Going long / Buying


Betting the price of the instrument will rise. You buy into a trade at the ask price

 


Going Short / Short selling / Selling Short


Betting the price of the instrument will fall. You sell into a trade at the bid price.

 


Bid price / Sell Price


The bid price is the lowest price of the bid and ask. It is the price you sell out of a trade or sell into a short trade.

 


Ask Price / Buy Price


The ask price is the highest price of the bid and ask. This is the price you buy into a long trade or buy out of a short trade.

 


Spread


The spread is the difference between the bid and the ask price. The size of the spread depends on the instrument you are trading and the spread betting firm you are using.

 


Pyramiding


This is when you buy or sell into and existing position.

 


Position


This is a open trade.

 


Slippage

 

This is when you get an order(any order) filled at a worse price than intended.

 


Technical Analysis


This is the study of past market data to try and predict the future direction of prices. There are typically five pieces of information required for this, they are, open, close, high, low and volume

 


Open


This is the opening price of the instrument over a given time frame.

 


Close


This is the closing price of the instrument over a given time frame.

 


High


This is the highest price the instrument reached over a given time frame.

 


Low


This is the lowest price the instrument reached over a given time frame.

 


Volume


This is the amount of buying and selling that has occurred of the instrument over a given time frame.

 


Instrument


This refers to the instrument being traded. This can be FOREX, commodities such as metals, coffee etc. Shares, indices etc.

 


Fundamental analysis


This involves analysing the financial health of a business, looking at the management team running the business, and investigating its competitors and markets. See wikipedia for a more in depth overview of fundamental analysis.

 


Moving average


This is a calculation based on the price of the instrument you are looking at. If you use 10 day simple moving average, it is calculated by adding the price of the previous 10 days and the dividing the result by 10. This can be performed on the open, close, high or low depending on your preference. Typically it is calculated using the close price. Moving averages come in two forms simple moving averages and exponential moving averages. Exponential moving averages give more weight to recent price movements.

 


ATR (Average True Range)


ATR stands for Average True Range. The difference between the low price for a period and the high price for a period is called the True Range. The average for a given period (say 14 bars) is calculated by adding all the true range values together for that period then dividing the total by the quantity specified. In this case it would be (TR1 + TR2 + … + TR14)/14.