GLOSSARY

Take Profit Order

A take profit order is an instruction to a broker that a profitable trade be liquidated once the price of the asset being traded has reached a specified point. This type of order is employed to lock in profits rather than holding on to the position and risking a reversal.

Technical Analysis

Technical analysis is a school of market analysis that studies the internal dynamics of an asset’s price action with a view to forecasting its future movements. Technical analysts presuppose that everything that needs to be known about a given asset has already been priced in, they also take as a given that trends repeat themselves and that market participants behave similarly in similar situations. For these reasons they focus exclusively on applying mathematical tools to historical price action and studying chart patterns in order to determine whether an asset is looking bullish or bearish.

Technical Indicator

A technical indicator is a mathematical tool applied to the historical price action of an asset in order to generate possible buy and sell signals.

Tick

A tick is simply the difference between the current market price and the next price to be quoted. This is not a fixed amount as the next price can vary greatly from the current price, depending on available liquidity.

Trade Balance

Trade balance is an economic indicator that looks at the changing balance, on a month by month basis, of the goods and services imported and exported by an economy. A negative trade balance indicates that the country in question is running a trade deficit, meaning that it is importing more than it is exporting. A positive trade balance indicates that the economy in question is running a trade surplus, meaning that it is exporting more than it is importing. The reduction of a deficit or the extension of a surplus is considered positive for an economy.

Trailing Stop

Trailing stops are stop orders that dynamically adjust to recent price action, rather than statically awaiting to be triggered by price swings. For example, a trailing stop for a buy order will allow the price to rise but will only close the trade if the price drops by a certain percentage. Similarly, a trailing stop for a sell order will allow the price to drop and will only liquidate the position if the price rises by a certain percentage.

Trend

A trend is simply a pattern of either bullish or bearish price action exhibited by an asset. This happens when regardless of its short-term highs and lows the price still seems to be moving in a generally upward (bullish) or downward (bearish) direction.

Trend Line

Trend lines are plotted over recent price action in order to identify the direction of the underlying trend. Bullish trend lines are drawn diagonally over recent highs and bearish trend lines diagonally over recent lows.

Trading Session Timetable

The foreign exchange market is open 24 hours a day, 5 days a week. This is one of its most attractive features as it allows traders from all across the globe to participate whenever they want. Market hours are divided into three broad trading sessions. The Asian session (which also includes New-Zealand, Australia, and Eastern Europe), the European session, and the North American session. Below you will find a table of the opening and closing hours. These hours change slightly when daylight savings time is observed.

Session Main Market Time (GMT)
Asian Tokyo 11 pm – 8am
European London 7am – 4pm
North American New York 12pm – 8pm

For more detailed information read please see The Sun Never Sets on Forex Traders.

Trade Surplus

A country or economic region is said to have a trade surplus (i.e. positive trade balance ) when it exports more goods than it imports.