Forex -Glossary Of Technical Terms -3
(1) JAPANESE CANDLESTICK- A Japanese candlestick is a representation of price movement over a certain period of time. The end result looks something like a candle with a wick on each end. They are called Japanese candlesticks because they were first used for trading rice futures in Japan in the 1700's
(2) MICRO LOT- A micro forex lot represents 1k of whatever currency your account is funded with. If your account is funded with US Dollars, a micro lot would be $1000.
A micro lot is equal to 1/10 of a mini lot of currency.
(3) OVERBOUGHT- Overbought is when a currency pair is considered to have had too much buying take place in a short period of time. An overbought condition often happens during important moves when many large one way trades are initiated at once.
(4) OVERSOLD- When a currency pair is considered to have been pushed in the short direction too quickly. An oversold condition often happens during important moves when many large one way trades are initiated in a short period of time.
(5 ) WHIPSAW- A whipsaw is when the market unexpectedly moves back and forth in a confusing manner. Whipsaws typically move the market in such a way that traders that are trading either long or short using tight stops are stopped out of the market.
(6) LIMIT ORDER- A limit order is an order placed away from the current market price.
For example, if you are trading EUR/USD and the current price is 1.31 and you want to go short if the price reaches 1.32, you can place an order for the price 1.32. That order is called a limit order. It is placed when the price reaches your "limit" of 1.32.
(7) PIP- Pip stands for percentage in point. A pip is equal to 1/100th of 1 percent. Example: If you buy the EUR/USD pair at 1.40 and sell it at 1.41 you have gained 100 pips.
(8) ECONOMIC INDICATOR -Economic indicators are a collection of various reports and data that provide fundamental clues as to how an economy is doing. These reports can include employment reports, money supply reports, and even changes in interest rate. How much an indicator can impact the value of a currency can vary with market conditions.
(9) PRICE ACTION-The term price action refers to the actual movement in price from moment to moment. It is a general term used to describe different types of pricing situations such as, impulsive movement of price, corrective movement of price, or random movement of price.
(10) VARIABLE SPREADS- A variable spread is a spread that is not constant in value. A variable spread will condense and widen as market conditions and liquidity change. When the forex markets get volatile, a variable spread will get larger. If the spreads are normally 2 pips on a pair, and suddenly there is a large buying spree on that pair, the spreads would "widen" to something like 5 pips.
(11) RESISTANCE- The term resistance is a technical analysis term that refers to lines on your trading chart that cap a rise in the current price. A resistance line can be just a horizontal line, or it can be sloping with a trend. Resistance only refers to a line that caps the current price. Once the current price definitively breaks through the resistance line, the resistance line becomes a support line.
(12) C.F.T.C- The term C.F.T.C refers to Commodity Futures Tradaing Commision of the US government, The forex ,market is bounded by certein rules as laid by C.F.T.C operated brokers in the United States of America.
(13) F.S.A- The F.S.A refers to the regulatory authority of United Kindom, It stands for Financial Services Authorty & Forex or Financial companies under the registration of F.S.A has to follow certein guidelines as laid down by them.
(14) N.F.A- National Futures Association (NFA) is the industrywide, self-regulatory organization for the U.S. futures industry. NFA strives every day to safeguard market from the common scams & business disputes in futures markets or forex based markets in United States of America.
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