Trading rules
Market drivers include economic indicators, central banks' policy decisions, and global events that influence price movements.
Market conditions describe the current environment of price movement, volatility, liquidity, overall trader activity, economic indicators, and external events.
Market conditions change due to economic events, geopolitical developments, liquidity shifts, and participant behaviour.
Market crashes may result from sudden shifts in sentiment, unexpected economic news, economic recessions, or rapid declines in liquidity.
No single entity controls the market. Prices result from the combined actions of participants, including institutions, traders, and market makers.
Market dynamics describe how prices change based on supply and demand, trading activity, and market sentiment. Changes in market dynamics can occur during periods of high volatility, economic news releases, or shifts in investor behaviour. These changes affect how quickly and strongly prices move.
Price factors include supply and demand, market sentiment, economic data, external events and broader financial conditions.
Price movements are affected by trading activity, liquidity, news events, and changes in market expectations.
Price can influence demand, as changes in price levels may alter buyer and seller behaviour.
Common market drivers include interest rates, economic data releases, corporate results, external events and geopolitical developments.
Economic indicators measure aspects of economic performance, such as growth, inflation, employment, and consumer activity.
Examples of economic indicators include GDP data, inflation rates, consumer activity, employment figures, and central bank announcements.
Leading indicators may include economic forecasts, sentiment data, and market activity metrics that often signal shifts before broader price trends.
Liquidity in stocks refers to how easily shares can be traded. Highly traded stocks with many participants typically have stronger liquidity.
Forex liquidity refers to how easily currency pairs can be exchanged. It's influenced by global participation and trading volume.
Crypto liquidity refers to how quickly digital assets can be bought or sold, which can vary significantly across exchanges and tokens.
Market liquidity refers to how easily an asset can be bought or sold without significantly affecting its price.
High volatility indicates strong price fluctuations. It reflects increased market activity but also higher uncertainty and risk.
High volatility is neither inherently good nor bad. It describes the speed and magnitude of price changes, which can affect trading conditions.
High volatility in stocks means prices move sharply within short periods, often due to news, earnings reports, or changing market sentiment.
Implied volatility has no fixed upper limit and can rise significantly during periods of uncertainty or major market events.
Volatility refers to how much and how quickly assets' prices change over time in response to market activity and events.
Volatility means the degree of variation in prices and indicates how stable or unstable a market may be.
Volatility itself is not positive or negative. It simply measures the extent of price fluctuations in the market.
Risk management basics include understanding exposure, trading volume, position size, lots, and how market movements may impact an account.
Risk management is important because it helps limit potential losses and supports more controlled trading activity.
The risk-reward ratio compares potential loss to potential gain for a specific trade setup.
The risk-reward ratio is calculated by comparing the distance between the entry and potential loss to the distance between the entry and potential gain.
The risk-reward ratio indicates how the potential outcomes of a trade compare with possible losses and gains.
Fundamental analysis examines economic data, financial reports, quarterly company earnings reports and external factors to understand market conditions.
Technical analysis studies historical price data and market patterns to understand price behaviour over time, and tries to predict future asset prices.
In the stock market, technical analysis focuses on price charts and trading activity rather than company fundamentals.
Algorithmic trading uses predefined rules and automated systems to generate and execute orders based on market conditions, timing, or technical signals.
Market demand can be observed through volume, price movement, order flow, and overall participation levels within the market.