Alligator Indicator
The Alligator Indicator is a trend-following tool developed by Bill Williams, built from three Smoothed Moving Averages known as the Jaw, Teeth, and Lips. When the three lines are tangled together, the market is considered to be ranging or 'sleeping'; when they fan out and separate in order, the market is considered to be trending or 'eating'. Traders use the indicator to avoid entering trades during choppy, directionless conditions and to confirm the presence of a real trend.
Arbitrage
Arbitrage is a trading strategy that takes advantage of a temporary price difference for the same instrument across two or more venues, buying where it is priced lower and simultaneously selling where it is priced higher. Common types include two-currency arbitrage, triangular arbitrage across three currency pairs, and statistical arbitrage based on historical price relationships. In practice, spreads, commissions, and execution speed often narrow or eliminate the apparent profit.
Ask Price
The Ask Price is the price at which a broker or market is willing to sell a currency pair or other instrument to a trader, and it is the price used to open a BUY position. It is always slightly higher than the Bid Price, the price at which the instrument can be sold, and the gap between the two is known as the spread. Understanding the Ask Price is essential for calculating entry costs, spreads, and the true cost of a trade.
Auto Trading
Auto trading refers to any system that opens, manages, or closes trades automatically based on pre-set rules or algorithms, without a trader manually clicking buy or sell. Common forms include Expert Advisors (EAs), copy trading and social trading, and signal-based execution tools. It removes emotional decision-making from execution, but still depends on sound strategy, proper risk settings, and ongoing monitoring, since no automated system guarantees profit.
Average Directional Index (ADX)
ADX is a technical indicator that measures the strength of a trend, not its direction. Developed by J. Welles Wilder Jr., it plots a single line on a 0-100 scale: readings below 20-25 signal a weak or absent trend, while readings above 40-50 signal a strong one. ADX is typically used alongside the +DI and -DI directional lines to confirm whether a trend is strong enough to trade, rather than to predict which way price will move.
Averaging
Averaging is a trading practice where a trader adds to an existing position, typically one that is currently at a loss, in order to improve the average entry price and lower the price needed to reach breakeven. Common variations include averaging down, averaging up (pyramiding), and martingale-style position sizing. It can reduce the distance to breakeven, but it also increases total exposure and risk if the market keeps moving against the position.
Bar Chart
A Bar Chart, also called an OHLC chart, displays price movement using a series of vertical lines with small horizontal ticks: a left-facing tick marks the Open price and a right-facing tick marks the Close price, while the top and bottom of the vertical line mark the High and Low. Unlike a candlestick chart, a bar chart has no filled body or color coding, so traders read the tick positions directly to judge whether a period closed higher or lower than it opened.
Bid Price
The Bid Price is the price at which a broker or market is willing to buy a currency pair or other instrument from a trader, and it is the price used to close a BUY position or open a SELL position. It is always slightly lower than the Ask Price, and the difference between the two, the spread, represents a built-in cost of trading. Most charting platforms plot price using the Bid by default, which is why a stop loss or take profit may appear to trigger slightly before the price line touches it.
Buy Limit
A Buy Limit is a pending order that instructs a broker to open a BUY position automatically once the market price falls to a specified level below the current price. It lets a trader plan an entry in advance rather than waiting and clicking manually, and is commonly used to buy a pullback, a support level, or a price the trader considers good value. The order only fills if the market actually reaches that lower price; otherwise it remains unfilled.
Buy Stop
A Buy Stop is a pending order that instructs a broker to open a BUY position automatically once the market price rises to a specified level above the current price. It is commonly used by breakout and momentum traders who want to enter only after price confirms upward strength by breaking through a key resistance level, rather than trying to anticipate the move in advance. It differs from a Buy Limit, which instead buys at a lower price on a pullback.