Forex Dictionary L-M

L

Limit Order — this is an order to buy or sell the pair for a better or a more favorable price.

Liquidity — Also known as marketability, it means the ease at which the holding position can be disposed off in the market or be converted in hard cash. In forex markets, EURO is considered to be the most liquid class which means that EURO positions can easily be closed in the markets irrespective of the volume of trade.

Long — it is used to describe the position which is in a Buy direction. You will often hear traders talking that ‘THEY ARE LONG’ which talking about a pair. It means that they have bought that pair and the position is open.

Loonie: This is the Nick name for USDCAD currency pair. This pair is also called ‘Little dollar’.

Lot -Forex currency pairs are always traded in pre-defined amount and the amount is called a LOT. As a trader, you can buy or sell a currency pair only in LOTS and not for an amount of your own choice. There are three kinds of LOTS available with the brokers and they are MICRO LOT, MINI LOT and STANDARD LOT.

Lot size: The number of units of the base currency bought or sold in the trade.

Low: A sharp point seen at the bottom of the chart from where the price has returned to the opening price.

M

Majors– Majors are the currency pairs that are most liquid and most traded. All the majors are based on United States dollar like EURUSD, GBPUSD, USDCHF, USDJPY, AUDUSD,USDNZD and they make about 90 percent of the whole volume of the Forex trading (Also check Cross rates).

Margin — this is the deposit money/Security money which, the investor needs to keep in his broker account to be able to place his trades. It is calculated by dividing the Lot size by the leverage being used.

Margin Account — this is the trader’s account which is used to hold his deposited money with the broker and is used for his FOREX trading.

Margin Call — Demand of a broker to deposit more money to the account when the amount in it falls below the minimum required to keep the position open. When you get a margin call, it means your position has automatically been closed by the broker.

Market Maker: A brokerage house that passes only a limited amount of orders to the Inter-bank market and retains most of the orders with itself by maintaining a balance on bought and sold volumes of the same pair.

Market Order — Instruction to the broker to buy or sell a currency pair for a current market price. This usually is done over internet on your trading platform that the broker provides but market orders are also accepted over the phone by the broker staff.

Market Price— the current price for which the currency pair can be traded at the time of reading.

Meta-trader: A kind of trading platform provided by the broker to the traders when they open an account with them. Meta-trader is the most commonly used platform and has seen its improved versions starting from Metatrader1 to Meta-trader 5 now.

Mini Lot: 10.000 units of the currency pair that you want to buy or sell.

Micro lot: 1,000 units of the currency pair that you want to buy or sell.

Momentum: the measure of the currency’s movement in any visible direction.

Moving average: Moving average is a technical indicator that works with the Close price of the pair under different time period bars to project the likely close price of the next bar.

MT4/MT5: See”Meta-trader”

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