Basic Forex terms and сoncepts
This glossary contains the most searched and used Forex trading terms and definitions of the Forex market indispensable to successful work
The glossary is a great tool to make your Forex trading more confident. Here you can find definitions of the basic trading concepts. Also, for your convenience, we have developed a navigation system that makes it easier to search using an alphabetical index.
- A
- B
- C
- D
- E
- F
- G
- H
- I
- J
- K
- L
- M
- N
- O
- P
- Q
- R
- S
- T
- U
- V
- W
- X
- Y
- Z
A
Appreciation
rise in value of one currency against another which has a floating rate.
Arbitrage
a type of trading with excepted risks, when opposite transactions are carried out simultaneously on the same trading instrument.
Ask
a price offered to a trader to buy currency.
Aussie
dealer’s slang for Australian Dollar.
B
Bank of Canada
the Central Bank of Canada.
Bank of England
the Central Bank of England
Bank of Japan
the Central Bank of Japan
Balance
total result of all completed financial operations on a trading account.
Balance of Trade (BoT)
difference between the volumes of exported and imported goods for a certain period of time in a country.
Bar Chart
is an instrument of technical analysis; a chart where prices are indicated with the help of bars or lines.
Base Currency
currency which goes first in the currency quote.
Bear
a trader whose trading tactics counts on the decline in the currency value.
Bear Market
a market which expects that currency rates will decline, "bearish market".
Beige Book
collection of the Federal Reserve reports which contains a review of the U.S. economic dynamics.
Benchmark interest rate
minimum interest rate which investors expect when buying securities.
Bid
price offered to traders to sell currency.
Bidder
buyer.
Big Figure
dealer’s slang to indicate currency pair movement by 100 points.
Borrowing
borrowing of foreign currency at interest for a certain period of time in the financial market.
Break
rapid decline in price.
Breakout
breakdown of the price below support level or above resistance level; breakdown of the trend line.
Broker
an agent who implements investors’ orders to conduct currency selling/buying transactions.
Brokerage Company
a Brokerage, whose mission is to bring together a seller and a buyer of foreign currency.
Bull
a trader, whose trading tactics relies on the rise in currency price.
Bull Market
market that expects the rise in the currency rate.
Bundesbank
Central Bank of Germany.
Buy
currency purchase transaction.
C
Cable
dealer’s slang for the British Pound.
Cancel
traders’ order to cancel Stop-Loss and Take-Profit orders.
Cancel-Replace
order from a trader to a broker to cancel prior order with simultaneous replacement of the cancelled order with a new one.
Candlestick chart
tool of technical analysis, a chart where price is indicated with the help of "Japanese candles".
Capacity Utilization
economic indicator, which shows production capacity workload.
Car Sales
economic indicator of a number of sold cars, an index of consumer demand.
Cash Flow
cash flow of the capital as a result of trading activity over a certain period of time.
Cash Market
a market where transactions are carried out at the prices specified through cash payment.
Central Bank
a financial institution which regulates monetary policy of a country.
Change
difference between the price of the trading tool and its price on the closing session on the day before.
Chain Store Sales
an economic indicator, showing retail sales dynamics.
Channel
area on the trading tool chart within limits of which price movements take place.
Chart
price chart, displaying changes in price over time.
Chartist
a trader who uses charts and technical analysis indicators as tools to forecast market price movements.
Clearing
trade settlement process.
Close Order
the order closing procedure.
Collateral
trader’s insurance deposit
Confirmation
situation on the technical analysis price chart when one or several indicators confirm the results of another indicator.
Correction
rollback of the price from the level reached.
Convertible Currency
national currency which can be freely exchanged (converted) into another currency without special approval from the Central Bank.
Counter Currency
quoted currency which appears second in the currency quote record.
Cross Rate
a currency quote without direct involvement of the USD.
Currency Conversion
exchange of one currency for another, in a financial market.
Currency Convertibility
is the possibility of free exchange of one currency into another.
Currency Option
option contract which entitles a trader to buy or sell one currency for another at an agreed quote and within stipulated time frame.
Currency Pair
two indicated currencies which make up a quote at the financial market.
Currency Rate
price rate of one currency against another one.
Currency Symbols
letter symbols to indicate currency.
Currency Trading
trading operations to buy/sell one currency for another according to established rules.
Cycle
repetition of a certain pattern of price movement at time intervals.
D
Day Order
trader’s order to buy or sell which is valid until the end of the trading day and is cancelled automatically in case of non-performance on the day of issue.
Day Trader
a trader who trades at the market during one day session.
Day Trading
opening and closing of the same position within one trading day.
Dealer
market participant who deals with currency buying and selling on his own account.
Dealing
non-cash currency trading.
Dealing center
a company which provides access to financial markets by creating clients’ applications for opening currency positions.
Deposit
amount of money transferred to the trader’s account to cover further operations.
Divergence
a situation in technical analysis when charts of indicators differ from price chart.
Direct Quote
amount of foreign currency required to buy a unit of national currency.
Downtick
downward movement of currency price.
Downtrend
downward trend of currency price at the market.
Double Top
a pattern of technical analysis, displaying the situation when the rate goes up to a certain level twice and then descends.
Double Bottom
a pattern of technical analysis indicating the situation when the rate goes down to a certain level twice and then goes up.
E
European Central Bank
European Central Bank, ECB.
Economic Indicator
is a fundamental analysis indicator, which shows general trends in economy.
Efficient Market Theory
is a market theory, which reflects all factors, affecting changes in quotes.
Elliot Wave Theory
Elliot theory according to which prices movement has a waveform (5 waves upward, 3 waves downward).
Employment Situation
economic indicator of labor market.
EU
European Union.
EURO
Unified currency of the European Union.
European Central Bank (ECB)
Central Bank of the European currency Union.
Exchange rate
the rate of buying/selling one currency for another.
Existing and New Home Sales
macro-economic indicator of real estate sales at the secondary housing market.
F
Factory Orders
production orders (orders for durable and non-durable goods).
Federal Reserve Bank
Central Bank of the United States of America.
Fed, FRS (Federal Reserve System)
Federal Reserve System of the USA.
Figure
Dealer’s slang to indicate basic figures of the exchange rate value or 100 points of the exchange rate movement.
Flag
is a pattern on a technical analysis chart indicating situation when currency price goes up significantly, and after that moves in a narrow range for some time, and then falls rapidly.
Flat
is a price which moves with no rises or falls.
Float Profit/Loss
amount of profit or loss on currently opened positions which is not fixed and is subject to change.
Floor Broker
a broker who takes part in trading on floor.
Forecast
Estimation of future trend of price movement, taking into account historical data of technical analysis and current macro-economic indicators.
Foreign Exchange
conversion operations of the foreign currency exchange.
FOREX
financial market where buyers and sellers carry out currency buying/selling transactions.
Foreign Currency
is a currency of any foreign country which can be used as a medium of circulation in another country.
Forward Market
"forward" currency market where currency transactions are concluded at the prices set today, but at a future time specified in the contract.
Free Margin
trader’s funds on the deposit which are not used as a pledge to open positions.
Fundamental Analysis
is a method of forecasting price changes which is built up on the analysis of the current economic situation.
G
G7
are the most developed countries, including the USA, Japan, Great Britain, Germany, France, Italy and Canada, which meet periodically at summits to resolve the issues of the world economic development, "Big Seven".
Gap
is a break on the price chart of technical analysis which is caused by the difference in opening price of a new day and the closing price the day before.
Greenback
"Greenback", dealer’s slang for the U.S. Dollar.
Gross Domestic Product (GDP)
aggregate value of goods and services produced in a country in a certain period of time.
Gross National Product (GNP)
gross domestic product plus income, gained from investments or work performed overseas.
H
Hedging
strategy which is used to reduce investment risks when urgent selling/buying transactions are concluded.
Hedgeable
characteristic of a transaction when risk of changes in currency rate can be covered by hedging.
Hedge Funds
American Funds which use hedging instruments.
High/Low
respectively, the highest and the lowest currency prices during the current trading day.
Housing Starts and Permits
macro-economic index which shows the number of houses under construction and the number of construction permits.
I
IFO
business optimism index, calculated by the Institute of Economic Research in Germany.
Import/Export Prices
data on dynamics of prices for the U.S. imports/exports.
Indicator Only
quotes which contain information and which are not used for opening currency positions.
Indirect Quote
cost per unit of domestic currency indicated in the foreign currency units.
Indicator
data which gives information on the general state of economy or financial markets.
Industrial Production
is an economic index, indicator of industrial production, which shows total output amount of national plants.
Initial Margin
value of initial deposit which shall be invested as a guarantee for transactions in the future.
Interbank Rates
currency rates set by large International Banks for the other large International Banks.
Interest
is the payment for using the money borrowed as a loan.
Interest Rate
is a sum of money which is credited or paid to a lender by a borrower for the use of money. It’s calculated as the ratio of the payment for the use of money to the credit total amount. For instance, if a lender (bank) requires a client to pay $90 a year for the credit of $1000, the interest rate will make 9% (90/1000 * 100%). The interest rate can vary as a result of inflation or change of The Federal Reserve’s policy.
Intraday
currency trading during one trading day.
Instant Execution
technology of instant transactions execution when streaming quotes are available in the online mode.
Inflation
rise of the general level of prices.
Investor
a holder of financial resources on whose behalf currency transactions are conducted at the currency market.
J
Jobless Claims
economic indicator, showing a number of the registered unemployed.
K
Kiwi
dealer’s slang for New Zealand Dollar.
L
Last
average value of the last bid and ask values; the price of the last transaction.
Leading Indicators
index of the leading macro-economic indicators.
Leverage
ratio between one’s own and borrowed money, used to conduct transaction.
Limit order
trader’s order to open short or long position when the price reaches the target level.
Liquidation
closure of a trader’s open currency position.
Liquid Currency
currency which can be bought or sold without restrictions at the world financial market.
Liquidity
is the ability to easily sell or buy security or currency.
Long Position
is currency purchase, when "buy" position is opened.
Loss
reduction in deposit amount due to losses.
Lot
is a position volume unit for the financial instrument purchased or sold. For example, when opening a EURUSD buy position of 1 lot, a trader acquires 100 000 euros for dollars.
M
Maintenance Margin
minimum amount on trader’s deposit necessary to maintain his open positions.
Margin
is an insurance deposit which provides cover of possible losses of a marginal trade, and is used as a pledge.
Margin Call
a message from a broker to a trader saying that it is necessary to increase funds on marginal account.
Margin Level
an indicator showing the state of a trader’s trading account.
Margin trading
is currency trading supported by the margin pledge.
Market Maker
a large bank or financial company which has significant share of market operations and which exerts influence on the current level of currency rates.
Market Maker Spread
is a difference between the currency buying and selling price, established by a market maker.
Market order
an order which is not limited either by time period, or by price and which should be performed immediately at the best current price.
Market Place
physical market; a trading place.
Market Price
the last market price at which a transaction was conducted.
Market Users
medium sized bank or financial company which uses current quotes established by market makers, for currency operations.
Minimum Equity
minimum amount which a client has on his account.
Momentum
is a characteristic of a price movement; speed of change in currency price.
N
Net Factory Orders
macro-economic indicator which shows the increase in a number of industrial orders.
Net Position
total amount of currency for all open positions held by a trader.
Nonfarm payrolls
number of employees on the payroll (excluding agricultural sector).
O
Offer
is the price at which a buyer is requested to make a purchase.
Old Lady
is dealer’s slang name for the Bank of England.
Open order
orders for open positions which will be performed when a declared currency price is reached.
Open Position
a position where transaction results are not yet recorded.
Order
trader’s order to a broker to conduct currency selling/buying transaction at a specified price.
Oscillator
a technical analysis tool utilized by the market, to predict the future course of a currency.
Output Index
index of production volume output.
Overbought
a market situation which takes place after a rapid and significant currency rise.
Oversold
a situation in the market which happens after a rapid and significant currency decline.
P
Personal Income
economic data indicating changes in personal incomes of a country’s population.
Personal Spending
economic data indicating changes in spending of a country’s population.
Pips/Points
minimum movement in a currency price.
Position
a number of opened "long" and "short" positions held by a trader.
Pound
dealer’s slang indicating a Great British Pound (GBP).
PPI
index of producer prices (Producer Price Index).
Premium
determines the amount at which future prices will surpass spot prices.
Price Quotations
quotes of one currency price against another currency.
Profit
amount gained as a result of trading operations.
Program Trading
computerized trading system in which currency buy/sell signals are generated by a specially developed program.
Q
Quotation
the price of one currency, indicated in the units of another currency.
R
Range
difference between two prices.
Resistance Level
a horizontal or inclined price level on the chart; upper limit of price fluctuation.
Retail Price Index (RPI)
an indicator showing changes of retail prices in Great Britain.
Retail Sales
an indicator of the retail sales volume.
Retracement
correction of a trend, rollback of a trend for a certain value to an opposite direction, after which original movement is resumed.
Roll-over
the way of transferring Stop-Loss orders to more favourable positions.
RSI (Relative Strength Index)
technical indicator, which specifies oversold and overbought zones.
S
Scalping
prompt strategy of gaining profit with the help of insignificant changes of the currencies prices.
Sell
currency selling operation.
Short
open selling position.
Short position
an open position for selling currency with the intention to buy it in the future at a lower price.
Spike
significant difference between subsequent quote and its previous value.
Spot
transaction which is carried out immediately but with the payment made within two days from the moment of its conclusion.
Spread
difference between buying and selling prices of the currency, indicated in points.
Square
result of trader’s transactions at which profit size is equal to the losses size.
Sterling
dealer’s slang for the British Pound.
Stop Order
currency buy or sell order when a specified price level is reached.
Stop Limit
pending orders; execution of the order is delayed by a dealer until the price at the market reaches the level, specified in the order.
Stop Loss
order to close positions to limit losses.
Support Level
horizontal or inclined price level on the chart; upper limit of price fluctuation.
Swap
funds that are retained or added to a trader’s account for rollover to the next day.
Swap points
points calculated in advance for transferring open position to the next day with the help of swap operation.
Swissy
dealer’s slang for Swiss Franc.
T
Take-profit
currency sell/buy order for the open position at a specified price to gain profit.
Technical Analysis
is a method of forecasting future price direction with the help of price charts examination.
Tick
minimum one time change of a trading tool price, in the financial markets.
Tick chart
price chart built on the ticks values.
Thin Market
market with low liquidity.
Today’s High
highest price of a transaction today.
Today’s Low
lowest price of a transaction today.
Trader
a person who buys and sells currencies from his personal account.
Trade Balance
trade balance is the difference between export and import values over a certain period of time.
Trading
securities or currency trading.
Trading platform
a set of software and hardware supporting trading in the market.
Trailing-stop
order to minimize losses.
Transaction
an operation of opening and closing of a currency position.
Transaction Cost
payment for buying or selling of a financial tool.
Transaction Date
the date of currency transaction operation.
Trend
a term of technical analysis, indicating general direction of the price movement.
Trend Line
straight line on a price chart drawn across the minimum values (in case of ascending trend) or across maximum values (in case of descending trend).
U
Unemployment
macro-economic indication which shows unemployment rate (in percentage against total number of able-bodied population).
Uptick
new price quote which is higher than previous price.
Uptrend
ascending price trend, "bullish" trend.
V
Value Date
the date when transaction terms are implemented.
Volatility
the speed at which price moves.
Volume
activity level of currency trading.
Volumes chart
is a bar chart that shows the volume of conducted transactions.
W
Wage
Index is a macro-economic index of data on wages
Wholesale Prices
is a macro-economic index of changes in wholesale prices.
Wholesale Trade
is a macro-economic index of changes in wholesale sales.
X
Y
Yard
means a billion US Dollars, in dealer’s slang.
Yours
means "sold".
Z
ZEW
The Center of European economic research – non-commercial research institute founded in1990, which is located in Hamburg.
