Terms and Definitions

Asset – a resource with economic value that is a subject of the financial market. It can be a currency pair, share, index, commodity, etc. The change in the price of the asset determines the final profitability.

Broker – the company that acts as an intermediary between an asset buyer and the market. The effort of the broker is remunerated by the client in the form of commission fees, which can be fixed or equal to the interest of the investment.

Commission – remuneration to a broker for its offered service (platform, placing trades, market analysis, etc).

Contract For Difference (CFD) – a financial instrument, the profit or loss of which is dependent on the price movement distance (difference). There is a calculation of the difference between the current asset quote and the purchase quote, on the basis of which the profit or loss is determined.

Diversification - the procedure for investing capital in various assets with different returns rather than in a single one. Diversification is used to reduce the risks of investment activity, covering the losses from unprofitable trades with the profits from the good trades.

Investment – the act of investing money to earn profits in the short or long term.

Indicators – tools that are part of the technical analysis. They are helping investors to make a better trading decision.

Long position – this is the process in which a trader opens a trading position by predicting a growth in the asset price.

Loss - in the financial market the term denotes any unprofitable position.

Margin Call - the procedure for compulsory closing of the trade by the broker, provided that the trade reached the point of getting out of money, which means the position can no longer be supported by the possibilities of the deposit.

Martingale – a simple trading strategy involving an increase in the trading lot, provided that the previous trade was closed with a loss.

Order – a request from the customer for opening a trade on a trading platform. Trading orders can be of two types: executed at the current price and executed upon the touching of a certain price (limit order).

Pip – the fifth decimal figure in a given pair. For example, if EUR/USD quotation is 1.12457, then “7” represents the point. USD/JPY and other JPY related pairs represent an exception where the point refers to the third decimal figure.

Point – the fourth decimal figure in a given pair. For example, if EUR/USD quotation is 1.12457, then “5” represents the point. USD/JPY and other JPY related pairs represent an exception where the point refers to the second decimal figure.

Profit – the financial gain based on a positive investment.

Quotation - the price of an asset in a given period of time. It can refer to the current price level at which the seller is willing to sell you an asset.

Short position – this is the process in which a trader opens a trading position by predicting a decline in the price.

Stop Loss – an order that sets the maximum loss level for a specific trade. With its help, you can avoid larger losses of your deposit, limiting the risks.

Swap – the difference in the interest rates of the currencies involved in the transaction.

Take profit – an order that allows the trader to set the profit level of the investment and automatically close the position when the level is touched.

Trader – a person who conducts trading activities in the foreign exchange market.

Trend – a clear and continuous movement of the asset price in one direction (like up or down).

Volatility - the range of price changes in an asset over a period of time. This indicator in many ways characterizes the potential risks that investors should consider, as the increase in volatility leads to sharp moves in the price, which can lead to a large difference between the buying point and the current point.