Personalized area where all transactions are recorded.
Current amount of money in account.
Trading with a higher level of risk.
Also known as a signal. Denotes some piece of market information.
When the value of an asset increases.
Simultaneous purchase and sale of an asset to use the difference in price to earn a profit.
The price at which a seller will sell an asset.
The Australian Dollar, or AUD.
The total of funds available in an account to execute new transactions or to increase exposure.
The departments and processes related to administration and support. This includes:settlement of financial transactions, clearances, compliance etc…
Balance of Payments
The difference between a country’s incoming and outgoing payments.
Balance of Trade
The value of a country’s exports subtracting its imports.
A type of chart which tracks four points: the high and the low prices, the opening price, and the closing price.
The currency that other currencies are quoted against. It is the first currency listed in a Forex paring.
1/100 of a percent.
One who believes that a price, or market sector will decline.
A market with declining prices often accompanied by pessimism.
The belief that a price, or market sector will decline.
A specific chart pattern that contains a small white candlestick with short tails which is followed by a large black candlestick that eclipses the small white one.
A reversal pattern in which a large candlestick is followed by a smaller one.
The second candle is within the range of the larger candle’s body. This kind of pattern is an indicator that an upward trend is coming to an end.
The second candle is within the range of the larger candle’s body. This kind of pattern is an indicator that an upward trend is coming to an end.
A formation of one or numerous candlesticks. It indicates that a downtrend is coming to an end.
The sale price of a security.
A phrase referring to the first few digits of an exchange rate that rarely change, and are often omitted in favor of only using the last digits that denote the difference in rates. For example, USD/Yen rate could be 107.30/107.35, but would be quoted as “30/35”.
A technical indicator that forms an envelope around the trading price.The envelope which is calculated using standard deviations shows price volatility.
Bonds are tradable instruments, also known as debt securities which are issued by a borrower in order to raise capital.
Bretton Woods Agreement of 1944
An agreement that established fixed foreign exchange rates for major currencies, and also provided for central bank intervention in the currency markets, while pegging the price of gold at $35/ounce. It lasted until 1971, when it was overturned, and the Bretton Woods agreement was established with a floating exchange rate for major currencies.
The breaking of a price through a critical level.
An individual, or firm, that acts as an intermediary by putting together buyers and sellers. A broker generally changes a fee for their services.
Bundesbank, the Central Bank of Germany.
One who believes that a price, or market sector will rise.
A market with increasing prices often accompanied by optimism.
The belief that a price, or market sector will rise.
A chart formed when a small black candlestick is followed by a large white candlestick that completely eclipses the previous day’s candlestick.The tails of the small candlestick are short, which enables the body of the large candlestick to completely cover the entire candlestick from the previous day.
A candlestick chart pattern in which a large candlestick is followed by a smaller one whose body is located completely within the vertical range of the larger body. This is a downtrend and therefore colored black. The smaller positive one is white, giving a sign of a reversal of the downward trend.
A formation of one or numerous candlesticks. It indicates that an uptrend is coming to an end.
Term for the British Pound referring to the Sterling/US Dollar exchange rate.
A candlestick chart is a bar-chart used used to show price movements of a security, derivative, or currency over time.They provide a quick visual of the relationship between opening and closing prices and their strengths or weaknesses.
A candlestick pattern where the body shows the difference between opening and closing prices, and the shadows represent the high and low of the candle.
Markets for medium to long term investment (usually over 1 year). These tradable instruments are more international than the ‘money market’ (i.e. Government Bonds and Eurobonds).
A private bank that manages a country’s monetary policy and prints a nation’s currency.
A collection of historical prices for an asset that is represented visually.
An individual who uses charts and graphs to interpret historical data in order to find trends and predict future movements. This is also referred to as Technical Trader.
Settling a trade.
An exposure that has been nullified by executing the exact opposite transaction.
The final price of a security on any given trading day.
The fee charged by a broker for a transaction.
Basic goods that can be traded like oil, gold, wheat etc…
A document used to convey that an action has been made.
To be cautious.
A less volatile period – or pause within a trend – where the price moves horizontally within a small trading range.
A commitment to buy or sell an asset on a fixed day for a fixed rate.
The participant (legal entity, collection of entities, or unincorporated entity), with whom a financial transaction is made.
An exchange rate between two currencies which is non-standard in the country where the currency pair is quoted. For example, in the US, a GBP/CHF quote would be considered a cross rate since it doesn’t involve US currency. In either Britain or Switzerland it would be considered a primary rate.
Legal tender issued by a government or central bank.
The substantial fall in value of a currency.
The two currencies that are paired together to show a foreign exchange rate. For Example, EUR/CAD
The risk of losing funds as a result result of a change in exchange rates.
Dark Cloud Cover
A specific chart pattern in which a black candlestick follows a long white candlestick. This indicates that an upcoming bearish trend is likely.
Opening and closing a position in the same trading day.
The principal to a transaction who is responsible for protecting a company from risk by reviewing the customer margin, trading rates, deal size, etc.
When both sides transfer possession of the currencies traded.
The act of funding an account.
When the value of a currency declines.
A contract that changes in value depending on the price movements of a related underlying security, future or other physical instrument. An option is the most common type of derivative instrument.
The downward adjustment of a currency’s value done deliberately, generally by an official announcement.
ECB (European Central Bank)
The Central Bank for the European Monetary Union which represents the EU.
A statistic or report regarding some sector of the economy that is issued by the government or a non-government institution (i.e. gross domestic product (GDP), unemployment rates, production rates, and company acquisitions and mergers).
EMU (European Monetary Union)
An umbrella term for the policies used to converge the economies of the member states of the European Union.
End Of Day (Mark-to-Market)
An accounting method for trader positions which uses the values of the trader’s book at the end of each working day by considering the closing market rates or revaluation rates. All profits and losses are booked so the trader can start the next day with a net position.
The legal tender of the European Union.
The date on which a trade begins.
The price at which an investor closes an open position. The exit point is generally decided in advance as part of a trading strategy meant to mitigate risk.
: Executing a deal(s) that results in the balancing of an exposure for a specific currency or of the entire exposure. This eliminates risk to the trader’s investment regardless of the exchange rate.
The percentage of exposure that is covered by funds. Exposure coverage is calculated by dividing the total equity by the net exposure.Total Equity / Net Exposure = Exposure Coverage
Fed (Federal Reserve)
The central bank of the United States.
Fixed Exchange Rate (Representative Rate)
The official exchange rate as set by monetary authorities, for one or more currencies.
Flat (Square, Balanced)
To be neither long nor short. This occurs with either no open positions, or when open positions cancel each other out.
FOMC (Federal Open Market Committee)
The committee for monetary issues under the The Federal Reserve Bank of the US.
Forex (Foreign Exchange)
The concurrent buying of one currency and selling of another in an over-the-counter market.
A Forex deal in which the value date is more than Spot (2 business days). The rate of a Forward deal differs from the rate of Spot deal, since it considers interest rate differences.Spot Rate + Forward Pips = Forward Rate .
The pips added or subtracted from a current exchange rate in order to calculate a forward price.
FRA (Forward Rate Agreements)
FRA’s are transactions that allow one to borrow or lend at a stated interest rate over a specific period of time in the future.
Front and Back Office
Front office denotes the departments of a company/organization that come into contact with clients. This includes departments like marketing, sales, and customer support. Back office relates more to the parts of an organization that are geared toward running the company/organization itself.
Analysis of political and economic information in order to determine the future movements of an asset.
A contract between two parties to buy or sell a specified asset at a specified future date and at a specified price. Futures contracts are not like regular securities like stocks, bonds, rights or warranties. Though they are still securities, they are a type of derivative contract, and they are traded on a futures exchange.
The top five leading industrial countries: US, Japan, Germany, France, UK.
The top seven leading industrial countries: US, Japan, Germany, France, UK, Canada, Italy.
GDP (Gross Domestic Product)
Total value of a country’s goods produced and services provided within one year.
GNP (Gross National Product)
The GNP is equivalent to the GDP + net income from foreign investments.
An order placed by an investor to buy or sell an asset at a specific price. The order remains active until executed or cancelled.
A position or combination of positions that are placed to reduce the risk of a trader’s primary position.
A portfolio of investments in a variety of assets that pools capital from different individuals or institutions with the goal of generating high returns. Hedge funds often use complex trading strategies and risk-management techniques.
A type of transaction that limits investment risk. A hedging transaction is the purchase of opposite positions in the market from an existing position in order to ensure a certain amount of gain or loss on a trade.
Generally the highest traded price in a given trading day, and the lowest traded price in a given trading day, for an underlying instrument.
IMF (International Monetary Fund)
An international organization consisting of most of the UN member countries. It has several purposes including the following: to establish and promote international monetary cooperation, currency exchange stability, and orderly exchange arrangements; to bolster economic growth and support high levels of employment; and to provide temporary financial assistance to countries that are in need.
An increase in the price of consumer goods which devalues a specific currency.
The initial deposit of funds/collateral that is required in order to enter into a position as a guarantee of future performance.
A market that is accessible only for banks or financial institutions to trade. The transactions take place via communication networks such as Bloomberg or Reuters, and without a physical marketplace.
The interest rate that is charged on short term loans between banks. This borrowing is done to manage liquidity, and comply with regulations for things like reserve requirements.
An action taken by a central bank to influence the value of a country’s currency, by entering the market. When done by a number of banks it’s called concerted intervention.
IRS (Interest Rate Swaps)
An exchange debt obligations that have different payment streams. The transaction is usually between two parallel loans; one that’s fixed and the other that’s floating.
A slang term for the New-Zealand Dollar.
Economic variables that are used to predict future economic activity (i.e. unemployment rates, non-farm payroll reports, producer price index, retail sales reports, income rates, prime rate, discount rate, and federal funds rate).
Also known as the margin. The use of borrowed capital with the expectation that the profit will exceed the interest to be paid.
Libor (InternationalExchange London Interbank Offered Rate)
A benchmark rate that many of the world’s leading banks use to charge one another for short term loans.
A market order with instructions that prevent it from being executed until a certain price point is reached. This price point is specified upon creating the order.
Existing an existing position by either selling it, or through the execution of an offsetting transaction.
The ability of a market to buy and sell assets at stable prices. It also denotes how easily an individual or company can meet their own financial obligations.
A position that will appreciate in value if the market price increases. A long position is expressed in terms of the base currency.
Slang term for the Canadian Dollar.
The standardized quantity of a given financial instrument which is set by an exchange or regulatory body. It can also represent the minimum quantity of a security that can be traded.
The collateral put up by a trader to hold a position open. The amount of margin required to hold a position is determined by trade size.
A broker’s demand for an investor to increase funds deposited in order to reach the minimum maintenance margin required.
The percentage utilized of the available margin. This is calculated by dividing the used margin by the total equity. The higher the value, the higher the risk, and the higher the chance that the transactions will be closed due to insufficient funds. Used Margin / Total Equity = Margin Utilization
A company, or individual, that quotes both buy and sell prices for a financial instrument in hopes of making a profit on the bid-offer spread or turn.
An instruction used to open or close a transaction at the price currently indicated in the platform, which is then executed in accordance with a specific company’s order execution policy.
The extent to which the return of an underlying asset will oscillate between the current time and when the option expires. It is also the measure of dispersion of returns for a given security or index.
Refers to investments of instruments with high liquidity and short maturities that are short-term (i.e. overnight to under one year) and whose participants include banks and other financial institutions.
Refers to the entire currency combined with liquid instruments that are circulating in a country’s economy at a particular time.
MPC (Monetary Policy Committee)
A committee of the central Bank of England that’s responsible for monetary policy decisions.
OCO (One Cancels the Other)
A set of two Limit orders, in which the execution of one automatically cancels the other.
Also known as the ask price. The lowest price that a seller is willing to sell an asset at.
An order to buy or sell an asset that remains open until the customer cancels it, it’s fully executed, or until it expires.
An active trade that is yet to be closed by an opposing trade.
A contract in which the buyer has the right to buy or sell an underlying asset or instrument for a specific price at a specific time.
An instruction from a client to a broker to make a trade. Orders can be placed at a specific price or at the market price.
A trade that remains open until the following business day.
Trading that is not done through a formal exchange. Traditional trading is done in this way, meaning traders enter into transactions over phone or via electronic devices.
The smallest price movements, either upwards or downwards, which are quoted in online trading. The amount of a pip is relevant to the asset being traded. For example, when looking at EUR/USD, a movement of 0.0001 is one pip, whereas for USD/JPY, a movement of 0.01 is one pip.
The difference between an ask price and a bid price is the spread. The spread is generally calculated in pips which are the smallest increment of change when looking at exchange rate fluctuation.
The term used in the Forex market to represent the smallest increment an exchange rate can move. Generally speaking, major currency pairs are priced to four decimal places out, with the last decimal place denoting the smallest change in price.
A binding commitment to buy or sell a given quantity of financial instruments: securities, currencies, stocks, or commodities, for a given price.
The total cost of buying an option. It can also mean the difference between the amount of points added to the spot price to determine a forward or futures price.
Artificially deflating or inflating the price of a security.
The actual – realized – gain or loss from trading activities on closed positions, in addition to the theoretical – unrealized – gain or loss on open positions that have been mark-to-market.
The market price for a security at any given time.
The second currency in a currency pair. For the EUR/CAD, CAD is the quoted currency. The exchange rate is relevant to how many units of the second currency it takes to equal one unit of the base currency.
An upward trajectory in prices.
The difference between the highest and lowest price for an asset on any given trading session.
The price of one currency in relation to another.
Occurs in the short-term money market and involves the sale and later re-purchase of an instrument, at a specific time and date.
A technical analysis term indicating a specific price level that a currency will not be able to rise above. The recurring failure for the price to move above that point makes a pattern that is generally in the shape of a straight line.
Individuals who buy and sell securities for themselves, and not for a company or organization.
Risk management is the identification of risk factors, as well as the methods used to mediate such factors. There are different strategies employed for managing risk depending on the specific situation. All trade involves a certain level of risk.
When the settlement date for a deal is rolled forward.
A ratio used to compare the expected returns of an investment to the amount of risk necessary to gain these returns. This ratio is calculated by dividing the amount of profit the trader expects to make when the position is closed, by the amount they stand to lose if the price moves in the other direction.
When securities are delivered, generally for payment of money, to complete a contractual obligation.
Going short is selling an instrument without actually owning it. It involves essentially borrowing the asset and agreeing to pay for it later with the hopes that the prices will fall by the time of execution leading to a profit.
An investment that benefits from a decline in prices. In Forex, when the base currency in a pair is sold, the position is said to be short.
A transaction that occurs immediately, but with payment of the funds changing hands within about two business days after deal is made.
The current market price of an asset. Settlement of spot transactions usually occurs in about two business days.
The difference between the bid price and the ask price. It’s used to measure market liquidity. Narrower spreads usually signify higher liquidity.
Stop Loss Order
A limit order to buy/sell at a price which is lower than the market price. This is done to minimize losses.
A technical analysis technique that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. It is the opposite of resistance.
A currency swap is the simultaneous buying and selling of the same amount of a given currency.
The analyzation of market data to forecast prices. This includes taking into consideration: historical price trends and averages, volumes, open interest, etc.
Any change in price either up or down.
Tomorrow Next (Tom/Next)
The simultaneous buying and selling of a currency for delivery the next day.
A systematic method for deciding which trades to make, and how to make them. A successful trading plan will involve details like the type of trading system to be used, how much risk to allow for, one’s individual economic situation, and general market information. Most plans require the use of various types of technical analysis tools.
An application that allows for trading online.
Two Way Price
When both the bid and ask rate are quoted for an online trading transaction.
Unrealized Profit/Loss (Open P/L)
The mark-to-market profit or loss that occurs from an open position, according to the relevant market rate.
US Prime Rate
The interest rate at which US banks will lend money to their prime corporate customers.
The amount of funds that are set aside to keep transactions open. The used margin acts as collateral for all net exposure per instrument, and is locked away until such exposure is closed. Once transactions are executed, the required used margin is deducted from the available margin until the exposure is closed. The used margin is also known as required margin.
The date on which participants of a financial transaction agree to settle their obligations, like exchanging payments.
A statistical measure of a market or a specific security’s price movements over time. It is calculated by using standard deviation. High volatility usually equals a higher level of risk.
The number, or value, of securities being traded at a specific time.