Videos
What is Margin Call?
A Margin Call is a red-flag warning that the available capital in the trading account is less than the minimum amount required to maintain the open positions.
What is Margin Level?
The Margin Level is the ratio of the equity to the Margin Used in currently open positions. It is expressed as a percentage:
What is Free Margin?
Simply put, Free Margin is the amount of cash in your account that is available for trading. Say, that your account Balance is 10,000 US Dollars, and you chose a leverage of 1:100.
What is Margin?
Margin is a “good faith deposit” required by the broker so you can open and maintain a position. It is actually the minimum amount of cash required to have in your account at all times to cover any potential losses that may be incurred.
What is Leverage?
In forex, traders may trade with more capital than the amount they deposited in their accounts. This is simply because of leverage. Leverage allows you to increase your trading potential.
What is a Lot?
In foreign exchange, transaction size is measured in lots. For example, if you were to buy one lot of EURUSD that simply means that you are going to buy 100,000 euros. Remember, that in forex we buy and sell the base currency, the first currency in a pair.
What is Equity?
Equity refers to the amount of money in your account including any unrealized profit and loss, commissions, credit, and swaps.
What is Balance?
A Balance is the amount of money you have in your trading account. It is the amount of available funds in your account excluding any unrealized profit or loss or any possible charges for open positions. The Balance does not change during open trades.
What is Forex?
Foreign exchange, or forex and fx for short, is a decentralized global market where the world's currencies are traded. Forex is the largest financial market in the world, with an estimated daily trading volume of over $6 trillion. Participants in the forex market include banks, corporations, governments, individual investors, and speculators.
What are the Exotics?
The exotics are another group of currency pairs in the foreign exchange market. They combine a currency of an emerging economy.
What are the Crosses?
The cross-currency pairs or cross rates as they are also known, combine currencies of the major economies but do not involve the US Dollar.
What are the Majors?
The most traded currency pairs in the foreign exchange market are known as the Majors. They account for most of the daily turnover in the market.
What are Base Quote and Quote Currency?
In foreign exchange, currencies are traded in pairs.
For example, in EURUSD, the euro is the base currency, and the US Dollar is the quote currency.
What is Bid Ask Price?
In forex, the Bid price is the price that a trader is willing to sell a currency pair for. The Ask price is the price that a trader is willing to buy a currency pair at.
The Bid price is always smaller than the Ask price.
What is a Pip?
A price interest point, point in percentage, point in price, or pip for short, is a price unit that measures the change in value between two currencies.
In most currency pairs like EURUSD, a pip corresponds to the 4th digit after the decimal point.
The Dumpling Top
The Frypan Bottom is a bullish reversal candlestick pattern identified at the end of the downtrend.
It is the equivalent of the Western bullish pattern known as rounding bottom. As the volatility at the end of the downtrend tightens, the size of the real bodies becomes smaller.
The Evening Star
This is a three-candlestick reversal pattern at the end of the uptrend or a rally. The first candle is a long white body in the direction of the trend “showing off” the buyers’ strength.
The second, is a small black or white candle that may open higher the prior close.
Three Black Crows
The following bearish reversal pattern we will discuss consists of three Japanese candlesticks. It forms at the top of a rally or near a resistance area.
The first candle is a long black candle in the opposite direction of the established trend
The Tweezers Tops
Tweezers Top is a two-candlestick bearish reversal pattern during an uptrend or a rally. It signifies the end of the uptrend and the beginning of a sideways or downward move.
Remember that after a reversal pattern, a sideways movement may occur before the decline.
The Long White Body
A long white candlestick at the end of a decline is a strong indication that the sellers are running out of steam and the bulls are entering the market aggressively.
Now that we have defined it, we need to pause for a while and explain the term long. Well, long refers to the real body being longer than the average body-length of the recent candlestick-bodies.
The Bullish Hammer
The Hammer is a bullish reversal pattern.
It consists of just one candlestick and a prerequisite condition is the existence of a decline. We may consider this decline, a correction or retracement as it is also known, or even a downtrend. What I am trying to say here is that the Hammer may appear at the bottom of a short or long decline.
The Bullish Harami
Interesting fact, by the way, in Japanese Harami means “pregnant woman”! But let’s go ahead and shed some light on this pattern.
As you might have guessed, the first prerequisite of this pattern is the existence of a trend, a downtrend in this case. If there is no trend, then there is no reversal. Period!
The Bullish Engulfing
The bullish Engulfing reversal pattern consists of two Japanese candlesticks of opposing colors. It forms at the end of a downtrend or near a support area.
The first candle has a black real body as expected after all, to confirm the sellers’ intention to push prices even lower during the downtrend.
The Piercing Line
The next bullish reversal pattern that we are going to discuss, consists of two Japanese candlesticks.
The Piercing Line forms at the bottom of a decline or near a support area.
The first candle is a long black body confirming the direction of the prevailing trend and the bears’ intention to push prices lower.
The Inverted Hammer
The Inverted Hammer is nothing new but a variation of the Hammer or the Hanging Man if you prefer.
So, an Inverted Hammer at the bottom of a downtrend will indicate that the bears are running out of steam and the bulls are taking over.
The Inverted Hammer is nothing new but a variation of the Hammer or the Hanging Man if you prefer.
The Tweezers Bottom
The next Japanese Candlestick reversal pattern that we are going to explore is the Tweezers Bottom. It is a two-candlestick bullish reversal pattern during a downtrend or a decline.
It signifies the end of the downtrend and the beginning of a sideways or upward move. Remember that after a reversal pattern a sideways movement may occur before the rally.
The Three White Soldiers
The next bullish reversal pattern that we are going to discuss, consists of three Japanese candlesticks. It forms at the end of a downtrend or near a support area.
The first candle is a long white candle in the opposite direction of the established trend. This is enough to raise an eyebrow not to mention a warning for an impending reversal.
The Morning Star
This is a three-candlestick reversal pattern at the end of the downtrend or a decline. The first candle is a long black body in the direction of the trend, “showing off” the sellers’ strength. The second is a small black or white candle that may open below the prior close. The third candle is a long white body that closes well into the long black body, ideally above fifty percent. It signals the end of the uptrend downtrend.
The Frypan Bottom
The Frypan Bottom is a bullish reversal candlestick pattern identified at the end of the downtrend. It is the equivalent of the western bullish pattern known as rounding bottom.
As the volatility at the end of the downtrend tightens, the size of the real bodies becomes smaller.
The Long Black Body
A long black candlestick at the top of a rally is a strong indication that the buyers are running out of steam and the bears are entering the market aggressively. Now that we have defined it, we need to pause for a while and explain the term long.
Well, long refers to the real body being longer than the average body-length of the recent candlestick bodies. Some traders consider a long real body to be about 3 times longer than the size of the previous body. I take a slightly different approach. Consider the average length of the last 25 real bodies, then double the size. Perhaps you can come up with a different method. Why not?
The Hanging Man
The Hanging man is actually a Hammer at the top of a rally. It’s a bit dubious that the same candlestick pattern is both bullish and bearish. But let’s explore it more thoroughly so we can understand the traders’ psychology during its formation.
Well, during an uptrend, the opening of a new candle the bulls fail to pull prices higher but instead, sellers take control to push them lower. This is an indication or warning that the bulls are running out of steam as indicated also by the long lower shadow. Eventually, something happens and prices bounce up to close at the upper part of the candle.
The Bearish Harami
The Dark Cloud Cover consists of two Japanese candlesticks. It forms at the top of a rally or near a resistance area. The first candle is a long white body confirming the direction of the prevailing and the bulls’ intention to pull prices higher. Of course, in the markets, nothing is 100% and this was true during the formation of the Dark Cloud.
The Bearish Engulfing
The Bearish Engulfing reversal pattern consists of two Japanese candlesticks of opposing colors. It forms at the end of an uptrend or near a resistance area.
The first candle has a white real body as expected after all, to confirm the buyers’ intention to pull prices even higher during the uptrend.
The Dark Cloud Cover
The Dark Cloud Cover consists of two Japanese candlesticks. It forms at the top of a rally or near a resistance area. The first candle is a long white body confirming the direction of the prevailing and the bulls’ intention to pull prices higher. Of course, in the markets, nothing is 100% and this was true during the formation of the Dark Cloud.
The Dark Cloud Cover consists of two Japanese candlesticks. It forms at the top of a rally or near a resistance area.
The Shooting Star
The Shooting Star is nothing new but a variation of the Hammer. It is an inverted hammer to be more precise.
So, a Shooting star at the top of an uptrend will indicate that the bulls are running out of steam and the sellers are taking over. The long upper shadow displays the buyers’ intention to pull prices higher in the direction of the established trend but unfortunately for them, the market rejects the high prices as the sellers take over and push prices to close way lower.
Now, let’s take a look at the specifications of the Shooting Star: