the corrective waves a and c move in the direction of the wave of one larger degree.
A Japanese Candlestick pattern signaling bearish continuation. In the course of a downtrend a small white candle opens below the low of the prior long black body and closes just above the prior close.
A Japanese Candlestick pattern signaling bullish continuation. In the course of an uptrend a small black candle opens above the high of the prior long white body and closes just below the prior close.
See INR.
Technical tools based on inductive statistics and mathematical formulas, which use price data, volume and open interest in order to identify future price trends.
Foreign Exchange Rate quoted for 1 unit of the foreign currency. Foreign currency represents the base currency where the domestic currency corresponds to the quote currency. For example if in Europe, the exchange rate between the euro and the dollar would be USDEUR.
A sustained increase in the price of goods and services that reduces the purchasing power of money.
Indian Rupee. The currency of India. It is subdivided into 100 paise.
In bar charting, an inside day is defined as a bar with lower high and higher low compared to the previous bar. It suggests a pause in the market.
The interest rate charged on short-term loans between banks.
The cost of borrowing money, usually expressed as a percentage and calculated on an annualised basis.
A technical analysis methodology that examines the correlations between four major asset classes: stocks, bonds, commodities, and currencies. For example, Stock Market and Treasury Bonds are positively correlated. Whereas Interest Rates are negatively correlated to both markets. Commodities and Bonds usually move in opposite directions. The US Dollar and Gold are also negatively correlated.
In Time Cycles analysis, Intermediate Cycles last from several weeks to several months. Identification of Intermediate Cycles may be performed by measuring the time interval between the cycle’s troughs (lows) on the X-axis of the price chart.
In Dow Theory, an Intermediate Trend is a correction of the Major Trend. It usually lasts 3 weeks to 3 months.
It runs through the price action, connecting internal tops and bottoms rather than extreme lows (uptrend line) or extreme highs (downtrend line).
*The International Monetary Fund, or IMF, promotes international financial stability and monetary cooperation. It also facilitates international trade, promotes employment, sustainable economic growth, and helps to reduce global poverty. The IMF is governed by and accountable to its 189 member countries.
*International Monetary Fund
Usually, opening and closing a position within the day.
A Technical Analysis chart pattern signaling a bullish reversal. It consists of three bottoms and their corresponding tops. The lowest bottom is known as the Head, where the bottom to the left is known as the Left Shoulder and the bottom to the right is known as the Right Shoulder. The line connecting the two tops is known as the neckline. A prerequisite of any reversal is the existence of a trend, a downtrend in this case. In the course of a downtrend, as defined by consecutive lower tops and lower bottoms, the presence of a higher bottom warns for a potential reversal. A decisive break of the neckline signals the end of the prevailing downtrend and the beginning of an uptrend.
A Japanese candlestick pattern signaling a bullish reversal. An Inverted Hammer formed at the end of a downtrend or at a support area has bullish reversal implications. Traders enter the market with long positions but eventually the sellers’ pressure overcomes buyers’ pressure and the candlestick closes at the lower area of the inverted hammer. The small body and the absence of a lower shadow reveals the weakness of the bears who are unable to maintain the downward move. The body of the Inverted Hammer is 2-3 times shorter than the upper shadow.
Iraqi Dinar. The currency of Iraq. It is subdivided into 1000 fils.
See IRR.
See IQD.
Iranian Rial. The currency of the Islamic Republic of Iran. It is subdivided into 100 dinar.
Iceland Krona. The currency of Iceland.
Near the end of an uptrend, a final gap known as exhaustion gap will appear on the price chart to alert the end of the trend and the beginning of a brief, narrow sideways movement. A breakaway gap to the downside this time, will end the sideways movement and signal a trend reversal. The price pattern, isolated by the two gaps, is known as Island Reversal.
A monthly survey where purchasing managers are asked to rate business activity in the manufacturing sector and more specifically, on production, employment, new orders, prices, supplier deliveries and inventories. A reading above 50 is bullish for the US Dollar, while a reading below 50 is bearish. Released monthly by the Institute of Supply Management.
ISM Non-manufacturing Index based on surveys of non-manufacturing firms' within 60 industry sectors. It helps investors to get better insights into current market conditions. When this index is increasing, the stock markets are generally going up due to potentially increased corporate profits. The index is a composite of four indicators, including seasonally adjusted business activity, employment, supplier deliveries and new orders received. A rule of thumb in terms of interpreting the data is- a reading above 50 percent means the non-manufacturing sector of the economy is expanding and below 50 percent means that it is contracting.
See JMD.
This is the theory that if the stock market ends higher in January, the rest of the year will also end higher. Conversely, if January ends on a low note, stock prices will be lower for the end of the year. According to Yale Hirsch: “As January goes, so goes the rest of the year.”
A charting method that has gained a lot of popularity recently, because the charts are more visually appealing than bar charts that reflect the same information. They are also generally easier to read and interpret. The chart makes it easier to see the relationship between the open and close and the high and low of price movements. They also give a more accurate depiction of market sentiment.
There are two types of Candlestick; the first Candle has a white or hollow body which indicates that the market is moving upwards, as there is more buying than selling interest. As the Close price is higher than the Open price, the white candlestick depicts the positive sentiment in the market and the fact that bulls are in control. The longer the body is, the stronger the buying interest.
A filled (black) body which indicates that the market is moving downwards indicates that there is more selling than buying interest. As the Close price is lower than the Open price, the black candlestick depicts the negative sentiment in the market and the fact that bears are in control. The longer the body is, the stronger the selling interest.
The lines above and below the body of the candlestick are called “Shadows” or “Wicks”. The upper shadow reveals the price levels above the body that have been tested but eventually rejected. Similarly, the lower shadow reveals the price levels below the body that have been tested but eventually rejected.
Jamaican Dollar. The currency of Jamaica. It is subdivided into 100 cents.
Jordanian Dinar. The currency of Jordan. It is subdivided into 10 dirham, 100 qirsh or 1000 fulus.
Number of job openings that need to be filled within 30 days. These include full-time, part-time, permanent, short-term and seasonal openings. Released monthly by the Bureau of Labour Statistics.
See JOD.
Yen. The currency of Japan.
One of the popular cycles in Time Cycle Analysis. Clement Juglar supported that a cycle of approximately 9 years, is presented in many areas of economic activities.
See Kondratieff-Cycle.
A price charting technique independent of time. It is plotted as a series of connected vertical lines. The thickness and direction of the lines, reflect the price action:
A buy signal is generated when price moves above the most recent high whereas a sell signal is in place when it moves below the last low.
See KES.
Riel. The currency of Cambodia. It is subdivided into 10 kak or 100 sen.
A Japanese candlestick pattern signaling a bearish reversal. During the course of an uptrend, a long black candle gaps below the previous white Marubozu and then declines lower closing at the low of the session, demonstrating strong bearish power.
See PGK.
See LAK.
See HRK.
See KWD.
See AOA.
See MMK.
It shows the hourly costs of maintaining employees.
Released quarterly by Eurostat.The percentage of population (eligible to work) that is either looking for a job or already has a job.
Released monthly by the Bureau of Labour Statistics.See LAK.
A Japanese candlestick pattern signaling bullish reversal. During the course of a downward move, three long black candles- each opening and closing lower than the previous one, re-establishes the decline. Even though the fourth candle gaps below the previous body, it attempts to extend into the previous candle’s body, as shown by the relatively long upper shadow, but eventually retreats making a new low. It then forms a small black body. The last candle is a long white body that opens above the previous body- signaling a reversal.
A Japanese candlestick pattern signaling bearish reversal. During the course of an upward move, three long white candles- each opening and closing higher than the previous one, re-establishes the rally. Even though the fourth candle gaps above the previous body, it attempts to extend into the previous candle’s body, as shown by the relatively long lower shadow, but eventually retreats making a new high. It then forms a small white body. The last candle is a long black body that opens below the previous body- signaling a reversal.
See LBP.
See All.
See HNL.
See LRD.
See LYD.
A Technical Analysis tool used for trend identification for a set of prices under a period of study. 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.
It consists of three lines:
The Linear Regression Trendline, is an equilibrium line that is, a straight line run through a set of prices using the statistical technique of best fit (or least squares) for a period under study. The Upper and Lower Lines are parallel to and equidistant from the Trendline. The distance between either Line and the Trendline, represents the maximum close price deviation from the Regression Trendline.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the end of an uptrend or a resistance area. It consists of a long black body and small shadows.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a downtrend or a support area. It consists of a long white body and small shadows.
See LSL.
The Moving Average Convergence/Divergence is a momentum oscillator developed by Gerald Appel. It is the difference between a 12 period and a 26 period Exponential Moving Average plotted usually as a histogram above (difference is positive) or below (difference is negative) the zero line. A 9 period Simple Moving Average of MACD is known as the Signal Line.
MACD follows the general rules of oscillator analysis:
Moroccan Dirham. The currency of Morocco. It is subdivided into 100 santimat.
See MGA.
See MWK.
See MYR.
See Depth of Market.
A technical indicator developed by Dr. Bill Williams to evaluate the efficiency of the price movement. An efficient market is defined as a market when all traders (long-term and short-term) are actively trading. The indicator combines price and volume:
MFI = (High – Low) * Volume
There are 4 combinations:
See Market Rate.
A technical analysis tool developed by J. Peter Steilmayer to allow traders to get information about the activity in the futures pit. It displays price distribution and reveals who is in control of the market:
A technical indicator developed by Donald Dorsey. It measures the difference between High and Low prices in order to identify reversals. Trading signals are triggered when a “reversal bulge” is identified. That is, a reading above 27.0 and then a decline of the indicator below 26.5.
A buy signal occurs during a downtrend and a “reversal bulge” in place.
A sell signal occurs during an uptrend and a “reversal bulge” in place.
A Japanese candlestick pattern signaling a bearish reversal. 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. This is indicative of a possible top. Since the market failed to record a new high, a resistance may have been formed and a possible reversal may be in place.
A Japanese candlestick pattern signaling a bullish reversal. 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. Since the market failed to record a new low, a support may have been formed and a possible reversal may be in place.
See MUR.
A market breadth indicator. It was developed by Sherman and Marian McClellan. It is the difference of a 19-period EMA and a 39-period EMA of advancing minus declining issues in the New York Stock Exchange.
A reading above 100 implies extreme overbought conditions whereas a reading below -100 signals extreme oversold conditions. A buy signal is triggered when the oscillator falls in the area between -70 and -100 and then turns up. Similarly, a sell signal is generated when the oscillator rallies in the area between 70 and 100 and then turns down.
The midpoint of a period’s price activity. It is calculated as:
(High + Low) / 2
A Japanese candlestick pattern signaling a bullish reversal. During the course of the uptrend, the presence of a long white candlestick confirms the strength of the prevailing direction of the market. While the sentiment is clearly positive, the next session gaps even higher, creating an open window. Eventually the session closes lower but at the same level as the previous session’s close.
A Japanese candlestick pattern signaling a bullish reversal. During the course of the downtrend, the presence of a long black candlestick confirms the strength of the prevailing direction of the market. While the sentiment is clearly negative, the next session gaps even lower, creating an open window. Eventually the session closes much higher but at the same level as the previous session’s close.
See MXN.
A micro lot is equal to 10,000 units of the base currency in a currency pair.
Historical data modelling for backtesting Expert Advisors. There are three available methods:
See MDL.
It measures the difference between the current price and the price n periods ago of a financial instrument. If the difference is above the 100-line and rising then it is presumed that the uptrend is accelerating. If the difference is below the 100-line and falling then the downtrend is accelerating. If the difference is above the 100-line and falling then the uptrend is decelerating. Similarly, if the difference is below the 100-line and rising then the downtrend is decelerating. Momentum follows the general oscillator analysis:
It is a momentum oscillator developed by Gene Quong and Avrum Soudack.
It combines both price and volume. It measures the strength of money flowing in and flowing out of a financial instrument over a period.
There are two general interpretations:
A Japanese candlestick pattern signaling a bullish reversal. A long black candlestick forms in the direction of the prevailing trend, signifying that the decline is still in force. Next session gaps below, forming a small candle, in this case a Doji that acts as an obstacle to further decline. A long white candle drives the market higher, well into the long black candle’s body and more specifically above its mid-point, indicating a bullish reversal.
A Japanese candlestick pattern signaling a bullish reversal. A long black candlestick forms in the direction of the prevailing trend, signifying that the decline is still in force. The next session gaps below, forming a small candle that acts as an obstacle to further decline. A long white candle drives the market higher, well into the long black candle’s body and more specifically, above its mid-point - Indicating a bullish reversal.
See MAD.
In Elliott Wave theory, a complete cycle has two phases, Motive and Corrective.
The Motive phase consists of the waves 1, 2, 3, 4 and 5. The Motive wave moves in the direction of the wave of one larger degree.
A trend following indicator. It is a series of averages of sequential data subsets. It may be used as a curving trend line that follows the price action. Buy signals are seen when prices cross above the moving average whereas sell signals are in place when prices cross below the moving average. There are many moving average calculation methods:
The major difference between the calculation methods is the weight attached to the most recent prices.
See MACD.
A technical oscillator that plots the difference between MACD and the Signal Line.
Extremely high readings warn for overbought conditions whereas extremely low readings warn for oversold conditions. A crossing above the zero line signals uptrend confirmation while a crossing below the zero line signals downtrend confirmation
See MZN.
See NGN.
See NAD.
See NFA.
See NPR.
See ANG.
See NYSE.
See NZD.
*Designated by the CFTC as a registered futures association, NFA strives every day to safeguard the integrity of the derivatives markets, protect investors and ensure Members meet their regulatory responsibilities.
*NFAHigh impact, monthly report presenting the change of US employed people, excluding the farming and the government sector. Released, usually, the first Friday of the month by the Bureau of Labor Statistics.
See BTN.
See NFP.
See KPW.
See NOK.
See On Balance Volume.
It is a Volume Indicator developed by Joseph Granville. Each day’s volume is assigned a plus or a minus sign, depending on whether the current day’s closing price is higher or lower than the previous day’s closing price. The result is added to a running cumulative total.
If Closing Price current > Closing Price previous then add Volume
If Closing Price current < Closing Price previous then subtract Volume
If Closing Price current = Closing Price previous then no change
The On Balance Volume should be in the same direction as the prevailing trend. Divergence is a signal that the prevailing trend is weakening and an impending reversal may be imminent.
In the course of a downtrend, a small white candle opens below the low of the prior long black body and closes at the aforesaid low.
In the course of an uptrend, a small black candle opens above the high of the prior long white body and closes at the aforesaid high.
Organization of Petroleum Exporting Countries. OPEC’s mission is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry. The twelve-member states are: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
The total number of outstanding (long or short) contracts at the end of the trading day. Open Interest applies to futures and options markets.
Buyer Sell Comment Open Interest
New Long New Short New Position ↑
New Long Old Short Not new Position − −
Old Long New Short Not new Position − −
Old Long Old Short Old Position ↓
A financial derivative where the buyer has the right to buy/sell an asset by the expiration date. More specifically, Call Options are contracts that give the owner the right (not the obligation) to buy an asset in the future (before or at the expiration date) at an agreed price. Investors buy Call Options when they believe that the value of the underlying asset will increase above the strike price. Similarly, Put Options are contracts that give the owner the right (not the obligation) to sell an asset in the future (before or at the expiration date) at an agreed price. Investors buy Put Options when they believe that the value of the underlying asset will decrease below the strike price.
Here are some examples of different types of Options:
Oscillator Analysis:
See Over the Counter.
The traditional way of trading forex was ‘over the counter’, meaning traders made forex transactions over the telephone or on electronic devices.
Balboa. The currency of Panama. It is subdivided into 100 centésimos.
See PKR.
See XPD.
Parabolic Stop and Reverse is a technical indicator developed by Welles Wilder. It is based on the premise that a strong trend will continue to increase in strength and hence it will follow a parabolic arc. During an uptrend a SAR point starts far from the price and as the price accelerates upwards the SAR points (below the price in an uptrend and above the price during a downtrend) close the gap. When the SAR point reaches the price the long position is closed and a short is opened. It is a system that is always in the market either as long or short. The points (SAR) serve as trailing stop loss and trailing take profit. It works well during trending markets but it produces many false signals during sideways markets.
See MOP.
See TOP.
See Personal Consumption Expenditures.
Sol. The currency of Peru. It is subdivided into 100 centimos.
Orders to buy or sell a financial instrument in the future when certain conditions are met. They consist of limit orders and stop orders.
Buy Limit Order: A predefined price to buy in the future. This is lower than the current market price.
Sell Limit Order: A predefined price to sell in the future. This is higher than the current market price.
Buy Stop Order: A predefined price to buy in the future. This is higher than the current market price.
Sell Stop Order: A predefined price to sell in the future. The price is lower than the current market price.
A Continuation price pattern composed of a small symmetrical triangle, preceded by an almost straight-line move called a flagpole. The breakout of the pennant should be accompanied by heavy volume where available. The measuring implication is equal to the length of the pole. The pennant pattern causes a brief pause in the market that lasts less than 3 weeks.
A monthly report that measures the total expenditure by individuals. A high reading is seen as positive for the US Dollar. Released by the Bureau of Economic Analysis, Department of Commerce.
See Personal Consumption Expenditures.
See CUC.
See UYU.
Kina. The currency of Papua New Guinea. It is subdivided into 100 toea.
See PHP.
Philippine Peso. The currency of the Philippines. It is subdivided into 100 centimos.
During the course of a decline, a long white candlestick exceeds the midpoint of the previous long black candle. The white candle opens below the previous close or low. It is a bullish reversal pattern.
A point in price, or pip for short, is the measure of change in a currency pair in the forex market. The acronym can also stand for a “percentage in point” and “price interest point”. It is a standardized unit and is the smallest unit of measurement by which a currency quote can change. Most currency pairs are measured to five decimal places. For pairs like EURUSD, a pip corresponds to the fourth decimal digit [EURUSD 1.06712]. Yen-based currency pairs like USDJPY are the exception, and are measured to three decimal places and the pip corresponds to the second decimal digit (USDJPY 114.612).
Pivot Points are popular technical tools used by traders to identify price direction and get a feel for market sentiment. There are five calculation methods:
The Standard pivot point calculation method, also known as the Classic or Floor method, uses the previous period’s high, low and close price to calculate the current period’s direction/sentiment, as well as future support and resistance levels.
Just like the Standard method, the Fibonacci method uses the previous candlestick’s high, low and close price to determine the current period’s direction. Future support and resistance levels are estimated by employing Fibonacci ratios 0.382, 0.618 and 1.00.
Unlike all other pivot point methods, DeMark’s method uses the relationship between the previous period’s close and open prices, to determine which of the 3 formulas to use, when calculating support and resistance. The main Pivot Point is not part of the DeMark method.
Camarilla Pivot Points provide a “road map” for both range and break-out traders, looking for potential turning points in the market. The emphasis is focused on the third support and resistance levels as potential reversals. Also, the fourth support and resistance levels play a key role in accelerating markets in both upward and downward directions.
Woodie’s method is another variation of pivot points. The main pivot point represents the deciding factor of the market’s sentiment and its future direction.
The corresponding support and resistance levels provide take profit opportunities and possible turning points.
Unlike other pivot point methods, Woodie’s use the current period’s open price when calculating the main pivot point. Just like the other methods, the daily timeframe is the preferred timeframe for calculations.
Pakistan Rupee. The currency of Pakistan. It is subdivided into 100 paisa.
See XPT.
Zloty. The currency of Poland. It is subdivided into 100 groszy.
See ISM Manufacturing PMI.
It is the smallest increment of an exchange rate.
Price charts that display supply and demand. Demand is represented as a column of X’s and supply as a column of O’s. They ignore time and volume. Each box (i.e. X or O) represents a predefined price movement called the box size. Price movement less than the box size is ignored, thus noise is not recorded. A reversal, i.e. a column of X’s, is created after a column of O’s, when there is a price movement to the upside equal to the number of boxes - known as the reversal size. Conversely A reversal, i.e. a column of O’s, is created after a column of X’s, when there is a price movement to the downside- equal to the number of boxes - known as the reversal size. Point and figure charts are named after their box and reversal size, for example 1 x 3.
A long or short trade taken by a trader.
See GBP.
A monthly report showing the monthly change in price of finished goods and services charged by producers. It provides an indication of consumer inflation. A high reading is seen as positive for the US Dollar whereas a low reading is perceived as bearish. Released by the Bureau of Labor Statistics.
See PPI.
The ratio between gross profits and gross losses.
Closing a position to take a profit.
The number of profitable trades.
See BWP.
See ISM Manufacturing PMI.
Guarani. The currency of Paraguay.
See QAR.
Identifies investment potential by studying unquantifiable factors that affect the market movement, such as traders’ sentiment, Psychology and behavior. Technical Analysis is a form of Qualitative Analysis, as many concepts and theories such as Elliott Wave Theory, Dow Theory and Cycle Theory study the behavior of the market participants.
See GTQ.
The second currency of a currency pair is called the Quote currency. In EUR/USD for example, USD is the quote currency.
See ZAR.
See Exchange Rate.
See ROC.
A market governed by legislative rules and regulations which are in place to protect investors.
See RSI.
A technical indicator based on the premise that during an uptrend, the closing price is usually higher than the open price. Conversely, during a downtrend, the closing price is usually lower than the open price. The calculation formula is:
RVI = (Close – Open) / (High – Low)
For further smoothing, a 10-period Simple Moving Average may be applied on the resulting RVI. Furthermore, a 4-period Signal Line may be constructed by applying a Symmetrical Weighted Moving Average on RVI.
A potential buy signal is triggered when there is a positive divergence between the oscillator and price, especially when RVI is in extreme oversold territory. Conversely, a potential sell signal is in place when there is a negative divergence and RVI is in extreme overbought territory.
A price level usually defined as a previous top, where selling pressure overcomes buying pressure. As a result, prices may find it difficult to break above.
See correction.
See OMR.
See KHR.
It refers to the controls applied to mitigate trading risk, for example:
It is a technical oscillator that measures the rate of ascent or descent in the price of a financial instrument. It measures the difference between the current price and the price n periods ago (Close Recent – Close n periods ago). If the difference is above the zero-line and rising then it is presumed that the uptrend is accelerating. If the difference is below the zero-line and falling, the downtrend is accelerating. If the difference is above the zero-line and falling, the uptrend is decelerating. Similarly, if the difference is below the zero-line and rising, the downtrend is decelerating. ROC follows the general oscillator analysis:
In forex, the rollover rate is the interest rate that traders pay or earn when they hold (rollover) a position open overnight.
See RON.
Refers to the total amount of funds involved in opening and closing a position.
Relative Strength Index. A popular technical indicator developed by Welles Wilder. It addresses erratic price movements in the markets by smoothing prices using the following formula:
RSI = 100 - (100 / (1+ (Average of n up closes / average of n down closes)))
The default value is 14 but 9 may also be used. RSI is bounded between 0 and 100. When the oscillator moves above 70 it is considered overbought and a reversal warning is indicated. If there is a negative divergence between the price and the RSI, then a potential sell indication is in place. When the oscillator moves below 30 it is considered oversold and hence a reversal alert is indicated. If there is a positive divergence between the price and the RSI, a possible buy indication may be in place.
See MVR.
See IDR.
See RUB.
See RWF.
A financial instrument or asset where the risk of it losing its value is relatively low.
See SHP.
Saudi Riyal. The currency of Saudi Arabia. It is subdivided into 100 halalas.
See SAR.
Solomon Islands Dollar. The currency of the Solomon Islands. It is subdivided into 100 cents.
A trading strategy that benefits from small price movements.
Seychelles Rupee. The currency of the Seychelles. It is subdivided into 100 cents.
Sudanese Pound. The currency of the Sudan. It is subdivided into 100 piasters.
Swedish Krona. The currency of Sweden. It is subdivided into 100 ore.
A pending order to sell at a predefined price higher than the market price in anticipation that the market will eventually decline.
A pending order to sell at a predefined price lower than the market price, in anticipation that the market will continue to decline.
A pending order that combines the Sell Stop and Sell Limit Orders. It allows a trader to specify a price lower than the current price that when reached, a Sell Limit ordered is placed at a higher price level.
Substantial sale of a financial instrument with rapidly declining prices. It is usually characterised by panic amongst traders.
The investors’ expectations about the direction of a financial instrument or market.
Japanese candlestick bearish continuation pattern. During the course of a downtrend, the appearance of a long white candlestick is common, as a correction is part of the prevailing trend. The Next candlestick is a long black body opening at the same price level as the opening of the previous white candlestick but eventually closing lower, signaling the continuation of the downtrend.
Japanese candlestick bullish continuation pattern. During the course of an uptrend, the appearance of a long black candlestick is common, as a correction is part of the prevailing trend. The next candlestick is a long white body opening at the same price level as the opening of the previous black candlestick, signaling the continuation of the uptrend.
See RSD.
The transfer of ownership of a financial instrument to a buyer.
See SCR.
Singapore Dollar. The currency of Singapore. It is subdivided into 100 cents.
The vertical line than extends above and below the body/real body of a Japanese candlestick. It defines the range between the high and the low price for the specific period.
Japanese candlestick bearish pattern. A Shooting Star formed at the end of an uptrend or at a resistance area has bearish reversal implications. Traders enter the market with long positions but eventually the sellers’ pressure overcomes buyers’ pressure and the candlestick closes at the lower area of the Shooting Star. The small body and the long upper shadow reveals the weakness of the bulls, who are unable to maintain the upward move.
The sale of a financial instrument to be bought later at a lower price.
Saint Helena Pound. The currency of Saint Helena, Ascension and Tristan da Cunha. It is subdivided into 100 pence.
Japanese candlestick bearish continuation pattern. During a downtrend, a black candlestick is followed by two white candles that gap down-their high price is lower than the black candle’s low price. The two white candles open at about the same price and have a similar body size.
Japanese candlestick bullish continuation pattern. During an uptrend, a white candlestick gaps above the previous white candle thus creating a rising window. The third white candle opens near the preceding open, creating a bullish continuation pattern.
The 9-period Simple Moving Average of the Moving Average Convergence/Divergence (MACD). It may also refer to a moving average of any other oscillator.
See XAG.
A trend following indicator. It also known as arithmetic moving average. It is calculated by adding the closing (other prices may also be used like open, high low, typical, median etc.) price of a number of candlesticks (equal to the time period of the moving average) and then dividing this number by the total number of prices. The result is known as the average. The oldest price is then dropped (i.e. discarded from the calculation) and the same formula is applied to the next prices. Therefore, it becomes the moving average.
Simple Moving Average = [Price(n) + Price(n-1) + Price(n-2) + … + Price(1)] / n
Where n is the period of the moving average.
See SGD.
This is when a trader executes an order at a price which is very different to the price they expected the trade to be executed at. This usually happens during periods of high volatility, when traders use market orders and stop loss orders.
Leone. The currency of Sierra Leone. It is subdivided into 100 cents.
A currency that is sensitive to political and economic events and thus fluctuates greatly and is generally unstable.
See PEN.
See SBD.
See KGS.
See SOS.
See TJS.
Somali Shilling. The currency of Somalia. It is subdivided into 100 senti.
See SSP.
A trader in financial markets who aims to gain from anticipated future market moves.
A sudden upward or downward movement in price that happens in a short time period.
The current market price of a financial instrument.
The difference between the Ask and Bid price of a currency pair.
Surinam Dollar. The currency of Surinam. It is subdivided into 100 cents.
See LKR.
South Sudanese Pound. The currency of South Sudan. It is subdivided into 100 piasters.
It is a statistical term denoted by the Greek letter (sigma). It is calculated by the following steps:
Or
Standard Deviation formula:
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.
It consists of three lines:
Prices trading above or below the Channel Lines hint for a reversal.
100 000 units of the base currency.
Dobra. The currency of Sao Tome and Principe. It is subdivided into 100 centimos.
Japanese Candlestick bullish pattern. During a downward movement, this three-line pattern consists of two long black candles and a white candle in the middle. The two black candles close at the same price level, while the white candle extends higher than the previous black body.
It is a momentum oscillator developed by George Lane. It determines where the price closed relative to a specific price range over a chosen time period. It is based on the premise that prices tend to close near the upper end of the candlestick during upward price movements whereas they tend to close near the lower end of the candlestick during downward movements. It consists of two lines; %K and %D.
%K=(Current Close-Lowest Low)/(Highest High-Lowest Low) x 100
Current Close – represents the latest closing price
Lowest Low – represents the lowest price for a specific time period
Highest High – represents the highest price for a specific period
Specific Period – is by default 5
Range – is the difference of Highest High – Lowest Low
The %D is a 3 (default value) period Simple Moving Average of %K.
The formula for %D is:
%D = SMA (%K,3)
This is known as fast stochastics.
By taking an additional 3-period Simple Moving Average of %D and %K, slow stochastics are calculated:
%K = SMA(%K,3)
%D = SMA(%D,3)
The Stochastic Oscillator ranges between 0 and 100.
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.
Also, a reading above 80 is considered to be an indication that the market has reached extreme overbought levels, whereas a reading below 20 means that the market has declined to extreme oversold levels.
The Stochastic Oscillators follows the general rules of oscillator analysis:
An order placed to close a position when a certain price is reached. These orders are placed to limit loss on a position.
See SDG.
A price level usually defined as a previous bottom, where buying pressure overcomes selling pressure. As a result, prices may find it difficult to break below.
See SRD.
El Salvador Colon. The currency of El Salvador. It is subdivided into 100 centavos.
After the swap-free period expires, the account will be charged with the Swap Free Fee for every night it remains open.
A swap in forex refers to the interest that you either earn or pay for a trade that you keep open overnight. There are two types of swaps: Swap long (used for keeping long positions open overnight) and Swap short (used for keeping short positions open overnight). They are expressed in pips per lot, and vary depending on the financial instrument you’re trading.
See SEK.
A trading strategy that aims to make potential profits by taking advantage of a financial instrument’s change in price direction.
See CHF.
It is the nickname used for the Swiss Franc and USDCHF.
Syrian Pound. The currency of the Syrian Arab Republic. It is subdivided into 100 piasters.
See SYP.
The risk associated with an event that can trigger substantial uncertainty and loss of confidence in the financial markets, financial system or even the whole economy.
Lilangeni. The currency of Swaziland. It is subdivided into 100 cents.
See BDT.
An order placed to close a position so as to lock profits once it hits a specific price.
An order placed to close a position once it hits a specific price.
See WST.
See TZS.
The study of market action mainly through price charts for the purpose of identifying future price trends in early stages.
Technical analysis applies to all:
Technical Analysis has received some criticism throughout the years:
Technical Analysis is based on 3 premises:
See Indicator.
See KZT.
One of the lines of Ichimoku Kinko Hyo. It is a 9-period moving average of the mid-prices; (Highest High + Lowest Low)/2 for the last 9 periods. It provides signals when combined with Kijun-sen.
A trendline that joins only two tops or bottoms.
Baht. The currency of Thailand. It is subdivided into 100 satang.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the end of a rally or near a resistance area. At the top of the uptrend the presence of three consecutive long black candlesticks signifies the end of the upward move and the beginning of a new move in the opposite direction. Each Marubozu opens above the previous close and concludes below it. The lower shadows are very small if present - thus demonstrating the strength of the decline.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the end of an uptrend or near a resistance area. A small candlestick body of either color follows a candlestick of a long white body. The color of the small candlestick is not important. The two candles form a Harami pattern. The bullish rally is running out of steam as shown by the presence of the small candle, which signals uncertainty as it is contained by the previous long body. The weakness of the market to move higher and the presence of the pattern at the end of a rally, signals possible bearish implications. The long black body that follows, extending below the second candle’s close, confirms the bearish reversal.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a downtrend or near a support area. A small candlestick body of either color follows a candlestick of a long black body. The color of the small candlestick is not important. The two candles form a Harami pattern. The bearish decline is running out of steam as shown by the presence of the small candle, which signals uncertainty as it is contained by the previous long body. The weakness of the market to move lower and the presence of the pattern at the end of a decline, signals possible bullish implications. The long white body that follows, extending above the second candle, confirms the bullish reversal.
A Japanese candlestick pattern signaling a bearish continuation. During a downtrend, three consecutive long black candlesticks (i.e. Three Black Crows) signify the strength of the downside momentum. The fourth candlestick, a long white body, opens below the third candle’s open and closes above the first candle’s close in the opposite direction.
A Japanese candlestick pattern signaling a bullish continuation. During an uptrend, three consecutive long white candlesticks (i.e. Three White Soldiers) signify the strength of the upside momentum. The fourth candlestick, a long black body, opens above the third candle’s close and closes below the first candle’s open in the opposite direction.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the end of an uptrend or near a resistance area. Just like an Engulfing Pattern, a long black candlestick is formed at the end of an uptrend preceded by a small white candlestick. The body of the small white candlestick is completely engulfed by the body of the long black candlestick. The bullish pressure of the prevailing upward move, is overcome by the sellers entering the market aggressively at the top of the rise-forming a long black candlestick with bearish implications. The presence of the long black candle at the third session which closes lower than the prior close, confirms the bearish reversal.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a downtrend or near a support area. Just like an Engulfing Pattern, a long white candlestick is formed at the end of a downtrend preceded by a small black candlestick. The body of the small black candlestick is completely engulfed by the body of the long white candlestick. The bearish pressure of the prevailing downward move, is overcome by the buyers entering the market aggressively at the end of the decline-forming a long white candlestick with bullish implications. Additionally, the presence of the long white candle at the third session which closes higher than the second candle, confirms the bullish reversal.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a downtrend or near a support area. While the market is in a downtrend, a long black body with a long lower shadow forms in the same direction. The second candle is a small black candle with a relatively long lower shadow as well but above the previous one. The third candle in the pattern is again a small black candlestick with very small or non-existent shadows. The body of the last candlestick is contained within the range of the previous candle.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a downtrend or near a support area. At the end of the downtrend or decline, the presence of three consecutive long white candlesticks signify the end of the downward move and the beginning of a new move in the opposite direction. Each Marubozu opens below the previous close and concludes above it. The upper shadows are very small if present - thus demonstrating the strength of the ascent.
During trading hours Bid/Ask prices change as new incoming prices are received. A tick represents any single incoming price quote.
There are 4 major categories:
It is applied to the breaking of trendlines, support and resistance. Sometimes a close is needed above or below the line or 2 closes or 2 days or a Friday close to name just few popular filters.
It is based on the study of the past. To forecast the future, one needs to study previous data.
To determine specific entry/exit points in the market.
Somoni. The currency of Tajikistan. It is subdivided into 100 diram.
Turkmenistan New Manat. The currency of Turkmenistan. It is subdivided into 100 tennesi.
Tunisian Dinar. The currency of Tunisia. It is subdivided into 1000 milim.
Pa’anga. The currency of Tonga. It is subdivided into 100 seniti.
During the course of an uptrend, the recording of a higher high followed by a lower close (lower than the previous close) suggests a reversal. The wide range of the day (bar or candlestick) and the accompanied heavy volume define the strength of the reversal. Also, known as buying climax.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a downtrend or near a support area. In the course of a decline a long black candle reaffirms the negative sentiment in the market. The following three candles are of small real bodies, displaying indecision. The last candlestick is a long white body, signaling a reversal.
In the course of a rally a long white candle reaffirms the positive sentiment in the market. The following three candles are of small real bodies, displaying indecision. The last candlestick is a long black body, signaling a reversal.
The difference between a country’s exports and imports. More exports than imports result in a trade surplus. If there are more imports than exports, it results in a trade deficit.
In Time Cycles, a trading cycle is 4 weeks long. It consists of the alpha (2 weeks) and beta (2 weeks) cycles.
Some of the most popular orders are:
See Trading System.
Trading software (i.e. MT4, MT5) is provided by the broker for traders to place, manage and close positions electronically. The platform provides account management, live market prices, news feeds and charting tools.
It is characterized by equal tops and bottoms. It is also known as sideways or trendless market. It is a state of the market where supply and demand are in equilibrium.
The trading hours of the foreign exchange market are divided into 4 broad categories:
See Trading System.
There are many different styles of trading to suit a trader’s profile, knowledge and time:
A detailed plan on how to trade the financial markets. It is a step-by-step set of instructions on when to enter the market, when to exit with minimal loss once the market goes against you and when to book profits.
A stop loss order that is applied on profitable positions to lock in profits. It follows the market price at a distance equal to a predetermined number of points. It is set on the Client Terminal as opposed to the Stop Loss order that is set on the Server.
The direction of successive tops and bottoms:
Trends fall under three categories:
Trend has three directions:
Trading in the direction of the established trend.
A very important concept in Technical Analysis. It is a straight line connecting successively higher bottoms during an uptrend or successively lower tops during a downtrend. Trendlines are used to open long positions during an uptrend and short positions during a downtrend. On the other hand, violation of the trendline is an early warning for a reversal.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the end of an uptrend or near a resistance area. During a prolonged rally, a formation of three consecutive Doji candlesticks, signals that the uptrend may be coming to an end. Second Doji gaps above the first and the third candles.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a downtrend or near a support area. During a prolonged decline, a formation of three consecutive Doji candles, signals that the downward move may be coming to an end. Second Doji gaps below the first and the third candlesticks.
A continuation pattern comprised of two converging sides with at least 4 reversal points (2 tops and 2 bottoms). The opening (height) of the triangle is called the base whereas the intersection of the two sides is called the apex. Three popular types of triangles are:
Volume is usually heavier on the breakout side hence giving hints to which side to expect the breakout. Two measuring techniques are available for triangle breakouts:
See TTD.
During the course of a downtrend the presence of three bottoms at about the same level and the breaking of the corresponding two tops, signal a reversal. Heavy volume (if available) confirms the reversal.
A trading method with 3 moving averages: a short-term, medium-term and long-term. A buy signal is triggered in a downtrend when the short moving average crosses above both the medium and the long moving average and in turn, the medium moving average crosses above the long moving average. A sell signal is triggered in an uptrend when the short moving average crosses above both the medium and long moving average and in turn, the medium moving average crosses above the long moving average. Popular triple crossover systems are 4-9-18 and 5-10-20.
During the course of an uptrend the presence of three tops at about the same level and the breaking of the corresponding two bottoms, signal a reversal. Heavy volume (if available) confirms the reversal.
The area below the market price where buying interest overcomes selling pressure. Also, known as bottom or support.
Turkish Lira. The currency of Turkey. It is subdivided into 100 kuruş.
Trinidad and Tobago Dollar. The currency of Trinidad and Tobago. It is subdivided into 100 cents.
See MNT.
See TND.
See TRY.
See TMT.
New Taiwan Dollar. The currency of Taiwan (Province of China). It is subdivided into 100 cents.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the end of a rally or near a resistance area. As the market continues to trade in the direction of the established uptrend, registering higher highs the next session is bearish, pushing prices lower. The matching highs indicate that a possible top may be in place and a reversal may be imminent.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a decline or near a support area. The market trades in the direction of the established decline forming a long black candle, registering lower lows. The next session registers a matching low and eventually forms a bullish candlestick hence, pushing prices higher. The matching lows indicate a possible reversal may be imminent.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the end of an uptrend or near a resistance area. In the course of an uptrend, the presence of a long white candlestick reaffirms the bullish sentiment. The second candle is a relatively small candle that gaps higher than the previous high but closes lower than its own open price forming a black candle. The third candle is a long black body that opens within the body of the small black candlestick, fills the gap and closes in the body of the long white candlestick, hence signaling a potential bearish reversal.
The average of the high, low and closing price of a trading period:
(High+Low+Close)/3
Tanzanian Shilling. The currency of Tanzania. It is subdivided into 100 senti.
See AED.
Hryvnia. The currency of Ukraine. It is subdivided into 100 kopiyky.
See UGX.
Uganda Shilling. The currency of Uganda.
The percentage of the labour force that during the last month that had no work but made specific efforts to find employment. Released monthly by the Bureau of Labor Statistics.
Japanese Candlestick bullish pattern. A long black candle forms in the direction of the downtrend. The next candle is a hammer that opened higher and tested lower prices levels but eventually rejected as shown by the long lower shadow. The third candle is a small white body formed below the hammer’s body showing signals that the market is not willing to move lower.
Japanese candlestick bullish continuation pattern. In an uptrend, two long white candles with a rising window in between are followed by a long black candle that fills the window (i.e. gap).
Japanese candlestick bearish pattern. During the course of an uptrend a long white body is followed by a shorter black body that gaps higher. A black candle that follows, opens at or above the previous open. It then pushes the market lower, well into the long white candle’s body and more specifically, below the close of the second body but above the close of the first candlestick.
Japanese candlestick bullish continuation pattern. During an upward rally, a long white candle is followed by a second long white body that gaps higher in the direction of the prevailing trend. A third candle, black this time, closes (but does not fill) within the gap.
See USD.
US Dollar. The currency of the United States of America, American Samoa, Bonaire, Sint Eustatius and Saba, the British Indian Ocean Territory, Equador, El, Salvador, Guam, Haiti, the Marshall Islands, Federated States of Micronesia, the Northern Mariana Islands, Palau, Panama, Puerto Rico, Timor-Leste, the Turks and Caicos Islands, United States Minor Outlying, British Virgin Islands, U.S. Virgin Islands. It is subdivided into 100 cents.
Peso Uruguayo. The currency of Uruguay. It is subdivided into 100 centesimos.
See UZS.
Uzbekistan Sum. The currency of Uzbekistan. It is subdivided into 100 tiyin.
See VUV.
See VPS.
See Elliott Wave Theory.
See Linearly Weighted Moving Average.
See WTI.
See KRW.
CFA Franc BEAC. The currency of Cameroon, The Central African Republic, Chad, The Congo, Equatorial Guinea and Gabon.
See YER.
See JPY.
See CNY.
See ZMW.
See ZWL.