Risk-to-reward ratio is a critical metric in trading that compares the potential loss (risk) of a trade to its potential gain (reward). It helps traders assess the profitability and viability of trades by measuring how much they stand to earn …
Margin in forex is the required amount of money traders must deposit to open and maintain a leveraged position. It acts as collateral, allowing traders to control larger positions with a smaller capital outlay. While margin increases market exposure and …
Slippage in forex is the difference between the expected price of a trade and the price at which it is actually executed. It occurs during high volatility or low liquidity, causing orders to fill at worse or better prices than …
Equity and balance are key figures in a trading account: balance reflects the total funds excluding open trades, while equity adds unrealized profits or losses from those open positions. Equity gives a real-time snapshot of your account’s worth, essential for …
Liquidity in forex refers to how easily a currency pair can be bought or sold without causing significant price changes. High liquidity ensures fast order execution, tight spreads, and lower risk of slippage, making trading smoother and more efficient. Understanding …
Swap and rollover in forex refer to the interest paid or earned for holding a position overnight. This cost or credit arises from the difference in interest rates between the two currencies in a pair. Understanding swaps is crucial for …
A quote currency is the second currency listed in a forex pair and is used to express the value of the base currency. It shows how much of the quote currency is needed to buy one unit of the base …
A stop loss order is a risk management tool that automatically closes a trade at a predetermined price to limit losses. It protects traders from significant downturns by triggering a market order when the asset price reaches the stop level. …
Lot size in trading defines the standardized quantity of currency units bought or sold in a forex transaction. It determines trade exposure, risk, and pip value, with common lot sizes including standard (100,000 units), mini (10,000), micro (1,000), and nano …
Forex acronyms are abbreviations commonly used in forex trading to represent currencies, trading terms, strategies, and market concepts. Understanding these acronyms helps traders communicate efficiently, read market analysis quickly, and execute informed trades. Mastery of forex acronyms enhances both trading …