Learning Metatrader Terminology

MetaTrader 4 is a trading platform developed by MetaQuotes Software for online trading in the forex.

Learning Metatrader Terminology

MT4, as it is more commonly known, can be downloaded at no charge directly from the MetaQuotes website or through dozens of online forex brokers. Below we'll give you an overview of Metatrader terminology.

Metatrader Terminology

Base Currency
The first currency in the pair is the base currency.

Buy
Buying means that the base currency will go up or increase in value.

Sell
Selling means that the base currency will go down or decrease in value.

Leverage
Leverage gives you the ability to control a large amount of money in the forex markets.

For example: Your broker offers you a maximum leverage of 100:1 which means for every $1 that you have in your trading account; you can trade $100 on the forex market.

Leverage gives you the ability to make meaningful profits on the usually tiny daily currency movements, and, at the same time, risk only a minimal amount of your capital on a given position.

Balance
The total result of all completed transactions on your trading account.

New Order
When you want to enter a trade now or set up a trade for later.

Lot
A lot is the measure of the trade volume or trade amount invested in a Forex trade, and is equivalent to 100,000 units of the base currency in a Forex transaction. A Standard lot can be subdivided into mini-lots (one-thousandth of a lot or 1/1000 lots) and micro-lots (one-millionth of a lot or 1/1,000,000 lots).

Price
The price at which you can buy or sell the underlying currency.

Margin
Margin is the term given to the amount of money required in your account in order to open a trade. Margin is calculated based on the current market quote of the base currency of the trader’s account vs base currency of the trader’s account, the volume requested, and the leverage level of the trader’s account.

Equity
The balance of funds on the trade account. It is calculated like this: balance + profit in open trades – loss in open trades.

Market order
A market order is used to buy or sell at the current price. If you want to enter or exit the market immediately, a market order is the most reliable method of accomplishing this.

Pending orders
A pending order allows you to buy and sell or set stops or take profit at a predefined price. This is for future trades and these will execute when the price reaches the level set by you. The order will not be filled if the price doesn't reach the level set by you. All of the below are pending orders in Metatrader.

Buy Limit
This is an order to buy at a price that is below the current market price. Once the market price reaches your predefined level, your order will get filled and you entered the trade.

Sell Limit
This is an order to sell at a price that is above the current market price. Once the market price reaches your predefined level, your order will get filled and you entered the trade.

Buy Stop
This is an order to buy at a price that is above the current market price. Once the market price reaches your predefined level, your order will get filled and you entered the trade.

Sell Stop
This is an order to sell at a price that is below the current market price. Once the market price reaches your predefined level, your order will get filled and you entered the trade.

Stop Loss
Stop loss is used to minimise losses or manage risk, in case the price moves against you. If the price reaches the level you have set as stop loss, the trade will be automatically closed. A stop loss order will always be connected to a running trade or a pending order (that has not yet been filled). You can also use a trailing stop to have to stop loss follow the market price at a maximum pip distance that you choose.

Take Profit
Take profit is what you can use to exit the trade once it reaches your target level. When the price reaches the level predefined by you, it will automatically close the trade. A take profit order will always be connected to a running trade or pending order (that has not yet been filled). 

Final Words

This is the general Metatrader terminology. Slightly different terminology might be used on other trade platforms, but the important thing here is that you know what you're doing when setting up for a trade or in a trade. So familiarise yourself with Metatrader before you start to use it with real money on live markets.

#UrbanForex - Be conscious of your trading!