The Australian forex market witnessed a turnover of 100% in the past two decades from 2001 to 2019. With the Australian Foreign Exchange Committee effectively operating under the Reserve Bank of Australia, the average daily turnover of forex derivatives and spot transactions amounted to over 119.5 billion USD. Today over 190,000 active traders actively trade forex online in the Oceania region. Whether they are novices or experienced traders, everyone must understand the terms that come up in the forex market.
Daily Chart and Trade
A daily chart refers to the graph that breaks down the day’s currency movement. A day trade is an FX trade that opens and closes on the same day.
Depth of Market (DoM)
Depth of Market or Market Depth is a measure for indicating the liquidity of the currency or the depth of the security. A higher depth in the market shows a higher number of transactions at each price. It is also known as the order book as it shows the pending orders for a currency trade or security.
Trading platforms like the Metatrader allows traders to explore the forex market, place transactions, experiment in the environment without investing capital. Demo accounts use virtual funds to help new traders familiarise themselves with the market trends and trading. They are therefore called dummy, practice or virtual currency accounts.
Drawdown refers to the difference between the peak and the low of a currency when its price dips.
Electronic Communication Network (ECN)
It is an electronic, automated system that connects individual traders and major brokerage firms and matches their buy and sell orders for security. It allows them to trade on an accessible platform without middlemen. Traders from various geographic locations in Australia and the world can easily trade through this network.
As forex trading involves the exchange of two currencies, the exchange rate represents the cost of one currency to the other during the process.
Execution and Exposure
Execution occurs when a trade set in motion completes successfully. Exposure refers to the amount traders invest in a currency and the market risks associated with it.
Expert Advice (EA)
EA is a software that analyses the historical data obtained from previous transactions and recommends buying and selling strategies to benefit the traders. From the data resource, the program forecasts future price movements in the market. They are an upgrade to human trade experts as they can quickly process significant amounts of data and forecast the market trends relatively accurately.
Traders address the completion of an order with its price through the fill price.
Fill or Kill (FOK)
Traders who trade forex online have the facility to set a price for a forex transaction. If the order doesn’t get fulfilled at the predetermined price, they can terminate the order. Fill or Kill therefore refers to the order filled or rejected for the entire amount.
Floating Exchange Rate
It refers to the exchange rate that is variable or not fixed currently. It can fluctuate depending on the supply and demand and numerous others factors of a currency with other currencies.
Forex Market (FX Market)
It is a decentralized, global and Over-the-Counter (OTC) trading market for international currencies. It includes traders and brokers buying, selling and exchanging currency pairs at their present or predetermined prices.
Scalping is a popular strategy that traders use to gain profits in short term trades (little and often trade). It works on the principle that if one trades a currency in a short period, they are more likely to earn profits than when large movements occur.