Trading Terminology

Forex stands for FOReign EXchange. Forex is also known as forex trading, currency trading, foreign exchange market or FX. It is an international trading system for the exchange of major and minor currencies, i.e. the foreign exchange market, whose mid-range courses are considered
as official world courses.

Volatility indicates the fluctuations in the value of an asset or its rate of return over a given period of time and expresses the risk of investing in an asset. Volatility is an essential heartbeat for a trader because it moves the price of the instrument up and down. When the volatility is zero, the trader cannot make any profit or loss.

• Bull Market  -  A market in which prices are rising.
• Bear Market - A market in which prices are falling.
• Bid Price - The highest price at which a buyer is willing to buy an asset.
• Ask Price - The lowest price at which a buyer is willing to sell an asset.
• Margin - The amount of money that an investor must deposit with a broker. 
• Long Position  - A position in which an investor has bought an asset and is hoping to sell it at a higher price.
• Short Position -  A position in which an investor has sold an asset and is hoping to buy it back at a lower price 
• Reward to risk ratio – RRR  - The reward to risk ratio is very simple. It is how much you risk compared to how much you can gain.

Lot is a measurement that we use in forex trading. One lot equals one hundred thousand units. 

So if we buy 1 lot in EURUSD, our investment is worth $100,000. If you go long 1 lot on EURUSD, one pip equals $10 of price fluctuation. Because EURUSD can move fifty to a hundred pips a day, this can be a lot for traders with smaller accounts.

• Pip - The smallest unit of price movement in a currency pair. For example, if the EUR/USD exchange rate moves from 1.1200 to 1.1201, this is a one-pip movement.

• Spread- The difference between the bid and ask prices of a currency pair. For example, if the bid price for EUR/USD is 1.1200 and the ask price is 1.1201, the spread is one pip.

• Leverage - The use of borrowed money to magnify the potential return on an investment. For example, if you have a margin account with a leverage of 100:1, you can control a position worth $100,000 with only $1,000 in your account.

• Margin- The amount of money you must deposit in your account to trade on margin. For example, if you want to trade a $100,000 position with a leverage of 100:1, you must have at least $1,000 in your account.

• Stop loss order- An order to automatically close a position if the price moves against you by a certain amount. For example, if you buy EUR/USD at 1.1200 and place a stop loss order at 1.1150, your position will be closed if the price falls to 1.1150.

• Take profit order - An order to automatically close a position if the price moves in your favor by a certain amount. For example, if you buy EUR/USD at 1.1200 and place a take profit order at 1.1250, your position will be closed if the price rises to 1.1250.

 The forex market is open 24 hours a day, 5 days a week. However, trading activity is not evenly distributed throughout the day. 

The most active trading session is the London session, followed by the New York session. The Sydney and Tokyo sessions are less active, but they can still provide opportunities for traders.

There are four main trading sessions:

| Sessions | Time | GMT |

| Sydney        | 5:00 AM - 2:00 PM |  GMT+11 

| Tokyo           | 7:00 AM - 4:00 PM |  GMT+9 

| London       | 8:00 AM - 5:00 PM |  GMT+1 

| New York | 8:00 AM - 5:00 PM |  GMT-5 

 A forex broker is a company that provides traders with access to the foreign exchange market. Forex brokers allow traders to buy and sell currencies in order to make a profit.

There are many different forex brokers to choose from, and each one offers different features and services. Some of the things to consider when choosing a forex broker include:

• The broker's fees:  - Forex brokers charge a variety of fees, including commissions, spreads, and overnight financing charges. It is important to compare the fees charged by different brokers before choosing one.
• The broker's platform: -  The broker's platform is the software that traders use to trade currencies. It is important to choose a platform that is easy to use and has the features that you need.
• The broker's customer service: -  The broker's customer service is important in case you have any questions or problems. It is important to choose a broker that has good customer service.

Once you have chosen a forex broker, you can open an account and start trading.

Leverage allows you to buy more shares than you could afford with your own money. 

For example, if you want to buy 100 shares of a stock that is currently trading at $100 per share, you could use leverage to borrow $5,000 from your broker and use it to buy the shares. You would now have a total investment of $10,000, even though you only have $5,000 in your account.

If the stock price goes up to $110 per share, you would have a profit of $1,000 on your investment. This is because you would be able to sell the 100 shares for $11,000, and you would only have to pay back the $5,000 that you borrowed.

However, if the stock price goes down to $90 per share, you would have a loss of $1,000 on your investment. This is because you would have to sell the 100 shares for $9,000, and you would still have to pay back the $5,000 that you borrowed.

Leverage can be a powerful tool for investors, but it is important to understand the risks involved. Before using leverage, you should make sure that you have a good understanding of the market and that you are comfortable with the level of risk involved.

 Hedging is a way to reduce risk in investing. It involves taking a position in one market to offset the risk of a position in another market. For example, if you own a stock, you could buy a put option on the stock to protect yourself from a decline in the stock price.

There are many different ways to hedge, and the best way to hedge depends on the specific situation. Some common hedging strategies include:

• Buying a put option -A put option gives you the right to sell a stock at a certain price in the future. If the stock price declines, you can exercise the put option and sell the stock at the strike price, which is the price specified in the option contract.
• Buying a futures contract: - A futures contract is an agreement to buy or sell a commodity or financial instrument at a certain price in the future. Futures contracts can be used to hedge against price fluctuations in the underlying commodity or financial instrument.
• Buying an insurance policy:-  Insurance is a type of hedging that protects you from financial losses. For example, you can buy homeowners insurance to protect your home from damage, or you can buy health insurance to protect yourself from medical expenses.

Hedging can be a useful tool for reducing risk in investing. However, it is important to understand the risks and costs of hedging before using it.