Volatility refers to the degree of variation in the price of a financial instrument over a certain period of time. In simpler terms, it measures how much and how quickly prices move. High volatility means prices are changing rapidly and unpredictably, while low volatility indicates more stable and gradual price movements. Volatility is a key…
A trailing stop is a type of stop-loss order that automatically adjusts to follow the market price. This happens as it moves in a trader’s favor. Unlike a fixed stop-loss, which stays at a set price, a trailing stop moves up (for a buy position) or down (for a sell position). It does so based…
Technical Analysis is a method used by traders to evaluate and forecast price movements in financial markets. This is done by analyzing historical price data and trading volumes. Instead of focusing on a company’s fundamentals or economic indicators, technical analysts use charts, patterns, and technical indicators—such as moving averages, RSI, and MACD. They use these…
A Take Profit (TP) order is a type of pending order used by traders. It automatically closes a position once the price reaches a specific profit target. It is designed to lock in gains without requiring the trader to monitor the market constantly. When the market hits the set take profit level, the order is…
Straight-Through Processing is a trading execution model used by brokers to route client orders directly to liquidity providers. These providers include banks or other financial institutions. The model operates without any dealing desk intervention. This means that trades are processed electronically and passed straight through to the market. This reduces delays and minimizes the risk…
Slippage occurs when a trade is executed at a different price than expected. This usually happens due to rapid market movements or low liquidity. It often occurs during periods of high volatility, such as major news releases. During these times, prices can change quickly before an order is filled. Slippage can result in either a…
Scalping is a short-term trading strategy that involves making numerous small trades to profit from minor price movements. Scalpers typically open and close positions within seconds or minutes. They aim to accumulate small gains that can add up over time. This approach requires high concentration, quick decision-making, and access to reliable trading technology for fast…
A reversal refers to a change in the direction of an asset’s price trend. This means that if a market has been moving upward (an uptrend), a reversal would signal the start of a downward trend, and vice versa. Reversals can occur in any financial market and over various timeframes, from minutes in day trading…
A resistance level is a price point on a chart where an asset’s upward movement tends to slow down or reverse due to an increase in selling pressure. Traders often view resistance as a barrier that the price struggles to break through. This level is usually identified by past price action. Past price action is…