Essential Vocabulary for Novice Traders – Part 1

Essential Vocabulary for Novice Traders – Part 1
TradeGM Analysis date_range December 8th, 2020

When learning about financial markets and how to trade, the so-called trading lingo is perhaps the hardest to understand. We compiled a list of essential trading terms for you below.

Essential trading terms for novice traders:

Ask: The selling price of a financial instrument, or better yet, the price a market-maker is keen to accept. It’s also often referred to as the offer price.

Aussie: Nickname for the AUD/USD currency pair; Ozzie is another common nickname.

Asian Session: The trading session of Asian Pacific, which happens between the hours of 23:00 to 08:00 (GMT +9 – Japan Standard Time).

Base Currency: The first currency in a currency pair (i.e., GBP in GBP/USD).

Bear market: When the market price is declining, traders are pessimistic about the asset.

Bull market: When the market price is ascending, traders are optimistic about the asset.

Bid: The price at which a seller is willing to buy a financial instrument.

Buy Position: An open position that represents anticipation that the market price will increase.

Buy Stop: A pending order for creating an open Buy position in the trader’s account, should the price of a specific instrument rise to a certain level.

Candlestick Chart: A data analysis method used by technical analysts to present numbers on a chart.

CFD (Contract for Difference): A financial contract that pays the differences between the opening and closing trades. 

Close: A request from a trader to close his position when the market reaches a certain point.

Demo account: A practice account used by traders to practice or experience a certain broker’s platform.

Dealer: A broker’s employee that is responsible for accepting trades and executing orders.

Downtrend: Declining price action.

ECN: Which stands for Electronic Communication Network. It is the bridge linking smaller participants, AKA retail traders.

European Session: Also known as the London session, which happens between the hours of 07:00 to 16:00 (London).

Expert Advisor (EA): A piece of software that advises investors when to trade. EA’s adjusted to execute the trade automatically.

Exotics: Currency pairs that come from emerging economies. Exotics are always paired with major currencies.

Fill: An order that has been successfully executed.

Fill or Kill: An order type where if the order cannot be filled, then it will be canceled – A.K.A ‘killed.’

Floating Profit/Loss: The difference in value between the customer account’s equity and balance.

Gap: When there is a significant difference between the two consecutive quotes.

GDP: Gross Domestic Product, which is the total value of a country’s production, revenue, or outflow generated within its physical borders.

Handle: Every 100 pips in the forex market starting with 000.

Hawkish: A country’s monetary policymakers are referred to as ‘hawkish’ when they believe that higher interest rates are needed, usually to combat inflation or restrain rapid economic growth or both.

Hedge: The position or combination of positions that reduces the risk of the primary position.

IMM Session: The trading session starting between 8:00 am – 3:00 pm GMT-5, New York.

Inflation: An economic condition that happens when prices for consumer goods rise, and as a result, destroys purchasing power.

Interbank Rates: FX rates that large international banks quote to each other.

Stay tuned for part 2 of our guide to the essential vocabulary for novice traders!

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.42% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The materials contained on this page are for advertising and marketing purposes only and should not in any way be construed, either explicitly or implicitly, directly or indirectly. as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. You should make sure that you have sufficient time to manage your investments on an active basis. CDF are derivative financial instruments, which price is derived from the price of the underlying asset or contract to which the CFD refers (for example currencies, commodities, indices, equity, etc.). Derivative financial instruments and related markets can be highly volatile. The prices of CFDs and underlying instrument may fluctuate rapidly over wide ranges and may reflect unforeseeable events or changes in conditions, none of which can be controlled by the client or eBrókerház Befektetési Szolgáltató Zrt. Prices quoted or information may vary and change depending on market conditions. When investing in Company’s Products denominated in a currency other than that of the state in which you reside, the return may increase or decrease as a result of currency fluctuations. Any indication of past performance or simulated past performance included in an advertisement is not a reliable indicator of future results. All names, pictures and personal details of people depicted as traders in advertisements concerning past performance are included for presentation purposes only, and are not the actual traders who have made the transaction detailed in the advertisement (actual details are kept for privacy purposes). All opinions expressed by traders are not actual testimonials but rather are depictive of the actual past performance and trading experience. Any trades depicted are selected from past real successful trades and are not reliable indicator of all customers past or future trades.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.42% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. X