Part I - Terminology

Part I - Terminology

Candlesticks are used to the display the opening, closing, high and low prices enabling traders to interpret price information. Candlesticks can be used to find patterns that may indicate an opportunity within the market as well as to make predictions.

*Uptrend and Downtrend

 

BULLS: buyers vs BEARS: sellers

-In simple words if the market is continually moving in an upwards momentum it is referred to as a bull market, while the downward moving markets are bear markets. A particular currency gaining value is called bullish, but if it is losing value it is called bearish.

 

*Buy and sell? What does this mean?

 

In the previous section we discussed that currencies work in pairs. When putting in a buy order for USD/JPY(Dollar vs Japanese Yen), this would mean that you are buying the BASE CURRENCY(USD)  and selling the QUOTE CURRENCY. When putting in a sell order for USD/JPY this would mean that you would be selling the base currency and buying the quote currency. 

E.g.

-If the US gets positive news that will impact Japan negatively you will then BUY USD/JPY due to the dollar strengthening and the Japanese Yen weakening.

And if Japan receives positive news that will impact United states negatively in the process, you will then sell USD/JPY.

 

*Lotsizing, Spread, Swaps

LOTSIZES: refers to the number of units that the trader will buy or sell. There are three known lot sizes; micro-lots, mini-lots and standard lots.

 

Micro-lots: 0.01 up to 0.09

Mini-lots: 0.10 up to 0.99

Standard Lots: 1.0 and can go as high as 100.0

 

SPREADS: The difference between the bid (sell) price and the ask (buy) price of a currency pair.

 

SWAPS: refers to the commission charged by your brokers. The lower your lot size the lower the swaps.

-Take Profit (TP) and Stop Loss (SL)

TP: Take Profit

SL: Stop loss

Remember when setting a STOP LOSS and TAKE PROFIT that Stop Loss will be executed automatically when the market moves against your position (hence the name: stop loss)

And Take Profit levels will be executed automatically when the price reaches your specified profit target.

It’s important to remember that a Stop Loss (SL) or a Take Profit (TP) must always be connected to an open position or a pending order. You can adjust both once your trade has been opened. It’s a protective order to your market position. Here at Lucrative associates we recommend to always protect your positions with a SL and TP.

*Points and Pips

Pips (points in percentage): are unique to the foreign exchange market (Forex) and measure fractional price changes for currency pairs.

Points: In the stock market, points represent the whole dollar amount by which a given stock or stock index has increased or decreased.