GLOSSARY

Margin

Margin is essentially the amount of your trading account balance that must be secured as collateral in order to guarantee your open positions. Margin is usually presented as a percentage and is related to leverage in that the more leverage you employ, the less money you need to post as margin. For instance a 2% margin requirement is the equivalent of using 1:50 leverage, a 1% margin requirement is the equivalent of using 1:100 leverage, and so on.

Market Depth

Market depth is a term used to describe how large an asset’s order book is. In other words, how many buy and sell limit orders are available for execution as well as how much volume these orders represent. A deep market is one that can handle a great influx of either buy or sell market orders without the price moving substantially in any direction

Market Maker

A market maker is simply any kind of brokerage business that brings buyers and sellers together, facilitating the execution of transactions between them. The term has been done a disservice in recent years by online FX brokers who have sought to convince their clients that all their trades are sent on to the interbank market and that none are internalized.

Market Order

A market order is simply an order that is executed at the current market price, the moment you decide to buy or sell.

Micro-lot

A micro-lot is one hundredth of a lot, which in FX trading equals to 1000 units of the base currency in question. Micro-lots have been introduced to make the trading of CFDs more accessible, especially for those who prefer to trade smaller volumes.

Mini Lot

A mini lot is one tenth of a lot, which in FX trading equals to 10,000 units of the base currency in question.

Momentum

Momentum is the rate at which an underlying asset’s price changes, either in an upward or downward direction. Once an asset begins to gather momentum it is considered increasingly likely that it will continue to move in the same direction. In technical analysis, indicators of momentum are called oscillators and are used to indicate emerging trends.

Minimum Bid Rate

Minimum bid rate is the main refinancing rate set by European Central Bank (ECB). The Minimum Bid Rate is important to currency traders because interest rates are central to currency valuation. For this reason, Minimum bid rate announcements tend to be highly anticipated by the market as well as the ECB press conference which occur 45 minutes later. These events generate a great deal of market volatility.

Micro lot

A Micro lot is a hundredth of a lot and represents 1,000 units of the base currency in a pair.

Maximum Deviation

In MT4’s order execution window you can choose to set a maximum deviation pip-range for your orders. Maximum deviation allows you to specify a pip-range that is acceptable to you in the event that your order cannot be filled at the requested price. In other words, checking the maximum deviation box and setting it to two pips indicates that you are willing to accept a price that deviates 2 pips above or below the requested price. In this way you can reduce the number of rejected orders, which is especially helpful at times of high market volatility. When the maximum deviation box is left unchecked, your order will only be executed if it is available at the exact price you requested. Otherwise, the order will be rejected.