12/13/2017

TERMS IN FOREX….
1. Type of Trader 9. Equity
2. Candle Stick (CS) 10. Swap
3. Time Frame (TF) 11. Lot
4. Pips 12. Pending Order (PO)
5. Bearish 13. Take Profit (TP)
6. Bullish 14. Stop Loss (SL)
7. Leverage 15. Indicator (Indi)
8. Margin 16. GAP @Smart
FX

4 TYPE OF TRADER..
i. The Scalper
ii. The Day Trader
iii. The Swing Trader
iv. The Position Trader
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FX

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FX

THE SCALPER
⊸Scalping is like those high action thriller movies that
keep you on the edge of your seat. It’s fast paced,
exciting, and mind-rattling all at once.

⊸These types of trades are usually only held onto for a

few seconds to a few minutes at the most!

⊸The main objective of scalpers is to grab very small

amounts of pips as many times as they can with
few Position throughout the busiest times of the
day.
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FX

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THE DAY TRADER

⊸Day trading is another short term trading style, but
unlike scalping, you are typically only taking one trade a
day and closing it out when the day is over.

⊸These traders like picking a side at the beginning of

the day, acting on their bias, and then finishing the day
with either a profit or a loss.

⊸They DON’T like holding their trades overnight.

⊸Day trading is suited for forex traders that have

enough time throughout the day to analyze, execute @Smart
FX
and monitor a trade.

THE SWING TRADER

⊸Swing trading is a longer term trading style that
requires patience to hold your trades for several days at
a time.

⊸It is ideal for those who can’t monitor their charts

throughout the day but can dedicate a couple of hours
analyzing the market every night.

⊸This is probably best suited for those who have full-

time jobs or school but have enough free time to stay
up-to-date with what is going on in the global
economies. @Smart
FX

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THE POSITION TRADER

⊸Position trading is the longest term trading and can
have trades that last for several months to several
years!

⊸This kind of forex trading is reserved for the ultra-

patient traders, and requires a good understanding of
the fundamentals.

⊸Because position trading is held for so long,

fundamental themes will be the predominant focus
when analyzing the markets.
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FX

CANDLESTICK (CS)
⊸There are 3 popular chart types, namely candlestick
chart, bar chart and also line chart.

⊸Candlestick charts are a great choice for traders.

⊸Each candlestick represents the movement of the

price of a time. For example, each candlestick on the 1
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Hour chart represents the movement of the price for a 1 FX
hour period.

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TIMEFRAME (TF)
⊸In each platform, there are several types of time
frame that are always used to represent the price
movement (candlestick) in the form of graphs.

⊸The time frame available on the platform is;

M1 (1 minute), M5 (5 minutes), M15 (15 minutes),

M30 (30 minutes), H1 (1 hour), H4 (4 hours), D1 (Daily),
W1 (Weekly) & MN (Monthly)

⊸So, 1 candlestick on the D1 graph represents the

movement of the price for 1 day. 1 candlestick on the @Smart
M5 graph represents the price movement for 5 minutes. FX
Similarly with other time frames.

PIPS
⊸The term '"pips" is an acronym for "percentage in
point," although it's sometimes also called a price
interest point.

⊸If that leaves you scratching your head, here's a

better explanation that's a little less technical. Pips
represent the smallest movement that a currency pair
can make. This is typically equal to 1 basis point, but
not always.

⊸The other word is the amount of movement of the

graph from a certain price to a particular pair price. @Smart
FX

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HOW TO COUNT THE PIPS

As we know, normal major pair such a EURUSD have
5 decimal = 1.18000

If you use some other broker, they will use 4 decimal

= 1.1800

So, to calculate your pips (5 decimal user).. just ignore

the last digit..

1.18000 to 1.18500 = 50pips

Same like 4 decimal.. @Smart

FX
1.1800 to 1.1850 = 50pips

HOW TO COUNT THE PIPS

How about some pair that only have 3 digits at the back
such a USDJPY = 113.800

Or if you use another broker they have USDJPY =

113.80

So, to calculate your pips.. just ignore the last digit (5

decimal broker)..

111.800 to 111.700 = 10pips

Same like 4 decimal broker.. @Smart

FX
111.80 to 111.70 = 10pips

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FX

BEARISH
⊸The graph shows the price is decreasing at a certain
time.

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FX

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BULLISH
⊸The graph shows the price is rising at a certain time.

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FX

LAVERAGE
⊸Leverage is a financial facility provided by a broker to
a trader over an agreement and an agreement between
the broker and the trader when the trader opens the
Forex account.

⊸When traders use leverage eg 1: 100 in trading it

means that the trader's capital has been multiplied by
100 times. So if a trader puts a deposit of USD1000, the
trader has a capital strength of USD100,000.

⊸Trader can open position 1 lot with only USD323

capitalization but this is very risky because leverage
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can trap traders if they fail to manage wisely. FX

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EQUITY
⊸Equity in forex therefore refers to the total value of a
trader’s account, when any open positions have been
factored into the equation.

⊸For instance, a look at the MT4 charts will give some

idea about what equity in forex really stands for. After a
trade is opened, a number of figures are listed on the
MT4 platform, at the trade terminal window. The trade
terminal window shows the following parameters:

i. Balance;
ii. Trading Equity;
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iii. Unrealized profit/loss; and FX
iv. Margin

EQUITY
⊸Balance: this refers to the total starting balance in the
trader’s account. It is not affected by any open positions until
when all active trade positions are closed.

⊸Trading Equity: This refers to the true amount of money that

a trader will be left with when all active positions are closed.
The trader’s account balance is made up of the equity and the
unrealized profit or loss in active positions.

⊸c) Unrealized profit/loss: This is the profit or loss in financial

terms that a trader’s account accrues from all open positions.
They are referred to as unrealized because they are in actual
fact, not true profits or losses.
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FX

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MARGIN
⊸Let’s go back to the earlier example:

⊸ In order to control a $100,000 position, your broker

will set aside $1,000 from your account. So, your
leverage is expressed in ratios, 1:100 to controlling
$100,000 with $1,000.

⊸So, the $1,000 deposit is “margin” you had to give in

order to use leverage.

⊸Margin is usually expressed as a percentage of the

full amount of the position. For example, most forex
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brokers say they require 2%, 1%, .5% or .25% margin. FX
And its depend on your Leverage Ratio.

MARGIN FAMILY
⊸Margin required: This is an easy one because we just
talked about it. It is the amount of money your broker
requires from you to open a position. It is expressed in
percentages.

⊸Free margin: This is the money in your account that is

available to open new positions.

⊸Used margin: The amount of money that your broker

has “locked up” to keep your current positions open.

⊸Margin call: You get this when the amount of money

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in your account cannot cover your possible loss. It FX
happens when your equity falls below your used margin.

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SWAP / ROLL OVER

⊸Since forex is traded in pairs, every trade involves not
only two different currencies, but also two different
interest rates.

⊸If the interest rate on the currency you bought is lower

than the interest rate on the currency you sold, then you
will pay rollover(negative roll) for the position opened
and is left over for another trading day.

⊸To avoid being charged, you can request for Islamic

Accounts from your Broker that are not subject to swap
charge (Swap Free)
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FX

LOTS
⊸In the past, spot forex was only traded in specific
amounts called lots, or basically the number of currency
units you will buy or sell.

⊸A standard lot is the equivalent to 100,000 units of

the base currency in a forex trading.

⊸A standard lot is similar to trade size. It is one of the

three commonly known lot sizes; the other two are mini-
lot, micro-lot & nano-lot..

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FX

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LOTS
BREAKING DOWN 'Standard Lot‘

⊸A standard lot represents 100,000 units of any

currency, whereas a mini-lot represents 10,000, a micro-
lot represents 1,000 and a nano-lot represents 100 units
of any currency.

⊸A one-pip movement for a standard lot corresponds

with a $10 change. For example, if you buy $100,000
against the Japanese yen at a rate of ¥110.00 and the
exchange rate moves to ¥110.50, which is a 50 pip
movement, you have made $500. Conversely, if the
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exchange rate falls 50 pips to ¥109.50 your net profit FX
and loss is minus $500.

PENDING ORDER (PO)

This technique is an opportunity for you to make 4 types
of pending orders ie buy stop (buy above current price)
and sell stop (sell below current price). You can buy limit
(buy below current price to reroute) and sell limit (Sell
above current price to get back) with a few pips range
from current price.

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FX

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TAKE PROFIT (TP)

⊸TP is a type of command or setting during entry where
you can set a target of how much profit you want by
placing a specific price for your close position.

⊸Let's say you BUY GBP/USD at 1.80000 and want to

take a profit of 20 pips. You can set your Limit Order or
Take Profit at the price of 1.80200. When the price rises
to 1.8020, your position will close automatically.

⊸In my Signal, normally I always to used TP1, TP2 &

TP3 to set my exit strategy.
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FX

STOP LOSS (SL)

⊸SL is a type of command or setting during entry where
you can set how much loss you are willing to bear.

⊸Let's say you BUY GBP/USD at 1.80000 and want to

take a profit of 20 pips. If the price goes up, you will
gain. But if the price drops lower than 1.80000, you will
lose. By using the Stop Loss order, you can set how
much your pip is willing to lose. If you are willing to lose
only 20 pips, you can place Stop Loss orders at the price
of 1.79800. When the price drops, your position will be
closed and you will lose 20 pips only.
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⊸If you do not put a stop loss, you may lose more. FX

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STOP LOSS (SL)

⊸SL is a type of command or setting during entry where
you can set how much loss you are willing to bear.

⊸Let's say you BUY GBP/USD at 1.80000 and want to

take a profit of 20 pips. If the price goes up, you will
gain. But if the price drops lower than 1.80000, you will
lose. By using the Stop Loss order, you can set how
much your pip is willing to lose. If you are willing to lose
only 20 pips, you can place Stop Loss orders at the price
of 1.79800. When the price drops, your position will be
closed and you will lose 20 pips only.
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⊸If you do not put a stop loss, you may lose more. FX

INDICATOR (INDI)
⊸forex indicator is a statistical tool that currency traders
use to make judgements about the direction of a
currency pair price. Forex indicators come in many
types, including leading indicators, lagging indicators,
confirming indicators and so on.

⊸So, indicator movement are base on your graph

market movement. That means, market will move first,
followed by indicator.

⊸No such holy grail Indicator's in this Forex Trading

shown the market direction.. but we will share a fasters
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indicator in the world to read market movement & FX
momentum in Technical Analysis Chapter.

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FX

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FX

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GAP
⊸A gap is a break between prices on a chart that occurs
when the price of a stock makes a sharp move up or
down with no trading occurring in between.

⊸Gaps can be created by factors such as regular buying

or selling pressure, earnings announcements, a change
in an analyst's outlook or any other type of news release.

⊸Gaps are a regular occurrence in all financial markets.

However, they are rarely seen in the forex market since
it is highly liquid and trades 24 hours a day. The open on
the first day of the week is where gaps are most likely to
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occur in the forex market. FX

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FX

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