Posts Tagged ‘Soria De Lachica’

The Basic Forex Trading Glossary, Part Two

April 20, 2011
by Pablo Soria De Lachica, Bforex’s Director of Business Development

The Basic Forex Trading Glossary, Part One here

Bid: The price at which a trader can sell a currency pair, or place an order to buy a currency pair. Some may refer to the bid as the “bid price” or “bid rate.”

Buy Limit Order: An order to complete a specified transaction at a given maximum price or lower. The limit refers to the quoted maximum price.

Buy Order: A demand to buy a currency or asset at its current market value. A buy order indicates that the investor wants to make a purchase immediately.

Cable: Slang for the exchange rate between the British pound and the United States dollar.

CFD (Contract for Differences): An arrangement through which the investor receives cash payments for differences in settlement rather than the actual asset. CFDs permit an individual to take part in equity and commodity markets without actually owning assets. Investors may trade CFDs at any point, unlike futures, which have a fixed trading date.

Day Order: An order to buy or sell that expires at the end of the trading day during which it was placed.

Discretionary Account: An account owned by a consumer but operated, according to predetermined rules, by a larger trading institution on the consumer’s behalf.

Dovish: An adjective denoting a passive, laissez-faire attitude toward inflation. Dovish policy makers and banks promote growth through low interest rates, believing this spurs consumer spending and drives the economy.

GTC: An order to complete a transaction that stands until fulfilled or retracted. GTC stands for Good ’Til Canceled. The order may remain in effect anywhere between 30 and 90 days, depending on the institution.

Hawkish: An adjective that refers to individuals and institutions who fight inflation. Hawkish banks and policy makers track inflation rates across a number of indexes and tweak interest rates to counteract them. When individuals become anxious about raising prices, hawkish banks hike their interest rates in response.

Pip: The basic increment of change in price for a foreign currency. Pip denotes the smallest increment allowable—1/100 of 1%— whether a decrease or increase in price.

Short-term Sentiment: Tracking changes in the daily and hourly market for quick, albeit small, turnaround opportunities.

Long-term Sentiment: Examining factors that will affect the world’s economy weeks, months, or even years in the future. Those trading with a long-term sentiment wish to invest now for a large payoff later.

To learn more about forex trading terms, visit www.bforex.com.

Candlestick Charts as a Critical Step Towards Forex Trading Success.

March 31, 2011

by Pablo Soria de Lachica

Candlestick charts show price fluctuations for stocks, currencies, and commodities over time. This chart shows the gold price relative to the U.S. dollar from 1968 to 2008.

Source: Produced from the London Bullion Market Association Gold Fixing. Posted at Wikimedia Commons.

Bforex provides dedicated forex trading solutions, allowing timely and informed speculation on international currency movement. When trying to understand forex trends and make educated currency trades, it pays to understand candlestick charts. First employed in medieval Japan as a way of quantifying and predicting rice price fluctuations, candlestick charts have become the predominant indicator of stock, commodity, and currency performance among brokers and investors.

Candlestick charts superficially resemble bar charts in that they record high and low valuations over a given period. Additionally, they provide indicators of underlying currency strength through color, length of wick, and body size. The wicks of each candle are the single lines extending beyond the larger bars on either end, indicating the highest and lowest prices within a period. The top and bottom of the bars reflect the actual opening and closing prices. By showing the fluctuations within the given period, the candles accurately reflect the battle between traders hedging for or against a particular currency. The color of each bar is either green or red, with green representing a higher close from the opening price and red indicating a lower close from opening. The doji is a unique candle that has no body, and simply shows two wicks meeting each other at a cross line. The doji represents a scenario where the closing price is the same as the opening price, with price fluctuations throughout the day represented through the wicks as usual.

The candles within a chart are flexible; they can be calibrated to time frames as short as a minute or as long as a month. Naturally, swing traders tend to study charts with shorter time intervals and long-term traders focus on charts with longer intervals. In fully understanding both the macro and micro trends of a currency, it is often useful to study candlestick charts that plot the same currency over different time intervals. The Bforex Forex Academy at www.bforex.com details a sophisticated multiple timeframe trading system that allows traders to avoid random trading in both directions in once, which will inevitably lead to a high incidence of false trades.