Free margin is the amount of available funds in a trading account that can be used to open new positions. It is calculated by subtracting the margin currently being used for open trades from the account equity. The account equity includes the balance plus or minus any unrealized profits or losses. In simple terms, free…
A flat position refers to a situation where a trader has no active trades in the market—they are neither long (buying) nor short (selling) any assets. Being flat means the trader is not exposed to market risk at that moment. Their account is fully in cash or settled equity. This is a common state for…
Fibonacci Retracement is a popular technical analysis tool used by traders. It helps identify potential support and resistance levels in a market. It is based on the Fibonacci sequence, a series of numbers where each number is the sum of the two before it. In trading, key Fibonacci levels—23.6%, 38.2%, 50%, 61.8%, and 78.6%—are drawn…
An exotic currency is a currency from a smaller or emerging economy. It is less commonly traded in the global foreign exchange (Forex) market. These currencies typically have lower liquidity, higher volatility, and wider spreads compared to major currencies like the US dollar (USD), euro (EUR), or Japanese yen (JPY). Examples of exotic currencies include…
Equity refers to the ownership value a trader or investor has in an asset, account, or company. In trading, especially in a margin account, equity represents the current value of an account, including open positions. It is calculated as the account balance plus or minus any unrealized profits or losses from active trades. For example,…
An economic indicator is a piece of data or a statistical figure that gives insight into a country’s economic performance and overall health. These indicators are released regularly by governments and independent organizations. They help traders, investors, and policymakers understand trends in areas such as growth, employment, inflation, and consumer activity. Examples of common economic…
An ECN (Electronic Communication Network) is a type of trading system that connects traders directly to liquidity providers, such as banks, hedge funds, and other market participants. This is done without the need for a traditional broker or dealing desk. ECN brokers facilitate transparent and fast trade execution by matching buy and sell orders in…
Drawdown refers to the decline in a trader’s account balance from its highest point to its lowest point before recovering. It is usually expressed as a percentage and helps measure the risk and performance of a trading strategy. For example, if a trader’s account grows to $10,000 but then drops to $8,000 before recovering, the…
Devaluation is the intentional reduction of a country’s currency value relative to other currencies. This is typically carried out by its government or central bank. This is different from depreciation, which occurs due to market forces. Devaluation is usually done in a fixed or managed exchange rate system. In these systems, the currency’s value is…