10 Trading Terms Every Trader Needs To Know

beginner insight Feb 12, 2017

So you want to be a big hot shot trader? Moving in and out of markets like a seasoned professional, grabbing pips and points in the world's biggest financial markets, as and when you please? Then you better read on as every successful trader in the world lives and swears by the following top ten trading terms. Of course the first step is knowing about it and then implementing it. So, eyes down folks, here we go...

1. The Forex Market

Every trader must know about the forex market as it is the largest market in the world with an average trading volume of $5 trillion per day. It is the go to market for professional and newbie traders alike as it's open twenty four hours a day, five days a week and is highly liquid making it very cheap to trade. This market has made many fortunes and is a must in any traders portfolio.

2. The Commodity Market

The oldest of all the markets is the commodity market and this is the go to market for many professional trading firms and corporations. It is the birth place of trading as it deals with buying and selling goods we all need on a daily basis such as wheat, coffee, cocoa, oil, gold and much, much more. These markets form at least a part of a successful traders portfolio as they offer huge trading opportunities, are accessible to everyone including you and is now as simple to trade as the forex market.

3. The Stock Market

The playground of many billionaires the stock market still presents solid trading opportunities every single day. This is why stock market indexes and individual stocks are hugely popular amongst traders. Many also find them just interesting to trade and why not? After all trading the likes of Apple and Facebook stock does seem pretty exciting. Let's not forget that technology has now made it available so everyone can be involved in the markets at the click of a button.

4. Long and Short Trades

Two of the most important trading terms that fly around the offices of many trading firms around the world is Long and Short. If a trader is going Long it simply means they are buying whatever market they're looking at as they believe it's going higher. If  a trader says they're going Short it simply means that they are selling whatever market they're looking at as they believe it's going lower. The great thing about trading is the fact you can make money as the market goes up and as it goes down.

5. Bull and Bear Markets

Bull and bear markets are terms both used to describe the direction and sentiment of the stock market, although it can be used on other markets too. In a bull market, participants are known as being bullish as investors are confident the market is doing well and are happy to keep buying and investing into companies (stocks). Technically a bull market is one that has risen in value by at least 20%. In a bear market, participants are known as being bearish as investors are fearful of investing and pull back further investments leading the market to drift lower. Technically a bear market is one that has fallen in value by at least 20%.

6. Day Trading

Day trading is the art of taking multiple trades a day and banking your profits at the end of the day. Typically trades are held for minutes or hours but rarely for days. This kind of trading is like the Ferrari of the market it's fast moving, sexy and can easily crash if you're not careful. Successful day traders typically have solid strategies, are tuned into the market every hour of the day and are confident in their own ability to take multiple trading opportunities every single day.

7. Swing Trading

Swing trading is the art of taking trading opportunities that are held for a few days to a few weeks but not any longer. Typically traders will look at daily charts and analyse price patterns along with fundamentals and perhaps some other advanced tools such as seasonality and the Commitment of Traders report. Whist many may look for high reward to risk opportunities there are those that will go for high frequency but low reward trades.

8. Risk Management

Every trader understands the importance of risk management as it is the one tool that can help them protect their account against losses. Risk management is about understanding how much to risk per trade so one trader will never wipe you out. It is also about how to manage each trade to reach maximum profitability whilst minimising any potential losses.

9. Technical Analysis

Technical analysis is the art of using technical tools to decipher a market's chart to find clues of where the market is likely to go next. These technical tools come in many forms but the most commonly used tools are ones such as Moving Averages, Bollinger Bands, Price Action, Stochastic and MACD. Through proper implementation of these tools, as well as others, traders can predict what the market is likely to do next and position themselves accordingly.

10. Fundamental Analysis

Fundamental analysis is the art of using macro-economic and news reports to find out where are market should be trading. For the stock market it could be earnings reports or a company's financial balance sheet. For the forex market it may be looking at economic announcements such central bank monetary policy, GDP, Retail Sales and so on. However, it is widely accepted that a combination of fundamental analysis and technical analysis is the best option for many traders.

So there you have it the top ten trading terms every trader needs to know. Now it's all about doing so check out our live trader training courses to get you started the right way https://www.traderprophets.com 




Natascha Sing is an investor, lawyer, entrepreneur and wealth strategist. Considered an authority on achieving peak performance through the financial markets and mastering wealth psychology, she has worked with some of the biggest institutions, financial investment houses and individual traders and investors around the world.

Through the birth of Trader Prophets, Natascha has bought together a world renowned team of traders, investors, peak performance psychologists and wealth masters to empower, educate and inspire over 15,000 people over 6 continents through her audio, video and live training programs.

With a team of over fifty years collective experience in the world's financial markets, Trader Prophets is a global leader in trader education equipping anyone, from any background with the right tools, strategy and plan to achieve success from the markets.

Whether trading Forex, Stocks or Commodities the live online trainings, workshops, coaching and personalised support has been a game changer in taking beginners with zero or little knowledge of the financial markets into confident, successful Master Traders.

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