Before you begin trading forex, you need to become acquainted with basic forex vocabulary (forex glossary). There’s a lot to understand, but here’s a fast rundown of some of the most prevalent terminology used by traders
We will be expanding the list frequently, growing it into a master sheet of forex glossary terms for you to learn from.
Use the “In this article” to find terms alphabetically.
It refers to the distribution of premiums and discounts on forward exchange transactions that are directly related to deposit swap (interest arbitrage) deals throughout the duration of the transaction.
Official action is generally occasioned by a change in either internal economic policies to correct a payment imbalance or in the official currency rate.
Traders and/or price action are acting with conviction.
A financial professional who evaluates investments and makes buy, sell, and hold recommendations for clients.
When a product’s price strengthens in response to market demand, it is called ‘appreciate.’
It refers to the Asian nations’ central banks or monetary authorities. As they manage growing pools of foreign currency reserves resulting from trade surpluses, these institutions have been more active in major currencies. Their market interest might be substantial and have a short-term influence on currency direction.
23:00 – 08:00 GMT.
The market’s willingness to sell a product at a prepared price. Prices are quoted by bidding and asking. The Ask price is often referred to as the offer price.
The Ask in FX trading represents the price at which a trader can buy the base currency, which is indicated to the left in a currency pair. In the quote USD/CHF 1.4527/32, for example, the base currency is USD, and the Ask price is 1.4532, meaning that you can buy one US dollar for 1.4532 Swiss francs.
In CFD trading, the ask represents the price at which a trader can buy the product. For example, the product quoted in the quote for UK OIL 111.13/111.16 is UK OIL, and the Ask price is £111.16 for one unit of the underlying market.
An instruction given to a dealer to buy or sell at the best rate specific at a given time.
An instruction is given to a dealer to buy or sell at a specific price or better.
The Australian Securities Exchange (ASX 200) is an index of the top 200 companies listed on the Australian stock exchange (by market capitalization).
Refers to the AUD/USD (Australian Dollar/US Dollar) currency pair. Also known as “Ozzie” or “Oz.”
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The sum of a country’s exports and imports.
A chart with four significant points:
A significant price is incorporated into the structure of a Barrier Option. If a Barrier Level price is reached, the terms of a specific Barrier Option occur a series of events to take the call.
A variety of option structures (such as knock-in, knock-out, no touch, and double-no-touch-DNT) place a high value on a certain price trading. A large defined payout is awarded to the buyer of the option by the seller if the strike price is not ‘touched’ before expiry in a no-touch barrier.
This incentivises the option seller to drive prices through the strike level and incentivizes the option buyer to defend the strike level.
The first currency in a currency pair. It displays the value of the base currency in relation to the second currency. For example, if the USD/CHF (US Dollar/Swiss Franc) exchange rate is 1.6215, one USD is worth CHF 1.6215.
The US dollar is typically considered the base currency for quotes in the forex market, which means that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The British pound, euro, and Australian dollar are the primary exceptions to this rule.
The lending rate given by a country’s central bank.
A chart pattern used in technical analysis to demonstrate when a product’s demand and supply are almost equal. As a result, the trading range narrows, and support and resistance levels merge.
A unit of measurement is used to describe the smallest change in a product’s price.
The price direction is negative, favouring a declining market. “We are bearish EUR/USD,” for example, suggests that we think the euro will weaken versus the dollar.
Traders who expect prices will decline may be holding short positions.
The price difference between the bid and the ask (offer).
Refers to the first three digits of a currency quote, such as 117 USD/JPY or 1.26 in EUR/USD. If the price moves by 1.5 big figures, it has moved 150 pips.
The Bank for International Settlements is the central bank for central banks, located in Basel, Switzerland. The BIS frequently serves as a bridge between national central banks and the market.
As central banks have increased their currency reserve management, the BIS has been more active. When the BIS is reported to be buying or selling at a certain level, it is usually for a central bank. Therefore the amounts might be large. The BIS is employed to avoid markets from mistaking buying and selling interest as official government intervention.
Systematic, model-based, or technical traders are referred to by this term.
The upside equivalent to capitulation. When shorts throw in the towel and cover any remaining short positions.
The Bank of Canada is Canada’s central bank.
The Bank of England is the UK’s central bank.
The Bank of Japan is Japan’s central bank.
A tool for technical analysts. A band is two standard deviations on either side of a simple moving average, and it is frequently used to represent support and resistance levels.
A name used to describe debt that is issued for a specified period of time.
A book is a summary of a trader’s or desk’s total positions in a professional trading environment.
A British measure of the rate of inflation at various retailers surveyed. This index solely takes into account price changes in retail outlets.
For a fee or commission, an individual or firm acts as an intermediary, bringing buyers and sellers together. A dealer, on the other hand, commits capital and takes one side of a position in the hopes of earning a spread (profit) by closing out the position in a subsequent trade with another party.
A million units of a dollar-based currency pair, or the US dollar in general, is market slang.
Favoring a strengthening market and higher prices. “We are bullish EUR/USD,” for example, suggests that we think the euro will strengthen versus the dollar.
Traders who expect prices to rise or may be holding long positions.
The German central bank.
A long position in a product.
Looking to buy 20-30 pip/point pullbacks during an intraday trend.
The GBP/USD (Great British Pound/US Dollar) currency pair. The rate was originally transmitted to the United States by a transatlantic cable beginning in the mid-1800s when the GBP was the currency of international trade.
The Canadian dollar is sometimes known as the Loonie or the Funds.
A currency trade takes advantage of a difference in interest rates between two countries. The trader will receive the interest difference between the two countries while the trade is open by selling a currency with a low-interest rate and buying a currency with a high-interest rate.
The Richard Ivey Business School issued a monthly gauge of Canadian business sentiment.
A chart that shows the day’s trading range as well as the opening and closing prices. The rectangle between the open and close prices is shaded if the open price exceeds the close price. The chart area is not shaded if the close price is higher than the open price.
At the end of an extreme trend, traders holding losing positions exit their positions. This usually signals that the expected reversal is close to the corner.
The actual underlying market on which a derivatives contract is based.
The price of a product for instant delivery; that is, the price of a product at that moment in time.
It is an abbreviation for central banks.
A government or quasi-government organisation in charge of monetary policy in a country. The Federal Reserve, for example, is the central bank of the United States, while the Bundesbank is Germany’s central bank.
A Contract for Difference (CFD) is a derivative that provides exposure to the value change of an underlying asset (such as an index or equity). It allows traders to leverage their capital (by trading notional amounts significantly higher than the money in their account) and provides all of the benefits of trading securities without actually owning the product.
In practice, if you buy a CFD for $10 and sell it for $11, you will be paid the $1 difference. You would pay the $1 difference if you went short on the trade and sold at $10 before buying back at $11.
A technical trader is someone who uses charts and graphs and interprets historical data to spot trends and forecast future movements.
Short-term price moves with limited follow-through are not conducive to aggressive trading.
Funds that are freely available and are sent in to settle a trade.
The process of settling a trade.
Exposure to a non-existent financial contract, such as currency. A position is closed by placing an equal and opposite deal to offset the open position. A position is considered squared once it is closed.
The process of terminating (closing) a live trade by executing the inverse of the open trade.
The price at which a product was traded in order to close a position. It can also refer to the price of the most recent transaction in a trading session.
An asset given to secure a loan or as a guarantee of performance.
A fee charged for buying or selling a product.
Currencies from countries whose exports are heavily based on natural resources, most notably Canada, New Zealand, Australia, and Russia.
The dollar pairs that make the crosses (for example, EUR/USD + USD/JPY are the EUR/JPY components). Selling the cross through the components refers to selling the dollar pairs in an alternating fashion to create a cross position.
It is the symbol for the NASDAQ Composite Index.
A document exchanged between transaction counterparts that states the terms of the transaction.
A period of range-bound activity following an extended price move.
The amount of money spent on new construction is reported monthly by the Census Bureau of the United States Department of Commerce.
The tendency of an economic crisis to spread from one market to the next.
The forex trading standard unit.
A confirmation email was sent out outlining the specifics of the transaction.
One CFD represents a notional number of shares.
A position with a limited risk due to the usage of a Guaranteed Stop.
A technical observation in which moving averages of different periods move towards each other, indicating a price consolidation.
An event that changes the equity structure (and usually the share price) of a stock. Acquisitions, dividends, mergers, splits, and spinoffs, for example, are all examples of corporate actions.
Corporations that participate in the market for the aim of hedging or financial management. Corporates are not necessarily as price sensitive as speculative funds, and their interests might be quite a long-term, making corporates less valuable for short-term trading.
The second currency listed in a currency pair.
One of the participants involved in a financial transaction.
Risks associated with a cross-border transaction, such as legal and political conditions.
CPI is an acronym for the Consumer Price Index, which is a measure of inflation.
The market is primed to crash.
A currency pair that does not contain the US dollar.
Refers to the CAD (Canadian Dollar), Aussie (Australian Dollar), Sterling (British Pound), and Kiwi (New Zealand Dollar) currencies of Commonwealth countries.
It refers to commodity trading advisors, speculative traders whose activity can resemble that of short-term hedge funds; it frequently refers to Chicago-based or futures-oriented traders.
Any form of money issued by a government or central bank that serves as legal tender and a trade basis.
The two currencies that make a foreign exchange rate. For example, EUR/USD (Euro/US Dollar).
The probability of an adverse change in exchange rates.
A three-letter symbol that represents a specific currency. USD, for example (US Dollar).
The sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends), and net transfer payments (such as foreign aid). The balance of trade is typically the most key component of the current account.
Speculators buy commodities and then sell them before the market closes on the same trading day.
Making an open and close trade in the same product on the same day.
A trade that is completed at the current market price. It is a live trade rather than an order.
A person or company who acts as a principal or counterparty in a transaction. Principals take one side of a position in the hopes of earning a spread (profit) in a subsequent trade with another party. On the other hand, a broker is an individual or firm that acts as an intermediary, bringing buyers and sellers together for a fee or commission.
Forex chart patterns - Chart visualisation to a tee — 2023The difference between a contract’s buying and selling price.
A barrier option is an action a trader or group of traders takes to prevent a product from trading at a specific price or price zone, usually because they have a vested interest in doing so.
A negative trade or payment balance.
Removing a stock’s listing from an exchange.
A trade in which both sides make and take actual delivery of the product being traded.
The ratio of a product’s price change to the price change of its underlying market.
A monthly survey produced by the DCLG uses a large sample of all completed house sales to measure price trends in the UK real estate market.
A yearly rate is quoted from a composite of tradable rates for lending and borrowing a currency over a specific period (tenor). The best bid and offer are taken to present a competitive picture of borrowing costs. The 1-month rate is typically utilised for consistency when using a deposit rate for financing.
The decrease in the value of an asset over time.
A financial contract whose value is based on the underlying asset’s value. Indices, equities, commodities, and currencies are some of the derivative contracts’ most common underlying assets.
When a pegged currency weakens or depreciates from any official actions (or any other).
The interest rate is charged to an eligible depository institution for borrowing short-term funds from the Federal Reserve Bank.
A situation in technical analysis in which price and momentum move in opposite directions, such as prices rising while momentum falls. Divergence is classified as either positive (bullish) or negative (bearish); both types of divergence signal significant price changes.
Positive/bullish divergence occurs when a security’s price makes a new low while the momentum indicator starts to climb. Negative/bearish divergence occurs when the security’s price makes a new high, but the indicator fails to do so and instead moves lower. Divergences are common in long-term price movements and frequently result in the price reversing direction to follow the momentum indicator.
A technical observation describes moving averages of different periods moving apart from one other, which generally forecasts a price trend.
The portion of a company’s earnings that is distributed to its shareholders is usually expressed as a value per share.
Abbreviation for the Dow Jones Industrial Average or US30.
Dovish refers to data or a policy view that suggests easier monetary policy or lower interest rates. The opposite of hawkish.
Price action characterised by lower lows and lower highs.
The US Dollar Index is denoted by the symbol DXY.
The European Central Bank (ECB) is the central bank for countries that use the euro.
A government-issued statistic that indicates current economic growth and stability. Common indicators include employment rates, GDP, inflation, retail sales, etc.
A buy or sell order remains open until the end of the trading day, usually at 5 pm New York time.
New York City’s time zone stands for Eastern Standard Time/Eastern Daylight Time in the United States.
The Euro Short-Term Rate (€STR) is the benchmark interest rate for overnight borrowing costs across the Eurozone. It is calculated and published by the European Central Bank (ECB) as a replacement for the Euro Overnight Index Average (EONIA) and the Euro Interbank Offered Rate (EURIBOR).
The Euronext 50 index is given this name.
The Eurozone’s currency.
A catch-all term for a set of policies aimed at coordinating economic and fiscal policies among EU Member States.
07:00 – 16:00 EUROPEAN SESSION (London).
It measures the annualised inflation rate in civilian employees’ compensation and benefits and is regarded as a primary driver of overall inflation.
The OECD produces a monthly index. It combines ten leading indicators to assess overall economic health, including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads.
A share purchased in which the buyer waives the right to the next dividend and instead gives it to the seller.
The precise date and time at which an option will expire. The two most common option expiries are 10:00 am. ET (sometimes referred to as 10:00 am NY time or the NY cut) and 3:00 pm. Tokyo time (also referred to as 15:00 Tokyo time or Tokyo cut). As option hedges unwind in the spot market, these periods frequently witness increased activity.
Corporations that sell goods on a global scale, making them both sellers of foreign currency and buyers of the domestic currency. Frequently refers to major Japanese corporations such as Sony and Toyota, who will be natural sellers of USD/JPY, exchanging dollars received from commercial sales abroad.
A market thought to have travelled too far and too fast.
The level of dollars spent on new orders for both durable and nondurable goods. This report goes into greater detail than the previous month’s durable goods report.
The Federal Reserve Bank, the United States’ central bank, or the FOMC (Federal Open Market Committee), the Federal Reserve’s policy-making committee.
It refers to Federal Reserve Board of Governors members or regional Federal Reserve Bank Presidents.
Refers to the ’00’ price quotation in a price such as 00-03 (1.2600-03) and is read as ‘figure-three.’ If someone sells at 1.2600, traders will remark ‘the figure was supplied’ or ‘the figure was hit.’
When an order has been fully executed out.
An order will be cancelled if it cannot be filled in its entirety.
It means that all positions opened inside a specific currency pair are liquidated in the order in which they were opened.
One of approximately five times throughout the forex trading day when a large amount of currency must be bought or sold to fill the orders of a commercial customer. These are typically volatile times in the market. The regular fixes are as follows (all times are in New York):
5:00 am in Frankfurt
6:00 am in London
WMHCO – 10:00 a.m. (World Market House Company)
11:00 am – WMHCO (World Market House Company) – more important
8:20am – IMM
8:15am – ECB
Economic data readings are unchanged from the previous period.
Dealer jargon for a completely reversed position, such as buying $500,000 and then selling $500,000, resulting in a neutral (flat) position.
Following a directional break of a particular price level, new buying or selling interest exists. A lack of follow-through usually indicates that a directional move will not be sustained and may reverse.
It is the US Federal Reserve’s policy-making committee.
The written record of FOMC policy-setting meetings is available three weeks after the meeting. The minutes give further insight into the FOMC’s deliberations and can generate significant market reactions.
The simultaneous buying of one currency and the selling of another. The global market for such transactions is referred to as the forex or FX market.
The exchange rate for a foreign exchange contract settles at some agreed-upon future date, based on the interest rate differential between the two currencies involved.
The pips were added to or subtracted from the current exchange rate to calculate a future price.
It is the name given to the index of the top 40 companies (by market capitalization) listed on the French stock exchange. FRA40 is also known as CAC40.
The UK 100 index’s name.
The evaluation of all available information on a tradable product in order to forecast where the price will go in the future. In fundamental analysis, non-measurable and subjective assessments, as well as quantifiable measurements, are frequently made.
Refers to hedge fund kinds that are active in the market. Also referred to as the USD/CAD (US Dollar/Canadian Dollar) pair.
An agreement between two parties to carry out a transaction at a specified future time when the price is agreed upon in the present.
An agreement to exchange a good or instrument at a specified price and quantity grade at a later date. The primary difference between a Future and a Forward is that Futures are typically traded on an exchange (Exchange-Traded Contacts – ETC), whereas Forwards are Over The Counter (OTC) contracts. An OTC contract is not traded on an exchange.
The G7 Group of Seven Nations consists of the United States, Japan, Germany, the United Kingdom, France, Italy, and Canada.
G8 Group of eight G7 nations plus Russia.
A quick market move in which prices skip many levels without any trades. Gaps typically follow after economic data or news announcements.
Trading a notional value greater than the amount of capital required in a trader’s trading account is called gearing. It is expressed as a percentage or as a fraction.
The DAX is another name for an index of the top 40 companies (by market capitalization) listed on the German stock exchange.
It refers to a successful bid or selling interest.
A technical level is defeated after a long battle.
Greenwich Mean Time – The time zone most commonly used in the forex market. In contrast to daylight savings/summer time, GMT does not alter throughout the year.
The purchase of a stock, commodity, or currency for the purpose of investment or speculation, with the expectation that the price would rise.
The sale of a currency or product that the seller does not possess, with the expectation that the price would fall.
It is commonly accepted that gold moves in the opposite direction of the US dollar. The long-term correlation coefficient is largely negative, although shorter-term correlations are less reliable.
Gold investors use a certificate of ownership to purchase and sell the commodity rather than dealing with the transfer and storage of physical gold.
The standard trading unit for gold is one contract, which is equal to ten troy ounces.
If not filled, an order will expire at the end of the day.
An order to buy or sell at a specified price remains open until filled or the client cancels.
An order type will expire on the date you specify if it is not filled sooner.
A nickname for the US dollar.
The total value of a country’s output, income, or expenditure produced inside its physical borders.
Gross domestic product plus income from foreign investment or employment.
A sort of order that protects a trader against market gapping. It guarantees that your order will be filled at a price requested.
A stop-loss order guarantees that your position will be closed at the level you choose if the market moves to or beyond that level. Even if there is a market gap, it is guaranteed.
Traders attempting to trigger known market stops or technical levels.
Every 100 pips in the forex market begin with 000.
When monetary policymakers in a country believe that higher interest rates are required, usually to combat inflation, slow rapid economic growth, or both, they are referred to as hawkish.
To sell at the current market bid.
Index names for the Hong Kong Hang Seng.
There is little volume traded in the market; lacking liquidity frequently creates choppy market conditions.
International Monetary Market, a Chicago-based currency futures market that is part of the Chicago Mercantile Exchange.
A traditional futures contract in which major currencies are based against the US dollar. IMM futures are traded on the Chicago Mercantile Exchange’s floor.
8:00 a.m. – 3:00 p.m. New York
It is an abbreviation for the Dow Jones Industrial Average.
The total output value produced by manufacturers, mines, and utilities is calculated. This data tends to react quickly to business cycle expansions and contractions and can act as a leading indicator of employment and personal income data.
An economic condition in which consumer goods prices rise, eroding purchasing power.
The initial collateral deposit is required to enter a position.
Significant international banks quote foreign exchange rates to one another.
Cash adjustments to reflect the effect of owing or receiving the notional amount of a CFD position’s equity.
A central bank’s intervention in the market influences its currency’s value. The action of many central banks to control exchange rates is called concerted intervention.
A person or corporate entity introduces accounts to a broker in return for a fee.
It is the symbol for the S&P 500 index.
A private company’s initial public offering of stock to the general public. It is an abbreviation for initial public offering.
A poll of executives on future production, new orders, inventories, employment, and deliveries is used to assess the state of the US manufacturing sector. Values more than 50 generally indicate expansion, whereas values less than 50 indicate contraction.
An index that polls service sector firms to gauge their outlook, representing the remaining 80% of the US economy not covered by the ISM Manufacturing Report. Values more than 50 generally indicate expansion, whereas values less than 50 indicate contraction.
It measures the mood of businesses that directly service consumers, such as waiters, drivers, and beauticians. In general, readings above 50 indicate an improvement in sentiment.
The total value of new orders placed with machine tool manufacturers is calculated. Machine tool orders are a leading indicator of future industrial production because they measure demand for machine companies. Strong data generally indicates that manufacturing is improving and the economy is expanding.
The NIKKEI index is given this name.
Due to inclement trading conditions, you should limit your trades. It may be better to sit out in either choppy or extremely narrow markets until a clear opportunity presents itself.
Nickname for NZD/USD (New Zealand Dollar/US Dollar).
Option strategy requires the underlying product to trade at a specified price before a previously bought option becomes active. Knock-ins are used to reduce the premium costs of the underlying option and can trigger hedging activities to be triggered if an option is activated.
If the underlying product trades at a specified level, this option nullifies a previously bought option. When a knock-out level is traded, the underlying option ceases to exist, and any hedging may have to be unwound.
The last day to trade a particular product.
The final time you can trade a particular product.
Statistics that are considered to predict future economic activity.
A price zone or particular price that is significant from a technical standpoint or based on reported orders/option interest.
Short-term traders largely refer to the hedge fund community.
Potential loss, debt, or financial obligation
The London Interbank Offered Rate (LIBOR). For international lending, banks utilise LIBOR as a base rate. SONIA has replaced her spot.
An order to buy at a lower price than the current market or sell at a higher price than the current market. A limit order limits the maximum price that may be paid or the minimum price that can be received. For example, if the current price of USD/JPY is 117.00/05, a limit order to buy USD would be at a price lower than the current market, say 116.50. A Limit Order attached to an existing open position (or a pending entry order) to close that position is also known as a “Take Profit” order.
A market with a sufficient number of buyers and sellers allows prices to move smoothly.
The closing of an existing position by the execution of an offsetting transaction.
08:00 – 17:00 (London).
A position that increases in value as the market price appreciates. When the pair’s base currency is bought, the position is considered long. This position is taken with the expectation that the market will rise.
Traders who have bought a product
Nickname for the Canadian dollar or the USD/CAD (US Dollar/Canadian Dollar) currency pair.
A long-term trader who bases their trading decisions on fundamental analysis. The holding period of a macro transaction might range from six months to many years.
Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only looks at the 13 sub-sectors that are directly related to manufacturing. Manufacturing accounts for over 80% of total Industrial Production.
A dealer who regularly quotes both bid and ask prices and is ready to form a two-sided market for any financial product.
A buy or sell order at the current price.
Re-process all open positions in light of current market prices. These new values then determine the margin requirements.
A financial product’s settlement or expiry date.
Medley Global Advisors is a market consultancy with excellent contacts with a central bank and government officials worldwide. Because they claim to have inside information from policymakers, their reports may frequently move the currency market. The reports’ accuracy has fluctuated throughout time, but the market pays attention to them in the short run.
Synonymous with the black box. Systems that buy and sell automatically based on technical analysis or other quantitative algorithms.
It is an abbreviation for month-over-month, which is the change in a data series relative to the prior month’s level.
A series of technical studies (for example, RSI, MACD, Stochastics, and Momentum) that assesses the rate of change in prices.
Traders align themselves with an intraday trend to capture 50-100 pips.
The NASDAQ 100 index is abbreviated.
The amount of currency bought or sold in opposite transactions has not yet offset that.
8:00 a.m. – 5:00 p.m. (New York time).
An option that pays the holder a fixed amount if the market never touches the predetermined Barrier Level.
It is the symbol for the NYSE Composite index.
The market’s willingness to sell a product at a given price. Prices are quoted in the form of a bid/offer. The Ask price is another name for the Offer price. In a currency pair, the ask represents the price at which a trader can buy the base currency, which is shown to the right. In the quote USD/CHF 1.4527/32, for example, the base currency is USD, and the ask price is 1.4532, implying that you can buy one US dollar for 1.4532 Swiss francs.
The ask represents the price at which a trader can purchase a product in CFD trading. For example, the product quoted in the quote for UK OIL 111.13/111.16 is UK OIL, and the ask price is £111.16 for one unit of the underlying market.
When a market is said to be trading offered, it means that a pair is receiving a lot of selling interest or offers.
A trade that cancels or offsets some or all of an open position’s market risk.
Making an attempt to sell at the current market order price.
A designation for two orders states that if one of the orders is executed, the other is automatically cancelled.
An option that pays the holder a fixed amount if the market reaches the predetermined Barrier Level.
An order that will be executed when the market reaches the specified price. Normally associated with orders that are good ’til cancelled.
A derivative that grants the right, but not the obligation, to buy or sell a product at a predetermined price before a specific date.
A trade execution instruction.
A system for displaying the market depth of traders willing to buy and sell at prices higher than the best available.
Any transaction that is not handled through an exchange.
A deal that is open until the next business day.
It refers to the offer side of market dealing.
The forex quoting convention of matching one currency to another.
A very heavy selling round.
A market that moves a long distance in a short amount of time, frequently in an accelerating fashion like one half of a parabola. Parabolic moves can be upward or downward.
When only a portion of an order is executed.
Waiting for particular levels or news events to hit the market before entering a position.
The total annual gross earnings of an individual through wages, business enterprises, and various investments. Personal income is essential for personal spending, which accounts for two-thirds of GDP in major economies.
Changes in government policy might have a negative impact on an investor’s position.
An entity’s collection of investments.
The total net holdings of a given product.
The amount by which the forward or futures price exceeds the spot price.
Quotes to which all market participants have equal access.
When the sale price is higher than the cost price, the difference between the cost price and the sale price.
A trending market’s tendency to retrace a portion of its gains before continuing in the same direction.
An economic indicator that indicates the performance of a country’s manufacturing companies.
Indicates the purchasing managers’ outlook in the service industry. These managers are polled on a variety of subjects such as employment, production, new orders, supplier deliveries, and inventories. Readings above 50 indicate economic expansion, while readings below 50 indicate economic contraction.
A product that gives the owner the right, but not the obligation, to sell it at a specified price.
When a central bank injects funds into an economy to stimulate growth.
A form of future with three-month expiration periods (once per quarter).
A market price that is used for informational reasons only.
When a price trades between a defined high and low, it moves inside these two boundaries without breaking out.
The value of one currency in terms of another is usually used for trading.
Reserve Bank of Australia, Australia’s central bank.
Reserve Bank of New Zealand, New Zealand’s central bank.
Large traders, such as pension funds, asset managers, insurance companies, and so on. They are seen as signs of major long-term market interest, as opposed to shorter-term intraday speculators.
When a position is closed, the amount of money you made or lost is calculated.
A price that may serve as a ceiling. The inverse of support.
An individual investor who deals with personal funds rather than on behalf of a company.
It is a monthly measure of all products and services sold by retailers based on a sample of various sorts and sizes. This information gives insight into consumer spending behaviour, which is a crucial driver of growth in all major economies.
When the value of a pegged currency is permitted to grow or strengthen as a result of official measures, the inverse of devaluation.
A type of corporate action in which shareholders are given the right to acquire more stock. Typically issued by companies in an attempt to obtain finance.
Exposure to unknown change, usually with a negative connotation of adverse change.
Financial analysis and trading approaches are used to limit and/or regulate exposure to various forms of risk.
A rollover is the simultaneous termination of an open position for today’s value date and the opening of the identical position for the following day’s value date at a price reflecting the interest rate differential between the two currencies.
Trades in the spot FX market must be paid within two business days. If a trader sells 100,000 Euros on Tuesday, they must deliver 100,000 Euros on Thursday unless the position is rolled over. All open forex positions at the end of the day (5:00 pm New York time) are automatically rolled over to the following settlement date as customer service. The rollover adjustment is just the daily accounting of the cost of carrying.
A trade has been initiated and then terminated by an equal and opposite transaction.
An indicator of the state of your open positions; that is, the amount of money you would win or lose if you closed all of your open positions at that moment.
It is the symbol for the Russell 2000 index.
The SEC is the Securities and Exchange Commission.
A collection of securities that operate in the same industry.
Taking a short position in the expectation that the market will fall.
The process of recording the counterparts to a transaction and entering a trade into the books. Currency trade settlement may or may not involve the physical exchange of one currency for another.
The Shanghai A index is denoted by the symbol SHGA.X.
Following a decline, traders who had previously gone short begin buying back.
An investment position that benefits from a market price decline. The position is said to be short when the pair’s base currency is sold.
A situation in which traders are heavily short and a market catalyst causes them to cover (buy) quickly, resulting in a sharp price increase.
Traders who have sold or shorted a product or are bearish on the market.
Traders who remain on the sidelines or sit on their hands due to directionless, choppy, or unclear market conditions are said to be on the sidelines or sitting on their hands.
A straightforward average of a predetermined number of price bars. For example, a 50-period daily chart SMA is the average closing price of the previous 50 daily closing bars. Any time interval is acceptable.
When the market appears to be poised for a quick move in any direction.
Choppy trading conditions with no discernible trend and/or follow-through.
The Swiss National Bank (SNB) is the country’s central bank.
The Secured Overnight Financing Rate (SOFR) is the overnight interest rate used in the overnight market for US dollar-denominated loans and derivatives.
The Sterling Overnight Index Average (SONIA) is the effective overnight interest rate that banks pay other financial institutions to borrow sterling overnight. It is used to replace LIBOR for overnight funding of off-hours trades.
Refers to central banks that are involved in the spot market.
A market in which products are traded at market value for immediate exchange.
The market price at the time. Spot transactions are typically settled within two business days.
Purchasing or selling a product for immediate delivery (as opposed to a date in the future). Typically, spot contracts are settled electronically.
S&P 500 index.
It implies the dealer’s purchases and sales are balanced; he has no open positions.
The British pound is also known as the GBP/USD (Great British Pound/US Dollar) currency pair.
A market for the trading of securities.
The aggregate price of a group of stocks, expressed against a base number, allows a comparison of how the group of companies is performing compared to the past.
This is a buy order placed above the current price or a sell order placed below the current price. These orders are useful if you believe the market is moving in one direction and have a target entry price in mind.
When a market appears to be approaching a certain level, that is thought to be heavily laden with stops. If stops are triggered, the price will frequently break through the level due to a flood of stop-loss orders.
This is a sell order placed below the current price (to close a long position) or a buy order placed above the current price (to close a short position). Stop loss orders are an important tool for risk management.
Set stop loss orders on open positions to limit your potential downside if the market moves against you. Keep in mind that stop orders do not guarantee your execution price; a stop order is triggered when the stop level is reached and is executed at the next available price.
A stop order is a buy or sell order triggered when a certain price is reached. When the price is met, the stop order is converted to a market order and executed at the best available price.
It is important to remember that stop orders can be influenced by market gaps and slippage, and they will not always be executed at the stop level if the market does not trade at that price. Once the stop level is reached, a stop order will be filled at the next available price. Placing contingent orders may or may not limit your losses.
Refers to the accumulation of stop-loss orders to buy above the market during an up move or sell below the market during a down move.
The set price at which an option holder can buy or sell a product.
A price that serves as a floor for previous or future price movements.
A technical analysis technique that indicates the price ceiling and floor at which a given exchange rate will automatically correct itself. The inverse of resistance.
A temporary halt in a product’s trading.
The simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate are referred to as a currency swap.
The Swiss franc is the USD/CHF (US Dollar/Swiss Franc) currency pair.
See Limit Order for more definitions.
Assuming control of a company by buying its stock.
The process of studying past price pattern charts for clues about the direction of future price movements.
Traders who make trading decisions based on technical or chart analysis.
US government-issued debt with a ten-year repayment period. Consider a US 10-year note.
A market that is illiquid, slippery, or choppy. A low-volume market with erratic trading conditions.
UK GOVERNMENT DEBT REPAYABLE IN 30 YEARS Consider a 30-year gilt in the United Kingdom.
A small price change, either up or down.
The amount of time until a contract expires.
09:00 – 18:00 (Tokyo).
The simultaneous buying and sale of a currency for delivery the next day.
T/P is an abbreviation for “take profit.” Limit orders that seek to sell above the level at which they were purchased or to buy back below the level at which they were sold.
The value difference between imported and exported goods and services. Countries with trade surpluses (exports greater than imports), such as Japan, see their currencies strengthen. In contrast, countries with trade deficits (imports greater than exports), such as the United States, see their currencies weaken.
The number of product units in a contract or lot.
A pair acts strongly and/or moves higher; bids continue to enter the market, pushing prices higher.
A trading postponement is not a trading suspension.
A market that appears to want to move lower is usually associated with an offered market that will not rally despite buying attempts.
A pair is acting weak and/or moving lower, and sell offers continue to flood the market.
The difference between a stock’s highest and lowest price is usually expressed in terms of time. For instance, consider the 52-week trading range.
When the market price moves in a favourable direction, a trailing stop allows the trade to continue to gain value, but it automatically closes the trade if the market price suddenly moves in an unfavourable direction by a specified distance. Placing contingent orders may or may not limit your losses.
The price of buying or disposing of a financial product.
The date on which a trade takes place.
Price movement results in a net change in value. Higher highs and lower lows indicate an uptrend. Lower highs and lower lows indicate a downtrend.
The total monetary value or volume of all transactions completed in a given time period.
When a forex transaction includes both a bid and an offer rate.
The CBOE 10-Year, Treasury Yield Index, is denoted by the symbol TYO10.
Describes harsh market conditions that can be violent and sudden.
Measures the average wage, including or excluding employee bonuses. This is measured in terms of quarter-on-quarter (QoQ) growth over the previous year.
The number of people who apply for unemployment benefits. Because not all unemployed people are eligible for benefits, claimant count figures tend to be lower than unemployment data.
It measures the relative level of UK house prices to provide insight into trends in the UK real estate sector and their implications for the overall economic outlook. This index, published by the largest UK mortgage lender (Halifax Building Society/Bank of Scotland), has the longest monthly data series of any UK housing index.
It tracks the number of people claiming unemployment benefits in the previous month.
The change in total labour cost expended in producing one unit of output.
Brent Crude Oil is a brand name.
Inflation rate experienced by manufacturers when purchasing materials and services. This data is closely scrutinised because it has the potential to be a leading indicator of consumer inflation.
The rate of inflation experienced by manufacturers when selling goods and services is measured.
The FTSE 100 index is given this name.
The actual traded market from which a product’s price is derived.
The total workforce that is unemployed and actively looking for work is expressed as a percentage of the labour force.
Every month, 500 US households are polled. The report is released in two parts: a preliminary version in the middle of the month and a final version at the end of the month. Individuals’ views on the US economy are the focus of the questions. Consumer sentiment is thought to be a good predictor of consumer spending strength.
The theoretical gain or loss on open positions is valued at current market rates, as determined solely by the broker. Un unrealised gains/losses become profits/losses when the position is closed.
A new price quote that is higher than the previous quote.
A rule in the United States is that security may not be sold short unless the previous trade was lower than the price at which the short sale is executed.
WTI Crude Oil is referred to as US OIL.
The interest rate at which US banks will lend to their most important corporate clients.
The Dow Jones index is given this name.
It is the date on which the counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. The value date for spot currency transactions is usually two business days ahead.
Traders must hold funds in their accounts to have the necessary margin to deal with market fluctuations.
The market’s expectation of 30-day volatility is shown. It is built using the implied volatilities of a variety of S&P 500 index options. The VIX is a popular market risk measure known as the “investor fear gauge.”
A chart formation shows a narrowing price range over time, where price highs in an ascending wedge decrease incrementally and price declines in a descending wedge are smaller incrementally. Ascending wedges usually end with a downside breakout, while descending wedges typically end with an upside breakout.
Slang for a highly volatile market in which a sharp reversal quickly follows a sharp price movement.
Changes in the prices paid by retailers for finished goods are tracked. Inflationary pressures typically manifest before headline retail prices.
A limit order has been requested but has not yet been filled.
The Wall Street Journal is abbreviated as WSJ.
The Silver Index symbol is XAG/USD.
XAU/USD is the symbol for the Gold Index.
The AMEX Composite Index is denoted by the symbol XAX.X.
A billion units.
The percentage of return on investment.
YOY is an abbreviation for year over year.
In China, the Yuan is the basic unit of currency. The renminbi is the name of China’s currency, where the Yuan is the base unit.
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Forex glossary provides you with a lot of basic knowledge. It is even beneficial for both beginners and advanced-level traders. Sometimes they got stuck with a term; they knew the starting letter but not the whole word. So if you go through our forex glossary alphabet, you will surely reach the word you are searching for.
