Do you know what these Forex terms mean?

Fsp Invest Team, 31 May. 2013

Tags: forex, trading forex, forex jargon, what is a pip, what is a margin, what is a fake out in trading, what does ‘catching a falling knife’ mean



You’ve probably heard trading jargon like, “pips”, “margin”, “catching a falling knife” and “fake-outs” The media and magazines use them time and time again. But do you know what they mean? Read on to discover what these trading terms mean so you can improve your Forex trading success.


Contrary to the belief that forex terms are too complex to understand, Forex expert Timon Rossolimos says that “these terms are actually very easy to understand and essential to successful Forex trading.”
 
Here’s what ‘complicated’ Forex terminology means…
 
Here’s how Rossolimos explains the following Forex terms in Forex Fundamentals
 
#1: “Pip”
 
“The pip in Forex is the smallest possible movement with the measure of change in a currency pair in the Forex market,” says Rossolimos.
 
Pip stands for “percentage in point” and represents one 100th of a percent or 0.0001, which is the smallest fluctuation in currencies. This means, if the EUR/USD bid is quoted as 1.3200 and it moves up to 1.3204 it has moved up 4 pips.
 
#2: “Fake-out”
 
This is a technical terms used to refer to a situation that didn’t go your way.
 
“The term describes a situation when you enter into a trade based on the anticipation of a future price movement and the damn thing never develops, instead moving in the opposite direction,” explains Rossolimos. You’ll often get a fake-out when a price breaks out of pattern and then retreats back into it.
 
#3: “Catching a falling knife”
 
Catching a falling knife’ is when you try to predict where a currency pair will stop falling, but it keeps cutting through prices like a hot knife through butter. Often prices fall further and faster than anyone can predict and that’s when a trader’s portfolio takes a nose dive.
 
So when you see a price making quick, dominant down movements, the alarm bells should be telling you to steer away from this market. “This will save you from your trade going unbearably wrong just by leaving the falling knives to fall alone,” cautions Rossolimos.
 
#4: “Margin”
 
A margin is the initial amount of money you need to have in your broker account to secure your open position. Each broker has different requirements of the amount of margin to keep your positions open.
 
“You need to know what margin is to know how much money you’ll be putting into the trade,” says Rossolimos. You can work out your profit percentage depending on what your trading levels will be.
 
Understanding these Forex trading terms is essential to your trading success.
 

Related QA

Pic
BombazInt asked:
Hi Timon..Are you familiar with this broker called CM Trading??.Whats your take on their trustwortiness??Also compared to other brokers which broker [read more]
Published at 06 Dec. 2017 in: Forex Forex trading 1 Answer
Pic
barbaramagwaza5 asked:
1.Good Morning Timon, I would like to know if I have ordered a book like Forex 101 etc, does it get physically delivered to me or? 2. When I have [read more]
Published at 06 Nov. 2017 in: Forex Barbaramagwaza5 1 Answer
Pic
pearlyhabib asked:
Hi Timon, I registered for the Webinar held on 30 September 2017 - How to turn R10,000 into R87,400 in just two hours. When i tried to access the [read more]
Published at 04 Oct. 2017 in: Forex Trading webinar 1 Answer
Pic
rakhabeletsi asked:
I have 1 year loosing money i cant seem to be making progress on this forex thing and investing on penny stocks so i believe if i could have a mentor [read more]
Published at 03 Oct. 2017 in: Forex Wealth creation 1 Answer
Pic
henry.bc asked:
I subscribe to GT247 and Easy Equities but what charting platform would you recommend to do or track the profit patterns on? [read more]
Published at 30 Sep. 2017 in: Forex 2 answers

Related articles:


Latest:

Comments
0 comments



 
 


Youtube Twitter Facebook

Connect with us:    

POPULAR TOPICS
  • Accelerated Investor
  • Accessories