Glossary
A
Absolute Value
The numerical value of a real number without regard to its sign. For example, the absolute value of -5 is 5.
Accumulation
In trading, it refers to an extended period of time during which investors are buying. It is said that accumulation occurs in price bottoms and during corrective downside waves. In centralized markets where volume data are accurate, traders know that after a sharp fall in price the volume increases, means strong hands are accumulating.
Adjustable Peg
Exchange rate regimen where a currency's exchange rate is pegged (fixed) to a major currency, such as the US dollar or the euro. The pegged rate can be adjusted occasionally in an attempt to improve the country's competitive position.
Aggregate Risk
A bank's exposure to forex contracts from a single customer.
Agio
A fee charged to exchange money from one currency to another.
Analyst
A market professional who analyses the markets on indicators and makes predictions.
Appreciation
A currency is said to `appreciate` when it strengthens in price in response to market demand.
Arbitrage
This is a style of trading where profits originate by buying the same currency as the one you have sold simultaneously in a different market. There are times when the price for the same pair is different in one market than the other. This momentary difference bridges up in no time and the prices become the same. Arbitrageurs take advantage of these pricing lapses to make their profits. Similarly, other form of arbitrage trading calls for taking position in the cross pairs as soon as a discrepancy is seen between majors and crosses.
Around
Dealer jargon used in quoting when the forward premium/discount is near parity. For example, "two-two around" would translate into 2 points to either side of the present spot.
Asian Option
An option that pays off according to the average prices of the underlying asset over time.
Ask (BUY)
This is the price at which you can buy the respective pair/instrument for, at the time of reading. It changes all the time and always is higher than the BID price.
Asset
An item/resource that has an economic value owned by an individual, corporation or a country.
Asset Allocation
Investment practice that divides funds among different markets to achieve diversification for risk management purposes and/or expected returns consistent with an investor's objectives.
Asset Class
A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations such as equities (stocks), fixed-income (bonds), commodities, forex etc.
Authorized Dealer
Depending on the regulatory body, a dealer authorized to deal in forex.
Automated Trader
A trader who uses an automated system to input trades without any human input.
B
Back Office
The departments and processes related to the settlement of financial transactions.
Back-test
The process of checking a trading method’s profitability over the historical price data. This usually is done by making an automated Expert advisor that runs from a Back-date to current date and produces data as to how many winners against how many losers the system could have produced in that period.
Balance of Trade
The value of a country's exports minus its imports.
Band
In countries where the currency is pegged, the range in which the rates are permitted to fluctuate.
Banking Day
Days of the week when commercial banks are open for business in the country of the particular currency traded.
Bank of England (BOE)
It stands for Bank of England that controls the interest and saving rates of GBP and supervises the monetary policies of United Kingdom.
Bank of Japan (BOJ)
The central bank of Japan. The Bank is often called Nichigin for short. The Bank of Japan is headquartered in Nihonbashi, Tokyo, on the site of a former gold mint (the Kinza) and, not coincidentally, near the famous Ginza district, whose name means "silver mint".
Bank Rate
The rate at which a central bank is prepared to lend money to its domestic banking system.
Bar Charts
A popular format for studying the price action of currency pairs.
Base currency
The base currency is the first currency in a currency pair, and the currency that remains constant when determining a currency pair's price. The United States Dollar (USD) and the European Union Euro(EUR) are the dominant base currencies in terms of daily traded volume in the foreign exchange market. The British Pound (GBP), also called sterling, is the third ranking base currency. The USD based pairs are USD/JPY, USD/CHF and USD/CAD; the Euro based pairs are EUR/USD, EUR/JPY, EUR/GBP, and EUR/CHF. The GBP is the base for GBP/USD and GBP/JPY. The Australian Dollar (AUD) is its own base against the USD (AUD/USD).
Basis
The difference between the spot price and the futures price.
Basis point
One hundredth of a percentage point.
Bear
A trader who believes prices will fall.
Bearish
Bearish means Going down or likely to go down. This is used to describe the movement of the currency pair/markets when the price of the pair starts going down. It is said that the market is Bearish or the market has turned bearish.
Bid /Ask Spread
The difference between the bid and offer (ask) prices; also known as a two-way price.
Bid (SELL)
This is the price at which you can sell the respective currency pair. Just like the Ask price, The BID price also changes all the time but is always lower than ASK price.
Big Figure
Dealer expression referring to the first few digits of an exchange rate. These digits rarely change in normal market fluctuations, and therefore are omitted in dealer quotes, especially in times of high market activity. For example, a USD/Yen rate might be 107.30/107.35, but would be quoted verbally without the first three digits i.e. "30/35".
Bonus
The incentive that the broker offers to you to open an account with him.
Book
In a professional trading environment, a 'book' is the summary of a trader's or desk's total positions.
Bretton Woods Agreement of 1944
An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.
Broker
The broker is the authorized and regulated representative of the bank and works as an intermediary between retail traders/Financial institutions and the Banks. Itsmain Job is to accept trading orders on behalf of the bank and maintain up-to-daterecords of all these transactions. The Broker is bound to comply with the transactionlimits and Conditions as set by the Banks and is regulated by the concerned financialauthority of the country.
Brokerage
A company that offers trading services to the public.
Bucket shop
A brokerage company that takes the opposite positions of the orders placed with it by the traders. They move with the belief that all trades or most of them will only lose money, so taking positions opposite to their orders will make profits for thecompany.
Bull
A trader who believes that prices will rise.
Bullish
Bullish means Going up or likely to go up. This is used to describe the movement of the currency pair/markets when the price of the pair starts going up. It is said that the market is Bullish or the market has turned bullish.
Bundesbank
Germany's Central Bank.
Business Days
Days of the week when commercial banks are open for business in the country of the particular currency traded.
Buy Limit Order
This is a pending order to buy a pair when the price turns more profitable for the trader by "falling" to a certain price.
Buy On Margin
The process of buying a currency pair where a client pays cash for part of the overall value of the position. The word margin refers to the portion the investor puts up rather than the portion that is borrowed.
Buy stop
This is a pending order to buy a pair when the price of it has risen to a certain level. It is believed that if the price has risen to a certain level, then the price will continue to rise.
C
Cable
This is a nick name for the GBP/USD currency pair. Cable is one of the heavily traded instruments and is also considered one of the fastest pairs. It is also called the ‘Wild beast’ or the ‘Wild Horse’.
Candlestick
This is bar on the historical price chart that displays the pair’s high, low, open, and close price for a specified period of time. Candlesticks are also known as “Candles”.
Carry Currencies
High interest rate currencies.
Carry Grid
A grid of positions (including open orders, take profits, and stop losses) built on a carry trading strategy.
Carry (Interest-Rate Carry)
The income or cost associated with keeping a foreign exchange position overnight. This is derived when the currency pairs in the position have different interest rates for the same period of time.
Carry Positive
A carry trade where you are long the high interest currency and short the low interest currency. Excluding the volatility of the currency pair, this strategy is profitable based on the interest rate differential between the two countries.
Carry Trade
A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates, which can often be substantial, depending on the amount of leverage used.
Cash on Deposit
Funds deposited in a trading account
Central bank
The principal monetary authority of a nation, controlled by the national government. It is responsible for issuing currency, setting monetary policy, interest rates, exchange rate policy, and the regulation and supervision of the private banking sector. The Reserve Bank of India is the central bank of India. Others include the Federal Reserve of the United Staes, European Central Bank, Bank of England, and the Bank of Japan.
Chart
A visual representation of the historical rates in the form of lines.
Charting application
This is software which shows you the multiple charts on multiple time- frames of your choice along with all the technical indicators.
Chartist
An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.
Choice Market
A market with no spread. All trades buys and sells occur at that one price.
Chunnel
This is the Nick name for the currency pair EUR/GBP.
Clearing
The process of settling a trade.
Collateral
Something given to secure a loan or as a guarantee of performance.
Confirmation
A document exchanged by counterparts to a transaction that states the terms of said transaction.
Contagion
The tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high volatility in their domestic currency, the Rupiah. From there, the contagion spread to other Asian emerging currencies, and then to Latin America, and is now referred to as the 'Asian Contagion'.
Contract
The standard unit of trading.
Conversion
The process by which an asset or liability denominated in one currency is exchanged for an asset or liability denominated in another currency.
Counterparty
One of the participants in a financial transaction.
Country Risk
Risk associated with a cross-border transaction, including but not limited to legal and political conditions.
Cross Rates
Cross rate is the currency pair without the United States Dollar like GBP/JPY. The currency pairs including Euro (EUR/GBP) are usually called as Euro crosses. The rest of the currency pairs also make crosses with each other also known as Cross.
Currency
A country's unit of exchange issued by their government or central bank whose value is the basis for trade.
Currency (exchange rate) risk
The risk of incurring losses resulting from an adverse change in exchange rates.
Currency pair
Currency pair is a quotation of two currencies against each other, usually written as Base currency/ Quote currency. i.e. EUR/USD would mean a currency pair with two currencies European Euros and United States dollars. It is the same pair that you have to either buy or sell at the price showing against it. A currency pair is also called a pair or an Instrument.
D
Day trading
A style of trading where the aim of the trader is to close the trades the same day or the same session, irrespective of whether the position is in profits or a loss.
Dealer
An individual who acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.
Deficit
A negative balance of trade or payments.
Delivery
An FX trade where both sides make and take actual delivery of the currencies traded.
Demo account
A practice account with virtual money designed for the beginners to practice their basics and test their strategies.
Depreciation
A fall in the value of a currency due to market forces.
Derivative
A contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.
Devaluation
Lowering of the value of a country's currency relative to the currencies of other nations. When a nation devalues its currency, the goods it imports become more expensive, while its exports become less expensive abroad and thus more competitive.
Deviation
The difference in the actual close price to the expected close price.
Dollar
Currency of United States of America.
Dovish
The statements (mostly related to News) that indicate an expected weakness in the currency price.
E
EA (Expert Advisor)
This is an automated script/ program which are written onto the trading platform software to read the markets, open positions and set orders on the trading platform automatically without manual control or human intervention. EA’s are also known as trading robots.
ECB
It stands for “European Central Bank” that controls the interest rates and monetary policies of the countries under European Union.
ECN Broker
A forex financial expert who uses electronic communications networks (ECNs) to provide its clients direct access to other participants in the currency markets. Because an ECN broker consolidates price quotations from several market participants, it can generally offer its clients tighter bid/ask spreads than would be otherwise available to them. ECN brokers charge clients a fixed commission per transaction.
Economic Indicator
A government issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.
Elliot waves
This is a technical indicator designed by R.N. Elliot to study the market movements and find the future direction.
EMA
It stands for “Exponential moving average” which is a technical method of studying the market movements on mathematical parameters.
End Of Day Order (EOD)
An order to buy or sell at a specified price. This order remains open until the end of the trading day.
Entry Limit Orders
An order initiating an open position to sell as the market rises, or buy as the market falls. The client believes the market will reverse direction at the level of the order. (a) Buy Entry Limit - An order to buy at a price Below the current market (b) Sell Entry Limit - An order to sell at a price Above the current market.
Entry Orders
An order used to enter a trade once a currency pair hits a pre-determined price level.
Entry Stop Orders
An order initiating an open position to sell as the market falls, or buy as the market rises. The client believes that prices will continue to move in the same direction as the previous momentum after hitting the order level. (a) Buy Entry Stop - An order to buy at a price Above the current market. (b) Sell Entry Stop - An order to sell at a price Below the current market.
Euppy
This is the Nickname for currency pair EUR/JPY (Euros and Japanese Yen).
Euro
Currency of countries under European Union.
European Central Bank (ECB)
The Central Bank for the European Union.
Exchange rate
The price of one currency stated in terms of another currency. Example - $1 Canadian Dollar (CDN) = $0.7700 US Dollar (USD)
Exotic pairs
A foreign exchange term for a thinly traded currency. Exotic currencies are illiquid, lack market depth and trade at low volumes.
F
FED
It stands for “Federal Reserve system”, the central bank of United States.
Federal Deposit Insurance Corporation (FDIC)
The regulatory agency responsible for administering bank depository insurance in the US.
Fibonacci
A technical indicator designed by an Italian mathematician named Fibonacci to read the market movements on mathematical parameters and project the retracement points.
Fibre
Nick name for EUR/USD currency pair. This pair is also called ‘Anti-dollar’.
Fixed exchange rate
A country's decision to tie the value of its currency to another country's currency, gold (or another commodity), or a basket of currencies. In practice, even fixed exchange rates fluctuate between definite upper and lower bands, leading to intervention.
Flat/square
Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.
Forex
Short-term language for ‘foreign exchange’. This refers to the Industry where one currency is bought in exchange of the other, i.e. Dollar for Euro or Euro for Pound.
Forward/Forward transaction
This is kind of a trade agreement where buyer and seller agree to exchange currencies at certain exchange rate some where in the future. Transaction will be made on that day no matter what the rates are as the rates are already fixed at the time of signing the trade agreement. The period of such deals can be from weeks to lasting for even several years and the size usually runs in millions of dollars on a single trade.
Forward points
The pips added to or subtracted from the current exchange rate to calculate a forward price.
Franc
Currency of Switzerland, also called Swiss franc.
Fundamental Analysis
This is the form of market analysis where the fluctuations are believed to be related to the news, economic indicators and global events. The opinions are formed at the time of news releases and the trades are carried upon accordingly. Fundamental analysis can be done at every major news release or time duration based news releases.
Futures Contract
An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts - ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.
G
G-10
G7 plus Belgium, Netherlands and Sweden, a group associated with the IMF discussions. Switzerland is sometimes involved.
G-20
A group composed of the finance ministers and central bankers of the following 20 countries - Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union. The IMF and the World Bank also participate. The G-20 was set up to respond to the financial turmoil of 1997-99 through the development of policies that “promote international financial stability”.
G-7
The seven leading industrial countries, being the United States, Germany, Japan, France, Britain, Canada, and Italy.
GBP
Great Britain Pound
Gopher
Nickname of the currency pair GBP/JPY (i.e. Great Britain Pound and Japanese Yen).
GTC (Good Till Canceled)
This is the type an order that is set in advance to buy or sell a currency at the set price. This order is alive (good) until execution or cancellation and it doesn’t matter how long the orders lasts. The other types of orders are time-based and expire at the specified time in case the order has not filled before expiry time.
H
Hedge fund
An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns
Hedging
Hedging means taking certain positions with the objective to secure the existing open positions. Instruments used are varied and include forwards, futures, options and combinations of all of them.
High
A sharp reversal point or a peak seen on the chart from where the market price returns to the opening price.
HYIP
It stands for “High yield investment program”. This program aim for extraordinarily high returns for their investors while trading at extreme risks. The probability of finding a total loss is higher under this program compared to conventional investment schemes. (Also see “PONZI schemes”)
I
Inflation
An economic condition whereby prices for consumer goods rise, eroding purchasing power.
Initial margin
The initial deposit of collateral required to enter into a position as a guarantee on future performance.
Interbank rates
The buy and sell rates at which the international banks trade with each other.
Interest Rate Swap (IRS)
An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for another based on a specified principal amount. Interest rate swaps often exchange a fixed payment for a floating payment that is linked to an interest rate (most often the LIBOR).
Intra-day
All trading activities that close in the same day.
J
Jobber
A trader who trades for short and quick profits rarely carrying the position to the next session.
JPY
It stands for the currency of Japan i.e. Japanese Yen.
K
Key points
The support and resistance points in the ongoing trend.
Killer
A sudden spike that triggers the stop- loss.
Kiwi
This is the Nick name for the New Zealand dollar and US dollar pair, i.e. NZD/USD.
Knocking
Double-touch to the key support and key resistance levels.
L
Leading Indicators
Statistics that are considered to predict future economic activity.
Liquidation
The closing of an existing position through the execution of an off setting transaction.
Liquidity
Also known as marketability, it means the ease at which the holding position can be disposed off in the market or be converted in hard cash.
London Inter-Bank Offer Rate or LIBOR
The standard for the interest rate that banks charge each other for loans (usually in Eurodollars ). This rate is applicable to the short-term international interbank deposit market, and applies to very large loans borrowed from one day to five years. This market allows banks with liquidity requirements to borrow quickly from other banks with surpluses, enabling banks to avoid holding excessively large amounts of their asset base as liquid assets. The LIBOR is officially fixed once a day by a small group of large London banks, but the rate changes throughout the day.
Long
It is used to describe the position which is in a Buy direction. You will often hear traders talking that ‘THEY ARE LONG’ which talking about a pair. It means that they have bought that pair and the position is open.
Loonie
This is the Nick name for USD/CAD currency pair. This pair is also called ‘Little dollar’.
Lot
Forex currency pairs are always traded in pre-defined amount and the amount is called a LOT.
Lot size
The number of units of the base currency bought or sold in the trade.
Low
A sharp point seen at the bottom of the chart from where the price has returned to the opening price.
M
Majors
Majors are the currency pairs that are most liquid and most traded. All the majors are based on United States dollar like EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD,USD/NZD and they make about 90 percent of the whole volume of the Forex trading.
Margin
This is the deposit money/Security money which, the investor needs to keep in his broker account to be able to place his trades. It is calculated by dividing the Lot size by the leverage being used.
Margin Account
This is the trader’s account which is used to hold his deposited money with the broker and is used for his FOREX trading.
Margin Call
Demand of a broker to deposit more money to the account when the amount in it falls below the minimum required to keep the position open.
Marked-to-Market
The theoretical value of an open position at the current market price.
Market Price
The current price for which the currency pair can be traded at the time of reading.
Market Risk
Exposure to changes in market prices.
Maturity
The end of the life of a security.
Meta-trader
A kind of trading platform provided by the broker to the traders when they open an account with them. Meta-trader is the most commonly used platform and has seen its improved versions starting from Metatrader1 to Meta-trader 5 now.
Momentum
The measure of the currency's movement in any visible direction.
Moving average
Moving average is a technical indicator that works with the Close price of the pair under different time period bars to project the likely close price of the next bar.
N
Net position
The total of profits and losses on the open positions.
Neutral markets
The stagnation period when the currency pair fails to move in either direction.
NFA
National futures association, a regulatory authority of USA that focuses primarily on qualifications, financial conditions and fair business practices.
NZD
New Zealand Dollar
O
OCO
“One cancels other”. This is a type of advanced order where one order that’s executed will cancel the other pending order.
Offer
Price at which you can buy the currency pair. It includes the spread and is the same as the ASK price.
Offsetting transaction
A trade which serves to cancel or offset some or all of the Maret Risk of an Open Position.
OHLC
Short form for describing “Open, High, Low, Close” price of the currency pair.
Open order
An order that will be executed when a market moves to its designated price.
Open Position (Trade)
A trade where you have bought or sold a currency pair and the trade is yet to close.
Overnight trade
A trade that lasts more than a day and stretches beyond twelve-past midnight.
Over the Counter (OTC)
Used to describe any transaction that is not conducted over an exchange.
P
Pending order
An order set in advance with the broker to automatically execute a trade as soon as the selected price level is reached.
Perfect market
A stage when the market moves with a slow and highly predictable pace within the expected boundaries.
Pip
A pip is the last digit in the currency pair rates. The term pip is used in Forex markets to define the minimal measure of the price movement. Let’s consider following example - the Euro/USD trading changes from 1.5000 to 1.5001, so it means that the currency pair changed by one pip. Therefore the pip is nothing but the minimal measure used to define the change in the exchange rate of the currency.
Pivot points
The primary support and resistance levels calculated by using last high, low and open price.
Political Risk
Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.
Ponzi schemes
These schemes, as Originated by a man called ‘PONZI’ are scam schemes that promise high returns to lure the investors but in reality, their money is never really invested in the markets. The investors are paid back a percentage from the new depositor’s money till the time the company fails to find newer depositors. At this time, the company winds up its operations with no notice, no refunds and disappears overnight.
Position
A view expressed by a trader through the buying or selling of currencies, and can also refer to the amount of currency either owned or owed by an investor.
Premium (cost of carry)
The cost or benefit associated with carrying an open position from one day to the next calculated by using the differential in short-term interest rates between the two currencies in the pair.
Price Transparency
Describes quotes to which every market participant has equal access.
Profit (Gain)
Positive amount of money gained for closing the position.
Profit target
Profit target is the price level where you expect the current price of the currency pair traded to move.
Q
Quantitative trading
Mathematical and statistical algorithms to trade the markets without technical or fundamental analysis.
Queue
The order that has been executed but yet to be accepted by the bank.
Quote currency
The second currency in the currency pair, i.e. JPY is the quote currency in USD/JPY currency pair.
Quote price
The available price at which the currency pair can be traded.
R
Range
The measurement of the magnitude of last High and Last Low.
Rate
The price of one currency in terms of another, typically used for dealing purposes.
Resistance
Price level at which the ongoing trend is likely to find difficulty in moving further.
Retracement
Retracement is a reversal point where the currency pair finds a support to continue with the original trend.
Revaluation
An increase in the foreign exchange value of a currency that is pegged to other currencies or gold.
Revaluation rates
The rate for any period or currency, which is used to revalue a position or book. The revaluation rates are the market rates used when a trader runs an end-of-day to establish profit and loss for the day.
Risk
Exposure to uncertain change, most often used with a negative connotation of adverse change.
Risk Management
The employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.
Rollover
The settlement of a deal is rolled forward to another value date with the cost of this process based on the interest rate differential of the two currencies. An overnight swap, specifically the next business day against the following business day.
S
Scalping
A trading strategy that attempts to make many profits on small price changes.
Sell limit
An order to sell a specified quantity of a security at or above a specified price called the limit price.
Settlement
The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.
Short
To go `short` is to have sold an instrument without actually owning it with expectation that the price will decline so it can be bought back in the future at a profit.
Signal
An event or condition that alerts investors to buy or sell a currency pair at specified prices.
SMA
It stands for “Simple Moving Average”. This is a mathematical technical indicator that works with taking average price over a certain period of time by giving equal weightage to all the prices.
Speculation
Trading with certain anticipation on the direction of the market movement.
Spike
A sudden and significant change in the price of the currency pair.
Spot
A transaction that occurs immediately, but the funds will usually change hands within two days after deal is struck.
Spread
The difference between the bid and offer (ask) prices; used to measure market liquidity. Narrower spreads usually signify high liquidity.
Sterling
Another term for British Pound
Stop-Loss Order
An order to close a position when the market reaches certain price against expectations. It is used to limit losses when market moves in the opposite direction.
Straddle
An options strategy with which the investor holds a position in both a call and put with the same strike price and expiration date.
Support Level
A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross below. Recurring failure for the price to move below that point produces a pattern that can usually be shaped by a straight line.
Swap
A swap occurs when one currency is temporarily exchanged for another, then the currency is held and exchanged later after a fixed period of time. Interest rate differential between the two underlying currencies is used to calculate swap points.
Swing trading
A short-term strategy used by traders to buy and sell stocks whose technical indicators suggest an upward or downward trend in the near future, generally one day to two weeks.
Swissy
This is the Nick name for USDCHF currency pair.
T
Take-Profit Order
An order given to the broker or used by currency traders specifying the exact rate where to close out their position automatically for a profit.
Technical Analysis
An analysis of past price changes and volume history for the purpose of forecasting future price trends.
Technical Indicator
Statistical information that is used to determine future trends in prices and make projections
Tick
The minimum movement on the currency pair chart.
Tomorrow Next (Tom/Next)
Simultaneous buying and selling of a currency for delivery the following day.
Trader
A person who does buying and selling to take advantage of the price movements to make monetary gains.
Trading platform
A software provided by brokers that allows investors and traders to place trades and monitor accounts.
Trading range
A security's highest and lowest price in which it has traded over a specified time.
Transaction
A trade is also called a transaction. (Also check transaction cost)
Transaction Date
The date on which a trade occurs.
Trend
The direction of market is called the market trend or the trend. It is uptrend when the market rates are going up and downtrend when they are coming down. It’s the indicator that suggests whether the price is in the uptrend or the downtrend.
Two-Way Price
When both a bid and offer rate is quoted for a FX transaction.
U
Uncovered
See open position
Unrealized Profit/Loss
Also called paper profit/loss or floating profit/loss. Its the profit/loss on open positions which actually have not been made or collected.
Uptick
A new price quote at a price higher than the preceding quote.
Uptick Rule
In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.
Useable Margin
When you open a position, certain money form your account is kept as a security with the broker in lieu of the leverage granted to you. Rest of the money which is unused is called useable margin as you can open further positions with this money as long as it suffices to meet the margin requirements.
Used Margin
Amount of money in the account already used to hold open positions open. This money is kept as security with the broker and is restored in our account when you close your position.
US Prime Rate
The interest rate at which US banks will lend to their prime corporate customers
V
Value-at-risk
The expected loss that can originate in case of adverse market movements.
Value Date
The date on which counterparties to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.
Variation Margin
The term usually refers to additional Funds that must be deposited as a result of unfavorable price movements.
Volatility
The movement or fluctuation in the currency pair prices is called Volatility. When the market movements become fast, huge and rapid, it is said that the market is highly volatile.
W
Wall Street
Wall-street is a street in Lower Manhattan, New York, USA where you find a large cluster of biggest brokerage houses, investment banks and retail trading communities.
Wash out
A total loss in your trading account because of a streak of losing trades.
Wedge
A chart pattern where the price tries to consolidate in a narrow range after having picked a trend.
Whipsaw
A condition where the price sees a sudden and sharp movement with an immediate reversal.
William %R
A technical indicator to determine overbought and oversold pairs.
World Bank
An international organization dedicated to providing financing, advice and research to developing nations to aid their economic advancement.
X
Xeno-currency
A currency that finds physical movement outside its own country. It happens when retail traders engage in cash trading and deposits.
Y
Yard
A trading slang for a billion.
Yen
The Nickname for the currency pair USDJPY.
Yield
The returns made on investment.
Z
Zero spread
A no spread offer made by the broker because of the large volumes being traded by the client. Under these offers, broker earns via trading volume commissions from the bank.
Zigzag
The up and down movement in the currency pair price after having picked a trend.
Zone of support/resistance
The price level area at which the trend finds either a support to continue or resistance to discontinue.