Tag: ForexBasics

3
Dec

SWAP
Posted ByJane G Category Daily FX Analysis
Forex swap refers to the interest that traders get charged for a trade that they keep open overnight. Every currency has its own interest rate, which is determined by the country’s central bank. Holding the currency overnight basically equals to holding a loan from the respective bank, hence the interest …
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19
Nov

Scalping
Posted ByJane G Category Daily FX Analysis
Scalping in Forex is a trading style used by traders who buy or sell a currency pair within minutes. The purpose of scalping is to make a small profit within the minutes of holding the position. Even though the profit is small, but Forex scalpers often open a large number …
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3
Nov

MARGIN
Posted ByJane G Category Analysis Aside
Margin is the amount of deposit traders need in order to enjoy leverage and higher potential for gains. It is also used as collateral to ensure traders have the ability to cover any losses that might incur on his or her positions.  How Does It Work? If a Forex broker …
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20
Oct

Hedging
Posted ByJane G Category Analysis Aside
Forex hedging is a strategy traders often use to protect their trading position from an adverse move. Hedging acts as an ‘insurance’ for traders’ trade. It involves the opening of an opposite position to a current trade when high volatility events like general election or financial announcement is expected.   How …
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6
Oct

What is Slippage?
Posted ByJane G Category Analysis Aside
Forex slippage is a situation where the price ordered is different compared to the execution price – a phenomenon when the final execution price does not meet the initial expected price.  Why so? It is caused by the delay due to the market fluctuation in the fraction of the second …
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23
Sep

What is ECN / MM Broker?
Posted ByJane G Category Analysis Aside
The foreign exchange market is the largest decentralized market with no physical location for traders to buy and sell currencies. As a result, the interbank market was formed to let big banks and financial institutions to trade currencies between themselves. Even though the interbank market is made up of big …
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8
Sep

What is Central Bank?
Posted ByJane G Category Analysis Aside
The central bank is an independent organization established for the sake of the domestic economy. Although their responsibilities range widely, the central bank’s duties usually fall into three areas. First, formulate and implement monetary policies. The central bank is in charge of issuing currency and setting interest rates in order …
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18
Aug

What is Leverage?
Posted ByJane G Category Analysis Aside
Leverage is a measure of the force amplification achieved by using a tool, mechanical device or machine system in our daily life. While in Forex, leverage results from the loan borrowed from the Forex broker to their traders. With brokers acting as a lever that turns minimum input (small capital) …
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5
Aug

Support and Resistance
Posted ByJane G Category Analysis Aside
Support and resistance are the prominent indicators that are widely used by traders in Forex trading. The role of these indicators is to identify the price points on a chart whether the probability favors a pause or reversal of the current trend.  The ‘support’ level is where the price hits …
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21
Jul

What is Liquidity?
Posted ByJane G Category Analysis Aside
Liquidity describes the degree to which an asset can be quickly bought or sold in the market. In other words, the ability of a currency pair to be traded on demand.  In the Forex market, the daily traded volume can reach as high as $6 trillion. Hence, it is safe …
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