Commonly Used Terminologies in MetaTrader 4 (MT4)
MetaTrader 4 (MT4) is a trading platform that was developed by MetaQuotes and was released in 2005. It is still one of the best Forex trading platforms today despite the number of trading platforms emerging nowadays. What’s good about MetaTrader 4 is that it can be downloaded free of charge from the website of MetaQuotes. You can also download it from the vast number of forex brokers online.
To understand more about MetaTrader 4, here are some of the most used terminologies in the platform and their meanings.
Most-Used Terminologies in MetaTrader 4
Base Currency – it is the first currency that appears in a currency pair.
Buy – this term means that the currency’s base will still go up in value or increase.
Sell – this term is contrary to the term ‘buy’. It means that the base currency will decrease its value.
Leverage – it is when you are given a chance to control a huge amount of money to open a position without paying much for it. For instance, your broker provides a maximum leverage of 100:1. This means that for every $1 in your account, you are allowed to trade $100 into the Forex market. You can make profits on leverage even with tiny currency movements and only risk a small amount of your trading capital on a particular position.
Balance – are the completed transactions that you see on your trading account.
New Order – this is the term used when entering a new trade or setting up a trade for a later time.
Lot – it is the measure of trade amount or trade volume that you invest in each Forex trade. It is equal to 100,000 units of your base currency in every Forex transaction that you have. For a standard lot, it is further divided into mini-lots and micro-lots.
Price – it is the amount at which you can buy or sell an underlying currency.
Margin – it is a term used to refer to the amount of money a trader needs to open a trade. It is calculated according to the present market quote of the base currency at the trader’s account against the volume requested as well as the leverage level at the account of the trader.
Equity – It is the balance of funds on your trading account. It can be calculated using this formula; balance + profit on open trades – the loss acquired in an open trade.
Market Order – it is used when buying and selling at a given price. When entering and exiting the market, you can use a market order to accomplish it.
Pending Order – it is a term used to buy/sell or set stop loss/take-profit according to the trader’s preference at a predefined price. This will only get executed once a price reaches a certain level previously set by the trader.
Buy Limit – it is an order to purchase at a given price just below the present market price.
Sell Limit – it is an order to sell at a given price above the present market price.
Buy Stop – it is an order to purchase at a given price above the present market price.
Sell Stop – it is an order to sell at a given price just below the present market price.
Stop Loss – it is utilized to minimize the trading losses and manage the risks of trading.
Take Profit – it is used when you exit a trade upon reaching your target level in MetaTrader 4 (MT4).