| AC |
AC stands for Accelerator/Decelerator Oscillator and it is a technical analysis indicator used to identify buying or selling opportunities. The indicator consists of a zero line and green/red bars represented on a chart: the green bar going above the zero line is a signal to buy, while the signal to sell is shown by the red bar going below the zero line. |
| Account currency |
The currency in which all account deposit/withdrawal operations are denominated. |
| AD |
The AD (Accumulation/Distribution) Indicator shows the difference between all upward price movements up to closing point (accumulation), and all downward price movements (distribution) by closing time during a certain period of time. This indicator helps traders to assess whether the market is controlled by buyers (accumulation) or sellers (distribution). |
| ADX (Average Directional Index) |
The Average Directional Index shows trend forces in a series of prices of a financial instrument, indicating their upward or downward tendency. It helps analyze market trends and make trading decisions. The ADX is a lagging indicator that shows only trend strength but not trend direction, and ranges between 0 and 100 (with readings above 50 indicating a very strong trend). |
| Affiliate Website |
A website connected with another in order to make a commission for referred clients. Apart from webmasters, individuals such as bloggers can also become affiliated with a website. |
| Algorithmic Trading |
A term that refers to making decisions about timing, price and quantity of market order by means of computers and advanced mathematics, and widely used by hedge funds and banks. To minimize risk and market impact, large trades are broken down into smaller ones, and trades are conducted without any human intervention, using electronically received information. |
| Alligator |
The Alligator indicator is a profitable trading tactic, and it is a combination of balance lines (moving averages) that use fractal geometry and non-linear dynamics to signal the beginning of a new trend. When a new trend is about to begin, the moving averages start to diverge in different directions. The main signals the alligator shows are the strength of the trend, preparation for entrance into the market, actual entrance, and stop-loss. |
| Alpha Capture |
Alpha refers to the part of a stock's risk and return which is attributable to the stock individually, as opposed to the overall market. Alpha capture is a spread trade between a stock future and a stock index future. |
| Annual Interest Rate |
An interest rate is the percentage of an amount of money paid for the use of borrowed funds. Interest rates are usually expressed in terms of annual percentage rate. |
| APEC |
Short form for Asia-Pacific Economic Cooperation, including 21 countries that aim to promote free trade and economic cooperation in the Asia-Pacific region. |
| Arbitrage |
The act of gaining profit from the correction of price or yield differentials in similar securities in different markets by taking a position in one market and an offsetting position in another. Positions can be profitably closed out as prices or yields move back into line (e.g. a stock and it equivalent futures contract can be quoted at different prices, and the cheaper one can be bought and sold to the higher-priced market). |
| Ask |
The Ask price is the market price for traders to buy currencies, shown on the right-hand side of a quote (e.g. EUR/USD 1.1965/1.1968 indicates that 1 Euro can be bought for 1.1968 USD). It is also called offer price. |
| Asset Management |
Sometimes also used as a synonym for fund management, it is the function of controlling assets and liabilities (all financial claims, debts or potential losses against or incurred by an organization or an individual) in order to achieve an optimal return. |
| Associated Person |
An AP solicits orders, customer funds and customers, or one who supervises persons in charge of such duties, and acts on behalf of an introducing broker, commodity trading advisor, futures commission merchant, or commodity pool operator. |
| ATR (Average True Range) |
The ATR is a widely-used indicator for price volatility, without actually indicating price trends. Calculations are based on the high-low range of a day’s trading, and the ATR extends this range to yesterday’s closing price if it was outside of today’s range. |
| Aussie |
Slang term for Australian dollar (AUD). |
| Authorized Dealer |
A regulated financial institution or dealer authorized to deal in foreign exchange. |
| Automated Trading |
Also known as algorithmic trading, it is used to divide large trades into smaller trades in order to manage market impact and risk. Automated trading implies the use of computer programs for entering trading orders. It uses mathematical models (algorithms) for taking decisions and carrying out financial market transactions. It is the computer algorithm that decides on the aspects of order, e.g. timing, price or quantity, mostly without any human intervention. |
| Average Hourly Earnings |
An economic indicator that evaluates the inflation level incurred by all economic sectors (excluding the farming industry) when wages are being paid to employees. Because an increase to en employee’s wages signifies and increase in private consumption, average hourly earnings are a leading indicator of consumer expenditure. |
| AО (Awesome Oscillator) |
The Awesome Oscillator (АО) is a 34-bar moving average histogram showing the market momentum of a recent number of periods compared to the momentum of a larger number of previous periods. It indicates current market situation compared to the momentum of a longer period, and helps traders with their buying or selling decisions. |
| Backwardation |
A state of backwardation occurs when the current price of a particular commodity is higher than the forward price (the price agreed on by seller and buyer of an asset). Factors that can lead to backwardation are, for instance, natural disasters that seriously affect both current and projected prices. |
| Balance |
The state of the trader's trading account, taking into account all completed transactions and operations, as well as account replenishment and withdrawal. |
| Bank Rate |
The interest rate at which a central bank (i.e. major regulatory bank of a nation’s monetary system) lends money to its domestic banking system. |
| Bar Chart/Graph |
Also known as OHLC (open-high-low-close) charts, bar charts illustrate price movements for a financial instrument over time. Each vertical line on the chart represents the highest and lowest prices over one time unit, which can be as short as one minute or as long as several weeks. Vertical lines (called hatch marks or tick marks) indicate the opening price on the left and the closing price on the right for the same period of time. |
| Base Currency |
In foreign exchange trading, currencies are quoted in terms of a currency pairs. The first currency in the pair is the base currency, which is the currency against which exchange rates are generally quoted in a given country. For instance, USD/JPY, the US Dollar is the base currency; EUR/USD, the euro is the base currency. |
| Base Metals |
Main industrial non-ferrous metals like copper, zinc, aluminum, lead, tin, or nickel. |
| Basis |
The difference between the current cash price and the futures price of the same commodity, and it is determined by the costs of actually holding the commodity as opposed to contracting to buy it for a later delivery (i.e. as a futures contract). |
| Bear Market |
A term used by stock marketers to describe the so-called pessimistic market (a bear seen as clawing the market down). As opposed to rising, a pessimistic market views the process of stocks and other securities falling outright or lagging behind. |
| Bear Raid |
Attempt to depress a market in order to cover a short position (trading position that increases in value as market prices fall) by spreading negative rumors, which is a form of fraud. |
| Bear Trap |
Situation in which expectations that a rising market trend will only be temporary and that the previous bear market (with consistently downward market trend) will resume turn out to be false. |
| Bears |
Refers to traders who believe and expect that prices will fall; the opposite of "Bulls". |
| Bid Price |
The price at which you can sell the base currency. You decide the currency you sell in: if for instance the value of EUR is decreasing, you can choose to sell it for USD. |
| BIS (Bank for International Settlements) |
Short form of Bank for International Settlements, a Switzerland-based organization that fosters international monetary and financial cooperation. |
| Black Box Trading |
Also called automated trading, it refers to the use of computerized systems that have buy and sell instructions generated by a proprietary software program. |
| Blue Chip Stock |
Equity in the securities of companies which are outstanding for high quality. Most DJIA (Dow Jones Industrial Average) companies are ranked in the category of blue chip stock. The ability of blue chip stocks to pay dividends irrespective of the economic climate is popular, and they have lower volatility than lesser known stocks. |
| BoE |
Short form for Bank of England, the central bank of the United Kingdom. |
| Boiler Room |
Also called bucket shop, it is the name given to a brokerage that sells overpriced securities fraudulently, with little underlying value. A boiler room can also be a brokerage that accepts commissions to trade shares at a certain price, but executes the order at a higher price and keeps the profit. |
| BoJ |
Short form for Bank of Japan, the central bank of Japan. |
| Bollinger Bands |
Invented in the 1980s and having evolved from the concept of trading bands, Bollinger Bands is a technical analysis tool that measures the highness or lowness of the price relative to previous trades. It is particularly useful in comparing price action of indicators in order to make systematic trading decisions. |
| Brent Crude Oil |
The benchmark oil produced in the North Sea. Since 2007, it has actually been a mixture of several grades of oil produced in the offshore fields between the coasts of Norway and the UK. |
| Broker |
A person/company that provides forex trading services. You open and fund an account and start to trade. Each broker has its own prices, spreads, minimum requirements (amount of money to start trading). Brokers generally offer a demo account and also have some training programs. |
| Bull Market |
A term used to describe an optimistic market (like a bull tossing the market up). In bull market, the prices of stocks and securities are continuously rising. |
| Bullish |
Refers to traders who believe that prices will rise and that the Bullish market sentiment will make prices go higher. |
| Bundesbank |
The central bank of Germany. |
| Buy Limit Order |
An order to buy provided the future Ask price is equal to the pre-defined value. The current price level is higher than the value of the placed order. Orders of this type are usually placed in anticipation of that the security price, having fallen to a certain level, will increase |
| Cable |
Refers to the GBP/USD exchange rate. The term originates from the mid-1800s, when the rate was being transmitted via a transatlantic cable. |
| Candlestick Chart |
Similar to bar charts but with greater visual detail, candlestick charts show the high, low, opening and closing price for a particular period of time. To highlight the open-close relationship, candlesticks widen and fill the interval between open and close prices. |
| CCI |
The Commodity Channel Index indicates the variation of a price from its average value. It corresponds to oscillators and thus measures price fluctuations. Designed to show cyclical tendencies, the CCI can be best applied to commodities and other high-and-low cycles that occur in periodic intervals. |
| CCI |
Consumer Confidence Index measures consumer confidence defined as the degree of consumer optimism about the state of economy and expressed through their savings and spending activities (e.g. a drastic decrease in consumer confidence may signal that the economy is weakening). While global consumer confidence is not measured, analysis made by countries indicates enormous variance around the globe. Tracking international consumer confidence is a key indicator of economic trends. |
| CFD (Contract for Difference) |
An agreement to exchange the difference in value of shares between the time of opening and closing the contract. |
| CFTC |
Short form for Commodity Futures Trading Commission, a US-based independent agency that regulates futures and option markets. |
| Chaos Theory |
Also called non-linear dynamics, it involves complex analysis but is basically a tool used to determine if repetitive patterns and cycles exist in the markets, that is, the presence of an underlying order. Chaos theory involves the study of historical price action, together with the use of mathematical and statistical tools. |
| Clearing House |
Financial institution that provides clearing (all activities from the time a commitment is made for a transactions until it is settled) and settlement services (delivery of securities or interests against payment of money) for financial and commodities derivatives and securities transactions |
| Close a Position |
The process of selling or buying a foreign exchange position that results in the liquidation of the position. |
| Cocktail Swap |
A complex transaction involving the use of a mixture of different swap types, and usually by more than just two counterparties. |
| Commission |
A one-time fee, fixed or variable, paid by a customer to a broker when the customer conducts futures or options trades through a brokerage company. |
| Commodity |
An item that is considered to be of value and with roughly the same market value across the market and without qualitative differentiation. Traded commodities range from agricultural, livestock and energy to precious metals and industrial metals. The current relationship between the supply and the demand for a particular commodity directly affects commodity trading. |
| Commodity Month Symbols |
F – January, G – February, H – March, J – April, K – May, M – June, N – July, Q – August, U – September, V – October, X – November, Z – December. |
| Commodity Pool |
An enterprise where funds contributed by a number of individuals are combined for the purpose of trading futures contracts or commodity options. |
| Congestion |
Time period characterized by repetitive and limited price fluctuations. |
| Contango |
A marketplace phenomenon involving a comparison of futures price and spot price of a particular security, with the expectation that the prices associated with the front month (the month specified in the futures contract) will be lower than the prices associated with the back month. |
| Contract |
The standard unit of trading. |
| Counter-trend Trading |
A trading method used to take a position contrary to the current market direction, anticipating a change in that direction. |
| CPI |
Consumer Price Index is a statistical estimate used for measuring changes in the price level of services and consumer goods purchased by urban consumers. It reports price changes in over 200 categories, and it is one of the price indices calculated by most national statistic agencies. As one of the most frequently watched national economic statistics, CPI is used as a measure of inflation. |
| Cross Rate |
The exchange rate between two currencies. It is the price of one currency in terms of another in the market of a third country. The cross rate is said to be non-standard in the country where the currency pair is quoted. For instance, in the US, a GBP/JPY quote would be considered a cross rate, whereas in the UK or Japan this would be one of the primary currency pairs traded. |
| Currency Pair |
Forex trading is done in currency pairs: one currency is bought, the other is sold. Together they make up the exchange rate. If you buy in Euros with Dollars and the Euro increases in value as compared to the Dollar, you can sell the position and make a profit. |
| Cycle |
In technical analysis, cycles indicate time targets for potential changes in price action, showing repetitive market fluctuations during a certain period of time (typically, for longer than a year). |
| CySEC (Cyprus Securities and Exchange Commission) |
Short name of Cyprus Securities and Exchange Commission, the financial regulatory agency of the Republic of Cyprus. In 2004, CySEC became part of European MiFID regulation (Markets in Financial Instruments Directive), allowing firms registered in Cyprus access to all European markets. |
| DAX 30 |
A German market-value weighted stock index including thirty blue chip stocks. |
| Day Order |
A buy or sell order that expires automatically at the end of the trading day on which it was made. |
| Day Trading |
A type of trading that refers to the fact that trade positions are opened and closed during the same day. |
| Dealer |
An individual or a firm that buys and sells assets from their own portfolio, acting as a principal or counterparty to a transaction. |
| Delivery Date |
Refers to the final date by which the underlying commodity for a futures contract must be delivered for the sake of complying with the terms of the contract. |
| Delivery Price |
Refers to the settlement price (payment from the buyer for securities delivered to him by the seller) set by a clearing house (administrative center of a market for settling all transactions) for delivering commodities against futures contracts. |
| DeMarker |
The DeM indicator is an oscillator (with a range between -100 to 100) designed to identify new buying and selling opportunities. It tracks the market sentiment of a stock or commodity by comparing the current and previous price of an asset, and so it can be used to detect changes and market interest. |
| Derivative |
Security or financial instrument the value of which is derived from the value of another, underlying asset. Similarly to shares and other financial instruments, a derivative can be bought, sold and traded. The main types of derivatives are futures, options, forward contracts and swaps. |
| Differentials |
Price differences between grades, classes and delivery locations of supplies for the same commodity. |
| Direct Quotation |
Quoting in variable units of domestic currency per fixed units of foreign currency. |
| Disinflation |
Refers to decline in the inflation rate: prices are rising at a slower rate than before. The term is often confused with deflation (meaning that prices fall for an extended period of time). |
| Diversification |
Distribution of investment risk through a portfolio that contains various investments with relatively uncorrelated returns. It is possible to reduce risk levels without an actual reduction in returns. |
| DJIA |
Stands for Dow Jones Industrial Average, the standard US stock market index. |
| Dollar Rate |
The amount of foreign currency quoted against one US Dollar. Some currencies, such as the British Pound, are quoted in the amount of US Dollars per foreign currency unit. |
| Domestic Rate |
The interest rates that apply to deposits or borrowing of a particular foreign currency. These rates are similar to those offered within the foreign country to citizens who keep money in deposit accounts. |
| Double Bottom |
A chart pattern showing a drop in price, a rebound, and another drop to the same or close to the level of the first drop, followed by another rebound. The chart looks typically W-shaped, with the two bottom points of the W representing the support areas. |
| Double Top |
A chart pattern showing a rise in price, a fall, another rise to the same or close to the level of the first rise, followed by another fall. The chart looks typically M-shaped, with the two top points of the M representing the resistance areas. |
| Dow&Jones Company |
American publishing and financial information firm, founded in 1882. |
| Dubai Crude |
Light, sour crude oil produced in the United Arab Emirates, the price of which is used as a standard to calculate the price of exports of sour Middle East crudes to Asia. |
| Due Diligence Process |
Investigation into the operations, accounts and management of a borrower, a potential investment or a takeover target (i.e. acquisition of a controlling interest in a company by purchasing its shares) to verify or determine material information. |
| Durable Goods Orders |
As a key indicator of future manufacturing activity, Ddurable goods rrders is a US government index that measures the dollar volume of orders, shipments, and unfilled orders of durable goods. |
| E-payment |
E-payment is a subset of an e-commerce transaction, including electronic payment for buying and selling goods or services offered via the Internet. The most common types of e-payment are credit cards, debit cards and prepaid cards. |
| EBITDA |
An indicator that reflects profit before taxes, interest, and amortization. |
| EBITDAR |
A measure of profit before taxes, interest, depreciation, amortization, and restructuring/annuity payments. It is used to determine operating results without taking into account financial and investment decisions. |
| ECB (European Central Bank) |
The European Central Bank is the central bank for the euro and administers monetary policy of the eurozone |
| ECI (Employment Cost Index) |
Short form for Employment Cost Index. ECI is a quarterly economic series used to indicate the rising and falling tendencies in employment costs, thus measuring inflation in salaries, wages and employer-paid benefits in business and government establishments in the United States. |
| Economic Indicator |
A set of statistics used to show current economic conditions. It allows analysis of economic performance and predictions of future performance. Economic indicators include a series of indices, reports and summaries, such as stock market prices, money supply changes or consumer leverage ratio. |
| EFT (Electronic Funds Transfer) |
It is an e-transfer of money from one bank account to another, either within one financial institution or in several ones, through computer systems without the direct intervention of bank personnel. |
| Elder-rays |
As one of the most relevant technical indicators, Elder-rays combine the properties of trend following indicators and oscillators. Based on the relative strength of market Bull and Bear power, Elder-rays are used to estimate the power struggle between these two powers. The moving average stands for the agreed-on price between sellers and buyers for a certain period of time; the maximum price shows the maximum power of the buyers; the minimum price reflects the maximum power of sellers. |
| Elliot Wave Principle |
Based on the theory of market behavior and developed by Ralph Nelson Elliot (1871-1948), the Elliot Wave Principle is a form of technical analysis used by traders to analyze financial market cycles and forecast future trends. According to Elliot, prices usually move in five waves in the direction of the larger trend (impulse waves) and in three waves into the opposite direction (corrective waves), and by analyzing these waves, traders can enter their trades at low-risk points and exit them at high-reward points. |
| Embargo |
Action taken by a country or group of countries to partially or completely prohibit commerce and trade with another country, with the aim to isolate it. |
| EMU (Economic and Monetary Union) |
Short form for European Economic and Monetary Union, in which all European Union member states participate and agreed on sharing one single currency, the euro. |
| Envelopes |
The Envelopes consist of two Moving Average indicators (showing the mean instrument price value for a certain period of time), one of which shifts upwards while the other one shifts downwards. By selecting the optimum relative number of band margins shifting, market volatility can be determined. Envelopes define the upper and lower margins of the price range: sell signals indicate that the price has reached the upper margin of the band; buy signals indicate that the price has reached the lower margin. |
| Equity |
The secure amount that clients have in their accounts, taking into consideration the open positions, balance and profit/loss. |
| EUREX |
Name for European Derivatives Exchange, which provides European benchmark (i.e. standard) derivatives. EUREX was established in 1998 by merging Deutsche Terminbörse (the German derivatives exchange) and Swiss Options and Financial Futures |
| Exchange Rate |
The exchange rate shows how much a currency is worth in terms of another currency. For instance, in the pair EUR/USD, the exchange rate is 1.30. This means €1 (base currency) is worth $1.30. So you can buy $1.30 with €1, or sell €1 for $1.30. |
| Execution |
The process of completing an order or deal. |
| Exercise |
Action taken by the holder of a call option if he wishes to buy the underlying futures contract, or by the holder of a put option if he wishes to sell the underlying futures contract. |
| Exercise Price |
Also referred to as strike price, it means the price at which the futures contract underlying a call or put option can be bought or sold. |
| Expert Advisor |
Software written for MetaTrader platform, providing advice about which trade to make, and has the ability to be programmed for automatic trade execution on live accounts. |
| Expiration |
Refers to the day on which an options or futures contract expires. It is important to be aware of the expiration date so that clients do not lose out if they intend to exercise an option. On expiration date, all open positions are closed at the time when the exchange business day closes. |
| Factory Orders |
The Factory Orders report, released by the US Census Bureau, measures dollar volume of new orders, shipments, unfilled orders, and inventories reported by domestic manufacturers. Although the monthly report figures do not affect markets, they help forecast inventories calculations in the quarterly Gross Domestic Product report. |
| FED (Federal Reserve System) |
Federal Reserve System (FED) is the central banking system of the USA. |
| Fiat Currency |
Refers to state-issued money, without any intrinsic value. Fiat currency is the opposite of a gold standard arrangement, which means that the currency value rises and falls on the market in response to demand and supply pressures. |
| Fibonacci Retracement |
As a method of technical analysis, the Fibonacci retracement is based on the idea that markets tend to retrace a predictable portion of a move, and then continue moving in the original direction. Fibonacci retracement levels are used as support and resistance levels. |
| Fill or Kill |
Often used when investors want to buy large quantities of stocks at a particular price, "Fill or Kill" refers to an order to buy or sell a security that must be cancelled if not carried out at once. |
| Financial Instrument |
Document (check, draft, bond, share, futures or options contract, bill of exchange) with monetary value and that represents a binding (legally enforceable) agreement between two or more parties regarding the payment of money. There are two basic types of financial instruments: debt instrument (loan with agreement to pay back funds with interest) and equity security (share or stock). |
| Financial market |
A set of financial institutions, economic entities that issue, buy and sell financial instruments. |
| Flexible Exchange Rate |
A fixed exchange rate that is, however, frequently re-evaluated. |
| Floating Exchange Rate |
An exchange rate the value of which is determined by market forces. |
| Floating Profit/Loss |
It refers to the profit or loss that may only be realized in case the open contracts are settled. |
| Floor Broker |
Also called FB, it refers to a person who executes orders for buying or selling commodity futures or options contracts for any other person and on any contract market. |
| Floor Trader |
Also referred to as local, it is an exchange member who trades only for hiw own account, or for an account controlled by him. |
| FOMC (Federal Open Market Committee) |
The department of the United States Federal Reserve System which sets the direction of monetary policy. It consists of a Board of Governors, which includes seven board members, as well as the presidents of five reserve banks. |
| Force Index |
The Force Index measures the actual buying or selling pressure: high positive values indicate a strong rising trend, while low values indicate a strong downward trend. The index can be better approximated with the help of the Moving Average (MA): approximation with a short moving average helps to find the best opportunity to open and close positions; with approximation using a long moving average trends and their changes can be indicated. |
| Foreign Exchange |
The system by which one currency is exchanged for another. It enables international transactions to take place. |
| Forex Robots |
Software used for market analysis and execution of automated trades, operating according to settings entered by the user. |
| Forex/FX |
Short forms for foreign exchange. |
| Forward Contract |
Also called forward, it is an agreement to buy or sell a financial instrument, a commodity, or a security at a specific future date and at a specified price. It is the opposite of an option contract which offers a choice of whether to complete a trade or not. Forwards are not contracts with standard terms but tailor-made between buyer and seller for every deal. They are traded directly, over the counter. |
| Fractals |
Fractals are versatile indicators, pointing the tops and bottoms where the market reverses, and are used either stand-alone or combined with other forex indicators. Fractals are used for trend confirmation and trend consolidation, and they can be filtered with the help of the Alligator Indicator. |
| Freeze |
Freeze level refers to the range between current market price and operation price. In case of freeze limit, Stop Loss, Take Profit, Modify Order and Close Order cannot be used. |
| FSA (Financial Services Authority) |
Stands for Financial Services Authority, the regulatory body for the financial services industry in the United Kingdom. |
| Fundamental Analysis |
A method used to forecast future currency value by providing analytical details for economic, political and social factors. While technical analysis is based on the results produced by these factors in terms of various price formations, fundamental analysis mainly deals with defining the causes of existing and future price movements. |
| Futures Exchange |
Central marketplace which has established regulations and where buyers and sellers meet to trade futures and options on futures contracts. |
| Futures Сontraсt |
A standardized contract used in finance and agreed on by two parties for the sake of exchanging a particular asset of standardized quantity and quality for a futures price (or strike price) but with the delivery only taking place at a particular future date. |
| G10 |
Refers to the G7 member states, completed with four further countries (Belgium, the Netherlands, Sweden and Switzerland), and aims to coordinate fiscal and monetary policies for the sake of a stable global economic system. |
| G7 |
Stands for Group of Seven, and refers to the worldwide leading industrial nations that meet to discuss global economic issues. The G7 members are Canada, France, Italy, Japan, the United Kingdom and the United States. |
| Gator Oscillator |
The Gator Oscillator helps visualize upcoming changes in trends (i.e. the periods in which Alligator Indicator lines widen or narrow down). |
| GDP |
Short form for Gross Domestic Product. GDP is often correlated with the living standard, as it is the market value of all services and goods produced in a country during a particular time period. It indicates the pace of a country’s economic growth and is determined in three different ways: through product output, income and expenditure. |
| Gearing |
A term related to margin trading, where you are controlling a position whose face value (i.e. the nominal value or dollar value of a security stated by the issuer) is greater than the money you deposit. |
| Global Macro |
A strategy in which trading decisions are based on macroeconomic principles, that is, on global economic and political factors. |
| GNP |
Short name for Gross National Product, which is the market value of goods and services produced by an economy in one year. While GDP (Gross Domestic Product) defines production based on its geographical location, GNP allocates production based on ownership. |
| Going Long |
Refers to the purchase of a currency pair. |
| Going Short |
Also known as selling short, it refers to selling a currency pair by first borrowing it, then returning it at a later time by buying it back. |
| Golden Cross |
In technical analysis, golden cross refers to the fact that two moving averages intersect: usually a short one like a 20-day and a long one such as 40-day. This is considered a favorable sign that the underlying currency will move in the same direction. |
| Grey Market |
Refers to the unofficial trading of shares or bonds before they have been formally issued in an initial public offering (IPO) or debt offering. |
| Grid Trading |
A series of positions and open orders built with a predetermined spread defined by the trader. |
| Gross Domestic Product Deflator |
The GDP deflator is a measure of price levels for all goods and services in an economy; in other words, it measures the annualized quarterly implied rate of inflation for all economic activities. By using the deflator, the difference between nominal and real GDP can be calculated. |
| Gross Profit |
The difference between company revenues or sales and sales costs. |
| GTC |
It stands for good-till-cancelled order. It is a type of limit order that remains in effect until it is either executed or cancelled, as opposed to a day order, which expires if not executed by the end of the trading day. |
| Hard Currency |
As opposed to soft currency, hard (or strong) currency is currency that investors have confidence. In terms of economics, it refers to a globally traded currency, which is stable. Due to its stability and reliability, investors have confidence in hard currency. |
| Hawks and Doves |
The terms indicate that a politician belongs to one of two directions of monetary policy. "Hawks" are lobbying for high interest rates in the economy, while "pigeons", on the contrary, and are in favor of lowering rates and easing monetary policy, for example, launching "quantitative easing". |
| Head-and-shoulders |
A price trend pattern with three peaks, the one in the middle being higher than the surrounding two. It is a pattern seen as an indicator of a trend reversal. |
| Hedge |
A position that reduces the risk of a trader’s primary position. |
| Hedge Fund |
An investment fund that aims to gain absolute return (profit made on an asset irrespective of market movements), using trading methods like short selling, swaps, derivatives, program trading, and arbitrage. |
| Hedging |
A technique used for reducing or even eliminating financial risk. Strictly speaking, it is a position made by trader to reduce the risk of opposed price movement. It helps to protect investments against unforeseen situations on the market. |
| Herstatt Risk |
Also known by the name cross-currency settlement risk, it refers to the risk that a party to a trade will fail to make payment despite the fact that payment has already been made by its counterparty. |
| Hit the Bid |
Selling at the Bid price. |
| Holder |
Buyer and as a result owner of a currency pair. |
| Horizontal Spread |
Strategy for simultaneous selling and buying two options that only differ in their maturity dates (time between issuing a bond or other security and the date on which it becomes payable in full). |
| Hot Stock |
Stock the price of which rises or falls suddenly and drastically. |
| Hyperinflation |
Refers to extremely high, out-of-control inflation: the general price level increases rapidly as the internal currency, as opposed to a foreign currency, and loses its value at an accelerated rate (e.g. the hyperinflation in Zimbabwe between 2004-2009). |
| Ichimoku Kinko Hyo |
The IKH, also called ichimoku, is a candlestick charting technique that provides a clearer picture of potential price action, as it indicates market movement with its entry and exit points. It is used to determine market trends, support and resistance levels, and to create sale and purchase signals. |
| IFO |
It stands for Institute for Economic Research (Institut für Wirtschaftsforschung). Based on the feedback of over 7,000 German business leaders, the German IFO business survey is considered to be a leading economic indicator for both Germany and Europe. It provides assessment of the current and upcoming economic climate, based on latest economic data. |
| IMF |
Short form for International Monetary Fund, which consists of 186 member countries and provides financing and policy advice to members in economic difficulties. It cooperates with developing countries to help them achieve macroeconomic stability and decrease poverty. |
| Implied Volatility |
The volatility (degree to which the value of a security changes over time) that the market expects in the price of a security. It is a measure, but not the direction, of future price movements, with a tendency to rise in bear markets and fall in bull markets. |
| Index |
In a broader sense, it is statistical measure of change in economy. In the financial markets, indices are imaginary securities portfolios that represent a particular market or market segment, and index variations indicate market trends. |
| Industrial Production |
IP is an economic measure of the changes in output for the industrial sector (such as manufacturing, mining and utilities) of the economy, indicating a country’s industrial capacity. |
| Inflation |
An economic condition in which prices for consumer goods and services rise, eroding purchasing power. |
| Initial Margin |
The deposit that clients need to make before they are allocated a trading limit. The first deposit that a client makes and that determines a corresponding maximum trade size. |
| Interest Rate |
The percentage of an amount of money paid for the use of borrowed funds. It is calculated on a daily basis and paid on the first day of each month. |
| International Trade |
International Trade measures the difference between imports and exports (trade balance) of all goods and services. The level of the international trade balance, along with the changes in exports and imports, indicate market trends, and so they are closely followed by foreign exchange markets. |
| Interpolation |
Inference about missing information by using available information (estimation of unknown values within a sequence of know values by means of a known trend). |
| Intraday |
Orders that are supposed to be performed within one day. |
| Intraday position |
A position opened and closed within the same trade day. |
| Introducing Broker |
A person or firm that introduces customers to a company, often in return for commission or a portion of the spread. |
| Investment |
Long-term investment of funds to generate income or preserve capital. Investment is an integral part of the modern economy. |
| Investor |
A person or organization (including a commercial company, government, etc.) that allocates capital for subsequent profit. The investor's capital can be either his own or borrowed. |
| Invisibles |
As opposed to trade in physical goods, invisibles are international transactions in services, and form part of a country’s current account (the sum of visible trade balance) including money made by or paid to insurance, shipping, tourism and banking sectors. |
| IPCU |
The Industrial Production and Capacity Utilization is a measure of economic activity, expressed as the percentage ratio of actual production to potential production. Capacity Utilization and Industrial Production are released by the US Federal Reserve in the form of a monthly report, showing data for the previous month about the total amount of US industrial production. Traders consider the IPCU report important as an indicator for the future performance of assets in the marketplace, as it can encourage buying or selling in certain industries. |
| IPO (Initial Public Offering) |
The process of a company or early investors selling shares of a private company on the stock market, which makes the company public and makes the securities available to a wide range of investors. |
| J Curve |
A term used to describe the expected effect of devaluation (i.e. reduction of currency value in terms of the goods and services with which that currency can be exchanged) on a country’s trade balance. It is expected that import bills rise before export orders start increasing. |
| Jawboning |
Strategy used by monetary authorities to step into the market by suggesting that an intervention is possible and by commenting in the media about its preferred currency level. This tactic can be also seen as a precursor to official action in the form of direct buying (to push prices higher) or selling (to push prices down). |
| JGB |
Short form for Japanese Government Bonds. |
| Jumbo Bond |
Slang term for very high-value bond, the size of which varies according to markets (i.e. in emerging markets, worth hundreds of millions of dollars, while in developed markets worth billions). |
| Junk Bond |
Also called high-yield bond or non-investment-grade bond, it is a bond rated below investment grade at purchase time. Although with a higher risk of default, junk bonds pay higher yields than bonds of better quality, a feature that makes them attractive to investors. |
| Kairi |
An indicator used in technical analysis charts and showing the difference in percentage between the current closing value and a moving average. The Kairi can also serve as a trend indicator or as an overbought/oversold signal. |
| Kerb market |
A term that refers to trading in commodity markets. Kerb market refers to a market where trading takes place outside official opening hours: after-hours if trading is undertaken after closing time, or sunshine if trading is prior to the official opening time. |
| Kiwi |
Informal name given to the New Zealand dollar (NZD). The $1 coin depicts the kiwi bird, which New Zealand is mostly associated with. |
| Knockout Option |
If an underlying instrument reaches a certain price, an option is nullified (knocked out). Knockout options are cheaper than standard options since they offer limited opportunities for gaining profit |
| Ladder option |
An option on which the strike price (i.e. price at which a security is bought or sold) can be moved to a more favorable level as soon as the original strike price is reached. |
| Leverage |
Leverage is what allow small investors to trade big lots. Forex brokers have leverage of 100:1 or 200:1. This means you can use $100 to trade $10,000 (100×100) or $20,000 (100×200). The leverage depends of the broker. |
| Liability |
Financial claim, debt or potential loss against or incurred by an organization or an individual. |
| Line Chart |
As a basic chart type, line charts visualize a trend in data over time intervals by connecting the closing price values straight-line segments. |
| Liquidation |
Refers to the closing of an existing position through the execution of an offsetting transaction. |
| Liquidity |
Refers to the relationship between transaction size and price movements. If large transactions can occur with only minimal price changes, a market can be called ‘liquid’. |
| Lloyd's |
A London-based major insurance market that provides insurance services to businesses in more than 200 countries. |
| Lock-up Period |
Time during which shareholders are not permitted to sell shares. |
| Locked Margin |
The amount of margin for two trades opened by one symbol and to different sides, e.g. EUR/USD buys 1 lot and EUR/USD sells 1 lot. The rate of EUR/USD is 1.33361. The full margin for these trades should be 1333.61+1333.61=2667.22. For example, RealForex trading accounts the locked margin is 50%. If you have two positions with the same volume and currency pair but with opposite directions, the actual margin deducted from the normal value will be 50%. For a better understanding, see two examples below: You have 1 lot EUR/USD buy with margin 100 and 1 lot EUR/USD sell with margin 100. Without taking into account the locked margin, the normal margin will be 100+100=200. However, if you take into account, the 50% locked margin, you will have 1/2 of the 200 normal margin, so your margin will be 100. You have 2.3 lots EUR/USD buy with margin 230 and 1.3 lots EUR/USD sell with margin 130. The 2.3 lot position is represented as an amount of 1.3 lots and 1 lot. You will have a locked margin for 1.3 lots and 1 lot will have a normal margin. If 1.3 lot margin is 130, the total margin will be $130 (locked margin from two 1.3 lot EUR/USD positions)+100 = $230. |
| Long Hedge |
Hedging position that involves the purchase of futures contracts in order to protect investors and traders against price rises in the corresponding cash markets. |
| Long Position |
When a currency pair is bought, the primary currency in the pair is 'long', and the secondary currency is 'short'. |
| Long-term Position |
Positions supposed to last for several months or even years. |
| Loss Limit |
The maximum loss on a position that a dealer is allowed before he is required to cut his losses. |
| Lot |
Foreign exchange is traded in lots. A standard lot means $100,000 of any currency you fund your account with. Trading with only $1 is not possible. |
| MACD |
An indicator used in technical analysis to assess and predict price fluctuations in stock and foreign exchange markets. It shows the relationship between two moving averages. |
| Make a Market |
A dealer makes a market by providing a two-way quote (a bid and ask price) in which they stand ready to buy or sell. In this way, dealers are also known as market makers. |
| Margin |
The minimum deposit needed to maintain an open position (e.g. with an open position of $250,000 and a leverage of 50, the required margin is $5000). |
| Margin Call |
A demand for adding funds to cover positions. Some brokers preserve the right to close clients’s positions without previous notification if the equity for the required margin is below 100%. |
| Mark-to-market |
The main principle on which regulated futures bookkeeping is based. It refers to the adjustment made to trading accounts at the end of the day in order to reflect profits and losses on existing positions. Accordingly, winnings are credited to the account, while losses are debited with instant execution. The essence of mark-to-market is that trading is not allowed to participants unless there are available funds to cover the positions. |
| Market Depth |
Volume of market liquidity that refers to the ability of the market to handle large trading volumes without significantly affecting prices. Market depth is relevant to traders as they can study it to to determine how and when particular orders may impact price action, and to help them find the right timing for entering and exiting trades. |
| Market Facilitation Index |
The MFI determines the efficiency of price movement by analyzing the amount that the price changes for each unit of volume. The BW MFI (Bill Williams Market Facilitation Index) evaluates the efficiency of market price movements. Changes in the value of this index are usually compared to changes in volume in order to determine market interest in a particular price trend. |
| Market Risk |
Refers to the risks that occur when demand and supply pressures in the market cause the fluctuation of an investment. |
| Market-if-touched |
Price order that becomes a market order automatically as soon as the price is reached. |
| MetaTrader |
An independent trading software platform developed for trading forex, options and futures; best known for its diverse technical analysis ability and the option to run forex robots and aexperts advisors. |
| Mid-term Position |
A position the goal of which should be reached within 1-3 weeks. |
| Mobile Trading |
Controlling of trading accounts via mobile devices such a cell phone or a PDA (Personal Digital Assistant). Wireless access technologies WAP and GPRS provide access to the Internet. |
| Momentum |
An indicator for market movement and the strength of trends through time. When a trend starts, momentum is the highest, and as the trend changes, it is the lowest. When price and momentum diverge, it suggests weakness. If price extremes occur with weak momentum, it signals the end of movement in that direction. A potential change in price direction can be expected if momentum is trending strongly and prices are flat. |
| Money Flow Index |
The MFI is an indicator that shows the intensity and volume of money invested in and withdrawn from a commodity. It compares the value traded on up-days to the value traded on down-days, anticipating trend weakness and points of reverse shift. |
| Moving Average (MA) |
The Moving Average is a technical indicator that shows the mean instrument price value for a certain period of time. With its four different types of moving averages (simple, exponential, smoothed and linear), it helps calculates the moving average according to increasing and decreasing price changes. |
| Moving Average Convergence/Divergence |
The MACD turns two-trend following indicators (moving averages) into a momentum oscillator by subtracting the longer moving average from the shorter moving average. It is one of the most effective momentum indicators as it combines trend following and momentum; and traders can look for signal crossovers, centerline crossovers and divergences to generate signals. |
| Moving Average of Oscillator |
Though similar to the MACD (Moving Average Convergence/Divergence), the OsMA is a modified version of the latter. It applies more smoothing features, and helps spot out convergences and divergences that indicate market changes. |
| Naked Position |
A long or short position in the market that has not be hedged (i.e. risk has not been minimized) or covered. In unhedged positions gains and losses are considerably higher. |
| NAPM Index |
The NAPM (National Association of Purchasing Manager) index measures the entire economy in general, and the condition of the manufacturing sector in particular. It calculates data of new orders, production, employment, deliveries and inventory, by summing up the surveys of over 250 companies in all 50 US states. |
| Narrow-based Index Futures |
Also known as industry-sector futures or exchange-traded baskets, they are targeted to a particular group of stocks like airline, telecom or auto industries. |
| NASDAQ |
National Association of Securities Dealers Automatic Quotation System. NASDAQ provides market participants with price quotations about common stock issues most actively traded in the OTC (over-the-counter) market. |
| National Debt |
The total indebtedness of a country that results from budget deficits, and normally financed by selling government securities and debt instruments. |
| Near Money |
Highly liquid assets (e.g. bank time deposits, government securities and money in savings accounts) that are readily convertible into cash. |
| Negotiable |
Refers to the fact that the price of an item is not firmly established, or to the fact that an item can be traded freely and whose ownership can also be transferred freely. |
| Net Assets |
Also known as net worth, it refers to a company’s total amount of assets (items of value to a business convertible into cash) from which its liabilities (i.e. financial claims, debts or potential losses) are deducted. |
| Net Position |
Refers to the difference between long and short market positions held by an individual or a company. A dealer with 100 short futures contracts and 80 long contracts will have a net short position of 20 contracts. Conversely, once he sold 120 contracts and bought 150 contracts, he will have a net long position of 30 contracts. |
| Net Transaction |
Transaction made without having to pay fees or commissions. |
| Neutral Market |
Also known as flat market. Refers to a market that shows neither bullish (with rising prices) nor bearish (with falling prices) tendencies. |
| No Par Value |
Refers to shares issued with no par value (par value means the value displayed on the face of a share certificate or a bond). With no par value shares the possibility of liability to shareholders can be prevented in case the share price falls below the par value. |
| Non-farm Payroll Employment |
It is an essential economic indicator and statistic released every month by the US Department of Labor. As part of a comprehensive report on the current state of the labor market, nonfarm payroll employment reports include 80% of the workers who produce the entire GDP in the United States. These reports are also used to predict future levels of economic activity. |
| Non-negotiable |
Can refer to a transaction whose contract terms are fixed, or to an instrument that can only be owned by its original holder and thus not traded or transferred. |
| Normal Market Size |
Refers to the minimum number of securities for which market makers (firms or individuals who trade in a security at publicly quoted prices on an exchange or over-the-counter market) are obliged to quote firm bid and ask prices. The aim of market makers is to gain profit from the spread between the bid and ask prices and from market movements. |
| NYSE (New York Stock Exchange) |
Also known by the name NYSE, or the Big Board, it is the world’s biggest equity exchange based on the total market capitalization of its listed securities. Operated by NYSE Euronext, its average daily trading value was estimated to 153 billion USD in 2008. |
| Official Cash Rate |
Official Cash Rate (OCR) is the interest rate set by the Reserve Bank of Australia and New Zealand, and used to influence the general level of interest rates in banking and the economy. Changes to the cash rate, also called official interest rates, flow on to variable home loan, personal loan and credit card rates within weeks. |
| On Balance Volume (OBV) |
As one of the first technical indicators to measure positive and negative volume flow (i.e. the buying and selling pressure), the OBV is used to predict price movements, or to confirm price trends. |
| OPEC (Organization of Petroleum Exporting Countries) |
An international intergovernmental organization created by oil-producing countries to control oil production quotas. |
| Open Order |
A buy or sell order that does not expire until it is cancelled. Theoretically speaking, an order does not expire. However, it usually does so in practice, at the end of the trading month rather than lasting forever. |
| Open Position |
A long/short position, subject to market fluctuations (i.e. profit or loss). |
| Optimistic Market |
It is also called Bull market, with prices moving upwards over time. |
| Option |
It gives the buyer the right, without obliging him, to buy or sell an underlying financial asset at a pre-determined price. An option gives the buyer the right to decide whether to exercise it (i.e. buy or sell it) or not. As flexible instruments, options allow investors to profit from favorable price movements and decrease the consequences of unfavorable price moves. |
| Order |
An instruction given to buy or sell. |
| Organization of Arab Petroleum Exporting Countries (OAPEC) |
Short name for Organization of Arab Petroleum Exporting Countries, which fosters the development of the petroleum industry in Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, Tunisia and the United Arab Emirates. |
| OTC (Over-the-counter Trading) |
Also known as OTC or off-exchange trading. It refers to trading financial instruments (stocks, bonds, commodities) between two parties directly. |
| Out-of-the-money |
A term that describes an option with no intrinsic value (e.g. a call with a strike price of $500 on gold trading at $490 is out-of-the-money $10). |
| Out-trade |
A situation that occurs as a result of confusion or error on a trade (e.g. misunderstanding of a price at which a trade is performed, or of the number of contracts traded). |
| Overbought |
A term used with reference to currency pairs. A currency pair is overbought when its price rises much more quickly than usual in response to net buying. Once overbought, the pair is expected to make a contrarian move (i.e. a fall in its price is to be expected). |
| Overnight Position |
A dealer's net position, carried into the next trading day. |
| Oversold |
A term used in technical analysis showing that the price of a certain currency, compared to another currency, has moved too far and fast into a certain direction. |
| Par |
The official value of a currency. In finance, par value means stated value. The term ‘at par’ is used when two currencies are exchanged at equal value. |
| Parabolic SAR |
Originally called Parabolic Time/Price System and referring to a price- and time-based trading system, SAR (stop and reverse) is an indicator used in this system. The SAR indicates price changes over time; it stops and reverses at the same time when a price trend reverses and moves above or below the indicator. |
| Pegged Exchange Rate |
A fixed exchange rate meaning that the value on one currency is matched to the value of another single currency or a set of other currencies. It is mostly used to stabilize the value of one currency against the currency it is pegged to. |
| Pending Order |
A pending order means that the client instructs the dealer to buy or sell once the price reaches the order level. |
| Pessimistic Market |
It is also called Bear market, with prices declining over time, and the opposite of Bull market. |
| Pip |
A pip stands for percentage in points. This is the last decimal point and minimum increment visible on a quote (e.g. 1.1230). 0 is the last decimal point, and if the price increases to 1.1235, this means 5 more pips. Checking the pips regularly shows you if you are earning or losing money. |
| Pivot |
A price level of significance used in technical analysis of a financial market. Pivot points are used by traders as predictive indicators of market movements, and they are calculated as an average of relevant prices (i.e. high, low, close) from the performance of a market during the previous trading period. |
| Plain Vanilla |
A term that refers to a relatively simple derivative financial instrument, usually a swap. |
| PMI (Purchasing Managers Index) |
Short form for Purchasing Managers Index. It indicates economic activity by reflecting the percentage of purchasing managers (employees of a company or business in charge of acquisition of goods and services needed by the company) in a certain economic sector. The PMI is released by the Institute for Supply Management on the first business day of every month. A PMI over 50 is often taken to indicate that the economy is expanding, while anything below 50 suggests economic contraction. |
| Point and Figure Chart |
A technique that uses numerical filters to mark price changes, without showing a time scale to associate a certain day with a certain price action. |
| Portfolio |
A set of investments held either by an individual investor or a financial institution, and it may include stocks, futures, bonds, options, contracts, real estate investments, or any other items that the holder believes will retain their value. |
| Position Trading |
A type of trading during which the trader either buys or sells contracts and holds them for an extended period of time. |
| PPI |
Short form for Producer Price Index, formerly known as Wholesale price Index (WPI). As one of several price indices, it measures average price changes received by domestic producers for their output. |
| Premium Spread |
The situation where the Bid price of a forward spread rate is higher than the Ask price. |
| Price Index |
A weighted average of prices for a particular class of services or goods available in a given region and during a given time interval. It is a statistic used to compare how these prices, all taken together, differ between time periods or geographical locations. |
| Profit Taking |
Closing a position with the purpose to make a gain. |
| Program Trading |
It involves computer-based trading techniques that rely on the flow of trading and price levels rather than on demand factors and fundamental supply. |
| Pullback |
Reversal of the value of a trading instrument after breaking through the resistance level, which has now become a support level. Pullbacks occur during uptrends and downtrends as temporary reversals from the current trend. |
| Quantitative Analysis |
A technique used to analyze an observed behavior by applying complex mathematical and statistical modeling, measurement, and research. |
| Quantitative Easing |
A monetary tool used by central banks to encourage spending within an economy. One of the most well-known instances of quantitative easing remains the Bank of Japan's attempts to fight domestic deflation in the early 2000s. Interest rates during this time got close to zero and further cuts could not be implemented. As a result, the Bank of Japan flooded commercial banks with excess funds to promote lending and by extension, encourage spending. |
| Quick Ratio |
Also called acid test, it is the sum of a company’s cash plus accounts receivable plus short-term investments divided by its current liabilities, and it indicates the company’s ability to meet its short-term liabilities. |
| Quote |
A quote is an indicative market price used as information only. |
| Quote Currency |
The second currency of two in a currency pair. For the EUR/USD, USD is the quote currency. The exchange rate quoted is how many units of the second currency you will receive for one unit of the base currency. |
| Real Interest Rates |
It is approximately the nominal interest rate (before adjustment for inflation) minus the inflation rate (rise in the general level of prices of goods and services in an economy). |
| Real-time Data |
As opposed to historical data, real-time data refers to live prices. |
| Regulated Market |
A market in which a government agency monitors and regulates industry activity to protect investors. An example is forex trading in the United States. |
| Relative Vigor Index |
The RVI indicates the actual energy (vigor) of the current market, and it is used to analyze price movements between the open and close of the market. By comparing results gained about the up-market (bull) and the down-market (bear), traders can assess the overall vigor of the market and predict the outcome of certain trends. |
| Retail Sales |
Retail Sales is a monthly report that measures consumer expenditure, which is an essential indicator of US Gross Domestic Product. The report is based on data submitted by retail firms on the dollar value of their retail sales and inventories. It is particularly useful as a timely indicator of broad consumer spending patterns, and it can be used to assess the immediate direction of an economy. |
| Retracement |
Percentage retracement of market price movements is a technique used to determine price objectives. The market is believed to retrace previous moves by predictable percentages like 33%, 50%, and 67%. In Dow Theory, the minimum and maximum retracements are 33% and 67%; according to technical analyst W.D. Gann, 50% is the most important; and the sequence produced by the Fibonacci Numbers is 61.8%, 38%, 50% |
| Risk Management |
Involves the use of strategies in order to control or reduce financial risk. An example is a stop-loss order that minimizes maximum loss. |
| Roll-over |
Roll-over refers to the extension of the settlement value date on an open position to the next trade date. |
| Roll-over Credit |
Amount credited to a trader's account when the long currency of a currency pair has a higher yielding interest rate than the shorted currency. |
| Roll-over Debit |
Amount debited from a trader's account because of an overnight rollover, when the long currency of a currency pair has a lower yielding interest rate than the shorted currency. |
| Roll-over Rate |
Generally, the daily rollover interest rate is the amount a trader either pays or earns, depending on the currency pairs in question. |
| RSI (Relative Strength Index) |
The RSI is a momentum indicator that shows the change and speed of price movements. Oscillating between 0-100, the RSI refers to overbought when it goes above 70, and oversold when it goes below 30. It can be also used to generate signals for divergences, failure swings (i.e. strong indications of market reversal) and centerline cross-overs (i.e. the RSI value moves over the centerline of the RSI scale). |
| Scale Down/Up |
To buy or sell scale down refers to purchasing or selling at regular price intervals in a declining market, while to buy or sell on scale up means the same but at regular price intervals as the market advances. |
| Scalping |
It is a technique of short-term trading with which a trader enters and exits trades minute by minute, making as many trades as possible during one given day. Scalpers usually do not gain more than a few pips per trade, and to make more profit they need to use vey high leverage. |
| SEC (US Securities and Exchange Commission) |
The US government agency is the primary oversight and regulatory agency for the US securities market. |
| Share |
Security, related to a specific company that allows its owner to receive dividends. |
| Short Position |
In forex, when a currency pair is sold, the position is called short. It is understood that the primary currency in the pair is 'short', and the secondary currency is 'long'. |
| Speculative bubble |
A fast and usually short-lived run-up in prices, caused by excessive buying which is not related to any of the basic, underlying factors that affect the supply or demand for the commodity. They are usually associated with a bandwagon effect where speculators rush to buy the commodity before the end of the price trend, and an even bigger rush to sell the commodity when prices reverse. |
| Spike |
A term used in the context of general equities (an order ticket displaying the stock, price and number of shares, type, and account of the order). Spike can also refer to an unexpected and drastic increase in a company's share price. It is an error quote from a broker’s server characterized by the following features: a) within a short period of time a significant price gap occurs, b) preceding its occurrence, there is no rapid price movement and/or no significant macro-economic indicator, or corporate reports. Error quotes are mainly caused by either a technical failure or separate deals, often mistaken, in the information system. When error quotes occur, deals on real accounts are not executed, or they are annulled. Deals do not get annulled on demo accounts. |
| Spot Market |
Also called cash market, it is a financial market where financial instruments or commodities are traded for immediate delivery (spot, or spot transaction). Spot market is the opposite of futures market, where delivery is due a later date. |
| Spot Price |
In terms of foreign exchange, it is the market price at a particular point in time. |
| Spread |
Spread is the difference between the ask price and the bid price, the two prices on a currency pair in forex trading. When making a trade, you pay the bid price on the currency pair, and you close the trade at the ask price. |
| Standard Deviation |
As a statistical method for measuring volatility, Standard Deviation indicates the difference between closing prices and the average prices over a number of time periods. It is a particularly useful indicator for target exchange rate volatility because the higher Standard Deviation gets, the higher volatility is. |
| Sterling (GBP) |
Refers to pound sterling (GBP), the official currency of the United Kingdom, the fourth most traded currency in the forex market after the US dollar, the euro and the Japanese yen. |
| Stochastic Oscillator |
By using support and resistance level, the Stochastic Oscillator is a momentum indicator that shows the location of the close relative to the high-low range over a period of time. |
| Stock Index |
Statistical indicator used to measure and report changes in the market value of a group of stocks or shares (e.g. Dow Jones Industrial Average). |
| Stock market |
A financial and economic instrument of a global scale, the main function of which is to regulate the turnover of securities through the purchase, sale, exchange, or pledge. Together with the financial and credit market, this impressive capital sector is shaping the global economy. |
| Stop-loss Order |
Stop-loss is an order placed with a broker to sell shares when they reached a particular price as per the investor’s risk-taking capacity. The aim of a stop-loss order is to minimize the loss, that is, after the price reaches the set value, client’s position is automatically closed with a fixed loss. |
| Stop-out Level |
Trading account conditions are controlled by a server that closes all positions automatically if the margin level reaches 50% or less for REALForex accounts and STP accounts. This is called stop-out, and it is in accordance with the current market price. |
| Strength |
A technical indicator that represents the intensity of market opinion on a certain price by analyzing the market positions taken by various market participants. |
| Strong Hands |
A term used in the context of delivery of commodities on futures contracts, meaning that the party receiving the delivery notice will probably take delivery and retain ownership of the commodity. When used in connection with futures positions, the terms means positions held by trade interests or well-financed speculators. |
| Support and Resistance Level |
The concept of support and resistance is based on the idea that the price of securities tends to stop and reverse at particular, pre-determined price levels, and describes the price levels where markets repeatedly rise or fall and then reverse. This phenomenon is attributed to basic supply and demand. The support level indicates a price level at which the decreasing price will find support, while the resistance level is where the increasing price tends to find resistance. |
| Swap |
A transaction that involves the exchange of two currencies and moves the maturity of an open position to a future date. |
| Swissie |
Slang term used for the Swiss franc (CHF), the official currency of Switzerland and Liechtenstein. |
| Systematic Risk |
Market risk caused by price fluctuations which can’t be eliminated by diversification. |
| Take a Position |
Buying or selling securities in order to establish a long position (in the hope that prices will go up) or a short position (with increase in value as market prices fall). |
| Take-Profit Order |
It is basically the same as a stop-loss order, but works in a reverse way. After the price reaches the set value, client’s position is automatically closed with a fixed profit. For instance, if you open a long position, you open a buy position up at ask price and close it at bid price. Here you can set stop-loss over the ask price and take profit under the bid price. |
| Tankan Survey |
Tankan Survey (Short-period Economy Observation) is a business confidence poll reported quarterly on the status of Japanese economy by the Bank of Japan. It is considered to be a major financial indicator in Japan as it significantly affects stock prices and currency rate. |
| Technical Analysis |
A method used to forecast future price movements by examining past market data. While fundamental analysis is based on the actual facts of the company, market, currency or commodity, technical analysis examines in detail price, volume and other market information. |
| Technical Indicator |
Short-term trends used by technical analysts to predict future price movements of securities and/or commodities. |
| Tick |
Refers to the minimum upward or downward movement in the price of a futures or options contract during a trading session specified by the terms of the contract. |
| Tomorrow Next |
Also used as tom next. The process of not taking delivery of a currency by closing the position and reopening it with the current trade date so the settlement date is pushed forward to the next trade date (tomorrow). This is done indefinitely until the trade is closed. |
| Trading |
Making of transactions for the sale and purchase of shares, securities, currencies to make a profit when the market value of assets changes. Unlike investments, trading is a shorter-term process that takes weeks, days, hours, and even minutes. |
| Trading Instrument |
Trading Instrument is an asset that is traded on the market and over-the-counter market. Examples of trading instruments include currency pairs, stocks, futures and options. |
| Trading Platform |
This is software provided to clients by a broker company to make trading possible through their own system and to manage accounts securely. |
| Trading session |
Periods of trading activity from the time a market opens until it closes. The forex market offers round-the-clock opportunity to trade; and because global forex sessions overlap due to the different time zones, it is possible to trade in different markets during the same session. There are four global trading sessions that operate in different time zones and according to summer or winter time: Sydney session, Asian session, London session, New York session. |
| Trailing Stop |
Trailing stop is a stop-loss order which automatically adjusts to how the market rate moves in the direction of your open position. It helps you capture profits: if the prices suddenly drop, the automatic stop-loss order gives you protection. |
| Treasury shares |
The portion of a company's shares that it holds in its treasury. These shares are not listed on the stock market, and they also do not provide any dividend or voting rights (since the company cannot share profits with it or be its owner). |
| Trend |
The current direction of the market, whether up or down or sideways. Trend lines (e.g. lines, arcs, or other visual cues plotted on a line chart) are used to predict possible future market directions. |
| Trending |
Trending refers to the phenomenon by which price movements tend to persist in a particular direction during a particular period of time. Market trends indicate upwards (bull market), downwards (bear market), and sideways market movements over time. They are categorized as secular (lasting long), primary (for medium time frames), and secondary (lasting short). |
| Turnover |
The volume of executed trading transactions during a certain period of time. |
| Two-way Price |
A term meaning that both a bid and offer rate has been quoted for a forex transaction. |
| UNCTAD |
Stands for United Nations Conference on Trade and Development, which promotes trade, investment and development opportunities of developing countries by fostering their integration into world economy. |
| Under Capitalization |
Refers to the situation where a trader does not own sufficient funds for the size of his transactions. It is one of the main causes of a margin call. |
| UNDP |
Stands for United Nations Development Programme, one of the biggest multilateral sources of grant funding for economic and social development worldwide. |
| Unemployment Rate |
Unemployment rate is the percentage of jobless people, and it is measured by the ratio of unemployed people who are willing and able to work as opposed to the total number of people in the work force. It is a lagging indicator (it changes along with economy) that may cause moderate market volatility as it gives traders clues about future interest rates and monetary policies. |
| Unrealized Gain or Loss |
The theoretical gain or loss made on an open position and valued at current market rates. Unrealized gains/losses become profits/losses when the position is closed. |
| Up and Out |
A knockout (i.e. nullified) option that gets cancelled once the price of the commodity or underlying instrument rises above a pre-determined level. |
| Uptick |
A new price quote at a higher price than the quote preceding it. |
| Uptrend/Downtrend |
Refers to movements on a market’s price chart where every successive peak or trough is higher, or lower, than the preceding one. |
| USDX |
Short form for US Dollar Index. It is a measure of the value of the US dollar relative to a market basket of foreign currencies (i.e. a fixed list of items used to track the progress of inflation or a specific market). USDX goes up whenever the US dollar goes stronger in value as compared to other currencies. |
| Used Margin |
The amount in the client’s trading account necessary to support all current positions. |
| Value Date |
The date on which two contracting parties exchange the currencies that are being bought or sold. |
| Value Spot |
The settlement for two working days from the date the contract is entered into; also referred to as cash transaction. |
| Variation Margin |
Funds that are required to be deposited by the client when a price movement has caused funds to fall below the stipulated percentage of the value of the contract. |
| Velocity of Money |
Also called velocity of circulation, it is the average frequency of a unit of money being spent in a particular period of time. It refers to the amount of economic activity in comparison to a given money supply. |
| Volatile Market |
Refers to a market that is often exposed to wide price fluctuation. This kind of volatility is usually the result of the lack of liquidity (also referred to as wicked market). |
| Volatility |
In financial terms, volatility refers to the standard deviation (measurement of variability or diversity) of the continuously compounded returns of a financial instrument during a certain period of time. Volatility is an effective trading strategy as it is a key measure of market sentiment. |
| Vulture Fund |
Name given to funds that invest in the debt of a company that has failed or is about to fail and whose market value is very low, but in the view of the fund it has value. |
| VWAP |
VWAP stands for the Volume Weight Average Price, calculated on the Currenex platform. Basically, VWAP is an average of the prices given by system within a 5 minute period of trading. |
| Watered Stocks |
Shares with overvalued assets as a result of inflated accounting values. |
| Weak Hands |
When used in the context of delivery of commodities on futures contracts, it usually means that the party will most likely not retain ownership of the commodity. It can be also used with regard to futures positions, referring to positions held by small speculators. |
| Wedges |
Chart pattern (i.e. shape created by movements on a price graph) used in technical analysis to forecast market trends: two converging lines connect a series of peaks and troughs to form a wedge. |
| Whipsaw |
A slang term for a particular condition of a highly volatile market, meaning that a sharp price movement is quickly followed by a sharp reversal. |
| Wholesale Money |
The money borrowed in large amounts from banks and institutions rather than from small investors. |
| Wholesale Price Index |
It measures price changes in the manufacturing and distribution sector of the economy and tends to lead the consumer price index by 60 to 90 days. The index is often quoted separately for food and industrial products. |
| Wide Opening |
Refers to the unusually wide spread between the Bid and Ask quote. |
| William’s Percent Range |
The WPR measures overbought and oversold market conditions, the %R always falling between a value of 100-0: indicator values between 80-100% show that the market is oversold, while those ranging between 0-20% indicate an overbought market. |
| Wire Transfer |
Wire transfer is an electronic payment service for transferring funds between two accounts by electronic means. |
| World Bank |
An international agency that channels aid funds to developing countries, and raises funds by selling bonds on world capital markets. |
| WTI Crude Oil |
A brand of oil, also known as Texas light, which is produced in the state of Texas. It is mainly used for the production of gasoline and therefore there is a high demand for this grade of oil, in particular in the USA and China. |
| WTO |
Stands for World Trade Organization, which supervises existing international trade accords, and provides a forum for negotiating new agreements and adjudicating disputes. |
| X |
The fifth letter of a NASDAQ (National Association of Securities Dealers Automatic Quotation System) stock symbol defining it as a mutual fund. |
| XMI |
Applies to derivative products. It is the quotron symbol for MMI (Major Market Index). |
| Y |
The fifth letter of a NASDAQ stock symbol defining it as an ADR (American Depositary Receipt). |
| Yankee Bonds |
Foreign bonds issued in the United States by foreign bank and corporations, denominated in US dollars. |
| Yankee Market |
Humorous name given to the foreign market in the United States. |
| Yard |
Informal name given to one billion currency units. Mainly used in currency trading to avoid mistaking “million” for “billion”. As one billion Japanese yen equals roughly 10 million US dollars, the two very similar words can be easily misheard. |
| Yield |
The percentage rate of return paid on a stock in the form of dividends, or the effective interest rate paid on a bond or note. |
| Yield Gap |
Also called yield ratio, it compares the dividend yield (ratio of annualized dividends to the price of a share) on equities with the yield on long-term government bonds. It helps assess if equities are under- or over-priced as compared with government bonds. |
| ZBA |
Short form for zero balance account. It is a checking account with zero balance maintained by funds transfers from a master account in amounts only large enough to cover checks presented. |
| Zero Coupon Swap |
An interest rate swap (agreement in which two parties make interest payments to one another for a set period) where the floating rate payments are periodically made, while the fixed rate payments are paid in a single payment. |
| Zero-investment Portfolio |
A portfolio designed to have zero systematic risk. |