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what is the economic indicator ?
a government issued statistic such as a country s gross domestic product gdp consumer price index cpi industrial production or unemployment rate which allows analysis of the economy s performance as a whole
what is the equally weighted index ?
an index calculated by averaging the percentage change of each of the listed stocks included in the group regardless of their market cap or economic size i e sales and earnings in this sense it is different from a cap weighted index in which stocks are weighted on a daily basis according to their total market value most of the widely used indices such as the s p 500 offer equal weight versions in addition to their cap weighed indices
what is the equity ?
the amount of money in an account that is available for trading equivalent to the trader s open p l account balance
what is an equity market
equities are the value of assets that traders have at their disposal an equity market also known a stock market is the place where investors meet to buy and sell stocks equity markets can be privately held stocks dealt via dealers on over the counter otc markets or can be publicly traded stocks on regulated exchanges such as nasdaq new york stock exchange and the dow jones in the united states or stock exchanges in europe asia and the middle east such as the london stock exchange ibex spain hang seng hong kong and tadawul saudi arabia most developed countries in the world have stock exchanges stock exchanges are heavily regulated as opposed to the unregulated otc markets
how do equity markets affect forex traders
besides the obvious fact that it is on equity markets that traders can keep track of how various stocks are performing the markets are also an excellent trading asset in and of themselves cfd trading on stock markets is especially popular as traders determine how they believe an equity market will behave within a determined trading period
what is the eur ?
the official currency code for the official currency of the eurozone
what is the european central bank ecb ?
the central bank for europe s single currency the euro its main task is to maintain the euro s purchasing power and ensure the stability of the eurozone
what is the european trading session ?
starts at 7 00 gmt and lasts to 16 00 17 00 gmt also known as the london trading session for forex
what is the execution ?
the carrying out of an order to purchase or sell a security or financial instrument
what are exotic currency pairs
most forex trading involves the major currencies usd vs one of the six other major currencies eur gbp jpy chf cad aud nzd or the minor currencies which do not involve the usd but do include either the eur gbp or jpy when the usd or one of the other major currencies is traded against a currency with a far lower trading volume this is referred to as an exotic trading pair examples of the exotics include the usd rub u s dollar vs the russian ruble gbp try british pound vs turkish lira and eur sek euro vs swedish krone
how does one use exotic currency pairs
traders who wish to minimize their risks as well as their potential earnings might choose to trade exotics because they are more illiquid than the majors and minors exotic pairs are affected by many of the same factors that influence currency pairs with greater liquidity such as economic announcements geopolitical events and global weather and can therefore be used as a good training ground for higher risk trading the fortrade website offers several exotic pairs from which traders can choose
what is the expiration time ?
the time at which an option or future contract lapses
what is the expiry date ?
the date at which a security or financial instrument expires or becomes due for settlement also called maturity date
what is the exponential moving average ema ?
a type of moving average that gives more weight to recent price changes meaning it reacts much quicker than a simple moving average
what is the federal reserve bank ?
the central banking system for the united states considered the largest monetary authority in the world
what is fiat money
fiat money is the term given to most currencies that are established as legal tender by governments without being rooted in a physical commodity such as gold or silver
how does one use fiat money
the very basis of online trading specifically forex trading whether major currency pairs minor pairs or exotics is centered around the strength of fiat currencies to one another each currency s value can be affected by a plethora of external factors but the most consistent factor may be the faith that the general public has in the strength of that particular currency for example if the various economic realities in the united kingdom make investors question the strength of the british pound then the gbp value against other currencies specifically the euro and the usd will drop as investors shy away from relying on what they see as a weak fiat currency gone are the days when that value would be linked to the price of gold so the less faith the public has in a currency and the higher the inflation rate of that currency the lower its intrinsic value may fall
what is the fifty two 52 week high low ?
the highest and lowest prices that a security or financial instrument has traded in the last 52 weeks
what is the fca
the financial conduct authority fca is an independent body responsible for regulating more than 56 000 financial brokers including fortrade and markets in the united kingdom its three point goals are to protect consumers of financial services in the u k maintain the integrity of the u k financial system to encourage healthy competition among the financial services in a way that benefits consumers regulated brokers and markets are generally more transparent than non regulated ones and where there is a suspicion of unfair or illegal practices traders can turn to the regulatory body to seek justice it is important to note that by definition the fca has no authority over any brokers trading on the otc market
how does one use the fca
the first step for a trader is to check that the broker they wish to use is in fact regulated by an overseeing body in whatever country the broker is incorporated to work the fortrade fca authorization can be seen here in the event of a dispute with your broker if you are unable to resolve the matter on your own then you may turn to the fca for arbitration if the fca determines that a broker has behaved in violation of the law or of the fca s guidelines and standards then the regulatory body may step in and impose fines or even withdrawing fca authorization from the broker if the proper standards are not met
what is a financial instrument
in its most basic form a financial instrument is any asset that can be bought sold or traded financial instruments can be currency shares in a company or bonds financial instruments can also be derivatives which are contracts whose values are based on underlying assets and are determined by the rise and fall of that underlying asset
how do financial instruments affect forex traders
financial instruments are the basis of stock markets foreign currency exchanges and cfd trading traders either trade actual possession of financial instruments such as purchasing one currency for an equivalent at the time amount of a different currency or shares of publicly traded companies cfd traders do not take actual possession of the currencies or stocks but rather trade against the projected price action
what is the financial report ?
a summary of all transactions and positions both long and short between a broker and a client also known as an account statement
what is the financial strength ?
with regard to online trading financial strength reflects a trader s ability to open new trades from within a trading platform it is calculated according to his her free margin i e the difference between equity and used margin
what is the flat ?
a term with three different meanings with regard to market movements a flat market is neither rising nor falling when referring to a specific asset a flat asset is a financial instrument that has neither gained nor lost interest with regard to trading a trader is said to have a flat trading position if he is neither long nor short
what is foreign exchange
foreign exchange otherwise known as forex or fx refers to the exchange or purchase of one currency for another rates of exchange are constantly fluctuating sometimes greatly other times only slightly exchange rates are always presented in pairs known as currency pairs the first currency in the pair is known as the base currency and is always equal to 1 the second currency is the quote currency and is the equivalent of one unit of the base currency for example if the eur usd is trading at 1 1150 that means that one euro is the equivalent of 1 1150 u s dollars if the rate of exchange goes up that indicates that the euro has grown stronger against the dollar because one euro will be able to buy more dollars than previously if the rate drops then the u s dollar has grown stronger against the euro three types of currency pairs are traded on forex markets majors pair the u s dollar with each of the six major currencies the euro japanese yen british pound swiss franc canadian dollar australian dollar and new zealand dollar minors cross currencies pair the euro japanese yen or british pound with other majors except the u s dollar minors cross currencies pair the euro japanese yen or british pound with other majors except the u s dollar exotics pair one of the seven majors with a currency not on that list generally with a lower trading volume
how do forex traders use foreign exchange
forex traders buy and sell foreign currencies speculating what the price movement will be in either the short or long term future when a trader takes what is known as a long position he purchases a currency with the expectation that the price will rise and he can sell it back at the higher price for a profit alternately a trader who sells a currency or takes a short position believes that the price of that currency will drop and he can buy back the units at a later date paying less for them than he received to sell them traders can also trade on currency cfds in which they do not actually take ownership of the currency but they invest on the price movement of the currency pair
what is the foreign exchange market ?
a global decentralized market for the trading of foreign currencies in terms of trading volume the fx market is the largest financial market in the world with a daily turnover of more than 5 trillion dollars
what is the forward ?
a forward contract colloquially known as a forward is an agreement to buy or sell a commodity security or financial instrument at a specified future date at a specified price it is a completed contract and the commodity or financial asset will be delivered unlike an option which offers a choice of whether or not to complete the trade unlike futures contracts forwards are not contracts with standard terms they are tailor made between the buyer and seller for each trade and are bought and sold over the counter otc and not on an exchange
what is forward contract
a forward contract is an agreement between a buyer and seller to trade an asset usually a currency at a mutually agreed upon fixed price and set date unlike futures contracts forward contracts are private arrangements between the buyer and seller and as such they are not traded on the centralized exchange but rather are considered part of the otc market this makes forward contracts a riskier venture than futures contracts the primary factors in determining the price of a forward contract are the market value of the asset and the time at which point the contract will be fulfilled which is influenced by the swap rates
how does one use forward contract
forward contracts are purchased in a manner similar to that of futures contracts the buyer and seller agree on the asset to be sold on the price and on the date that the exchange will take place the forward contract is settled only when the contract term expires unlike futures contracts which settle on a daily basis forward contracts are primarily used as a tool to hedge the volatility in the asset being traded that forward contracts can be more highly customized than futures contracts provides both more flexibility but also a higher risk
what is the free margin ?
refers to the available margin a trader has in order to open a trading position in a security or financial instrument free margin is therefore equivalent to the trader s equity used margin free margin increases or decreases according to the trader s total profits earned or losses realized
what is a front fee
a front fee is the initial payment made by an investor when he purchases a compound option compound option is the term given to what is essentially an option on an option that is to say the trader may wish to buy or sell an option at a future date and the front fee is what he must pay in order to have that opportunity the four types of compound options are call on a call option put on a put option call on a put option and put on a call option for example an investor sees a company stock valued at 24 per share and he believes the price will rise dramatically but is not certain he decides that if the price reaches 30 per share then his prediction is probably correct and the price is likely to continue rising well beyond 30 in this case he can decide to purchase a compound option a call on a call which will give him the right to purchase say 100 shares if the stock reaches 30 by a particular date december 31 he would then pay a front fee for example 500 thus giving him the right to make that purchase if the stocks hit 30 if he chooses to exercise his option and buy 100 shares when the price reaches 30 he would pay the full 3 000 100 shares x 30 share the 3 000 is called the back fee the front fee does not obligate the trader to exercise the compound option but it does allow him to do so
how does front fee affect forex traders
the ability to place a compound option gives traders leeway in future decisions the advantage to compound options is that if a trader believes prices will rise or fall as the case may be but is not certain he has the opportunity to trade if he proves to be correct he will pay more on the compound option than he would have in a single option front fee 500 back fee 3 000 but if his projection is correct then his profits should outweigh that additional cost without paying the front fee he may not even have the ability to purchase the shares the disadvantage is that if he chooses not to exercise the option he has paid the front fee with no return
what is the futures contract ?
an agreement to purchase or sell a financial instrument or security e g a commodity stock index at a future date and at a fixed price futures contracts are traded on a futures exchange or futures market according to standardised terms i e predetermined quantities for each specific type
what is the futures market ?
a market for purchasing and selling futures contracts of a financial instrument or security at a future date and at a fixed price
what is the fwb ?
an abbreviation for frankfurt stock exchange also referred to as b rse frankfurt
what is the gbp ?
the official currency code for the british pound sterling
what is the germany 40 ?
the ger 40 indicative of the dax 40 is an index that tracks the 40 largest companies being traded on the frankfurt stock exchange fwb as measured by market capitalization and order book volume fortrade offers futures contracts on the index with trading hours monday friday 07 01 20 59 gmt the idea of a stock market index is to measure how a certain segment of stocks on a particular exchange are trading and it can be an effective indicator of the general stock market
what is the gdp ?
an abbreviation for gross domestic profit one of the primary indicators used to measure the health of a country s economy
what is the gmt ?
greenwich mean time the most commonly referred time zone in the forex market often interchangeable with coordinated universal time utc
what is the government bond ?
a debt security issued by a national government generally with a promise to pay periodic interest payments at the security s maturity or end date in most cases a government bond is issued in the country s own currency also called sovereign bond
what is the gross earnings ?
an individual person business or company s taxable income before deducting expenditures credits and taxes
what is the gold contract ?
one of the most actively traded commodities on the market the standard trading unit for one contract is 10 troy ounces for more information on this commodity click here
what is the hkd ?
the official currency code for hong kong dollar
what is the hrk ?
the official currency code for the croatian kuna
what is the huf ?
the official currency code for the hungarian forint
what is the jpy ?
the official currency code for the japanese yen
what is the key industry ?
an industry that is essential to a country s economy
what is the kiwi ?
a common name for the new zealand dollar
what is the last dealing day ?
the last day during the month in which a trader can deal in a particular product may differ from the contract s expiry date
what is the last dealing time ?
the last time during the day in which a trader can deal in a particular product may differ from the contract s expiry date
what is the leverage ?
the use of borrowed capital for an investment in order to significantly increase the profits that can be made from it for example with a leverage ratio of 1 30 a trader can trade a notional amount 30 times greater than his her available capital i e 30 for each 1
what is the liquidity ?
the ability of a security or financial instrument to be bought or sold with ease or in relation to a financial market the ability to carry out large volumes of trades the opposite of illiquid
what is litecoin
litecoin is the world s second largest cryptocurrency and digital payment system after bitcoin it operates using blockchain technology which is a public ledger recording all transactions while litecoin is completely unregulated which might give some investors pause it has also proven to be extremely secure as no hackers have succeeded in compromising the blockchain technology
how does one use litecoin
using a hashing algorithm miners can discover litecoins and while there is a limited number of litecoins that will ever be mineable that limit is 84 million or four times the number of bitcoins the litecoins already on the market and in circulation can be traded like any other asset and many forex brokers including fortrade com depending on regulation do enable traders to trade litecoin cfds on their platforms
what is the lse ?
an abbreviation for london stock exchange
what is the ltc ?
the currency code for litecoin
what is the major currency pairs majors ?
foreign currencies are always traded in pairs the value of one currency compared to a counterpart major currency pairs match up the u s dollar with each of the other six major currencies the euro japanese yen british pound swiss franc canadian dollar australian dollar and new zealand dollar the following seven currency pairs are the most commonly traded and the most active on global forex markets eur usd gbp usd usd jpy usd chf aud usd usd cad nzd usd of these pairs the eur usd is by far the most commonly traded pair reaching a full one third of the global forex market
how does one use major currency pairs
traders follow the various factors that affect currency prices including economic announcements geopolitical events and even global weather in order to determine which currencies they wish to buy or sell at any given time the major currency pairs tend to be the most volatile and therefore the most commonly traded upon the fortrade website offers all of the major pairs from which traders can choose
what is the margin ?
in financial markets margin refers to the required collateral an investor must deposit to hold a trading position in a security or financial instrument
what is a margin call
if a trader or investor has an account that has fallen below the brokerage s minimum margin requirement then the brokerage can place a margin call on the account in which case the investor would have to either deposit additional funds into his account or sell off some of the shares he is holding for which he took a loan in order to invest to begin with barring that the brokerage has the authority to sell some of the investor s shares even without his permission to make up the difference for example if a trader wishes to purchase 500 shares of a stock that costs 50 per share if the trader does not have the 25 000 necessary to purchase those shares he may put up half of the amount from his own equity and borrow the other half from the brokerage most brokerages require a maintenance margin of 25 which is to say that the equity value the amount that the trader put up for the shares must be at least 25 of the total value of the shares if the stock proves to be a wise investment and increases in value the investor can earn a tidy sum and repay his loan to the brokerage however imagine the value of the stock falls to 30 the initial investment of 25 000 is now worth only 15 000 the amount loaned by the brokerage remains the same but the equity invested by the trader is now worth only 2 500 which is below the maintenance margin of 3 750 25 of the current 15 000 value now the brokerage can and likely will make a margin call requiring the trader to either deposit additional funds into the account or sell off whatever percentage of the shares would be needed to bring the account to within the range of the maintenance margin
how do margin calls affect forex traders
forex and cfd traders often invest on margin or leverage thus enabling them to see higher earnings on their initial investments however when their investments fall short of expectations they need to be aware of the maintenance margins and the potential consequences on their holdings when the equity declines to a value below the required margin amount i e when your margin level is less than 100 your account will become under margined this is because you will have less funds in your equity the market value of your account than the required margin
what is market capitalization
market capitalization is the monetary amount that a publicly traded company is worth as determined by the value of the company s outstanding shares the market capitalization is calculated by the value of one company share times the number of outstanding shares shares held by stockholders for example a company that has 3 million outstanding shares that are valued at 45 per share will have a market capitalization of 105 million dollars
what is the market maker ?
an investment company or broker who maintains firm bid and ask prices in a given security or financial instrument by continuously standing ready to buy or sell that same security at its publicly quoted price
what is the market order ?
an order to buy or sell at the current market price
what is the market risk ?
the possibly that the value of a security of financial instrument will experience losses due to performance factors such as adverse price movements national or global macroeconomic changes also called systematic risk
what is the maximum trading amount ?
the maximum amount of funds that can be allocated for a long or short position according to the specific trading requirements of a security or financial instrument a trader wishes to trade on
what is metatrader 4
metatrader 4 mt4 is a popular forex trading platform used by many leading online brokers use the technology including fortrade com the mt4 can be downloaded for free and provides an effective tool for trading forex futures markets and cfds online both from a pc as well as from tablets and smartphones the platform offers trading signals and expert analytics which enable users to develop effective trading strategies the platform can be accessed from anywhere that there is an internet connection
how does one use metatrader 4
once the mt4 has been downloaded and customized to the trader s preferences trading forex is with mt4 is fairly straightforward under the market watch column choose the currency that you wish to trade the buy and sell prices are clearly marked a separate window will open enabling you to choose the volume that you wish you buy or sell fill out the details of the transaction that you wish to make and click on either the buy or sell button the mt4 will keep track of all executed transactions for you when buying and selling the mt4 also enables you to place stop loss and take profit orders on fortrade com the mt4 can be downloaded here
what is the minimum trading amount ?
the minimum amount of funds that can be allocated for a long or short position according to the trading requirements of a certain security or financial instrument may also vary according to a trader s specific account balance
what are minor currency pairs
foreign currencies are always traded in pairs the value of one currency compared to a counterpart minor currency pairs also known as cross currency pairs are pairs that do not include the u s dollar but do include at least one of the world s other three major currencies that is to say that the japanese yen british pound or the euro are at least one if not both of the currencies included in the pair minor currency pairs are not to be confused with the seven major currency pairs all of which include the u s dollar against one of the six other most liquid currencies in the world
how does one use minor currency pairs
depending on how volatile and liquid a market a trader wishes to invest he might find that the minor currency pairs are a safer investment than a major pair as is the case with all other currency pairs the rates can be influenced by several factors including economic announcements geopolitical events and even global weather the fortrade website offers several minor pairs from which traders can choose
what is the mobile trading platform ?
a downloadable mobile application through which traders can access financial markets open edit and close online trading positions and receive live streaming of quotes graphs and other technical indicators
what is the moving average ma ?
an indicator frequently used in technical analysis to identify and demonstrate the average value of a security or financial instrument s price over a specific period of time the ma is used to smooth out price data and to help confirm price trends and directions also referred to as a simple moving average or sma there are three main types of moving averages used in the field of forex trading simple weighted and exponential
what is the mxn ?
the official currency code for the mexican peso
what is the nasdaq ?
an abbreviation for national association of securities dealers automated quotations it is the second largest stock market both in the us and worldwide
what is the net earnings ?
an individual person business or company s taxable income after detecting expenditures credits and taxes the formula for calculating net earnings is total revenue total expenses net earnings
what is the net position ?
the difference between a trader s long buy and short sell positions at any given time for example if he she has 4 long positions and 2 short positions his her net position would be 4 2 2
what is the ninja ?
a nickname for the us dollar japanese yen usd jpy pair
what is the nok ?
the official currency code for the norwegian krone
what is the north american trading session ?
starts at 12 00 13 00 gmt and lasts to 21 00 22 00 gmt also known as the new york trading session
what is the nyse ?
an abbreviation for new york stock exchange
what is the nzd ?
the official currency code for the new zealand dollar
what is the opec basket ?
a weighted average of oil prices collected from the organization of petroleum exporting countries a group of 13 major oil producing countries opec basket s average oil price is based on the production and exports of each country the two other leading benchmarks are the brent and west texas intermediate wti crude
what is the oecd ?
an abbreviation for organization for economic co operation and development
what is an open p l
an open p l profit loss is a financial statement that forex traders receive summarizing all open positions that he has in terms of profits earned and losses incurred
how does one use open p l
knowing when to open and close a position is the key to successful forex trading by carefully examining the open p l a trader can determine which markets are behaving in a bullish manner and which are more bearish in doing so traders are better equipped to make informed decisions concerning short and long term trading strategies
what is the open position ?
any trade that has been entered and has not yet been closed with an opposite trade an open position can exist following a long position also referred to as simply buy or short position also referred to as simply sell
what is the open price
the open price also known as the opening quote or opening price is the price of an asset on the trading market at the outset of the trading day it is important to note that the opening price of one day is not necessarily the same as the closing price of the same asset from the previous day fluctuations in the asset value can and often do continue even when the markets are closed and the asset is not being traded
how does one use the open price
the open price is the primary indicator for a trader on what the currency pair has done on the day that you are weighing a long or a short position by examining the open price along with the day high and the day low traders can gauge the volatility of the currency and develop a strategy to either buy sell or avoid the currency altogether
what is the open trades ?
any and all open buy long and or sell short positions in a trader s online trading account
what is an otc market
an otc over the counter market is a decentralized market where assets including some currencies that are not traded on centralized stock markets can be traded because otc markets are not centralized and not regulated by any governmental authority they will often be less transparent than centralized markets and therefore riskier
how does one use an otc market
trading on an otc market is similar to trading on a centralized market traders find a broker who serves as the middleman between them and fellow dealers as well as with corporations and businesses that are not being traded on centralized stock exchanges one of the primary differences between an otc market and an exchange market is that on an otc market the brokers have more flexibility on the buy and sell prices that they set as a result a broker may quote one price to one client and a different price to another and there may be differences in the bid ask spread
what is the outperform ?
a situation in which a security or financial instrument is believed to be more profitable than the overall market also known as market outperform opposite of underperform
what is the overnight position ?
a trade that remains open overnight from one business day to another
what is the p l statement ?
a financial statement that summarizes the trader s total profits earned or losses realized from his her current trading positions also known as a statement of profit and loss
what is the p e ?
price earnings ratio
what is the pci dss ?
payment card industry data security standard pci dss a proprietary information security standard for financial institutions and organizations that make online transactions using major credit card and debit card providers visa mastercard american express etc administered and managed by the international payment card industry security standards council pci dss is designed to increase data protection of card holders and reduce the risk of credit card fraud brokerage firms such as fortrade must comply with this standard in order to maintain accreditation
what is the peak ?
the highest point i e price rate value of a specified security or financial instrument at a specified time