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Forex Trading Glossary (1)
Source: | Author:finance-102 | Date2022-12-16 | 150 Views | Share:
Forex glossary —Broker, Day trading, Economic calendar, High-Frequency Trading (HFT), Limit Orders, Long

Broker:  A Forex broker is a company or individual that acts as an intermediary between buyers and sellers of currencies and other financial assets. They facilitate the buying and selling of these assets by creating a marketplace where traders can exchange them. Forex brokers are regulated by official bodies to ensure the integrity and fairness of their operations. In addition to their role as intermediaries, brokers may also execute orders on behalf of their clients.

Day trading: Day trading is a popular short-term trading strategy in which a trader only takes one trade per day and closes it out at the end of the day. To engage in day trading, a trader typically selects a position (either long or short) at the start of the day based on their skills and biases, and aims to make a profit or loss by the end of the day. Day trading requires careful analysis and decision-making skills, as well as the ability to react quickly to market movements.

Economic calendar: An economic calendar is a schedule of upcoming events and news releases that are likely to have an impact on financial markets, including currency exchange rates. These events can include announcements related to fiscal and monetary policies, economic indicators, and other developments that can affect market volatility. Traders use the economic calendar to stay informed about when these events are likely to occur and to plan their trading strategies accordingly. Economic calendars are an important tool for traders, as they help them to anticipate market movements and to make informed decisions about their trades.

High-Frequency Trading (HFT): High-frequency trading (HFT) involves the use of computer programs and algorithms to execute trades at high speeds. HFT strategies often involve arbitrage, market making, and momentum trading, which involve identifying and exploiting differences in prices or changes in market conditions. HFT relies on advanced technology and sophisticated algorithms to analyze market data and make rapid trades in order to take advantage of small price movements or imbalances in supply and demand. These strategies can be highly effective in generating profits, but they also carry some risks and can be complex to implement.

Limit Orders: A limit order is a type of trade order that specifies the maximum or minimum price at which the trader is willing to buy or sell a particular asset. When a limit order is placed, the trade will only be executed at the specified price or better. For example, if a trader sets a limit order to buy the EUR/USD at 1.1020, the broker will only execute the order if they can find another trader who is willing to sell the EUR/USD at that price or lower. Limit orders can be used to protect against unfavorable price movements and to ensure that a trade is executed at a desired price. Experts often recommend using limit orders to manage risk and defend positions in the market.

Long: In trading, a "long" position refers to a trade in which the trader expects the price of an asset to increase and will therefore profit if the market price does indeed rise. To "go long" or "take a long position" means to buy an asset with the expectation that it will increase in value. In the forex market, a long position involves buying the base currency and selling the quote currency in a currency pair. For example, if a trader goes long on the AUD/USD pair, they will buy Australian dollars and sell U.S. dollars. A long position is the opposite of a "short" position, in which the trader expects the price of an asset to decline.