Today we will review several trading terms that any IronTrade trader should know. Probably you already know some of them, so let’s start.

 

 

Trend reversal

 

A trend reversal usually indicates a point on a chart when one trend ends, and another one begins. Any trader must understand and predict reversal points. The beginning of a new trend can be considered a unique opportunity. However, it is essential to differentiate a new trend and a retracement, which is only a short fluctuation and does not affect the general trend.

 

Volatility

 

Volatility means the intensity of the price fluctuation. If the price for some assets changes very fast, it means that the volatility is high. When the price does not change a lot, it means that the market is flat and the volatility is low. Isn’t the trend direction more critical than volatility? Well..there are several reasons to watch this metric. First, volatile markets on calm markets offer countless trading opportunities. Usually, traders even don’t try to open trades when the market is not volatile. Lower volatility implies lower yields. So, when traders open positions based on volatility, they prefer to do it when the volatility is high.

 

Trading strategy

 

A trading strategy is vital for all traders. Even though we talk about this every time, still not many traders constantly and diligently use it. In short, a trading strategy is a set of conditions to open and close trades to eliminate randomness and emotional aspects in trading. Usually, it depends on market conditions, assets, price patterns, technical analysis, and world events. There is no unique trading strategy that suits everyone. Every trader should develop and improve their own one.

 

Fundamental analysis

 

It is the thing when a trader checks the fundamental metrics of an asset. It may include the strength of the currency in the real world, potential for growth, etc. Usually, it is a complex analysis based on many factors. As a result, a trader better understands the current trend movement.

 

Technical analysis

 

In contrast to fundamental analysis, it does not focus on fundamental metrics of a currency but instead focuses on the price of an asset. Technical analysis is based on complex chart patterns and indicators. Most day traders use this in practice.

 

Risk management strategy

 

Another strategy that every trader should know is risk management. It aims at risk and loss management. In other words, it indicates how often and how much you can lose. The conservative approach allows traders to allocate no more than 2% of their entire trading capital to a single position. Those traders who are willing to take risks may go for 5%. But never invest all your capital in a single trade. If you lose your capital, you can not trade. No trading means no money.

 

Leverage

 

Leverage is not widely spread on IronTrade, but knowledgeable traders should also be aware of it. It is a tool that you can use to increase the potential upside of your traders by taking additional risks. Mainly it is used in the Forex market due to low price dynamics. However, you should use it with great caution. On the one hand, it can bring you a high income, but on the other, it can deplete your account in no time if you make a wrong trade.

 

We hope this brief explanation will be useful for you. IronTrade wishes you good luck!