Forex trading – Simple steps to get you started

 Forex trading – Simple steps to get you started

Forex trading – simple steps to get you started

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The forex trading world has its own language, and before traders delve in, it is imperative that they first familiarise themselves with and understand it.

Equity

This is another word used to describe the total amount of funds in the trader’s account, including their profits and losses. Should a trader deposit R1 000 into their account, and they make a profit of R500, their equity amounts to R1 500.

Used margin

This is the amount of funds that the broker keeps aside so the trader’s current trading positions can be kept open, in addition to avoiding them ending up with a negative balance on their trading account.

Free margin

This is the amount of funds in the trader’s account they can use to open new positions. Free margin is equal to used margin subtracted from the trader’s available equity.

Open order

This is an order with which a trader either buys or sells a financial instrument, such as forex, which will stay open until either the trader closes the position or they have their broker close it for them.

Limit order

This is an order that is placed away from the current market price on the financial instrument with which the trader is trading.

Take profit order

This is an order put in place to close trades automatically as soon as a certain level of profit (as indicated by the trader) has been reached.

Stop-loss order

This order closes the trader’s position or trade as soon as a predefined level of loss has been reached. This is an effective and important risk management tool that traders always have to use.

Chris Louw

https://sashares.co.za/

Featured Financial Writer for SA Shares - Read more about Chris's Bio -

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