A
A
Accrual
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.
Adjustment
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.
Aggressive
Prices or traders are acting with conviction.
Agio
A fee charged to exchange money from one currency to another.
Analyst
A person that conducts analysis of the markets.
Appreciation
Increase in the value of an asset over time.
Arbitrage
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
Ask
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.
AUD/USD
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.
Aussie
Slang for the AUD/USD pair.
Automated Dealer
A trader that inputs trades without human input.
B
B
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.
Band
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.
Basing
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.
Bid
Price at which a buyer/market is willing to buy.
Bid Price
Price at which the /buyer/market is willing to buy a product.
Bid/Ask
Spread Difference between buy and sell price of a foreign exchange pair.
Big Figure
Second figure after the decimal point in a price.
BIS
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.
BOC
Bank of Canada.
BOE
Bank of England.
BOJ
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.
Bond
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.
Broker
An agent, often working on commission or spreads, that executes orders to buy or sell currencies.
Brokerage
A company that offers its trading services to the public, often where brokers are found.
Buck
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.
Bullish
Actions that are favouring the strengthening of the market, or increase in prices.
Bulls
Traders that believe that the market is going to increase in prices, regardless of the current trend.
Bundesbank
Germanies central bank.
Business Day
A day when banks are open for business.
Buy
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.
C
C
Cable
GBP/USD pairing.
CAD
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.
Capitulation
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.
Carry
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.
CFD
“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.
Chartist
Trader that uses charts/graphs/historical data to find trends and predict movements. Also known as a “technical trader”.
Choppy
Price moves that are only short lived and not often conducive of aggressive trading.
CIPM
“Certificate of Investment Performance Measurement”.
Cleared Funds
These are funds that are freely available and are sent to settle a trade.
Clearing
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.
Closing
Process of closing a position.
Closing Price
Price of an asset when it was traded to close a position.
Collateral
Asset used to secure a loan or act as a guarantee of performance.
Commission
Common fee charged for buying or selling a product.
Commodity Currencies
Currencies of countries whose main exports are natural resources.
Components
Dollar pairs that form crosses.
COMPX
Symbol for the NASDAQ Composite Index.
Confirmation
Document shared by two parties describing the terms of a transaction.
Consolidation
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.
Contagion
Psychological impact of a local crisis that leads to its spread into other markets.
Contract
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.
Copey
Slang for the Danish Krone
Corporate Action
An event within a corporation that changes the equity structure of a stock.
Corporates
Corporations in the market for hedging or financial management. Their interests are often longer term than speculators.
Correlation
Relationship between two (seemingly) independent things.
Counter Currency
Second listed currency in a currency pairing.
Counterpart
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.
Cover
The action of taking out a forward foreign exchange contract, or closing of a short by buying an asset which has been sold.
CPI
Consumer Price Index
Crater
A market that is ready to sell-off hard.
Cross
A currency pair that does not include the dollar.
Cross Rate
Exchange rate between two currencies.
Crown Currencies
Currencies of the commonwealth.
CTAS
Commodity trading advisors and speculative traders who can resemble short-term hedge funds.
Currency
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.
D
D
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.
Deal
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.
Dealer
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.
Dealing
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.
Deficit
Negative balance of trade/payments.
Delisting
Removing a stocks listing from an exchange.
Delivery
A trade in which both parties take physical delivery of the product being traded.
Delivery Date
The date upon which delivery is due.
Delta
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.
Depreciation
Decrease in asset value over time.
Derivative
Financial contract whose value is based on an underlying asset.
Devaluation
Pegged currency is allowed to weaken based on official actions.
Discount
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.
Divergence
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.
Dividend
Amount of company earnings shared with its shareholders.
Djia Or Dow
Abbreviation of DOW JONES or US30.
Dollar
US dollar. Other dollars must be more specifically described.
Dove
Data or policy that implies easier monetary policy or a lowering of interest rates.
Downtrend
Actions within prices that consist of lower lows and lower highs.
Drawdown
Size of drop in account value from its high to its low.
E
E
Easier
Indication that a currency is weaker than from the previous quoted price.
Easing
Small price decline of a currency when the currencies CB enacts monetary policy to induce spending.
ECB
“European Central Bank”
ECN
“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.
EIA
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.
EOD
“End of Day Order”
Est – Edt
New York time zone. Eastern Standard Time/Eastern Daylight Time.
Estx50
Euronext 50 Index.
Euro
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.
Ex-Dividend
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.
Exporters
Companies that sell goods internationally. This means that they sell foreign currency and purchase domestic currency from abroad.
Exposure
Total quantity of money loaned to someone else. Rules are often in place to prevent overexposure.
Extended
Market that is believed to have moved too far and too fast
F
F
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.
FED
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.
FIFO
First in First out. This is when the trades of a certain currency pair are liquidated in the same order as they were made.
Fill
Order has been fully executed.
Fill or Kill
if the order cannot be filled, it will be cancelled.
Firmer
Currency is stronger or strengthening.
Fix
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).
Flat
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.
FOMC
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.
Forward
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.
Fra40
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.
Fundamentals
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.
Funds
Hedge fund types active within the market.
Futures
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.
G
G
G7
Group of 7 nations – USA, Germany, Japan, France, Italy, Canada and UK
G8
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.
GBP/JPY
The UK and Japanese pairing.
GBP/USD
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.
Ger40
Top 40 companies on German stock exchange (market cap). Another name for the DAX.
Given
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.
Greedy
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.
Greenback
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.
H - K
G
Handle
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.
Hedge
Position/positions taken to reduce risk on your primary position.
Hedging
Strategy used to offset ones market risk.
Hit The Bid
Sell at the currently offered market bid.
Hk50 – Hkhi
Hong Kong Hang Seng index.
Holder
The buyer and subsequent owner of a currency pair.
I
IFEMA
International Foreign Exchange Master Agreement.
Illiquid
Term to describe an environment where there is little traded volume. Can often create choppy market conditions.
IMM
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.
Indu
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.
Inflation
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.
Instruction
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.
Interest
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.
Intervention
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.
INX
Symbol for S&P 500 Index.
IPO
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.
J
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.
Jobber
Trader that commonly practices short-term, small trades for profits. Rarely holds positions overnight.
JPN225
Name for the NEKKEI Index.
K
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.
Kiwi
Trader term for the New Zealand Dollar.
Knock-Ins
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.
Knock-Outs
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.
L
L
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.
Level
Price zones or spot prices that are considered to be significant on technical standpoints.
Leverage
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.
Liability
A potential loss, debt or even financial obligation.
Libor
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.
Liquidation
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.
Longs
Traders who have purchased a product.
Loonie
Nickname for the Canadian Dollar or the US/Canadian dollar currency pairing.
Lot
A common unit used to measure the amount of the deal. The value of a deal always corresponds to an integer value of lots.
Lots
This is a standardised method of trading within FOREX, whereby a trade of 100’000 units of a particular currency is traded.
M
M
Macro
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.
Maintenance
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.
Margin
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.
Market-To-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.
Maturity
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.
Mio
One million.
Models
Synonym of Black Box. Systems that buy or sell based on technical analysis.
Mom
Abbreviation of “Month-over-month”.
Momentum
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.
N - O
N
Nas100
Abbreviation of the NASDAQ 100 Index.
Nasdaq
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.
NFP
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).
NYA.X
Symbol for the NYSE Composite Index.
O
Nas100
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.
Offer
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.
Offered
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.
Option
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.
Order
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.
Oscillators
This is a quantitative method that gives signals about overbuying and overselling conditions.
OTC
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.
P - Q
P
Paid
This is reference to the offering side of the market.
Pair
This is the FOREX quoting convention whereby one currency is matched against another.
Paneled
A heavy round of selling.
Par
This means that the forward price of a purchase of a currency is that same as the spot price.
Parabolic
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.
Patient
Description of a person that is waiting for certain levels or maybe even news events to hit before entering the market.
Pegged
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.
Pip
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.
Point
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.
Portfolio
Collection of investments.
Position
This is the net total holdings of a given product.
PPI
Producer Price Index. Monthly report that measures selling prices that domestic producers receive for their output.
Premium
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.
Profit
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.
Pullback
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.
Q
Quantitative Easing
The act taken by a central bank when injecting money into an economy, in the aim of stimulating growth.
Quote
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.
R
R
Rally
This is the recovery of a price after a period of decline.
Range
This is when a price is moving between a defined high and low. It moves between these boundaries, without breaking beyond them.
Rate
This is the price of one currency in terms of another.
RBA
Royal Bank of Australia. The Australian Central Bank.
RBNZ
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.
Recession
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.
Revaluation
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.
Risk
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.
Rollover
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.
Rut
Symbol for the Russell 2000 Index.
S
S
SEC
Securities and Exchange Commission.
Sector
This is the name for a group of securities that operate within a similar industry.
Sell
Taking a short position in the expectation that the market is going to go down.
Settlement
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.
Short-Covering
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.
Slippage
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.
Slippery
Term that is used to describe a market that is believed to be ready to move quickly in any direction.
Sloppy
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.
SNB
Swiss National Bank. The central bank of Switzerland.
SOFR
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.
SONIA
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.
Spot
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.
Spread
Difference between the bid and offer price.
SPX500
Another name for the S&P Index.
Square
Purchase and sales are in balance, and therefore the dealer has no open positions.
Stagflation
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.
Sterling
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.
Support
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.
Swap
Simultaneous sale and purchase of the same amount of a currency at a forward exchange rate.
Swissie/Swissy
Nickname for the Swiss Franc, or the USD/CHF currency pair.
T
T
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.
Takeover
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.
Technicians/Techs
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.
Term
Period from the trade date to the settlement date.
Thin
Description of a market that is illiquid or choppy in character.
Thirty (30) Yr
Us government issued debt that is repayable in 30 years.
Tick
Smallest possible change in price. Also known as a pip.
Tick (Size)
The size of the smallest possible change in price.
Ticker
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.
Trend
This is a term used to describe the current direction of the market, whether it is up, down or sideways.
Turnover
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.
U
U
Ugly
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.
Uk100
Name for the FTSE 100 Index.
Unconvertible Currency
Currency that cannot be converted for another currency because of foreign exchange regulations.
Underlying
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.
Unit
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.
Up-Tick
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.
US10YRBOND
This is the rate at which a 10yr US treasury bond is being offered. Can be a good indicator for future economic activity.
US30
Name for the DOW Jones Index.
V - Z
V
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.
Volatility
Extent to which exchange rates change over time period.
Volume
Number of securities traded during a specific period.
W
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.
Whipsaw
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.
WSJ
Acronym for Wall Street Journal.
WTI
Oil benchmark used by the markets. Stands for “West Texas Intermediate”.
X
XAG
This is the currency of silver, also called the Silver Ounce.
Xag/Usd
Symbol for the Silver Index.
XAU
This is the currency of Gold, also called the troy ounce of Gold.
XAU/USD
Symbol for the Gold Index.
XAX.X
Symbol for AMEX Composite Index.
Y
Yard
Trader term meaning “billion”.
Yield
Percentage return on an investment.
YOY
“Year on Year”.
Yuan
Base unit of Chinese currency. Renminbi is the name of the currency (as Sterling is for Britain).
