Page 176 - Ultimate Guide to Currency Trading

APPENDIX A

Glossary

2 percent rule
A method of building in stop-loss settings (automatic closing of a position) to limit the overall
loss of a position to 2 percent of the cash balance of your total day trading account.

200-day moving average
A technical indicator that mathematically and statistically calculates the average of the
currency pair on a 200-day rolling basis.

Automated take profit
The process of programming your trading software to close out a trade at a prespecified price;
is often used to lock in gains automatically.

Bar chart
A technical chart that uses long and short lines to indicate the price movement of a currency
pair within a set time frame. The length of the bar will show the range of movement of price
within the time frame observed.

Base currency
The first currency listed in a currency pair quote. Also the currency that is divided by the
second listed currency.

Big four
A term that refers to the largest in trading volume of the world's currencies: USD, EUR, GBP,
JPY.

Blow up
When the losses in a trading account get to the point that the chances for rebuilding its
balance through capital gains is unlikely.

Brokers' reports
Very helpful technical and fundamental reports of currency pairs and markets published by
currency brokers and full-service firms for private client and institutional use.

Bubble
A market condition in which the price of an asset is inflated beyond its fundamental value.

Candlestick chart (Japanese candlestick chart)
A chart type that shows the range of movement that a currency pair has made during a set
time frame. Also shows opening and closing prices as well as if the price finished higher of
lower than the time frame directly before it.