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…
Day trading is a trading strategy where traders buy and sell financial assets within the same day, aiming to profit from short-term price movements. Unlike long-term investors, day traders do not hold positions overnight, as they seek to take advantage of small fluctuations in price during market hours. This approach is common in markets like…
A currency pair is the quotation of two different currencies in the Forex market. It shows how much of one currency is needed to buy one unit of the other. Currency pairs are always written in a specific format, with the base currency listed first and the quote currency (or counter currency) listed second. For…
The Commodity Channel Index (CCI) is a technical indicator used to measure the strength and direction of a price trend. Despite its name, the CCI is not just for commodities—it is widely used in Forex, and other financial markets. The indicator compares an asset’s current price to its average price over a set period, helping…
A closing order is a trade instruction used to exit an open position in the financial markets. When a trader closes an order, they are finalizing the trade by selling an asset they previously bought or buying back an asset they previously sold. This action locks in any profits or losses from the trade. Closing…