Round trip
What is a Round Trip in Trading?
A round trip is the complete cycle of a trade; opening a position and then closing it. It does not matter whether you buy first and sell later, or sell first and buy later; once both actions are done, one round trip is complete.
Example of a Round Trip
Suppose you buy EURUSD at 1.10201 and later close the trade by selling at 1.10401.
- Opening the trade (buying) is the first step.
- Closing the trade (selling) is the final step.
Together, these two actions form one round trip.
Why Round Trips Are Important
- Tracks Trading Activity: Brokers and Prop firms often measure the number of round trips to calculate how active a trader is.
- Determines Costs: Commissions and fees are usually applied per round trip rather than just one side of a trade.
- Shows Final Results: A trade’s profit or loss can only be confirmed after the round trip is completed.
Other Glossary Terms
R
- Risk Management
Risk management in trading means using rules and tools to limit losses, protect your capital, and ensure one bad trade doesn’t wipe out your account while aiming for steady gains.
- Risk-to-Reward Ratio
The risk-to-reward ratio measures how much a trader risks compared to potential gain in a trade, helping assess whether the potential reward justifies the possible loss.
- Raw Spread
A raw spread is the true market difference between bid and ask prices, shown without broker markups, offering the lowest spreads but with a small commission per trade.
- Resistance Level
A resistance level is a price point where upward movement often stalls, acting like a ceiling that prevents the market from rising further until strong buying breaks through.
- Retail Trader
A retail trader is an individual who trades financial markets with personal funds through online platforms, unlike institutions that trade large capital for clients or organizations.
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