Forex Glossary

  1. ADI     Abbreviation for Average Directional Index. It is a technical indicator that measures the strength of a trend in the forex market.
  2. Appreciation  A state in which a currency’s price strengthens in response to the demand in the market
  3. Anonymous Trading The bids and offers that appear in the forex market without the identity of the seller or buyer being exposed.
  4. Arbitrage       A rare opportunity to make profit in forex especially when a price difference occurs
  5. Ask Rate        Also known as offer, it is the lowest price at which shares are offered for sale
  6. Authorized Dealer     A financial institution or a bank that has the mandate or authority to deal in foreign exchange
  7. Attorney in charge    A person given the authority to trade in the forex market on behalf of another trader
  8. Away from the market         A situation in which a bid is lower than the current market price
  9. Asset allocation          The process of putting one’s assets into different sectors in order to maximize the potential of making more profit and also to minimize risk of loss.
  10. Bank Rate      The percentage rate that central banks use to lend money to commercial banks in different countries
  11. Balance of Payments An account of all the transactions that one country has had with another. Often includes foreign investments and investments by foreigners.
  12. Balance of trade                    The difference of exports and imports of a given country
  13. Bear    An investor who has a strong belief that the market or the market prices will decline
  14. Bear Market                          A kind of market where prices are likely to decline
  15. Bull     An investor who believes that the market or market prices will rise
  16. Bull Market   A kind of market where prices are always rising or are always expected to rise
  17. Bid                                          The selling price of a given currency
  18. Broker                                    The person who serves as a link or bridge between retail traders  and large financial firms the same time
  19. Liquidity        The ability of a market to accept large transactions with minimal or no impact at all on the price stability
  1. Breton Woods Agreement    A universally acceptable system for monetary and exchange rate management that was established in 1944 in the USA.
  2. Counter Currency                The second currency in a currency pair that is being traded
  3. Cross Currency         The situation in which one foreign currency is traded for another currency without first having to change it into US dollars
  4. CCI     Abbreviation for Commodity Channel Index. It is a technical indicator that is used to know the currencies that have either been overbought or oversold
  5. Commission                           The money charged by a broker for handling a currency exchange
  6. Currency Trading     A money market where different currencies are exchanged everyday
  7. Cross Currency Transaction Involves the trading of more than two different currencies at the same time
  1. Commodity Pairs      Three pairs of currencies from countries that have the largest amounts of commodities. These three pairs of currencies are: USD/CAD, USD/AUD, and USD/NZD
  2. CPI     Initials for Consumer Price Index. It is the statistical measure of inflation based upon changes in price of a specified set of goods.
  3. CFD    Initials for Contract for Difference. It is a trading instrument that allows financial speculation on stocks, commodities and other instruments even without buying or selling currencies
  4. Day Trading  The process of opening and closing trade within the same day or the same trading session.
  5. Deficit Too much liabilities compared to assets or too much losses compared to profits
  6. Depreciation  A state in which a currency’s price weakens according to the demands of the market
  7. Demo Trader A trading account that allows a potential forex trader to test the trading systems using fake money before indulging in real trading
  8. Expert Advisor          A script within the trading platform software to manage the market positions and place orders with little or no manual control.
  9. ECN Broker  A brokerage firm that provides its forex clients with direct connections to other forex market participants.
  10. Federal Reserve         Also known as Fed, it is the central bank of USA that is responsible for making monetary regulations and policies.
  11. Forex                                      An acronym for foreign exchange
  12. Forex Trader                         A person who engages in trading currencies
  13. Forex Robot   An automated trading software that is programmed with trading signals to determine when to place an order on behalf of a human trader
  14. Fundamental Analysis          A market analysis that involves taking a keen look at the forex market situation and interpreting the statistics appropriately in order to help a trader to trade wisely.
  15. Flat                                         A condition in which all possible trading positions are closed
  16. GDP   Initials for Gross Domestic Product. It is one of the most important forex indicators. It looks into the income and output of a given economy.
  17. GTC   Initials for Good Till Cancelled. It is an order to buy or sell a currency at a fixed price but this order only stands, said to be good, until it is cancelled.
  18. Gap     The difference between the closing price of one trading session and the opening price of the next trading session
  19. Hedging          A risk management strategy in which a trader comes up with ideas of minimizing, eliminating or avoiding huge losses is a forex market
  20. Inflation         Increase in price levels and decrease in wages leading to a decrease in purchasing power
  21. Interbank Rate                      The rate at which major banks trade in foreign exchange
  22. Leading Indicators                Statistics used to predict the economy of a given country
  23. Leverage        Use of borrowed funds to increase the probability of making huge returns
  1. Margin           The amount of money that a trader sets aside to trade in the forex market
  2. Margin Account                    The account where the trading capital is kept
  3. Margin Call   Demand for additional funds at a minimum level in order to cover a movement in market price.
  4. Market Price  The current price at which the currencies are being traded in the forex market
  5. Money Market           Markets for short-term investing in monetary instruments and debts.
  6. Mine and Yours        Terminologies used by traders when they want to sell (Mine) and buy (Yours) currencies
  7. Market Risk   The risk associated with investing in the forex trade. A risk that cannot be hedged
  8. Order  An instruction to a broker or a trader to trade at a given market price
  9. Open Order   A trading order that remains valid until it is cancelled by a trader
  10. Open Position                        A trading position that is open but yet to be used by a trader
  11. Overnight       A trading position that remains open and valid until the next business day
  12. Overtrading   Deviating from the initial trading plan and trading based on emotions
  13. Principal Value          The initial amount of money that a trader invested in the forex market
  14. Pip      The smallest increase in the exchange rate that a currency can make
  15. Rate    The price of one currency against the other. Also known as the exchange rate
  16. Risk Capital   The amount of money that a trader is willing to invest in the forex market
  17. Spot    A transaction that occurs immediately though money usually changes hands after two days the moment the transaction deal is struck.
  18. Spread            A platform used to measure liquidity. It is often the difference between bid and offer prices.
  19. Stop Loss Order        An order to buy or sell a currency when a market reaches a certain fixed price. This is often used to stop extra losses when the market moves to a different direction.
  20. Scalping          A form of trading that involves many openings for short-term profits
  21. Swap   The situation in which a trader exchanges one currency for another but only holds it for a period of time. This is often done to determine the interest rate levels between two currencies
  22. Technical Analysis    Interpretation of statistics for the technical market data with the help of other technical market indicators.
  23. Transaction Date                   The date in which a trade occurs
  24. U.S Prime Rate          The standard rate at which most major banks use to lend money to clients
  25. Variation Margin      An additional fund that a broker requires from a trader when the market fluctuates.
  26. Volatility                                 The tendency of market prices to fluctuate over time
  27. Value Date     The settlement date for a given trade either spot trade or future trade
  28. XE      Initials for Xpress Engine, it is the most visited currency site that offers a currency converter together with other tools
© 4545 Forex Trading Big. All rights reserved.
Website designed by Opidue Services.