OFP Glossary

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OFP Glossary

Here you can find a collection of words and their related definitions, all of which are relevant and linked to the world of FOREX trading. These are words that may come up in day-to-day trading; might appear on news releases; or may be something you simply want to know. Regardless of the reason, you’ll never be left wondering. Simply find the first letter of relevance, and you’ll become better informed, and a better trader.



An accounting measure whereby transactions that have not yet occurred are included on income statements or balance sheets.

Adjustable Peg

Exchange rate where a currency is pegged to another currency, often a stronger and more stable one.


Actions forced by a change in internal ecnomic policy, aimed at correcting a payment imbalance or official currency rate.

Aggregate Risk
Total amount of exposure a bank/broker has in spot and forward exchange contracts.
Prices or traders are acting with conviction.
A fee charged to exchange money from one currency to another.
A person that conducts analysis of the markets.
Increase in the value of an asset over time.
Simultaneous buying and selling of foreign exchange pairs when there is believed to be a rate discrepancy in different markets, in order to get a profit.
Asian Central Banks
Central banks and financial authorities in Asian countries.
Asian Session
23:00 – 8:00 GMT
The price the foreign exchange pair is offered at.
Ask (Offer) Price
Price at which the market is willing to sell a product/asset. It can be called the ask or offer price. In a forex currency pairing, the ask refers to the price at which the base currency can be bought (to the left of the pairing).
Asset Class
An item that has value, ie stocks, option, Forex.
At Best
The instruction provided to a broker, asking them to buy or sell and asset at the best rate available in a market.
At Or Better
Instruction given to dealer to buy or sell at a certain price or better.
The abbreviation for the Australian dollar and US dollar pair. Describes how many US dollars are needed to get a Australian dollar.
Aus 200 Australian Securities Exchange. This is the index of the top 200 companies on Australian stock exchange by market cap.
Slang for the AUD/USD pair.
Automated Dealer
A trader that inputs trades without human input.


Back Office

A system used by banks/brokers to process and report transactions.

Balance Of Trade

Difference between the value of a country’s exports and imports for a given period.

Balance of Payments

System by which a country’s economic transactions are recorded.


When a country uses a peg, the band is the permitted fluctuation.

Bank Notes

This is the paper issued by a central bank that is redeemable as money and is classed as legal tender.

Bank Rate

This is the rate at which a central bank is willing to lend to domestic banks.
Banking Day Outlines the days of the week in which the commercial banks are open.

Bar Chart

One of the most popular methods to study price action of a currency pair.

Barrier Level

Price level at which a barrier option can be exercised.

Barrier Option

Type of derivative whereby the payoff depends on whether or not the underlying assets price has reached or exceeded a certain level.

Base Currency

Currency of the country in which your trading account is based

Base Rate

Lending rate of central bank.


Chart pattern used in technical analysis that shows when demand and supply of a certain asset are nearly equal. Often appears as a merging of support and resistance levels.

Basis Point

One hundredth of a percent, or 0.0001.

Bear (Bearish)

The view that there is going to be a decrease in the price of a currency.

Bear Market

General period of price decline in an individual security, asset or market as a whole.


Price at which a buyer/market is willing to buy.

Bid Price

Price at which the /buyer/market is willing to buy a product.


Spread Difference between buy and sell price of a foreign exchange pair.

Big Figure

Second figure after the decimal point in a price.


Bank of International Settlement based in Basel, Switzerland. This is the central bank for central banks.

Black Box

Term to describe model based traders. The models are often too complex for human interpretation.

Blow Off

Chart pattern that shows a steep incline followed by steep decline in security price, usually on high volume. Often caused by the ending of a large number of shorts.


Bank of Canada.


Bank of England.


Bank of Japan.

Bollinger Bands

Combines moving averages and volatiltiy of an instrument in order to guage whether prices are high or low. It is 2 st.dev above and below the moviing averages.


Debt that is issued for a specific period of time. Can be annuity of perpetuity.
Book Total number of currency positions open at a given moment. Aim is to have a net of zero, meaning that shorts and longs cancel out.

BRC Shop Price Index

British measure of inflation based on surveyed retailers.

Breakaway Gap

Occurring at the beginning of a new trend, this is the visible price trend.


An agent, often working on commission or spreads, that executes orders to buy or sell currencies.


A company that offers its trading services to the public, often where brokers are found.


Slang for one million units of a dollar based currency pair.

Bull (Bullish)

The view held by traders that go long on currency, expecting that the prices will increase.

Bull Market

A market that is in long term, continual upward trends.


Actions that are favouring the strengthening of the market, or increase in prices.


Traders that believe that the market is going to increase in prices, regardless of the current trend.


Germanies central bank.

Business Day

A day when banks are open for business.


Action of taking a long position on a product, usually with the hope that the price will increase. Opposite of a short/sell.

Buy Dips

Action of purchasing an asset after having fallen a certain number of pips (often 20-30) within an intra-day period.

Buy Limit Order

Order to fulfil a transaction at a specified price or lower.

Buy on Margin

Buying a currency pair, but only part of the position value is covered for by cash. Margin is the part of the value that is paid for, not borrowed for.



GBP/USD pairing.


Canadian Dollar

Call Option

In FOREX, this describes a currency trade where an interest rate difference between countries is exploited. The currency with a low interest rate is sold, and the one with a high interest rate is purchased. The trader received the interest rate difference whilst the trade is open.

Candlestick Chart

Chart that indicates the trading range for the day, including the opening and closing prices. If the open is higher than close, the candle is shaded. If the opposite is true, it is unshaded.


Dramatic surge in selling pressure in a declining market. Often follows a significant downturn in prices, where pressure builds once investors don’t want to suffer further losses, and so further sell positions, increasing the downwards pressure. Often acts as a signal for an expected reversal.

Carded Rate

Foreign exchange rates quoted by a bank for small foreign exchange transactions.


Interest cost of financing assets/securities.

Carry Trade

Strategy where one longs a high interest currency and shorts a low interest rate currency.

Cash Market

The market upon which the derivate contract of an asset is actually based.

Cash on Deposit

Funds that are deposited within a trading account.

Cash Price

Price of a product that is for instant delivery/price of the good at that instant.
CBs Central bank abbreviation.

Central Bank

Government or quasi-government organisation in charge of a countries monetary policy.


“Contract for Difference” gives traders exposure to the change in value of an underlying asset whilst using leverage to trade accounts far higher than what they actually have. Means that a trader can benefit from trading a security without actually owning it.


Trader that uses charts/graphs/historical data to find trends and predict movements. Also known as a “technical trader”.


Price moves that are only short lived and not often conducive of aggressive trading.


“Certificate of Investment Performance Measurement”.

Cleared Funds

These are funds that are freely available and are sent to settle a trade.


The process whereby a trade is settled.

Closed Position

Exposure that not longer exists. A position can be closed by taking an equal but opposite position.


Process of closing a position.

Closing Price

Price of an asset when it was traded to close a position.


Asset used to secure a loan or act as a guarantee of performance.


Common fee charged for buying or selling a product.

Commodity Currencies

Currencies of countries whose main exports are natural resources.


Dollar pairs that form crosses.


Symbol for the NASDAQ Composite Index.


Document shared by two parties describing the terms of a transaction.


Period of bound activity that follows an extended price move.

Construction Spending

Measures the US expenditure on new construction.

Consumer Price Index

“CPI”. Month-on-month indicator that shows the change in cost of living by comparing common basket of goods price across time.


Psychological impact of a local crisis that leads to its spread into other markets.


Standard unit of forex trading.

Contract Note

Confirmation of trade details.

Contract Rate

Notional rate represented by a single CFD.

Contract Size

Notional number of shares represented by a single CFD.

Controlled Risk

Position that limits risk with a guaranteed stop.


Slang for the Danish Krone

Corporate Action

An event within a corporation that changes the equity structure of a stock.


Corporations in the market for hedging or financial management. Their interests are often longer term than speculators.


Relationship between two (seemingly) independent things.

Counter Currency

Second listed currency in a currency pairing.


A party in a financial transaction.

Country Risk

The risk associated with transactions that are cross-border in nature. Can include legal, political and even natural conditions.


The action of taking out a forward foreign exchange contract, or closing of a short by buying an asset which has been sold.


Consumer Price Index


A market that is ready to sell-off hard.


A currency pair that does not include the dollar.

Cross Rate

Exchange rate between two currencies.

Crown Currencies

Currencies of the commonwealth.


Commodity trading advisors and speculative traders who can resemble short-term hedge funds.


Money form issued by government or CB that is used as legal tender and basis for trade.

Currency Pair

Currency pair that makes up a foreign exchange rate.

Currency Risk

Chance of an adverse change in exchange rates.

Currency Symbols

This is the three letter symbol for a currency, ie USD, GBP

Current Account

Sum of the balance of trade, net factor income and net transfer payments.


Day Order

Buy or Sell order that expires at the end of the day.

Day Trade

Trade opened and closed on the same day.

Day Trader

Traders that open and close trades on commodities on the same day.


Term that denotes a trade completed at the current market price. Not an order.

Deal Blotter

List of all the trades that were completed on a trading day.

Deal Date

Date upon which a trade was entered.

Deal Ticket – Deal Slip

Most common method of recording the basic information relating to a transaction.


Person/firm acting as the principal in the purchase of a foreign exchange, as opposed to being an agent. They take on their own risk.


Act of buying/selling foreign currencies on FOREX markets across the globe.

Dealing Spread

Difference between buying and selling price on a contract.

Dealing Systems

Systems that link investment banks one-on-one in order to complete and facilitate FOREX transactions.

Defend a level

Actions taken to prevent a product from trading at a certain price point or zone, often due to interest in that product.


Negative balance of trade/payments.


Removing a stocks listing from an exchange.


A trade in which both parties take physical delivery of the product being traded.

Delivery Date

The date upon which delivery is due.


Ratio between change in product price, and change in price of underlying market.

Department Of Communities And Local Government (Dclg) Uk House Prices

Monthly survery that uses large number of house sale figures to measure price trends in UK real estate market.

Deposit Rate

Composite of rates for lending and borrowing a currency over a specified time period.


Decrease in asset value over time.


Financial contract whose value is based on an underlying asset.


Pegged currency is allowed to weaken based on official actions.


The amount by which it is cheaper to buy a currency for future delivery compared to a spot delivery.

Discount Rate

The rate at which a currency is discounted.


In technical analysis, where price and momentum move in opposite directions. Bullish and bearish both signal large shifts in price directions.

Divergence Of Mas

Technical observation that describes how different period moving averages are moving away from each other. This often acts as a forecast of price trends.


Amount of company earnings shared with its shareholders.

Djia Or Dow

Abbreviation of DOW JONES or US30.


US dollar. Other dollars must be more specifically described.


Data or policy that implies easier monetary policy or a lowering of interest rates.


Actions within prices that consist of lower lows and lower highs.


Size of drop in account value from its high to its low.



Indication that a currency is weaker than from the previous quoted price.


Small price decline of a currency when the currencies CB enacts monetary policy to induce spending.


“European Central Bank”


“Electronic Comminication Network”

Economic Indicator

Used to gauge the current economic conditions.

Effective Exchange Rate

Country’s currency strength/weakness, based entirely off of its trade of balance.


Environmental Investigation Agency.

EIA Crude Oil

Weekly EIA report on petroleum status.

Electronic Communication Network

Computer that allows trading products outside of stock exchanges. Primarily selling of stocks and currencies.

Elliot Wave Principle

System of empirically derived rules that allow for interpretation of markets. Specifically a 5 wave/3 wave pattern which combines to form a complete bull or bear market.

End Of Day Order (Eod)

Order to sell at a predetermined price that remains open until the end of the trading day.


“End of Day Order”

Est – Edt

New York time zone. Eastern Standard Time/Eastern Daylight Time.


Euronext 50 Index.


Eurozone currency

European Monetary Union

Group of policies that coordinates economic and fiscal policy of the EU member states.

European Session

7:00 – 16:00 London.

Eurozone Labor Cost Index

Measure of annual rate of inflation in compensations of typical works.


Type of share where the next dividend is given to the seller, not the buyer.

Exchange Rate

Value of one currency in terms of another currency.

Exotic Currencies

Currencies of nations that do not have developed international markets and that are seen as illiquid.

Expiry Date

Date of transaction expiry, of 2 working days before settlement.


Companies that sell goods internationally. This means that they sell foreign currency and purchase domestic currency from abroad.


Total quantity of money loaned to someone else. Rules are often in place to prevent overexposure.


Market that is believed to have moved too far and too fast


Factory Orders

A report that gives the dollar value of new orders of both durable and non-durable goods.

Fear of Missing Out

Often called FOMO, this is the phychological challenge that traders often face. It tends to lead to overtrading as people fear missing out on profits or good trades, and this leads them to make unneccesary errors.


Federal Reserve Bank. Central bank of the US.

Fed Officials

Members of the board of the FED. They are often the individuals behind important decisions.

Fiat Currency

In this system, value of a currency rises and falls depending on demand and supply pressures, as with any good. This is why FOREX trading is possible.


First in First out. This is when the trades of a certain currency pair are liquidated in the same order as they were made.


Order has been fully executed.

Fill or Kill

if the order cannot be filled, it will be cancelled.


Currency is stronger or strengthening.


A group of five time zones in which large amounts of FOREX traded currency is bought or sold to fulfil orders. They are often linked with market volatility. This includes Frankfurt (5:00), London (6:00), WMHCO (11:00), IMM (8:20), ECB (8:15).


Data readings that are unchanging from the previous levels.

Flat – Square

Language that describes a position that has been reversed completely.

Follow through

New buying or selling interest that has been sparked after a directional break at a certain price levee. The lack of any follow through often indicated that the move will not be sustainable, and may even reverse.


Federal Open Market Committee. Policy setting group within FED.

Fomc Minutes

The minutes from FOMC meetings. Gives more insight into reasoning behind particular choices.

Foreign Exchange – Forex – Fx

The simultaneous buying and selling of currencies.


A pre-specifies exchange rate for a contract that will be settled at a pre-determined future date.

Forward Exchange Rate

The exchange rate quoted and agreed on in a forward contract.

Forward Points

The pips added or subtracted from the spot rate to determine the forward exchange rate.

Forward Settlement Date

Settlement date of a forward contract.


Index of the 40 largest (market cap) companies listed on the French stock exchange.

FTSE 100

Name of UK 100 index.

Fund rate

The interest rate that depository institutions lend their reserves to other depository institutions in an uncollateralised basis, overnight.

Fundamental Analysis

Assessment of all information available on a tradable product used to determine the future outlook and therefore attempt to predict its future price movements. Often very subjective.


Basic ingredients of exchange rates, ie inflation, interest rates and economic activity.

Funded Trader

A trader who is using capital that is not theirs. Acting on behalf of another firm, or perhaps borrowing the capital.

Funded Trading

Trading that occurs when capital is traded without ownership. Traders can trade on behalf of another group, retaining some profit shares that are agreed separately.


Hedge fund types active within the market.


Agreement between parties to execute a transaction at a future date when price is agreed in the present.

Futures Contract

Obligation to exchange goods at a set price at a specified quantity at a future date. Similar to a forward. Difference is that future is settled on an exchange (more universal sizes) whereas forwards are settled OTC, meaning contracts are more specific to each transaction.



Group of 7 nations – USA, Germany, Japan, France, Italy, Canada and UK


Group of 8 nations – G7 and Russia

Gap – Gapping

A market movement that skips large price intervals without any trading. This often occurs when news or economic data is released.


The UK and Japanese pairing.


The UK and USA pairing.

Gearing (Also Known As Leverage)

This can also be referred to as leverage. It occurs when a trader trades a value that is greater than the amount of capital that the trader is able to hold.


Top 40 companies on German stock exchange (market cap). Another name for the DAX.


A bid being hit or selling interest.

Giving It Up

Technical level succumbs to a hard-fought battle.

GMT (Greenwich Mean Time)

Most commonly referred to time zone in FOREX trading. This does not change during the year.

Going Long

Purchasing a stock with the expectation of the price going up, with the intention of selling the currency at a later date.

Going Short

Selling a currency with the expectations of the price going down, with the intention of buying the currency back at a later date.

Gold (Gold’s Relationship)

Commonly accepted concept that gold prices move in the opposite direction to the US dollar. The relationship breaks down in the shorter-term.

Gold Certificate

Ownership certificate that gold investors use to buy and sell it.

Gold Contract

A standard unit of trading gold. Equals 10 troy ounces.

Golden Cross

In technical analysis, when two moving average intersect. Considered a good sign that the underlying currency will move in the same direction.

Goldilocks Economy

An economy that has steady growth and stable inflation.

Good ‘Til Cancelled Order (Gtc)

An instruction that does not terminate at the end of the trading day. Often will expire at the end of the month.

Good ‘Til Date

Order type that expires on the date specified.

Good For Day

Order that expires at the end of the day if not fulfilled.


Term to describe an approach to trading whereby the trader wants more than they have, even if needs are met. Often leads to losses as they throw away data and info and trade off of emotion.


Nickname for the US dollar.

Grid Trading

Positions and orders that are constructed with a spread predetermined by the trader.

Gross Domestic Product

Value of a country’s output, expenditure or income within its borders.

Gross National Product

This is GDP plus income earned from a country’s assets or citizens abroad.

Guaranteed Stop

Stop-loss order that is certain to close your position at the level dictated by yourself. It is guaranteed even if there is gapping in the market.

Gunning – Gunned

An act whereby the trader pushes to trigger known stops or technical levels within the market.



Indicates 100 pips in the FX market, starting at 000.

Hard Currency

Confidence inspiring currency.

Hawk – Hawkish

An approach to monetary policy is said to be hawkish when it is thought that higher interest rates are needed, most commonly to fight inflation or to prevent rapid economic expansion.

Head and Shoulders

Price movements that appear to have a head and a shoulder. Often believed to indicate a price trend reversal. Price rises for some time, and flattens when profit is taken (shoulder). Rises again (to the head) until more profit taking causes it to fall back to the shoulder. A larger price drop is beleived to follow later.


Position/positions taken to reduce risk on your primary position.


Strategy used to offset ones market risk.

Hit The Bid

Sell at the currently offered market bid.

Hk50 – Hkhi

Hong Kong Hang Seng index.


The buyer and subsequent owner of a currency pair.



International Foreign Exchange Master Agreement.


Term to describe an environment where there is little traded volume. Can often create choppy market conditions.


International Monetary Market, which is a Chicago based currency futures market.

Inconvertible Currency

A currency that is forbidden, by the regulations, to be traded for other currencies.

Indicative Quote

Market maker’s price that can be used to indicate somethings price, but that cannot be traded on.


Abbreviation of the Dow Jones Industrial Average.

Industrial Production

Total value of production output created by manufacturers, mines and other utilites. Can act as one of the leading indicators of employment and personal income data.


Condition of economy whereby the price of consumer products rise, lowering the purchasing power.

Inflation rate

The rate by which prices are rising on consumer goods, often quotes as a percentage.

Initial Jobless Claims

Measures the number of people that filed for unemployment insurance for the first time during a one week period.

Initial Margin

A form of deposit required to be given by both buyers and sellers when opening a position.

Initial Margin Requirement

The minimum needed margin for a newly opened position, that needs to be settled in cash.

Instant Funded Trading

Trading that occurs when the capital used is not ones own, but can be “traded” very rapidly after a decision has been made.

Instant Funding

A form of trading whereby, for a small fee, and strict rules, you are able to gain access to trading capital that you otherwise would not be able to access.


Spec of the banks at which the funds will be paid when settlement is needed.

Inter-dealer Broker

Specialist that acts as an intermediary between market-makers who want to improve their book positions without losing their anonymity.

Interbank Rates

The bid and offer rates that banks use when depositing between each other. This is the basis of interbank markets, ie LIBOR.


The cost of holding someone’s money, i.e. borrowing.

Interest Rate Differential

Difference between the interest rates that are applicable to a currency pair.


The action most often taken by CBs in order to effect the value of the domestic currency. The CB often comes into the market and acts as a large player buying up or selling large swathes or currency.

Introducing Broker

Broker that introduces customers to market makers in return for commission or spreads.


Symbol for S&P 500 Index.


Private companies initial public offering of stock onto the market for the public.

ISM Manufacturing Index

Index for the US manufacturing sector, based off of expectations for future productions, new orders, inventory, employment and delivers, by currency executives. Values above 50 indicate expansion, below 50 contraction.

Ism Non-Manufacturing Index

for the 80% of US economy not covered by the ISM Manufacturing Report. Values above 50 show expansion, and below 50 contraction.


Japanese Machine Tool Orders

Total value of orders places with machine tool manufacturers. Indicator of future industrial production. Strong data signals that the economy is in expansion.

Japanese Yen

Japanese currency unit. Third most traded currency.


Trader that commonly practices short-term, small trades for profits. Rarely holds positions overnight.


Name for the NEKKEI Index.


Keep The Powder Dry

Limit of your trades due to wild trading conditions. In rough trading conditions, sometimes best to wait until a clearer opportunity arises.

Key Currency

For a smaller country, this is the act of aligning their currency to that of a different, major trading partner.


Trader term for the New Zealand Dollar.


An option strategy that requires the underlying asset to reach a certain price point before a previously purchased option can activate. They are used to decrease premium costs of an underlying option, and are also good to trigger hedging activities.


An option strategy that nullifies a purchased option on an underlying asset when a price point is reached. When they are traded, the underlying asset option ceases existence, and so any hedging may need to be undone.


Leading Indicators

These are statistics that are considered to be good indicators of future economic activity.

Left-hand Side

Taking left-hand side of a two-way quote.


Price zones or spot prices that are considered to be significant on technical standpoints.


This is the percentage or fractional increase in the amount that you are able to trade, compared to the amount of capital that you have. If you are leveraged 100:1, this means that you are able to trade 100 times a greater notional value of capital compared to what you have.


A potential loss, debt or even financial obligation.


London Inter Bank Offer Rate. The rate at which london banks lend to each other over night.

Limits – Limit Order

These types of orders seek to set minimum and maximum levels at which something can be bought or sold. Most commonly seeking to buy at prices lower than market, and sell at prices higher than market.

Liquid Market

A market that has a large number of buyers and sellers, that allow for prices to move in a smooth manner.


This is the process of closing an existing position by executing an offsetting transaction.

London Session

8:00 – 17:00 (London)

Long Position

This is a common position whereby the value increases if the market price increases. Usually taken when market is expected to rise.


Traders who have purchased a product.


Nickname for the Canadian Dollar or the US/Canadian dollar currency pairing.


A common unit used to measure the amount of the deal. The value of a deal always corresponds to an integer value of lots.


This is a standardised method of trading within FOREX, whereby a trade of 100’000 units of a particular currency is traded.



Name for the longest term traders. They are the ones that make their trade decisions based on fundamental analysis. Their trades can last from six months through to multiple years.


This is the minimum margin that a customer must maintain in their margin account.

Maintenance Margin

The minimum margin that has to be readily available to support all open trades.

Make a Market

One is said to be able to “make a market” when they quote bid and offer prices on which they are ready to deal.

Manufacturing Production

Total output of the manufacturing section of the industrial Production figures. Overall accounts for approx. 80% of Industrial production.


The difference between the buying and selling rates. It can also be used to show the discount/premium between a spot and a forward rate.

Margin Call

This is the demand for more funds to be added to your maintenance margin, as it is no longer sufficient given adverse price movements.

Marked to Market

This is the act of adjusting an account daily, in order to better reflect the accrued profits or losses that are then used to calculate margin requirements on a daily basis.

Market Maker

This is an individual or a firm that is allowed to create and maintain a market in a foreign currency.

Market Order

This is an order that dictates an instrument is to be bought or sold for the best possible price at the time of order placement.

Market Spot Exchange Rate

Current spot exchange rate on the foreign exchange market.


The act of re-evaluating all open positions, in light of current market prices. It is these values that are then used to determine margin requirements.

Matching Systems

These are electronic systems that duplicate traditional broker markets. Prices show be a bank can be used by all trades.


Date of settlement/expiry or a financial product.

Maturity Date

Date on which the foreign exchange is to be delivered or received.

Medley Report

Medley Global Advisors are a consultancy firm that are in close contact with CBs, government officials etc from around the world. Their reports are said to have so much inside information, that once released, it can move markets. Whilst its accuracy is questioned, it is still said to have weight.

Michigan Consumer Sentiment

Monthly survey of consumer confidence levels in the US, conducted by University of Michigan. Based on telephone interviews that gather information on consumers beliefs about the economy.

Mid-price or Middle Rate

Price halfway between two prices (buying and selling) offered by the market.


One million.


Synonym of Black Box. Systems that buy or sell based on technical analysis.


Abbreviation of “Month-over-month”.


Technical studies that assess the rate of change in prices.

Momentum Players

Traders who align themselves with day-on-day trends in attempts to grab 50-100 pips.

Monetary Easing

Acts taken by CBs where they loosen monetary constraints. Done either by changing interest rates, money supply or deposit requirements.

Monetary Policy

Central banks management of money supply. Believed that control of this can impact prices, inflation rates etc, but in reality, can be limited due to global forces.

Money Market

This is the market that consists of institutions, dealers etc in money or credit who wish either to borrow or lend.

Moving Average

This is a method of smoothing data sets, widely used in time series data.



Abbreviation of the NASDAQ 100 Index.


An American financial services firm that owns and operates 3 stock exchanges in the US.

Net Position

Total amount of currency that have been bough or sold, that have not yet been offset with a countering transaction.

New York Session

8:00 – 17:00 (New York).

News Trader

Investors who base their decisions on the news announcements and the way that they impact the market.


Abbreviation for Non-Farm Payrolls.

No Touch

This is an option that pays a fixed amount to the holder of the option, even if the market never reaches a preagreed Barrier Level.

Non Farm Payrolls

This is the monthly report of data on 80% of the US workforce that is not in farming (ie manufacturing, construction and goods).


Symbol for the NYSE Composite Index.


Odd Lot

This is a non-standard transaction size. Within FOREX, this would be anything that is not in lot sizes of 100’000 units of currency.


This is the price at which the seller is willing to sell. The lowest such price available is often known as the best offer. Also called the ask price.


A way of describing a market condition. Characterised by heavy selling interest in a certain pair.

Offsetting Transaction

This is a trade that cancels or to some degree offsets market risk of an open position.

On Top

An attempt to sell at the current market order price.

One Cancels Other Order (O.C.O. Order)

This is a description of an order whereby two orders are placed. If one of the orders is executed, the other order is automatically cancelled.

One Touch

An option that will pay its holder a fixed amount if the market touches a preagreed Barrier Level.

Open Order

Description of an order that will be executed when a market reaches a designated price. This is often linked with good ’till cancelled orders.

Open Position

Active trade that does not yet have any realised profits or losses, and which has not been offset by an opposing trade.


This is a financial derivative that gives the holder the right, but not the obligation, to buy or sell a product at a pre-agreed price before a certain date.


Instruction to execute a trade.

Order Book

This is a system that is used to show the depth of the market in terms of traders willing to buy and sell at a price beyond the best currenctly available.


This is a quantitative method that gives signals about overbuying and overselling conditions.


Abbreviation of “Over the Counter”.

Outright Deal

Forward deal that is not part of a swap.

Over the Counter

A transaction that is not conducted via an exchange. Often characterised by more tailored deals between two counterparties.



This is reference to the offering side of the market.


This is the FOREX quoting convention whereby one currency is matched against another.


A heavy round of selling.


This means that the forward price of a purchase of a currency is that same as the spot price.


Term describing a market that is moving a great distance over a small period of time. This can be either up or down.

Partial Fill

A term describing the partial fulfillment of an order.


Description of a person that is waiting for certain levels or maybe even news events to hit before entering the market.


Description of a system where the domestic currency value is tied with that of another, more stable currency. The pegs are often allowed to flucuate within a certain band.

Personal Income

A persons total annual gross earning. This is key to personal spending, which makes up 2/3 of GDP in most major economies.


Smallest unit of price for any foreign currency. If a currenc moves from 1.0410 to 1.0420, it is said to have moved 10 pips.


Same as Pips.

Political Risk

This describes the exposure faced by someone to changes in a governments policy, which, if changed, could have an adverse effect on an investors position.


Collection of investments.


This is the net total holdings of a given product.


Producer Price Index. Monthly report that measures selling prices that domestic producers receive for their output.


This is the amount by which a currency is more expensive to buy for a future delivery than for spot delivery.

Price Transparency

Price quotes to which all participants have equal access.


Difference between cost and sale price, often where the sale price is greater than the cost price.

Profit & Loss or P&L

These are the real gains or losses that occur from trading activities. They can combine both closed positions, and also unrealised gains/losses on currently open positions.

Prop Firm

This is a company that gives people access to money that is not theirs, on the agreement that they will trade for profit. There are often profit splits, combined with rules that aim to prevent excessive losses on behalf of the firm.

Prop Trader

This is a trader who uses capital granted to them by a prop firm. This means that their profits are often magnified, but they are often only entitled to a certain profit split, which is the cost of trading with another companies funds.

Prop Trading

This is the act of trading with money granted by a prop firm.


This is the act of a trending market to retrace a certain portion of the gains, after which the trend will continue in the same direction.

Purchasing Managers Index (Pmi)

Indicator of performance of manufacturing companies within a country.

Purchasing Managers Index Services (France, Germany, Eurozone, Uk)

This is a measure of the outlook of purchasing manager in the services sector. They are surveyed on wide range of topics. Readings above 50 indicate economic expansion, whilst below 50 indicated economic contraction.

Put Option

A financial product where the holder has the right, but not the obligation, to sell an underlying asset at a specified price.


Quantitative Easing

The act taken by a central bank when injecting money into an economy, in the aim of stimulating growth.


This is an indicative market price, most often used for information as opposed to actual trading.

Quote Currency

This is the second currency in a currency pair. If we take USD/GBP, GBP would be the quote currency. In the rate, it means that you would be able to get a certain amount of the second currency for one unit of the quote currency.



This is the recovery of a price after a period of decline.


This is when a price is moving between a defined high and low. It moves between these boundaries, without breaking beyond them.


This is the price of one currency in terms of another.


Royal Bank of Australia. The Australian Central Bank.


Royal Bank of New Zealand. The New Zealand Central Bank.

Real Money

If one is said to be real money, they are often someone/a firm of significant size, whose actions are taken as an indicator of long-term trends, as opposed to a speculator trading intra-day.

Realized Profit/Loss

The actual amount of money that a trader has made or lost when a position is closed.


A business cycle of contraction, where there is a decline in economic activity. Most often characterised by a decrease in spending.

Reciprocal Currency

A pair involving the US Dollar, but where the dollar is not the first currency quoted.

Resistence Level/Point

This is a price point that is believed to act as a resistance level. If this level is broken by a price, it is expected to lead to significant price movement.

Retail Investor

An investor that uses personal wealth.

Retail Sales

A measure of monthly retail sales of goods and services sold by retailers based on a sample. It is a good indicator of consumer spending, which is subsequently used to gauge the health and growth of an economy.


If a pegged currency is allowed to strengthen or increase due to actions of officials or the government.

Right-hand Side

Looking at the right hand side of a two way quote.

Rights Issue

This is a form of corporate action whereby shareholders are given the right to buy more stock. Used as a method of capital raising by companies.


This is the most common exposure to uncertainty. Often, it is negative in connotation.

Risk Management

The use of analysis or techniques to try and reduce/control exposure to a variety of risk sources.


Simultaneous closing of a position for todays value date and opening of the same position on the next day’s value date at a price reflecting the interest rate differential between the currencies. This is often done to prevent the having to actually deliver the currency traded when the position is closed.

Round Trip

Trade that has been open and then closed by an equal, opposite deal.

Running Profit/Loss

Indicator of your current open positions. Similar to unrealised gains or losses.


Symbol for the Russell 2000 Index.



Securities and Exchange Commission.


This is the name for a group of securities that operate within a similar industry.


Taking a short position in the expectation that the market is going to go down.


This is the process of entering a trade into the record books, including the counterparts within the transaction. It may or may not include the physical exchange of currency.

Short Position

This is an investment position that is taken when expectations are that the market/asset will decrease in price. Profits are made when the price declines.

Short Squeeze

This is when traders are heavily involved in shorting a large quantity of assets. However, market catalyst forces them to cover their exposure, which causes a sharp increase in the price.


After a decline in market price, previous shorters begin to buy back the asset.
Shorts This is the name for traders that have either shorted a product, or who are bearish in market beliefs.

Sidelines, Sit On Hands

Description of traders who stay out of the market due to a lack of clear direction.

Simple Moving Average/SMA

This is a simple average of a pre-defined number of price bars. Any time interval can be applied.


The difference between the price that was requested, and the price that was actually traded. This difference often occurs due to choppy or changing market conditions.


Term that is used to describe a market that is believed to be ready to move quickly in any direction.


Term that is used to describe a market that had no meaningful trend or follow-through.

Smart money/Smart Money Concept

This is money that is placed in the market by large players/forces. The act of their placing money in the market can often influence financial markets directions.


Swiss National Bank. The central bank of Switzerland.


This is the Secured Overnight Financing Rate. This rate is used for US dollar denominated loans and derivatives that are used in the overnight market.


Sterling Overnight Index Average. The overnight interest rate that banks pay to borrow in sterling from other financial institutions. It is replacing LIBOR.
Sovereign Names This is how traders refer to central banks that operate in the spot market.


This is the foreign currency exchange that occurs two days after it is bough or sold.

Spot Market

This is the market where products are traded for their current market price, for their immediate exchange.

Spot Price

This is the current market price. Settlement with these prices often occurs within two business days of completion.

Spot Trade

The purchasing or selling of a product for its immediate delivery. These are often completed electronically.


Difference between the bid and offer price.


Another name for the S&P Index.


Purchase and sales are in balance, and therefore the dealer has no open positions.


Term to describe an economy that is characterised by slow growth and a high unemployment rate, which is accompanied by inflation. It is a combination that is tough to combat, as the cure for one of the problems tends to exacerbate the other problem.


Nickname for the British Pound, or the pound/dollar currency pair.

Stock Exchange

The market on which securities are traded.

Stock Index

This is the combined price of a group of stocks. It is quoted against a base number so as to allow assessment of how the companies within the index are performing. Examples are the S&P 500, FTSE 100 etc.

Stop Entry Order

An order to buy above the current price or sell below the current price. They are useful for those that believe that the market is going to move in a certain direction, and when you have a target entry price.

Stop-Loss Hunting

The market appears to be nearing a certain level where there are believed to be lots of stops. If the stops end up being triggered, the price often jumps through the level as the stop-losses initiate lots of buying.

Stop Loss Order

An order to sell below the current price, or to buy above current price. They are used as risk management methods. By using them, you are limiting your downside against currently open positions. Traders often need to remember, however, that they are not guaranteed, as they often don’t get triggered until a certain price is reached.

Stop Order

This is an order to buy or sell once a certain price is reached. Once reached, the stop order becomes a market order and is executed at the best possible price. Because of events like slippage or market gaps, stop orders are not a guaranteed method of loss prevention.

Strike Price

This is the defined price at which an option holder is above to buy or sell a product.


This is the price which is said to act as a floor for past or future price movements.

Support Levels

Opposite of resistance. It is a technique used within technical analysis that shows a specific price range at which an exchange rate will naturally self-correct.

Suspended Trading

The temporary suspension of trading of a given product.


Simultaneous sale and purchase of the same amount of a currency at a forward exchange rate.


Nickname for the Swiss Franc, or the USD/CHF currency pair.


Take Profit Order (T/P)

Instruction to sell or buy a currency pair. Once executed, it will result in a reduction of the size of the existing positon, and thus will show a profit on the position.

Take Profits

Limit order places above the market price with a long position, or below the market price with a short position. Once the price is reached, the order is executed, and the profit is locked in.


The taking over of a company by buying its stock.

Technical Analysis

Process of using charts of past price movements to try and find clues as to the direction of future price movements.

Technical Correction

This is an adjustment to prices, not due to market sentiments or actions, but due to technical factors, such as volume or charting.


These are traders that base their actions on technical analysis or chart analysis.

Ten (10) Yr

US government issued debt that is repayable in 10 years.


Period from the trade date to the settlement date.


Description of a market that is illiquid or choppy in character.

Thirty (30) Yr

Us government issued debt that is repayable in 30 years.


Smallest possible change in price. Also known as a pip.

Tick (Size)

The size of the smallest possible change in price.


The streaming of the current or historic price of a currency pairing.

Time To Maturity

Time remaining until a contract expires.

Tokyo Session

9:00 – 18:00 (Tokyo).

Tomorrow Next (Tom Next)

The simultaneous buying and selling of a currency that is deliverable the following day/tomorrow.

Trade Balance

The difference between imported and exported goods or services. Countries with a surplus often see their currency appreciate, and those with a deficit see their currency depreciate.

Trade Date

Date on which a transaction/trade is entered.

Trade Size

The number of units of a product that are included in a contract or lot.

Trading Bid

Term used to describe a pair that is acting strong or moving higher, due to new bids entering the market.

Trading Halt

A trading postponement, but not a suspension.

Trading Heavy

This is a term used to describe a market that feels like it wants to move lower.

Trading Offered

A pair is acting slow/weak, and yet offers to sell keep entering the market.

Trading Range

This is the range between which the price of a stock usually moves. The period over which the range is referring is often quoted.

Trailing Stop

This allows for a trade to keep benefitting from a beneficial price movement, no matter how small. However, the trade automatically closes if the price moves in a way that is detrimental to the trade.

Transaction Cost

This is the cost of buying or selling a financial product.

Transaction Date

The date on which a trade occurs.

Transition Period

The period from and including the trade date through to the settlement date.


This is a term used to describe the current direction of the market, whether it is up, down or sideways.


Total monetary value of all the executed transactions over a given time period.

Two-Way Price

This is when a bid and offer price is quoted for a FOREX transaction.

Two-Way Quotation

When the dealer quotes both the buying and selling rate for a FOREX transaction.



Description of unforgiving, harsh market conditions that are characterised by violent and quick movements.

Uk Average Earnings Including Bonus/Excluding Bonus

This is a measure of the average wage earned by employess, both including and excluding bonuses. This measure is done quarter-on-quarter from the previous year.

Uk Claimant Count Rate

Measures number of people claiming unemployment benefits. Often lower than unemployement data as not all those unemployed claim benefits.

Uk Oil*

Name for Brent Crude Oil.


Name for the FTSE 100 Index.

Unconvertible Currency

Currency that cannot be converted for another currency because of foreign exchange regulations.


The actually traded market from which the products price is derived.

Unemployment Rate

This is a measure of the total number of people that are unemployed and seeking work. Quoted as a percentage of the total workforce.


Widely used unit of currency. It is the smallest allowed trade size in FOREX.

University Of Michigan’S Consumer Sentiment Index

This is derived from a poll of 500 households per month. The questions within it are focussed around sentiment about US economy. The results are viewed as a good proxy for the strength or consumer spending.

Unrealized Gain/Loss

This is the hypothetical profits or losses that would occur if an open position was closed at the current market price.


A transaction that is exectuded at a price greater than the previous one.

Up-Tick Rule

A rule in the US whereby a security is not allowed to be sold short, unless that trade prior to the short was completed at a price lower than the price at which the short sale is being executed.

US Oil

Name for WTI Crude Oil.

US Prime Rate

Interest rates at which US banks will offer loans to their corporate customers.


This is the rate at which a 10yr US treasury bond is being offered. Can be a good indicator for future economic activity.


Name for the DOW Jones Index.


Value Date

Commonly referred to as the maturity date, this is the date on which counterparties agree to fulfil their transaction obligations, i.e. exchanging payments.

Value Today

This is a transaction where the date of settlement is the same as the trade date.

Value Tomorrow

This is a transaction where the date of settlement is one day after the trade date.

Variation Margin

This is the requirement of traders to have enough of a margin within their accounts to cope with market fluctuations.

Virtual Balance

This is the potential account balance you would retain if all of your open positions were closed immediately.

VIX Or Volatility Index

Shows the market’s expectations of 30-day volatility. It is often called the “investor fear gauge”, as it can indicate market risk.


Extent to which exchange rates change over time period.


Number of securities traded during a specific period.


Wedge Chart Pattern

Formation that shows narrowing price ranges over time. Price highs decrease incrementally, and price declines are incrementally smaller also. An ascending wedge ends with downside breakout, and a descending wedge ends with an upside breakout.


This is slang for a market of high volatility, where price movements are often rapidly followed by a sharp reversal.

Wholesale Prices

This is a measure of the change in prices paid by retailers for finished goods. Inflation is often visibly earlier here than in headlines.

Working Day

Day where the banks of the currency pairs principal financial centre are open.
Working Order This is where a limit order has been requested, but has not yet been fulfilled.


Acronym for Wall Street Journal.


Oil benchmark used by the markets. Stands for “West Texas Intermediate”.



This is the currency of silver, also called the Silver Ounce.


Symbol for the Silver Index.


This is the currency of Gold, also called the troy ounce of Gold.


Symbol for the Gold Index.


Symbol for AMEX Composite Index.



Trader term meaning “billion”.


Percentage return on an investment.


“Year on Year”.


Base unit of Chinese currency. Renminbi is the name of the currency (as Sterling is for Britain).