39 Terms in Trading and Their Definitions. The terms in trading will often be encountered when entering the world of online trading or the derivative market. These terms and abbreviations are sometimes still not well understood. In fact, there are some basic terms in the trading world that need to be known.

Here are the terms in trading along with their meanings that are often encountered in the forex world. Hopefully, you will always be enthusiastic about learning the process. But before that, you can fill out an internal survey about GIC so that we can improve the existing performance.

Table of Contents

39 Terms in Trading and Their Meanings

1. Margin

Margin is the amount of deposit/capital needed to open or maintain a trading position. Margin is divided into ‘used‘ and ‘free‘. Used margin/equity is the amount of funds used to maintain a trading position. Free margin means the amount of funds available in your account to hold a position against market movements and can also be used to open other trading positions.

2. Spread

Spread is the difference between the ask and ask price of a currency pair. For example, if the EUR/USD pair is at bid 1.3200 ask 1.3203, then the spread is 3 pips, which is between 1.3200 and 1.3203.

3. Pips

Short for Percentage in Points or if translated is 4 digits behind the comma or dot if in the nominal US Dollar currency. While pippette is 5 digits behind the comma or dot as mentioned above.
You may often hear or read about pips, for example a profit of 25 pips or a loss of 56 pips. This means the difference between the pips of opening a transaction and closing a transaction. So, if you open a BUY position at 1.3600 and the graph goes up to 1.3620 and then closes, then the transaction value increases by 20 pips. You will get a profit of 20 pips.

4. Leverage

In short, it can be interpreted that leverage is a leverage or lever that allows an investor or trader to transact with much larger capital than he has. Leverage provided by forex brokers, for example, is 1:1 to 1:1000.
If a trader uses a leverage facility of 1:1000, it means that the capital we have is multiplied 1000 times from the value of the deposit we have invested. So the forex broker company that provides our trading access provides a loan as much as our capital is multiplied to 1000. The use of large leverage requires proper financial management, because the loan given by the broker to the trader is getting bigger and the capital that needs to be provided by ourselves is also getting smaller.
With this facility, traders have leverage that allows them to increase the amount of capital for transactions much larger than the capital or deposit that has been deposited.
Simply put, if we submit a capital of 1000 USD, by using a leverage facility of 1:1000, our capital will seem to be 1 million USD. With leverage, you can increase the profit you get, but also increase the potential loss if the position you open actually moves against the estimated price direction. Therefore, for those of you who are learning to trade, you should use leverage that is not too large to minimize losses.

5. Lot ( letter of transaction) 

It means a certain amount of a standard contract, a unit for each forex transaction we make. Generally 100 thousand units of standard currency for a standard/regular account, 10 thousand units for a mini account, and the last is 1000 units for a micro account.
The size of the lot determines the size of the transaction we make in the forex market. If the capital or equality we have is large, then we can make forex transactions with a large number of lots.
But it must be remembered that the risk of defeat or loss will be greater, although of course it is followed by a greater opportunity to gain profit. Transaction units Example of lot: 1:00 for regular/standard account lot 0:10 for mini account lot 0:001 for micro account lot

6. Liquidate

Liquidation, which is closing an open position of a contract. A buy contract is closed by selling the contract. A sell contract is closed by buying back the contract.
Before moving on to the next terms, you can take a Preliminary Test to find out how far you understand trading and its terms.

7. Long/short

In forex trading, there is a two-way trade, which is when the market is up or down. To make a profit when the market is up, you have to buy at a low price and sell at a high price.
This is known as a long position. Meanwhile, if the market is moving down, then you must first sell at a high price, then buy it at a low price. This position is called a short position.

8. Sideways 

A condition where the market is not actively moving up or down, but with a relatively limited movement/range.

9. Swap

The general term is the overnight fee or interest that will be charged or given to you if you have an open position that exceeds one trading day.

10. Stop/Cut loss

Stop loss or cut loss is a term that means limiting losses in trading. In many trading applications, this feature can already be run automatically. You only need to enter the amount of loss you anticipate as the maximum loss limit, and the application will automatically close the position if the loss actually occurs.

11. Support 

Generally, it is often said that the bottom price/price resistance level is below the current market price/running price, where buying interest should be able to control selling pressure and keep the price from falling.

12. Resistance

Generally, it is often said that the upper price/price resistance level is above the current market price/running price, where selling pressure should be strong enough to overcome buying pressure and keep it from getting too high.

13. Rebound

Price bounce in the market, after previously experiencing a significant decline or usually used as a term for bullish movement. Understanding these trading terms will be good for you if you want to trade.
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14. Risk Management

A structured approach/methodology in managing uncertainty related to threats, generally said to limit losses/risks that occur in the market.

15. Risk Aversion

Market symptoms where investors avoid buying high-risk instruments such as stocks and switch to low-risk instruments or safe havens, for example: Gold.

16. Rollover

Rollover is a kind of interest or fee that must be paid to hold a trading position overnight. Each currency pair has an interbank interest rate attached to it, and because they are traded in pairs, each trade will involve not only two currencies, but also two different interest rates.
The rollover calculation will be a bit complicated if it is related to banks, because generally these financial institutions are closed on Saturdays and Sundays. Banks are closed so there is no rollover on those days, but banks still apply interest rates on those two days.
To further simplify the calculation, the forex market then ‘orders’ a rollover three days in advance, namely on Wednesday. Therefore, traders who hold trading on Wednesday at 05 pm will be charged two rollovers, of course with different fees that refer to interest rates.

17. Scroll Contract

Trading contracts that are continued to the next day until the position is closed. Exchange floor products are this type of contract.

18. Bearish

A common term often used by traders, which describes a market condition that is falling.

19. Bullish

A common term often used by traders to describe rising market conditions.

20. Buy (or sell) on close 

Make a buy (or sell) transaction at the end of the trading session at the closing price.

21. Buy (or sell) on opening

Make a buy (or sell) transaction at the start of the trading session at the opening price.

22. Bond / Obligasi

Bonds are long-term debt securities issued by a company or government, which have a fixed interest rate and maturity date.
The characteristics of this bond are contained in the bond indenture, including whether the interest and principal will be paid to the person whose name is listed on the bond certificate, or to whoever holds the bond, in which case the bond in question is called a bearer bond.

23. Bid Rate

The price at which a trader is willing to buy a particular currency.

24. Base Currency

In general terms, it describes a currency that an investor holds on their balance sheet. In the foreign exchange market, the US dollar is normally referred to as the base currency for trading against other currencies. It is calculated per US dollar per counterparty currency. The exceptions to this base currency system are the Euro, Pound Sterling, Australian dollar and various currencies that are quoted in front of the US dollar, indicating that they are the direct currency.

25. Bar Charts

Bar chart. This type of chart shows the opening, highest, and lowest closing prices of a currency or stock. Changes in value occur over time. Usually used by dealers/traders in currencies/securities to do forecasting, or estimate prices that may appear in the future. In this bar chart analysis, various patterns (chart patterns) are also known that describe a condition of a collection of prices at a certain time to then anticipate the next price movement according to patterns that have occurred in the past.

26. Barrel (satuan untuk oil)

Barrel is the standard measure of crude oil volume in international oil trade. The unit of measurement for barrel is abbreviated bbl or blue barrel or blue drum (keg), the standard container for the oil industry in North America. But in general at that time wine barrels were used, barrel = 42 US gallons based on the old English standard on tierce wine barrels. And barrel = 40 US gallons or 151.4 liters

27. Cross Rate

Cross rate Generally a currency pair that is not paired with the US dollar (USD) Commonly known as “Cross Currency Pair” the exchange rate between one or more currencies that are not the standard benchmark of the country where the currency is traded. For example: EURJPY, GBPCHF, AUDJPY… etc.

28. Major Rate 

Generally currency pairs that are paired/transacted/directly related to the US Dollar. Example: EUR/USD, GBP/USD, USD/JPY, etc.

29. Margin Requirement

The minimum funds required to open a position either buy or sell in the market. For forex/gold1:00 lot Regular account (Margin Requirement) is $10000:10 lot Mini account (Margin Requirement) is $1000:001 lot Micro account (Margin Requirement) is $10

30. Margin Call

So, Margin Call is a broker facility that warns traders if the account condition is threatened by floating loss from the current trading position. A condition where the existing funds/equity can no longer withstand price movements in the market.
To maintain the existing position, additional funds (topup) are required. If the existing equity is only 20% of the Margin Requirement, then a Margin Call will be imposed. Margin Call can also be easily viewed through the Margin Level.

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If your margin level falls close to 100% or less then your open position can be closed automatically by the system. The Margin Level formula is = Equity / Margin x 100% Example: Suppose you open a mini account with a capital of $ 1000, then buy EUR / USD at a price of 1.4000 as much as 0.50 mini lots with a leverage of 1: 200. 
The margin required for the trading position = (1000 x 1/200 x 1.4000 x 50) = $3.50. In this situation, your Free Margin is $1000-$3.50 = $996.5. The Free/Usable Margin of $996.5 illustrates your ability to withstand market movements in EUR/USD to move minus (opposite to the expected direction). In detail, $996.5 in a position of 50 mini lots, each lot is only able to withstand movements of $19.93.
As a result, if the price drops 19.93 points from 1.4000 to around 1.3980, your account will immediately be hit by a Margin Call because the Free Margin has reached zero. At that time, the total loss that must be borne is $ 996.5 or even more if you consider costs such as Spread and Commission Fee. That's huge, right? In fact, to move as much as 19.93 points, the EUR / USD pair may only need less than an hour.

31. Pending Order

This is a facility provided by the broker whose function is to allow you to open/enter the market/open a position in the market at the desired price.
There you will find various types of pending orders, such as the following:
  • Buy Limit : A “buy” position will open at the desired price (request/want a price below the running price)
  • Buy Stop : A “buy” position will open at the desired price (request/want a price above the running price)
  • Sell Limit : A “sell” position will open according to the desired price (request/want a price below the running price)
  • Sell Stop : A “sell” position will open according to the desired price (request/want a price above the running price)

32. Hedging

In trading strategies, traders can apply in carrying out trading, one of which is hedging. Hedging is one strategy that is often used by traders to mitigate or limit the risk of loss by equalizing the positions opened.
In other words, the trader will open a new position in the opposite direction to the open position. If the initial position is SELL, then a new BUY position will be opened with the same number of lots.

33. Take Profit

The desired profit target, in other words, the position in the market will be liquidated/closed automatically if it reaches the predetermined profit level based on the price obtained when opening the position in the market.

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34. Analisis Teknikal

There are 2 analyzes that are done when trading, fundamental analysis and technical analysis. Fundamental analysis is a basic analysis that will affect when trading, for example the economic and political conditions of a country. Technical analysis is a technique that analyzes the rise and fall of prices in a certain time span, there are measuring tools for the direction of price movements for technical analysis such as indicators, price action and trendlines.

35. Support & Resistance

Resistance is the highest price limit before it falls/goes down again, conversely support is the lowest price limit before it goes up again.

36. Stop loss 

Stop loss is a term for an automatic sell order submitted to a stockbroker or broker. This order is useful for avoiding losses, stop loss will be active when a trader's stock falls to a previously set point.

37. Moving Average 

Salah satu indikator teknikal yang sering digunakan karena sederhana dan mempunyai banyak modifikasi 

38. Pump (pompom)

Pompom is a term for someone who suggests a stock to pump its price up.

39. ARB dan ARA

Auto reject lower (ARB) and Auto reject upper (ARA) are automatic price reject systems if the price has reached the limit, where later the price will no longer be able to penetrate the limit.
Thus the review of the terms in trading along with their meanings. Hopefully it can help all fellow traders to be more enthusiastic about learning. However, for those of you who are still confused about the terms, you can fill out the Trader Assessment survey to be able to consult with GIC about trading itself.

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