Bollinger Bands are a volatility indicator made up of three lines: These bands expand and contract depending on market volatility: Because of this, Bollinger Bands help traders understand market conditions at a glance. How Bollinger Bands Work The concept behind
The Moving Average Convergence Divergence (MACD) is a trend-following and momentum indicator. It helps traders understand the relationship between two moving averages of price. MACD is made up of three main components: Together, these elements reveal the strength, direction, momentum,
The Relative Strength Index (RSI) is a momentum oscillator developed by J. Welles Wilder. It measures the speed and strength of price movements over a specific period, usually 14 candles. RSI values range from 0 to 100 and help traders
A Moving Average is a technical indicator that calculates the average price of a currency pair over a specific period. Instead of focusing on the latest price spike or drop, it smooths out fluctuations and gives you a clearer picture
The Head and Shoulders is a reversal pattern that signals a shift from an uptrend to a downtrend. It consists of three peaks: Once the price breaks below the neckline, it confirms a bearish trend reversal. How the Head and
A Double Top is a bearish reversal pattern that forms after an extended upward trend. It consists of two peaks (tops) that reach a similar price level, separated by a temporary pullback. Here’s what it represents: The double top shows
Trend lines are straight lines drawn on a price chart that connect sequential highs or lows. They serve as visual representations of the prevailing market trend—whether bullish, bearish, or sideways. By identifying these lines, traders can gain insights into the
Support and resistance are horizontal lines or zones on a price chart that indicate where the price has historically had difficulty moving beyond. These levels are not fixed but are zones where supply and demand dynamics shift, causing the price
Candlestick patterns are formations created by the arrangement of individual candlesticks on a price chart. Each candlestick displays four key data points: Open, High, Low, and Close. The shape and position of these candlesticks reveal the battle between buyers and
A forex broker is a financial company that provides traders with access to the global currency market. Since individuals cannot directly trade in the interbank forex market, brokers act as the doorway that connects traders to buy and sell currencies
In forex trading, margin is the amount of money a trader must deposit to open and maintain a leveraged position.Think of margin as a “good-faith deposit” that your broker holds while your trade is active. It’s not a cost—it’s simply
Leverage in forex trading is a tool that allows traders to control a larger position in the market with a smaller amount of capital. It works like borrowing money from your broker to open trades much bigger than your actual
In forex trading, a lot is a standardized unit of measurement for the volume of a trade, representing a specific amount of currency being bought or sold. The four main lot sizes are standard (100,000 units), mini (10,000 units), micro (1,000
A pip is the smallest whole unit of measurement for a price change in a currency pair, most often equal to 0.0001. For currency pairs with the Japanese Yen, a pip is typically 0.01. Pips are used to calculate profits and
The bid-ask spread is the difference between the highest price a buyer is willing to pay for an asset (the bid price) and the lowest price a seller is willing to accept (the ask or offer price). This spread is a built-in transaction cost for traders
A currency pair is the quotation of two different national currencies in the foreign exchange (forex) market, showing the value of one currency relative to the other. In trading, currencies are always bought and sold in these pairs. The price indicates how much
Forex ( foreign exchange ) trading is the process of buying and selling one currency for another on a global market with the Aim of profiting from exchange rate fluctuations. The forex market is the largest financial market in the
