Terminology Flashcards
What is a pip?
(Percentage in points)
1 pip= 0.0001
Value of pips= 0.0001 / Exchange rate
*trade risk
Spread
EURUSD. 1.19173. 1.19186
The difference between these two numbers is the commission your broker will take as soon as you open the trade
Spread= amount your broker takes as commission
Margin
Amount of money required to start a trade
This money is set aside from your free equity, win or lose you keep the margin
Higher leverage the lower the margin
Leverage
Leverage is a loan provided by the broker
Higher leverage=higher access to funds
Formula= total value of opening positions / total margin balance
Swing and trend trading
Medium - long term trades
Couple days - a week
Want around 80-200 pips
Want all figures pointing towards one direction (up or down)
Look for everything to be in place don’t rush
Bullish trend
Market has higher highs and higher lows
Look for buying opportunities during a bullish trend
Bearish trend
Market has lower highs and lower lows
Look for selling trades during a bearish trend
Sideways trend
Market stuck consolidating where the price will go
Doesn’t have the volume of buyers or sellers to decide which way to go
Counter trend
Risky trading as market manipulation can show false tops and false bottoms easy to be tricked into seeing an opportunity that isn’t there.
Going against the trend of the market
Day trading/intraday
Less than an hour per trade
8-15 trades a day
Impatient trading
Due to high amount of trades these accounts will be very highly leveraged
-select a few high probability trades and monitor them throughout the day
Scalping
Very fast paced
Chasing 10-20 pips
On small timeframes a winning trade can easily turn to losing trade in minutes
Take profit when you can
Difficult trading method
