Dictionary Of Forex Terms

А

◉ Ask or Ask Price) - this is the offer price on the stock exchange, the quotation at which sellers agree to sell an exchange-traded asset.
◉ Arbitrage - this is a trading strategy in which opposite trades are simultaneously opened on the same exchange instrument or on different instruments or markets that are in mutual correlation.
◉ Asset - a tool that has economic value and can bring income in the future.
◉ Alligator - an indicator created to highlight the periods of range trading of trend movements.
◉ American Stock Exchange, AMEX - the stock exchange, which has grown from a small company of stock traders into the second largest stock exchange in the United States, is among the key exchanges in the United States by a number of indicators. Its distinctive feature is that it includes shares of companies that are under development (small and medium-sized businesses). There are two main indexes: the AMEX Major Market Index and the AMEX Market Value Index.
◉ ADX - Average Directional Index - a technical indicator developed by Wells Wilder, the purpose of which is to determine the strength of the trend and further price movement by analyzing the dynamics and difference of minimum and maximum trading prices.
◉ Aussie - the name is from Forex slang for the Australian Dollar.
◉ Ask - The offer price, that is, the price at which you buy.

B

◆ Base Currency - the currency that stands first in the currency pair (in the numerator) is a "commodity", i.e. it is bought and sold for the second currency in the currency pair. The transaction volume is indicated in the base currency.
◆ Balance - the total result of all completed financial transactions on the trading account.
◆ Bid или Bid Price - the price at which the client can sell the currency (the lower number in the two-way quotation).
◆ Broker - an agent who carries out investor's orders for currency purchase and sale operations.
◆ Bull Market - a market characterized by an increase in prices (quotations).
◆ Basis point - a unit of measurement that is equal to one hundredth of a percent. Ambiguity must be eliminated when calculating the difference in interest rates. In this case, the base point acts as the unit of measurement. Example: an increase in the interest rate from 7% to 7.2% is a 20 basis point change.
◆ Break - a term that is used to denote a rapid and sharp drop in price. This is an indicator of monetary imbalance, when sellers are significantly stronger than buyers of a particular financial instrument.
◆ Bull - a market participant who bought securities, hoping for an increase in their price on the stock exchange. He makes a profit by increasing the exchange value of shares. A trader or investor who acts in accordance with the belief that the market and prices for specific financial instruments (currency pairs, stocks, etc.) will rise. Opens purchase transactions (long position). Traders playing for a raise. They are buying up assets to profit from rising prices.
◆ Breakout - Literally "breakthrough", the term refers to a situation where the stock price goes beyond a local maximum or minimum.
◆ Basis - this is the difference in price between the futures price and the price of the underlying asset. The basis can be either positive or negative. By the end of the contract period, the basis will be zero, as the futures and spot prices will be equal.
◆ Base Interest Rate - the rate that banks set to determine the key amount of interest accrual for different types of loans. Its size depends on the supply and demand for credit resources, interest rates on the market and other factors.
◆ Beneficiary - the one who receives income from the property that he has officially transferred to trust management by concluding a contract. This can be income from renting out property, transferring shares to a broker, and much more.
◆ Big Board - this is how the name of the New York Stock Exchange sounds in the slang of traders. It is the world's largest stock exchange in terms of the total value of listed companies' securities. Its platform is currently the leader in terms of traded shares. More than 3,000 corporations worldwide are listed on it.
◆ Binary options - a relatively new financial instrument, the distinctive features of which are a fixed cost and a pre-determined amount of potential profit or loss. Binary options are considered a suitable tool for novice traders, since the possible profitability is known even before the transaction, which can be obtained simply by determining the direction of price movement.
◆ Bear - a market participant who has sold securities or opened a short position, or is about to open one, hoping for lower prices. Makes a profit by reducing the exchange value of shares.
◆ Buy - purchase of a financial instrument in order to increase the exchange rate. In relation to currency pairs: purchase of the base currency for the quoted currency. In relation to contracts for difference: purchase of the underlying CFD asset in US Dollars (USD).
◆ Balance of Trade - It is an economic indicator that tracks the monthly or quarterly difference between the volume of imported and exported goods and services in a country or region. Negative values indicate a trade deficit; positive values indicate a surplus. When the data comes out better than expected, i.e. the deficit is smaller or the surplus is larger, this often has a positive effect on the currency of a given country.
◆ Bear Market - the situation in the financial market, which has a pronounced tendency to sell off assets or the predominance of "Bearish" sentiments among the majority of traders.

C

◈ Currency pair - a financial instrument that is an operation to buy/sell one currency for another currency.
◈ Chart - graphical representation of changes in the price (exchange rate) of a certain financial asset.
◈ Consumer Price Index, CPI - it is an economic indicator that measures the average price level of goods and services consumed by households. It is an important tool for estimating inflation in the economy and is used by governments, central banks, and economists to analyze changes in the cost of living.
◈ CCI - Commodity Channel Index - a cyclical technical indicator that is often used to determine overbought and oversold conditions in the market.
◈ CFD - a special trading tool that allows you to speculate on the prices of stocks, commodities and other instruments without buying or selling them.
◈ Cross rates - a currency quote without the direct participation of the US dollar in it.
◈ Cable - this has been the name of the GBPUSD currency pair since the 19th century, since at that time communication between the New York and London stock exchanges was carried out via a transatlantic cable. In terms of trading volume, this pair is second only to EURUSD and USDJPY and is considered highly liquid, because it includes the first and third reserve currencies in the world. At the same time, Cable trading is characterized by high volatility.
◈ Clearing - the process of trade settlement.
◈ Сross pairs - currency pairs that do not contain the US dollar.
◈ Commission - payment to the broker for performing the operation.
◈ Correction - a noticeable pullback of the price from the previously reached level.
◈ Cash - it is the currency of the state in a certain physical representation. Cash is money (coins or bills) that are in free circulation in the hands of the population and are used in the sphere of turnover of goods and services.
◈ Confirmation - this is a document that records all the details of a newly concluded transaction on the securities market, such as the settlement date, terms of the agreement, commission, and others. Confirmation is also understood as a written document that confirms the trader's order sent by phone. As a rule, these are written notifications from brokers to traders that a deal has been executed.
◈ Candlestick Chart - a technical analysis tool, a chart on which the price is indicated using "Japanese candlesticks".

D

◈ Day trading, Intraday - opening and closing of one or more positions during one trading day.
◈ Derivative - It is a financial instrument whose value depends on the underlying asset or group of assets. Most often, derivatives are linked to assets such as stocks, bonds, commodities, currencies, or interest rates. Derivatives can be used to hedge risks, speculate, or increase liquidity. Examples of derivatives include futures, options, swaps, and forward contracts. Derivatives trading provides traders with the opportunity to make money on fluctuations in the prices of underlying assets without having to own them directly, which makes this tool popular in financial markets.
◈ Dealer - a market participant who buys and sells currency at his own expense.
◈ Day order - a trader's buy or sell order, which is valid until the end of the trading day and is automatically canceled if not executed on the day of receipt.
◈ Deposit - funds deposited to the client's account.

E

» Elliot Wave Theory - a set of principles for analyzing charts based on figures of five or three waves.
» Euro - the currency is used in 19 countries of the European Union: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
» Equity - this is the difference between the assets and liabilities of a company or an investment account. In the context of trading and investment, funds represent the net asset value after deducting all debts and liabilities.
» Expert Advisors - an automated script that is used by trading software to manage positions and orders automatically, without human intervention.
» Expiration - the last day when a derivative (futures, option, etc.) transaction can be executed or closed.

F

◆ Floating Profit/Loss - profit/loss on a position that is still open.
◆ Foreign Exchange Market, Forex - conversion operations for the exchange of foreign currencies.
◆ Floating Profit or Loss - this is an unrealized gain or loss from an open position held by a trader.
◆ Free Margin - funds on the trader's deposit that are not used as collateral for open positions.
◆ Fundamental analysis - fundamental analysis, a method of forecasting price changes based on an analysis of the current economic situation.
◆ Federal Reserve System, Fed - The main regulatory organization of the US financial system, whose division is the FOMC (Federal Open Market Committee), regulates, among other things, federal interest rates.
◆ Flag pattern - a figure on a technical analysis chart that shows a situation where there is a large increase in the price of a currency, then its movement in a narrow range for a while and then a large drop.
◆ Fractal - a fractal is an indicator that shows local tops and lows in places where the price movement stopped and unfolded. These reversal points are called Peaks and Troughs, respectively.
◆ Flat - A "plane", a price that moves in a certain range: neither rising nor falling.

G

◈ Gross Domestic Product, GDP - a measure of the national income and production of a country's economy; one of the most important indicators for the Forex market.
◈ Gap - a situation where the current quote differs from the previous one by more than the size of the spread. It can occur both during a trading session after the release of significant macroeconomic data, economic and political news, or in case of force majeure, and at the market opening after weekends and holidays.
◈ GTC - Good Till Cancelled - this is a special type of exchange order that remains active until it is canceled or executed; it is not automatically deleted at the end of the session, unlike regular pending orders.
◈ Growth stock - it is usually referred to as the shares of a company that either has already demonstrated good earnings (above average) over a certain period of time (usually several years), or has sufficient potential for profit growth in the near future. A feature of growth stocks is that their price often rises faster than the price of other stocks.

H

◈ Hedging - opening a position to sell an instrument without closing positions to buy the same instrument. And vice versa.
◈ Hedge - restrict, fence off, evade. Actions aimed at limiting/reducing risks, including risks related to price movements. Hedge is also called risk insurance.
◈ Hawk - a term in political and economic jargon that denotes a proponent of harsh monetary and credit measures in the economy (including raising interest rates) and a tough pragmatic line in relations with other countries in politics, when other countries significantly improve their own situation.

I

◆ Ichimoku Indicator - It is a comprehensive technical analysis tool introduced in 1968 by Tokyo-based columnist Goichi Hosoda. The idea of the system was the ability to quickly understand the mood of a trend, its dynamics and strength, interpreting all five components of the system in combination with price dynamics in terms of the cyclical nature of their interaction due to the group dynamics of human behavior.
◆ Investor - someone who has temporarily available funds and is interested in making a profit, for which he purchases securities. Investors can be individuals, organizations, companies, and various funds.
◆ Index - this is a statistical indicator that reflects the cumulative change in prices of a certain group of goods, services, assets, or other objects. Indexes are used to measure changes in the economy, financial markets, and various industries.

J

◉ Japanese Candles - one of several types of charts in a trading terminal that allow a trader to navigate through price fluctuations in the market.

K

✦ Kiwi - the designation of the New Zealand dollar in dealer jargon.
✦ Kleen - It refers to short-term graphical price models of trend continuation, showing that its direction will continue in the near future. For example, on a daily chart, a model is often formed within a week or two.

L

➛ Long Position - a buy position. In Forex, the currency you buy is called long, and the currency you sell is called short.
➛ Latency - trading delays are the time intervals between placing an order and executing it. It is desirable that the delay be as small as possible, as this allows the trader to hope for the execution of the order at the specified price during the market movement.
➛ Leverage - borrowed funds that the broker provides to the trader. This is the amount of money that the broker is willing to provide to the trader to perform operations on the financial markets with a large volume of transactions. Using leverage, the trader increases his deposit several dozen times. It is expressed in the ratio between the deposit amount and the trading volume.: 1:10, 1:100, 1:500 and so on. When using leverage, the trader's own funds act as collateral.
➛ Lot - the standard number of financial assets per transaction.
➛ Liquidity - a market measure that describes the relationship between trading volume and price changes.
➛ Limit order - an order (request) to buy or sell a specified amount of an asset at a specified price or better. For example, if the current price of the USD/JPY currency pair is 108.24/108.26 (Bid/Ask), the trader can place a buy limit order at a price of, for example, 107.50; if the quote falls and the Ask price reaches 107.50, the transaction will be completed and the corresponding Buy position will be opened.
➛ Liquid market - A market where traders can buy and sell large amounts of assets at any time and with low transaction costs.
➛ Low price - The minimum price for a certain period of time.
➛ Leading Indicator - registers changes by industry before they are noticeable in the economy as a whole. Leading indicators, for example, include the Volume of money supply, building permits and production orders.

M

◆ Momentum - characteristics of the price movement, the rate of change of the currency price.
◆ Margin - the necessary financial support for opening and maintaining trading positions. For currency pairs, the margin size will be proportional to the leverage less than the actual volume of the trading position (for example, 1% with a leverage of 1:100). For CFDs, the margin size does not depend on leverage and is determined in absolute (monetary) or percentage terms of the actual volume of the trading position (for example, 10% for CFDs on drag. metals). The margin size for each instrument is specified in the contract specifications on the Company's website.
◆ Margin Call - a message from the broker to the trader that it is necessary to increase the funds in the margin account.
◆ Margin Account - the account where the client receives a loan from a broker/dealer for making transactions.
◆ Market maker - a large bank or financial company that has a significant share of its operations in the market and has an impact on the current level of the exchange rate.
◆ Marginal Trading - conducting trading operations using leverage, when the Client has the opportunity to make transactions for amounts significantly exceeding the size of his own funds.
◆ Market order - a market order, an order to trade a stock at any prevailing price at the time of its receipt.
◆ Market Price - the last market price at which the transaction was conducted.
◆ Moving Average - a method of smoothing price values that facilitates trend recognition. The simple moving average is the average price for the last period of a certain number of days. It is represented by a line on the price chart. In some simple trend-following trading systems, the intersections of a price curve and a moving average or two moving averages (that is, one curve crosses the other from bottom to top or vice versa) are used as buy and sell signals.
◆ MACD - Moving Average Convergence Divergence - It is a technical indicator used to analyze price dynamics in financial markets. It consists of two moving averages (usually exponential) - a fast one (the MACD line) and a slow one (the signal line). The difference between these two moving averages forms a histogram.
◆ Margin level - a key indicator of the account status, which characterizes the sufficiency of Funds in the trading account to maintain open positions. Calculated using the formula: Margin Level = Funds / Margin * 100%. If the Margin Level falls below the acceptable value defined in the Trading Regulations, a Stop-out occurs.

N

✦ Net Change - the difference between the closing price of the previous trading period and the closing price of the current trading period for this security.

O

◉ Order - the company's client's order to open or close a position when the price reaches the order level.
◉ Open position - A position to buy or sell a currency pair.
◉ Out-of-the-money Option - this means that the option has no intrinsic value at the time of the transaction. For example, you predicted that the price of an asset would rise, but it, on the contrary, fell. Your forecast did not come true - the option turned out to be unprofitable.

P

◈ Pennon - it refers to short-term graphical price models of trend continuation, showing that its direction will continue in the near future. For example, on a daily chart, a model is often formed within a week or two.
◈ Producer Price Index, PPI - the Producer Price Index (PPI) is a Producer Price Index (PPI) published by The Bureau of Labor Statistics (The Bureau of Labor Statistics), which is a group of indexes that calculate and represent the average change in selling prices of domestic production over time.
◈ Pip - the minimum possible quote change. As a rule, the point is 0.0001 or 0.00001 for most currency pairs that are quoted to the fourth or fifth decimal place; but for yen pairs it is 0.01 or 0.001 when quoted to the second or third digit. For other financial instruments, the point is usually from 0.1 to 0.001.
◈ Portfolio - simultaneous purchase or sale of a basket of securities combined into a portfolio according to any criterion.
◈ Position - the type of contract for an unfinished transaction. When playing for a raise, the position is called long, and for a decrease, it is called short.
◈ Profit - excess of income from a trade transaction over its expenses.
◈ Point - the minimum possible quote change. As a rule, the point is 0.0001 or 0.00001 for most currency pairs that are quoted to the fourth or fifth decimal place; but for yen pairs it is 0.01 or 0.001 when quoted to the second or third digit. For other financial instruments, the point is usually from 0.1 to 0.001.

Q

✦ Quote - the specified market price, which consists of two digits (Bid/Ask), one of which shows the purchase price and the other the sale price of a particular financial asset at the current time.

R

➛ Range - the range of the price spread.
➛ RSI - Relative Strength Index - an indicator that measures the strength of directional price movement by comparing bullish and bearish trend segments.
➛ Rate - the price of one currency expressed in units of another currency.
➛ Risk control - using trading rules to limit losses. Risk control skills allow traders to trade comfortably and increase profits in relation to losses.
➛ Rollover - a way to move Stop-Loss orders to more favorable levels.
➛ Resistance level - it is one of the key concepts of technical analysis. Resistance is the price level at which the sellers' activity is significant enough to prevent further purchase and increase in the value of the asset.

S

✦ Short Position - sale of a financial instrument based on the depreciation of the exchange rate. In relation to currency pairs: selling the base currency for the quoted currency. In relation to contracts for difference: sale of the underlying CFD asset for US Dollars (USD).
✦ Shareholder - this is a natural or legal person, the owner of securities - ordinary or preferred shares, indicating the share of their owner in the capital of the issuer. Shareholders are endowed with property and non-property rights.
✦ Stop-loss order - an order to close a position upon reaching a certain (worse than it is) price level for it. The simplest and most effective way to avoid huge losses.
✦ Stock - this is a security indicating the investor's (shareholder's) share in the company's capital.
✦ Support - the price level at which active purchases can stop or reverse the downward trend.
✦ Slippage - this is the difference between the price expected by the trader for the placed order and the price of the actual execution of this order. Slippage can occur at times of low liquidity or in volatile markets, often immediately before and after the release of important macroeconomic news. Slippage also has an impact on stop orders, as the latter are executed as market orders at the next best available price, rather than through requesting another quote for the trader.
✦ Spread - the difference between the price of supply and demand (that is, the maximum selling price and the minimum purchase price). One of the fundamental concepts in the foreign exchange market, without which it is difficult to imagine the work of a trader. It indicates the difference between the current purchase and sale prices of a financial instrument and is the main source of income for brokers who take a small part of the spread as a kind of commission for the provision of services. The difference between the best price (quotation) for the purchase and the best price (quotation) for the sale of a particular stock in the "order queue". The smaller the spread, the higher the liquidity.
✦ Swap - It represents the difference in interest rates on loans in the currencies involved in the transaction. It is credited (if positive) to the trading account or debited from it (if negative) when the open trading position is transferred overnight.
✦ Spike - a type of Japanese candle with a small body and long shadows, indicating a non-market quotation. A spike appears when the next quote significantly differs from the previous one or there is a price gap. A spike can be either a sign of a confrontation between sellers and buyers in the market, or simply be the result of a technical malfunction. Therefore, the appearance of hairpins should be treated very carefully.
✦ Saucer - a long-term figure of technical analysis, which means a slow change in the trend in the Forex market towards long-term growth and the corresponding dynamics of trading volumes. The saucer usually has an arc-shaped bottom, which is most clearly visible on the weekly charts. However, the period of formation of this figure can last more than a year.
✦ Stop out - automatic order of the trading server to close client positions at current quotes without prior notification to the Client. Occurs if there is a shortage of funds to maintain open positions on the account, when the Margin Level is equal to or less than the Stop out value specified in the "Trading Conditions" section on the Company's website.
✦ Stop Loss - an order to close positions to limit losses.
✦ Spot - a transaction that is carried out immediately, but the transfer of money for which usually takes place within two days of the conclusion of the transaction.
✦ Scalping - a quick strategy to make a profit on minor changes in the value of the currency.
✦ Spot Rate - in forex, the spot level is the current price at which a given currency pair can be bought or sold.
✦ Spike - this is a relatively large price movement up or down in a short period of time.
✦ Stop order - an order to buy or sell a currency upon reaching a specified price level.
✦ Support level - This is a key concept in the technical analysis of the Forex market and other financial markets. It indicates the price level below which the asset's decline is expected to slow down or stop. The support level is often interpreted as the point at which demand for an asset increases, which prevents the price from falling further. This is because investors are often willing to buy an asset at a lower price, which creates pressure for higher prices.
✦ Strike Price - the price fixed in the option contract at which the option buyer can purchase (Call) or sell (Put) shares if the option is successfully executed.

T

» Trendline - lines connecting a series of extreme upper or extreme lower points on a price chart.
» Transaction - the operation of opening and closing a currency position.
» Technical analysis - market analysis based only on technical market data — quotes and various technical indicators.
» Tick - a one-time price change by the market maker, transmitted in the form of new purchase and sale prices.
» Trend - the direction of price movement during a certain time interval (steady trend). A directional price movement. The trend can be upward or downward. This is a certain direction of the Forex price movement. The behavior of the trend, among other things, is analyzed during technical analysis. Trends are of the following types: downward (also called bearish), upward (also called bullish) and lateral (absent or flat). As a rule, it is recommended to open sell positions during a downtrend, and buy positions during an uptrend. If there is no trend, it is better not to perform any operations.
» Trading terminal - a computer trading system in which signals for buying and selling currencies are generated by a specially designed program.
» Take profit - a trading order that automatically captures the profit from the transaction when the price position determined by the trader is reached.
» Technical indicators - they are an integral part of technical analysis. Their purpose is to predict the direction of the market movement to help the trader. There is a large set of indicators that traders use to determine market movements.
» Trader - a person who buys and sells currency using their personal account.
» Trade session - a continuous period of time during which trading transactions can be concluded in the underlying market.

V

◈ VPS - Virtual Private Server - it is a powerful tool used by traders to ensure smooth and fast trading in financial markets.
◉ Volume - the total number of shares sold/purchased for a certain period.
◈ Volatility - price fluctuation. High market volatility means rapid price movement in a wide range. Low volatility is a situation of calm in the market when there are no sharp price spikes. A measure of price variability or price deviation from its average or usual value. The measure of volatility is usually the standard deviation of the price. The greater the fluctuations or price changes, the higher the volatility. The range of fluctuations in the price of a financial instrument is one of the most significant indicators of the attractiveness of an instrument in trading. It is volatility that reflects the degree of risk in working with a particular instrument, because the higher this indicator is, the greater the range of exchange rate changes in a certain period of time.

Y

◈ Yen - the monetary unit of Japan.