A
What is ADX (Average Directional Index)
ADX is a technical analysis indicator measuring the strength of a trend.
What is Appreciation (Currency Appreciation)
A currency is appreciated when it earns value against another currency. This may be due to a new fiscal or monetary policy. A monetary policy aiming domestic currency appreciation is called “a hard-currency policy” and it is usually followed by higher interest rates.
What is Arbitrage
Arbitrage is the type of trading when opposite transactions are executed simultaneously.
What is Ask Price (Offer)
The Ask Price or offer price is the price offered for a particular currency to be bought.
What is Aussie
Aussie is a slang name that is used for the Australian dollar.
B
What is the Bank of Canada (BOC)
Bank of Canada is the Central Bank of Canada responsible for
Canadian monetary policy.
What is the Bank of England (BOE)
Bank of England is the Central Bank of England responsible for UK monetary policy.
What is the Bank of Japan (BOJ)
Bank of Japan is the Central Bank of Japan responsible for Japanese monetary policy.
What is Bank Rate
Bank rate is the interest rate charged by the central bank of a particular country when it lends capital to the domestic commercial bank institutions. It is used by central banks as a tool to control the money supply in the economy and focus either on inflation or in unemployment.
What is the Balance of Trade
Balance of Trade measures the difference between the value of imports and exports of a country for a particular time frame (usually monthly or annually). When the outcome is negative, the Trade Deficit is created and when it is positive, Trade Surplus is achieved.
What is the Bar Chart
A bar chart is a chart where prices are indicated in forms of bars or lines.
What is Base Currency
In a Forex currency pair, the base currency corresponds to the first quoted currency.
What is Bear Market or Bearish Market
Bear or Bearish market is a financial market that is expected to trend downward.
What is Beige Book
The Beige Book is an economic report published by the Federal Reserve Board eight times a year. It was formally called the Summary of Commentary on Current Economic Conditions.
What is Bid Price
Bid Price is the price offered to traders to sell a currency.
What is Borrowing
In Forex, it is the borrowing of a foreign currency at a specified interest rate.
What is Breakout
Breakout in technical analysis means the breakdown of the trend below its support / or above the resistance level.
What is Forex Broker
A Forex broker is the market participant who works as the middleman between traders and commercial institutions. A forex broker may execute buy and sell orders on behalf of his clients charging a predefined commission.
What is Forex Brokerage
Is the act of a buying and selling Forex currencies on behalf of third parties.
What is Bull Market
Bull or Bullish Market is a market that is expected to trend upward.
What is Bundesbank
Bundesbank is the Central Bank of Germany. As Germany is a member of the eurozone, Bundesbank is coordinated with the policies of the European Central Bank (ECB).
C
What is Cable
Cable is a Forex slang used for the British Pound against the US Dollar (GBP/USD currency pair).
What is the Candlestick chart
Candlestick chart is a Japanese origin chart which is widely used in the Forex market. A candlestick chart is a combination of a line-chart and a bar-chart.
What is Car Sales
Car sales is a consumer demand indicator measuring the number of cars sold during a particular period.
What is Carry Trade
Carry trade in Forex, means keeping a position with a positive overnight interest return.
What is Cash Flow
It is the difference between cash inflow and cash outflow during a particular period, usually from one month to one year. Cash flows are measuring the ability of an entity to generate money.
What is Cash Market
The cash market is any market where transactions are carried out through cash payments.
What is CCI (Commodity Channel Index)
CCI is a cyclical technical indicator identifying when a market is overbought/oversold.
What is Central Banks
Central Banks are authorized by governments to regulate the domestic economy and to implement their monetary policies.
What is CFD (Contract for Difference)
A contract for difference is a specialized trading instrument that provides speculation on stocks, indices, commodities, and other financial assets.
What is a Channel
A trading channel indicates the limits of a future price movement.
What is a Chartist
Chartist is the trader who uses charts and other technical analysis tools to predict the future price movement of a currency pair.
What is Clearing
Clearing is the trade settlement procedure.
What is a Collateral
Collateral is the trader deposit held as insurance.
What is a Commission
Commissions are charged by brokers for their services. In Forex brokers are not charging commissions as they profit from the offering spread.
What is Confirmation
Confirmation of a trend in technical analysis means that a particular forecast is confirmed and usually it signals a profitable trade.
What is Counter Currency
Counted currency in Forex is the currency which appears second in a currency quote.
What is CPI
CPI stands for consumer price index. CPI is the statistical measure of inflation and it is based upon the changes in prices of specified goods and services.
What is Currency Conversion
In the Forex market, currency exchange is simply the exchange of one currency for another.
What is Currency Option
Currency options are contracts to buy or sell one currency for another at an agreed quote and within a predefined period of time.
What is Currency Pair
A currency pair is a quote of two currencies.
What is the Currency Rate
A currency rate is the price rate of a particular currency against another particular currency.
What are Currency Symbols
Currency Symbols are indicating particular currencies.
D
What is Day Trader
It is a trader who takes positions in an intraday time frame.
What is Forex Dealer
Forex dealers are individuals or firms who trade for their own account and risk, in contrast to Forex brokers who trade on behalf of others.
What is Downtrend
Downtrend expresses a downward trend of a currency price.
E
What is ECN Forex Broker
ECN Forex broker is a type of Forex brokerage firm that is offering to its clients' direct access to Forex market participants. ECN brokers don't charge spread but they charge commissions for every trading order.
What is an Economic Indicator
An economic indicator is a micro or macro fundamental indicator used to show several trends in an economy.
What is Elliott Wave Principle
Elliot Waves principal is a basic chart pattern which includes 5-waves upward and 3 waves downward.
What is ERM
ERM is the Exchange Rate Mechanism.
What is Eurodollars
US dollars which are deposited in a bank outside the US.
What is European Option (Options Contracts)
An option contract that can be exercised only on its expiration date. American options, on the contrary, may be exercised at any given business date.
What is the European Union (EU)
It is the group formerly known as the European Community (EC).
What is the European Central Bank (ECB)
European Central Bank is the regulatory body of the European Union responsible to regulate monetary policy in the economic zone of the euro.
What is EURO Currency (EUR)
The euro currency is the official currency of the European Union.
What is an Exchange Rate
It is the rate of buying/selling one Forex currency for another currency.
F
What is the Fed (Federal Reserve)
Fed is the US regulatory body which is responsible to control the economy and implement the federal monetary policy.
What is Fibonacci Retracement
Fibonacci Retracement is a tool of technical analysis calculated as 23.6%, 32.8%, 50% and 61.8% of the trend range of a price.
What is Figure
A figure is the Forex slang which indicates 100 points of the exchange rate movement.
What is Flat Price
Flat means a price that isn’t moving either upwards or downwards.
What is a Currency Forecast
It is the prediction of a future currency movement.
What is FOREX
Forex means Foreign Exchange and it is the financial market where international currencies may be bought or sold.
What is Forward Contract
A forward contract which is also called as Forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a specified price agreed upon today.
What is Fundamental Analysis
Fundamental analysis validates fundamental factors affecting Forex as macroeconomic indicators, news etc.
G
What is G5
G5 is the Group of the five leading world industrial countries: US, Germany, Japan, UK, and France.
What is G7
G7 is the G5 group plus Italy and Canada.
What is G10
G10 is the G7 group plus Sweden, Belgium, and the Netherlands.
What is Gap
The gap means a difference between the previous period's close price and the next period's open price. In Forex market gaps may occur only after weekends.
What is Greenback
Greenback is the Forex slang for the U.S. Dollar.
What is GDP (Gross Domestic Product)
GDP measures the change of the national income in an economy. GDP incorporates the values of all products and services that were produced during a particular period (usually 3-month or 1-year).
What is GNP (Gross National Product)
GNP includes GDP plus income gained from investment and overseas work.
H
What is a Hard-Currency Policy
A monetary policy that aims domestic currency appreciation is called “a hard-currency policy”.
What is Hedging
Hedging is the strategic procedure which helps traders to reduce their portfolio risk using multiple financial instruments like derivatives.
What are Hedge Funds
Funds which use hedging instruments (future, options, swaps etc).
What is Housing Starts and Permits
It is a macroeconomic index measure the number of houses under construction plus the number of construction permits.
I
What is a Forex Indicator
It is a tool of technical analysis which helps Forex traders to predict future currency movements and indicate oversold/ overbought levels.
What is Industrial Production
Industrial production is an index which measures the total output amount of national economy plants.
What are Interbank Rates
Interbank rates are set by large international banks in order to lend capital to other international banks.
What is Interest
Interest is paid when borrowed money is used.
What is Intraday Trading
Intraday trading means buying and selling currency pairs during the same day.
What is Intraday High
It is the highest price of trading activity on a particular day.
What is Intraday Low
It is the lowest price of trading activity on a particular day.
What is Inflation
Inflation in an economy is measuring changes in the level of prices. Inflation is often called as the ‘hidden tax’ as it diminishes the purchasing power of consumers. Higher levels of inflation constitute ‘bad news’ for the economy and for the corresponding currency rate.
J
What is Jobless Claims
Jobless Claims is an economic indicator measuring the number of registered unemployed.
K
What is Kiwi
Kiwi is the Forex slang for the New Zealand Dollar.
L
What is Leverage
Leverage in Forex means the ratio of capital leverage used by traders when trading currencies. In Forex market capital leverage is usually 1:100 but it can be set up to 1:500 even more.
What is Liquidation of a Position
Liquidation means closing a trading position.
What is Liquid Currency
A liquid currency may be bought/sold without any limitations.
What is a Long Position
Long positions are buying positions on a currency rate. In the Forex market, the primary currency when bought is long and the other is short.
What is Lot
A lot in Forex is the smallest volume of a transaction.
M
What is Forex Margin
The margin is the minimum amount demanded by a Forex broker in order to execute a trade.
What is Forex Margin Account
Forex margin account is the account which holds deposited money for trading.
What is Forex Margin Call
A margin or marginal call occurs when a Forex broker demands more money to be deposited by a client/trader.
What is Forex Market Maker
In the Forex market, a market maker is a large bank or other financial organization which has a significant share of market operation and may determine in a high extent the level of a particular currency rate.
What is Market Maker Spread
In Forex, market maker spread is the difference between the currency buying and selling price, this spread is defined by the market maker.
What is Market Order
A market order is the type of trading order which is not limited by price or by time. Market orders are executed extremely fast but they are expensive for traders.
What is Momentum
Momentum is the speed of change of a currency’s value.
N
What is NYSE
NYSE stands for NYSE Euronext market.
What is New York OTC
New York “Over the Counter” market.
O
What is Offer or ask price
Offer or ask price is the price at which a buyer is able to make a purchase.
What is Old Lady
Old Lady is a Forex slang name which corresponds to the Bank of England (BOE).
What is Open Position
An open position is an active Forex trading position.
What are Oscillators
Oscillators are technical analysis tools which are used to predict future price movements.
What is Output Index
Output index is the index measuring the production volume output.
P
What is the Personal Spending Indicator
Personal spending indicator measures the changes of individual spending in an economy. When spending is increased high growth and high inflation are the outcome and vice versa.
What is Pip or Point
A pip in Forex is the minimum change in a currency price.
What is PPI (Producer Price Index)
PPI is the index of producer prices. When PPI increases it means ‘bad news’ for the corresponding economy.
What is Profit
Profit is the positive outcome of a particular transaction.
What is Pivot Point
A pivot point is the primary support/resistance point.
Q
What is Quotation
The quotation is the price of a particular currency, expressed in the units of another currency.
R
What is Resistance Level
Resistance level in technical analysis is the price upper zone where a bullish trend is possible to reverse. The increase of volume activity is a common phenomenon in such price zones.
What is a Retracement
Retracement is a short-term correction of a price trend, after which the master trend is continued.
What is RSI (Relative Strength Index)
RSI is a widely used technical indicator which indicates oversold and overbought levels.
S
What is Scalping
Scalping trading in Forex is the strategy of selling currencies and gaining profits by tiny changes in the currencies price level. Some Forex brokers allow scalping others don’t.
What is Short Position
A Forex trader “short” the market when he opens a selling position.
What is Slippage
Slippage is the execution of an order for a price different than expected. Slippage may occur based on a fast market or a low-speed broker.
What is Spot
A spot transaction is carried out at once but the payment is made within two days.
What is Spread
Spread is the difference between the buying and the selling price of a currency. The trading spread is a very important variant when trading on Forex and it is measured by pips.
What is Sterling
Sterling in Forex corresponds to the British Pound (GBP).
What is Stop Loss
It is a very important order when trading. A stop loss order is a predefined price level where a trader is determined to close his positions and thus limits his trading losses.
What is Support Level
Support level in technical analysis is the price level below the current price level where a bearish trend is possible to reverse. The increase of volume activity is a common phenomenon in such price zones.
What is Swap (on Forex)
A Foreign Exchange swap or Forex swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates.
What is Swissy
Swissy is the Forex slang name for Swiss Franc.
T
What is Technical Analysis
Technical analysis is the analysis used by traders using moving averages, indicators and other tools to predict future price movement but also the timing to buy or sell currency pairs.
What is a Tick
Tick is the minimum change of time in the Forex market.
What is a Tick Chart
Tick chart is a price chart made by ticks values.
What are Time Cycles
Time cycles are used to describe the repetition of price movements at particular time frames.
What is Thin Market
A thin market is called a market with low market activity/liquidity.
What is Trader
A Forex trader is an individual who is buying and selling currencies in order to make a profit.
What is Trading Platform
A trading platform consists of software and hardware and provides the ability to trade using a personal computer. Trading platforms may be manual and/or automated.
What is a Transaction
A transaction in Forex is the procedure of opening and closing a currency trading position.
What is Transaction Cost
Transaction cost in Forex is the incorporated trading cost when buying or selling currencies.
U
What is Unemployment (%)
Unemployment is a macro-economic indicator which measures the level of the unemployed population in percentage to the total population who is able to work.
What is an Uptrend
An uptrend is a price trend that is bullish.
V
What is Volatility
It is the speed at which the price of financial security fluctuates.
What is Volume
Volume measures the level of trading activity.
What is VPS (Virtual Private Server)
VPS is a virtual environment of trading Forex without unexpected interruptions.
W
What is the Wholesale Trade Index
Wholesale Trade Index is a macro-economic index which measures changes in wholesale sales.
What is a Yard
It’s the Forex slung for a billion US Dollars.
Z
What is ZEW
ZEW is the Center of European economic research founded in 1990 and located in Hamburg.
Forex Glossary -Basic Terms
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