Currency Trading Dictionary: Forex Trading Glossary – M
MACD
(Moving Average Convergence Divergence) Developed by Gerald Appel in the 1960s, this oscillator uses three exponential moving averages to show changes in currency trends. The MACD fluctuates above and below a zeroline.
Major Currencies
Eighty-five percent of all FX transactions involve seven major currencies: the U.S. Dollar (USD), Japanese Yen (JPY), Euro (EUR), British Pound (GBP), Swiss Franc (CHF), Australian Dollar (AUD), and Canadian Dollar (CAD).
Margin
The amount of money a Forex brokerage firm requires a trader to keep in his/her account to support a currency position.
Marked to Market
The calculation of the value of a market traded position based on the settlement prices for the day.
Market Maker
A Forex dealer or FX brokerage firm that risks its own capital offering buy and sell quotes in a currency market. One that consistently makes two-way prices, providing both a bid and an offer.
Market Order
An order to execute a trade “at the market” or best available price.
Market Regulation
Unlike the U.S. Stock Market, which is subject to regulation by the Securities and Exchange Commission (SEC), the FX markets are still largely unregulated. There are no licensing requirements for FX brokers, no capital requirements and no federal or industry protection for your account.
Market Sentiment
A measurement of views expressed by market participants and generally measured through surveys, a gauge of bullish or bearish attitudes among investors and traders.
Market Timing
Using technical tools to devise timely entry and exit strategies.
Market Trend
The overall direction in which currency prices are moving.
MarketView
As used by FX-Strategy, a market forecast based on the overall direction and momentum of a market trend.
Marubozu
(Candlestick)
A Marubozu is a bar where the open and close are at the extremes of the bar. The body is long and has no shadows. A Marubozu represents a large shift in market perception of value from open to close that are at the extremes.
By themselves single bars do not necessarily provide any indications but will contribute to a group that represent a candlestick pattern.
Mat Hold – Bullish and Bearish
(Candlestick Continuation Pattern)
A Bearish Mat Hold occurs during a downtrend. The first day is a long black day. On the second day, price opens below the close of the first black day, makes a new minor low, but the bar develops with a short body. The third and fourth days also see small bodies rising from the low of the second day, but in which the bars remain below the high of the first long black day. On the fifth day a further long black day occurs that declines below the low of the first day.
The pattern represents a holding pattern in a downtrend and when three short bars cannot rally back above the high of the first long black day, sellers once again dominate trading.
A Bullish Mat Hold occurs during an uptrend. The first day is a long white day. On the second day, price opens above the close of the first white day, makes a new minor high, but the bar develops with a short body. The third and fourth days also see small bodies declining from the high of the second day, but in which the bars remain above the low of the first long white day. On the fifth day a further long white day occurs that rallies below the high of the first day.
The pattern represents a holding pattern in an uptrend and when three short bars cannot fall back below the low of the first long white day, buyers once again dominate trading.
Maximum Adverse Excursion
Developed by John Sweeney. Measuring negative price performance of a series of trades. This information is used to determine a reasonable stop-loss level based on the historical analysis.
Maximum Entropy Method
A technique for spectrum analysis and a method of adaptive filtering and trend forecasting.
Mean
Another method of describing the average price.
Mean Deviation
The average value on an absolute basis of the difference between the mean (average) price and the individual prices in the lookback period.
Minor Currency
Lesser-traded currencies, in terms of daily volume of trades and liquidity. The Singapore Dollar and Mexican Peso are examples of minor currencies.
Momentum Oscillator
Measures the momentum or rate of change of currency prices within a specific time interval. The momentum oscillator fluctuates around a central zeroline.
Money Markets
Markets for instruments, such as CD’s and other bank deposits that carry short-term interest rates.
Morning Star and Evening Star
(Candlestick Reversal Pattern)
The first bar to develop in a morning or evening star is a long white/black day. This is followed by a gap in the direction of the trend and then a Short Day.
There will be no overlap between the first and second candlesticks. (The short day may be substituted with a Doji).
Finally there is a second black/white long day, gapping in the opposite direction, with no overlapping shadows.
The pattern is similar to an “Island Reversal” in classical patterns, representing a market that has over-extended in one direction, with little supporting sentiment. It is always preferable to have other supporting technical evidence of a potential reversal such as a bullish/bearish divergence or break of trend line.
Moving Average
A series of averaged price data plotted on a currency chart. This technical indicator makes it easier to see the general direction of a trend underlying market action.
Moving Average Convergence Divergence – see MACD
Moving Average Crossovers
It is common for traders to employ two or more moving averages to identify turn points in the trend of the market. A shorter-term moving average rising above the longer-term moving average is called a “Golden Cross” and is a buy signal, while a sell signal would be the shorter-term moving average closing below the longer-term moving average, otherwise known as a “Dead Cross”.
Moving Average Stops
A moving average whose price is used in a stop order. The lagged nature of a moving average makes it easily applicable as a trailing stop.
Multiple Time Frames
The use of more than one time frame to determine trades. For example, look to the weekly chart for the trend, support and resistance levels, then trade on signals generated by the daily chart only if they are supported by the weekly chart.
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