Home Foreign exchange investment commonly used terminology

Foreign exchange investment commonly used terminology

1, point PIP exchange rate changes the smallest unit cashbackforexpipcalculator the point if the euro / dollar exchange rate from 1.2250 to 1.2251, the change is exactly 1 point foreign exchange quotation of the last is the points of the digit, the penultimate is the points of the tenth, cashback forex calculator Online so on 2, spread SPREADS spread is the bid cashback forex (Ask) and the ask price (Bid The smaller the spread between the bid price and the ask price, the smaller the cost for investors means the smaller the long-term cashbackforexcalculatorOnline down, the size of the spread on the overall profit and loss of short-term investors have a greater impact, and almost no impact on medium and long-term investors to EUR / USD for example: the bid price (Ask) is 1.4390, the ask price (Bid) is 1.4393, there is a spread of 3 points between the bid and offer price If you want to buy EUR at this time, will be at 1.4393 deal, profit and loss will show 3 points, that is, -30 U.S. dollars (3 * $ 10 = $ 30) loss value of this $ 30 loss can be seen as the cost of opening a position spread is actually the cost of our transactions 3, point value PIPVALUE point value is the value of a point between the bid and ask prices when conducting foreign exchange transactions, please refer to the details Foreign exchange calculations 4, margin / leverage MARGIN margin is the buyer or seller in accordance with the standards set by the trading cashbackforexprofitcalculator to pay the funds, specifically for the settlement of orders and performance guarantee used margin = lot * contract units / leverage gold and silver used margin = lot * contract units * market price / leverage CFD margin is fixed available margin = net value - used Margin - spread 5, additional margin VARIATIONMARGIN additional margin refers to the clearing house provisions, in the shortage of the amount of the members margin account, in order to maintain the amount of margin in the initial margin level, and require members to increase the deposit of the margin of the day equity minus the position margin is the balance of funds if the day equity is less than the position margin, it means that the balance of funds is negative, and also means that the margin is insufficient 6. Also means that the margin is insufficient 6, the number of contracts CONTRACTSIZE foreign exchange contracts also called contract units, is the volume of the transaction itself, is the amount of buy/sell currency for example: foreign exchange, 100,000 contract units for 1 standard lot, also called 100K (K = kilogram), which means that the minimum share of each single transaction is 100,000 base currency 7. STPSTP, the full name Straightthoughprocessing, straight-through processing, is a bridge approach, no dealer back office (dealer back office, English for dealingdesk, often translated as a dealer platform) in which the offer and control the market price (that is, no market-making), all customer orders directly to the liquidity provider (or Liquidity providers, that is, other brokers and banks), the bid/ask price by those liquidity providers to decide no trader back office STP platform to bridge all order information directly to the liquidity provider, liquidity providers with the opposite of the customers position to trade, at the same time, by later trading with another party to close this position, in order to gain profits STP foreign exchange platform three key elements 1) Liquidity provider ECN trading platform will pass orders to the ECN liquidity pool, which has a large number of interbank trading liquidity providers STP platform has its own internal liquidity pool, this pool consists of a predetermined number of liquidity providers, only those who have signed a contract with the STP broker liquidity providers will be in it these liquidity providers for orders from the STP The better the liquidity, the better the buy/sell price, the better the buy/sell price will be, the lower the spread will be If there is only one liquidity provider, then there is no price competition between liquidity providers, which is the same as just adding a middleman to trade inside 2) Spread type Fixed spread STP forex platform: not to multiple If the STP broker has only one liquidity provider, the role of this liquidity provider is the traders only counterparty, in this case the bid/ask price is all determined by this liquidity provider floating spreads STP forex platform: the liquidity provider provides the best bid/ask price. STP brokers will choose the best bid price from a liquidity provider and the best bid price from another liquidity provider so that they can offer the lowest bid/ask spread to their clients 3) Instant execution or market execution Instant execution means that the order will not enter the market directly, it will be processed by the broker first Market execution mentions that the order information is sent to the market and the price is determined by having Liquidity providers in the market decide to provide market execution STP brokers, providing customers with direct market access DMA (DirectMarketAccess) 8, ECNECN that is, the electronic communication network (ElectronicCommunicationNetwork, ECN), so that the orders of ECN users are directly anonymous hanging On this network, buying and selling prices are involved in this ECN environment of all transactions, including individual investors, small banks, investment institutions, hedge funds, etc., in accordance with the price and time of the most optimal fair collocation transaction from a broad sense, the ECN model is to include STP bridging, the biggest advantage of ECN is fair, the real ECN model, only responsible for the delivery of customer orders, earning fees, and customer orders in this ECN. The customer orders are traded in this ECN liquidity pool with other counterparties, which may be hedge funds, banking institutions or non-banking institutions, or other investors, to name a few and, since ECNs pool large volumes of liquidity, these liquidity providers will bid against each other in order to get more orders filled, thus enabling customers to enjoy lower The ECN account threshold is high, the starting size of the account, the number of lots traded, the volume of transactions have certain requirements, suitable for institutional investors and large capital accounts, such as the use of 9, EA intelligent trading is ExpertAdvisor (EA) Chinese translation, can also be translated as expert advisors, commonly known as intelligent trading system, is a computer simulation The computer according to the pre-edited trading strategy program to execute trading orders automatic trading strategy mainly includes three elements: order execution, risk management and money management intelligent trading system is to run on a specific trading platform international financial currency trading system, the principle of the effective international financial currency trading strategy with a special programming language (MQL / Java / C++) written into a special programming language (MQL / Java / C++) into the international financial currency trading system. Java/C++) into a computer program, allowing the computer to automatically execute positions and buy and sell according to the pre-set conditions, with the winning and losing results depending on the quality of the trading systems strategy. The computers computing speed is much faster than the human brain, so it can quickly trade in some fleeting entry opportunities, greatly improving the quality of the trading behavior Intelligent trading system is directly dependent on the trading strategy developed by the trader, a good trading strategy can achieve stable profits, even in the event of a loss will be in a very short period of time. A good trading strategy can achieve stable profits, even if losses will be controlled within a very small range, while poor trading strategies can lead to trading accounts in a very short period of time on the huge losses or even burst positions currently on the market circulation of EA fully automatic and semi-automatic two, fully automatic EA will be fully autonomous execution of trading strategies, while semi-automatic need to manually assist its single or close positions traditional EA is divided into: grid type, trend type, hedging type, arbitrage type 10 Market maker (MM/MARKETSMAKER) refers to a number of independent securities dealers in the financial market, for investors to undertake the purchase and sale of a security, buyers and sellers do not need to wait for the counterparty to appear, as long as the market maker to assume the counterparty can reach a deal market maker through this continuous trading to maintain the liquidity of the market, to meet the public investors In essence, the emergence of market makers stems from the imbalance between supply and demand in the lack of liquidity in the market, as buyers and sellers do not necessarily appear or trade the same number of products at the same time, this temporal and spatial difference leads to transactions that cannot be realized the emergence of market makers, making the arrival of different times The characteristics of the market maker are: 1) profit model, profit by controlling the bid-ask spread, no obvious speculative intent; 2) trading method, market makers need to provide bilateral quotes to the market, and do not know in advance the direction of the opponents purchase and sale, is the markets passive trading, to a certain extent, has the role of smoothing the market price fluctuations; 3) risk management, due to light trading The market maker mainly adopts the hedging approach to manage inventory risk; 4) market making obligations, if the customer inquiry needs to give a quote, the quoted bid-ask spread must be within a certain range, and the minimum buy and sell volume to comply with the regulations; 5) liquidity provision, when the market lacks liquidity or price fluctuations are intense, the market maker through the provision of quotes to facilitate the transaction to achieve the coexistence mode according to and bidding system. Market maker system can be divided into pure market maker system and mixed market maker system The so-called pure market maker system, refers to a product trading completely through the market maker to complete the so-called mixed market maker system, refers to a product trading may be completed both through bidding transactions, may also be completed through the market maker, belongs to the model of the coexistence of bidding and market making but MM model of market makers usually classify customers, resulting in Customers face slippage, orders are difficult to fill, repeat quotes and other multiple obstacles, and market makers and customers to bet on the transaction, the odds are usually very high, and transparency depends on the market maker itself 11, the bid price BID / ask price ASK bid price is the foreign exchange market is willing to buy a particular currency pair price traders can sell the base currency at this price, it is on the left side of the offer sheet for example, the U.S. dollar / For example, USD/CHF is quoted at 1.4527/32 and its bid price is 1.4527; that is, you can sell 1 USD for 1.4527 CHF Ask is the price at which a trader is willing to sell a particular currency pair in the foreign exchange market. 4532; that is, you can buy 1.4532 Swiss francs 1 U.S. dollar foreign exchange selling price is also called the selling exchange rate 12, spread SPREAD spread is the difference between the bid price and the ask price 13, quotation QUOTATION foreign exchange market exchange rate with the following format to say: the base currency / offer currency bid / ask price such as: EUR / USD 1.2604 / 07, GBP / USD 1.5089 British pound / U.S. dollar 1.5089 / 94, Swiss franc / Japanese yen 84.40 / 45 Under normal circumstances, only the last two figures are shown if the selling price exceeds the bid price of 100 points, then the right side of the slash will have three figures (such as the euro / Czech koruna 32.5420 / 780) Only when the offer currency is very weak will this situation 14, liquidity LIQUIDITY Liquidity is actually the ability of investors to quickly trade a certain number of assets at a reasonable price based on the underlying supply and demand conditions of the market Simply put, liquidity is the cost of quickly executing a certain number of transactions The higher the liquidity of the market, the lower the cost of making immediate transactions Generally speaking, lower transaction costs mean higher liquidity, or a correspondingly better How do prices measure liquidity? Market Depth: The depth indicator is primarily the depth of the quote, i.e., the number of orders at a particular price level (usually the best bid/offer) Depth of Fill: i.e., the size of the trade, which is an after-the-fact indicator that measures the number of orders filled at the best bid/offer Depth of Improvement: is when the number of orders exceeds the number at the best bid/offer and the order is filled at a price equal to or better than the quote Fill Rate: refers to submitted orders in that market actually get executed rate of turnover includes three indicators: First, the market order and better than the best bid and offer limit orders the probability of the entire immediate fill; second is the order at a single price all filled ratio; third is the order partially executed when the volume of the ratio of the volume of orders for inferior to the best bid and offer limit orders, the turnover rate is also a very important indicator 15. SWAP foreign exchange trading, each transaction involves two currencies, which contains two different interest rates, and the interest paid or received are based on the interest rate difference between the two and the direction of the position interest rate is based on the difference between the two currencies interest rates as the basis for calculation, when the investor sells a higher interest rate / buy a lower interest rate currency, you need to pay overnight interest; when the investor buys a higher interest rate / sell a lower interest rate currency, you can earn When an investor buys a currency with a higher/low interest rate, he/she can earn SWAP interest according to the banks practice of T+2 delayed liquidation, which starts after two banking days See FX Calculation SWAP = annual interest rate differential/360 days * 1 standard contract unit * number of lots * exchange rate price (long/short) * number of interest-bearing days 16, CLEARING CLEARING throwing the risk to the market or liquidity provider (banking institution) 17, SCALP Scalping SCALP scalp trading refers to a fast-in and fast-out ultra-short term trading method, refers to the trading investors in a very short period of time, frequent orders to close positions and other operations very simple fast-in and fast-out ultra-short term trading this requires investors to market trends, support and resistance to make certain accurate judgments, and then use high leverage rates to profit, is a mode of profit mostly by probability 18. PAMM (PERCENTAGEALLOCATIONMANAGEMENTMODULE) PAMM management model is a percentage allocation management model (PercentageAllocationManagementModule) abbreviation, refers to a kind of vicarious financial account, the investor and the account fund manager in accordance with the agreed percentage Allocation of profits investors can take advantage of the PAMM account managers wisdom and extensive trading experience, the money into the PAMM account, the account manager with a centralized management interface on behalf of its trading account manager to take a portion of the proceeds from the trading revenue as management compensation 19, MAM (MULTIPLEACCOUNTMANAGEMENT) MAM is a multi-account management software, can Help professional traders to achieve the integrated management of multiple accounts, MAM account can add an unlimited number of trading accounts, and the allocation mode can be based on the percentage can also be allocated according to the proportion of assets MAM account orders can be bulk transactions, instantaneous allocation of multiple management accounts, but also all the orders can be filled, specifically for the money manager and set 20, LAMM ( LOTALLOCATIONMANAGEMENTMODULE) LAMM management mode is a batch group allocation management mode (LotAllocationManagementModule) abbreviation, refers to the ability of the money manager to separately trade different customer accounts, and through a single interface for their management, so that the money manager can trade, supervision As the money manager manages each clients account separately, the margin, profit and loss and rollover fees will vary from client to client LAMM is a master managed account where the client must sign a Limited Power of Attorney to entrust the trader with the LAMM account to manage their trading account, while the clients The account will be placed under LAMM account each time before placing orders can choose to operate against those accounts under the name, and set the amount of operations LAMM account under the name is a read-only account, the customer can not trade on their own customers can fill out a "revocation of limited power of attorney" to withdraw their accounts from LAMM, after which the customer can trade their own accounts

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