In other words, when the prices of stocks are falling. If a stock price falls deep and fast, it's considered very bearish. The opposite of a bear market is a bull market. When the stock market is experiencing a period of rising stock prices, we call it a Bear Market. An individual stock, as well as a sector, can also be called bullish or bearish.
A metric indicating the relationship between a stock's price relative to the whole market's movement. If a stock has a beta measuring 1. A broker is a person or company that helps facilitate your buying and selling of an instrument through their platform in the case of an online broker.
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They usually charge a commission. The bid is the price traders are willing to pay per share. It is set against the ask price, which is the price sellers are willing to sell their shares for. What do we call the difference between the bid and the ask price? The spread.
This is a place where trades are made. This is the at which an exchange closes and trading stops. Eastern time. After-hours trading continues until 8 p. This when traders buy and sell within a day. Day trading is a common trading strategy. However, if someone day trades , they may also make long term investments as well a long-term portfolio.
A proportion of the earnings of a company that is paid out to its shareholders, the people who own their stock. These dividends are paid out either quarterly four times per year or annually once per year.
Not every company pays its shareholders dividends. For example, companies that offer penny stocks likely don't pay dividends. These are stocks in big, industry-leading firms. Many traders are attracted to Blue chip stocks because of their reputation for paying stable dividend payments and demonstrating long-term sound fiscal management. Some believe that the expression 'blue-chip' derived from the blue chips used in casinos, which are the highest denomination of chips.
One of the things you should keep in mind when you want to learn Forex from scratch is that you can trade both long and short, but you have to be aware of the risks involved in dealing with a complex product. Buying a currency with the expectation that its value will increase and make a profit on the difference between the purchase and sale price.
Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets CFDs, ETFs, Shares. Past performance is not necessarily an indication of future performance. You sell a currency with the expectation that its value will decrease and you can buy back at a lower value, benefiting from the difference. The price at which the currency pair trades is based on the current exchange rate of the currencies in the pair, or the amount of the second currency that you would get in exchange for a unit of the first currency for example, if you could exchange 1 EUR for 1.
If the way brokers make a profit is by collecting the difference between the buy and sell prices of the currency pairs the spread , the next logical question is: How much can a particular currency be expected to move? This depends on what the liquidity of the currency is like or how much is bought and sold at the same time.
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The most liquid currency pairs are those with the highest supply and demand in the Forex market. It is the banks, companies, importers, exporters and traders that generate this supply and demand. The main Forex pairs tend to be the most liquid. However, there are also many opportunities between minor and exotic currencies, especially if you have some specialised knowledge about a certain currency. No trading for beginners article would be complete without discussing charts. When viewing the exchange rate in live Forex charts, there are three different options available to traders using the MetaTrader platform: line charts, bar charts or candlestick charts.
In the toolbar at the top of your screen, you will now be able to see the box below:. A line chart connects the closing prices of the time frame you are viewing. So, when viewing a daily chart the line connects the closing price of each trading day. This is the most basic type of chart used by traders. It is mainly used to identify bigger picture trends but does not offer much else unlike some of the other chart types. An OHLC bar chart shows a bar for each time period the trader is viewing.
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So, when looking at a daily chart, each vertical bar represents one day's worth of trading. The bar chart is unique as it offers much more than the line chart such as the open, high, low and close OHLC values of the bar. The dash on the left represents the opening price and the dash on the right represents the closing price. The high of the bar is the highest price the market traded during the time period selected. The low of the bar is the lowest price the market traded during the time period selected.
In either case, the OHLC bar charts help traders identify who is in control of the market - buyers or sellers. These bars form the basis of the next chart type called candlestick charts which is the most popular type of Forex charting. Candlestick charts were first used by Japanese rice traders in the 18th century. They are similar to OHLC bars in the fact they also give the open, high, low and close values of a specific time period.
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However, candlestick charts have a box between the open and close price values. This is also known as the 'body' of the candlestick. Many traders find candlestick charts the most visually appealing when viewing live Forex charts. Our quote is: 1. The stake is how much you are prepared to make or lose per point movement in the currency pair and starts at just 0. So, if our price moves from 1. And as you can see from the example quote above, our spread on this currency pair is 0.
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You decide to close your position and we give you a quote of 1. Spread trades and CFDs are leveraged products. This means that you only have to deposit a small percentage of the value of the underlying currency pair to control all of it. For holders of accounts regulated outside the UK, the corresponding margin rate is 0.
As with other financial markets such as individual equities and stock indices, the FX market is affected by the supply and demand for one currency compared to another. Much of this will depend on the difference in interest rates, as investors are more attracted to currencies of countries with a higher interest rate than a lower one. Then global issues, geopolitical events and ultimately market sentiment all have an influence on how currencies move relative to each other. Watching currency moves and working out the reasons behind them helps to open up an in-depth viewpoint on world events.
But please bear in mind that FX can be volatile. How do you know a Forex broker is reputable? These institutions regulate the industry, protect traders and foster financially sound markets. Many brokerages allow you to open a demo account with virtual money. You can also test your trading strategy before committing funds to a live Forex trading account. Just be aware that these demos usually expire after a given time. These two types of fees are how brokers make a living. Many brokers make their money with wider spreads instead of charging commissions.
Ask about how each of these fees could affect your earnings over time. You can choose from standard, mini or micro Forex accounts. Your initial investment amount and risk tolerance will play a role in deciding which one is right for you. Many beginner investors like to start with mini accounts , which allow you to make trades using smaller lots of 10, base units rather than the , units of a standard lot.
Mini accounts offer lower risk, but also lower reward. The percentage in point pip movement cost fluctuates based on the base currency funding of your account and the currency pairs that you are trading.