Forex Terms

Forex Definition

FOREX is an international investment market. Because it is the largest and most liquid market in the world, it has an average transaction volume of 5 trillion dollars daily. Forex markets are generally used as a system of exchange between currency units; but it has become a market that offers a wide range of investment possibilities for the purchase and sale of precious metals such as gold, silver, oil and various foreign stock indices over time. Just as it is individual investors in these markets, institutional investors, central and commercial banks, hedge fund managers.

Advantages of Forex

1. With the Forex market leverage system, you have the possibility of trading up to the higher floors of your account. Today, leverage ratios of up to 1: 1 are available. Leverage rates may vary depending on the Broker you open your account with. So you can process up to 100 times the amount you deposit. You will be a partner in the loss of this figure in profitability.

2. As you know, in the stock markets, you earn while prices rise. The most profitable process you can do when prices fall is not to do anything! You just have to wait in the falling market. But at Forex markets, transactions are bidirectional. Except you can sell it open. You can invest in this bidirectionally.

3. With high leverage ratios, it is authorized to deal with even a small amount of capital. In this regard, investors who make small amounts for investment can even trade on the forex market. Low leverage ratio; you will be able to take less risk in your investment.

4. Forex market is the most liquid market in the world with an average daily transaction volume of 3 trillion US dollars. For this reason, the liquidity does not have to be the buyer and seller as in the low-end markets; your transactions happen instantly.

5. With the help of developing technology, you can make your transactions online from your screen and you do not have to use intermediary institutions or individuals to direct your investments immediately.

6. The Forex market is open 24 hours a day, 5 days a week. Investors can trade on weekdays if they wish.

7. Since it is the world's largest market, it can not be manipulated like various stock exchanges. There are predefined economic data, with opening times and dates enabling the parcels to move. The parallels move as a result of this incoming data. Investors also follow this data.

Examples Forex

Forex market transactions are bidirectional. You can buy and sell on the same parity. With one example we can clarify these operations more clearly.

* Which currency name is in front of the book; o, base exchange. For example, in EUR / USD parity, the name of EUR is written in front of USD, so the base currency is EUR.

Suppose you are trading in EUR / USD. If we think that the price will move upwards, we have to do AL (Buy) operation. At this point we will receive the Euro (if the base currency is EUR). If we think that the price will move downwards, we will issue a Sell (Sell) order. So we sell the euro.

For new investors, the first question that comes to mind in the open sales process is:

How can I sell a non-existent value? Am I owed to an open-source institution?

The transaction that is made is not actually a value that is not available. When you issue an AL order on the EUR / USD parity, you will be selling other currencies when you buy the base currency. So you buy the Euro, you sell the USD. On the SAT order, you will receive the other currency when you sell the base currency. So you are selling the Euro, buying the USD.

Let's take an example of a transaction in EUR / USD parity

Assume that the price is 1.2420 / 1.2422. Decide whether to buy or sell. The first price on your screen (ie 1.2420 in our example) is the selling price. The second price (ie 1.2422 in our example) shows the purchase price. Suppose we made a purchase; the investor enters 1.2422 dealing process. So it gives $ 12,422, it gets 10,000 euros. Let's think that the price is then 1.2600 and you close your position.

12.600 - 12.422 = $ 178.
However, if a different trader sells 1.2422 lots (10.000 euros) in the EUR / USD parcel and the price is later to 1.2600,
1.2600-12.422 = $ 178.
The above example is valid for 1 lot processing. As you increase the amount of lot you process, your profit or loss will also increase.

What do you need to trade on the Forex market?

Since transactions are performed online, The main requirement for the investor to access his account is internet access. Computer, PDA (handheld computer), etc. technological equipment is another basic requirement.

Parliamentary expansions and explanations

What is the parity? The two countries are called the "union" of the currency. The investment value of two foreign currencies. Parallels, or currencies, are traded at the same rate.

PARTIAL DEFICIT MARKED IN MARKET

  • EUR / USD Euro / US Dollar Euro
  • GBP / USD British Sterling / US Dollar Cable yada Sterling
  • USD / JPY US Dollar / Japanese Yen Dollar Yen
  • USD / CHF American Dollar / Swiss Frangi Dollar Swiss
  • USD / CAD US Dollar / Canadian Dollar Dollar Canada
  • AUD / USD Australian Dollar / American Dollar Aussie Dollar yada Aussie
  • EUR / GBP Euro / British Sterling Euro Sterling
  • EUR / JPY Euro / Japanese Yen Euro Yen
  • EUR / CHF Euro / Swiss Frangi Euro Swiss
  • GBP / JPY British Sterling / Japanese Yen Sterling Yen

Definition of terms in the market (Forex Glossary)

  • Open Position: When you place an order, the sale takes place instantly and your position is opened. Your order will appear in that open position and the open positions window. You can close your position by placing an order to close the position, you can add your profits to your profit or loss.
  • Balance: The amount available for withdrawal, which is free from losses and losses.
  • Base Currency: It is the first currency in the currency. The parity moves up when it gains value, pulls down parity when it loses value.
  • Margin to be found: The minimum margin required to have the Open Position is Margin.
  • Current Balance: Capital + Profit is the amount of loss. So when you open a position your capital does not play until that position closes, but you can instantly keep track of what happens when your profits from open positions are added to your capital.
  • Demo Trading Platform: Demo platform is a live simulation in which you can use the program, you will be able to trade on these markets, you can make trial transactions with live prices, you will use it as virtual money, without having to deposit any money. It is a tool that you absolutely recommend for investors who have just started the market.
  • Support Level: It is the level that prices are expected to face in the face of intense purchases and fall down even further.
  • Resistance Point: The price increase is expected to stop the end result of intense sales.
  • Hedging: The risks arising from a position in a cash market are protected by taking a reverse position in other markets. As an example, if you have a buying process, you can hedge by issuing sales orders for the same amount.
  • Account Movement: List of positions that have occurred in a certain time period.
  • Closed Position: It means to return the position you entered to accept the current profit and loss. When you return and close the open position, the current profit or loss will be processed into your balance.
  • Closing Price: Parity is the price you can find at 24:00.
  • Profit / Loss: Indicates the actual gains and losses from the positions you open in the Closed Paragraphs in USD.
  • Opposite Parity: The second currency located in the Parliament. The pair moves down when it gains value.
  • Short Position: It is the other name of the sales position.
  • Limit Order: The order you want to enter is used when it is outside the market price. Above the market price, you can sell under the yada.
  • Margin Call: This warning comes when a loss occurs to the margin level you are using in an operation. If your balance is as high as this figure, there is a danger that your positions will automatically shut down for protection purposes.
  • Margin: The amount of cash required to hold Open Positions in the Customer's Account.
  • Withdrawal Request: It is an application to withdraw funds from the Client Account.
  • Parity: The two countries are known as the unit of money divided by each other.
  • Pip: The price of the smallest unit of any currency. For example; One pips for EUR / USD pair: .0001 USD. You will profit / loss each pip according to the amount of leverage you have entered and the amount of leverage.
  • Market Order: An order issued for parcels to buy or sell at the current market price.
  • Position Closure Order: An indicator that is used to return your open positions, that is, close together with profit or loss. This order is reflected in the resultant profit or loss.
  • Risk Declaration: Explain the risks that the customer may undertake in the transactions to be carried out at international markets.
  • Technical Analysis: Examination of price charts to find formations that occurred as a result of past price movements. The basic concept is that the formation of similar models in the current market can signal a possible market movement in the same direction.
  • Trend: It refers to the continuous increase or decrease in a certain range in a certain time interval.
  • Long Position: It is the other name of the buying position.
  • Valor date: The value date for Forex markets is generally 2 business days.
  • Strike Stop Order: This is the type of automatic order you place to stop your damage, by checking the price if you are reversing your position. If you think you are buying at the price of 2,00000, put a stop order at 1.9950 and the position closes when you see this price.
  • Emir Types
  • Market Order: Market entry is at the current price in the market.
  • StopLoss Order / Damage: It is the order to close the forward position to prevent the growth of your damage.
  • KarAl / TakeProfit Order: Forward position closing command for automatic closing when your open position is carded.
  • Waiting Orders
  • BuyLimit: Used to enter the market at a price below the market price.
  • BuyStop: It is used to buy at a price higher than the price of the market.
  • SellLimit: Used to sell at a price higher than the market price of the market.
  • SellStop: Used to sell at a price lower than the price of the market.

How to Maximize Your Loss or Minimize Your Loss

In this article I will point out some important points to be successful in Forex markets. There is a lot of thought among the traders in the markets. Wait while your positions are carded to enlarge your belly and cut short the damage on the contrary when it is harm. We can say it's true, but it's a lot easier to do than to say it as you know it. The best way to maximize your stamina and limit your harm is to take a systematic approach to your disciplined and emotional decision-making.

Investors, especially those who are beginning to trade in Forex markets, may fail because they generally rely on their sentiments when they give out their trading profits.

Your psychology plays a very important role in the process. Our uncheckedness, fear and ambition make it almost impossible for the decisions we make while trading to be rational. And it raises our chances of failing. Fear prevents an investor from limiting the harm. Learning to stop loss is one of the most important behaviors for a successful investor and protect us from making big losses. Greed causes people to be overconfident, encourages too much risk, and disrupts your discipline.

To succeed, you have to act like a corporate governor and learn how to manage risk to make money.

The first step in maximizing your profits and limiting your losses is to prepare a trading plan in which money management is involved. Money management is actually a risk management and it is used to determine strategy, to protect your risk capital and to remain in the game.

At the very least, a trading plan should include a set of objectives, including a monetary management strategy that guides you to protect your capital and make disciplined trading decisions. The plan should include systems to set the risk / profit ratio, determine the profit taking and loss stop levels. This plan should, of course, be in the process of training with new knowledge about the self-sustained continuous market.

The objectives should include questions such as "Why Do I Process" and "What are My Targets When Making Transactions?". If you do not know what you want, Forex markets can be an expensive place to learn it. Some people trade for excitement or competition, some make it as a hobby, but the biggest part of the process is to make money and avoid big capital losses.

Money management is a concept of protecting yourself and is the key to distinguishing successes and mistakes in trading. The efficient money management strategy helps you to set aside a set of rules to protect discipline and capital, how much you will risk per transaction.

The amount you raise per transaction is usually determined by the risk / rate of return. The risk / profit ratio is the expected rate of return expected from a transaction. A good risk / benefit ratio is 1: 3. Risk / earnings ratios are not absolute fixed figures and can be adjusted according to your risk tolerance level, according to market conditions, the input and output levels you enter into process.

The Stop Loss order is one of the key parts of risk management and must be decided when you execute an order. Stop loss order is a type of order that both limits losses and guarantees profitable positions. The placement of the damage stop level is calculated on the basis of how much risk you intend to risk in that process, or on the technical analysis tools you use. The subsequent loss stopper is used to protect the profit you have earned and to wait for your card. Generally, the profit target is determined by the risk / profit ratio. For more information on order types, please see the Order Types in the Basic Education section.

Keeping the position small, especially for newcomers, lowering the risk / profit ratio and shortening your waiting time at the position are good ways of protecting your capital. It is very important to protect your capital because when buying and selling in Forex markets, there can be frequent declines in the capital. The aim is to manage these risks by risk management and prevent large losses.

In our next articles, we will give more space to issues such as money management and preparing a transaction plan.