💱 The Full Set of Forex Trading Orders

• What is a Trading Order?

A trading order is an instruction you give to your broker to buy or sell a financial asset on your behalf. Modern exchanges use order-driven systems to automatically match buyers and sellers.

Using trading orders properly gives you better control over your positions, reduces risk, and lowers trading costs. Since brokers may offer different order types, it’s important to choose one that provides a full range of trading orders.

📊 Money Management

This article presents three basic investment concepts along with key portfolio management ratios.

Three Basic Investment Concepts

• risk-free rate
• standard deviation
• max drawdown

(i) Risk-Free Rate

The 'Risk-Free Rate' refers to the annual return an investor can earn without taking any market risk. It is typically calculated based on the annualized interest from holding a three-month treasury bill. Any investment offering returns below this guaranteed rate is considered unacceptable.

• In the EU, the 3-month Euribor is used.
• In the USA, the 3-month US Treasury bill is used.

(ii) Standard Deviation

Standard deviation (SD) is a statistical measure estimating the amount of variation in a set of values. A low standard deviation indicates values close to the mean (expected value), while a high standard deviation shows larger variations from the mean.

Why is a low standard deviation important for a portfolio? Because it ensures that the portfolio’s positive performance is consistent over time and more likely to be repeated in the future.