Forex Glossary

a

Arbitrage Arbitrage

Selling or buying a certain product at a low price and an instantaneous opposite action (buying or selling) in another market in order to profit from the difference in rates.

Ask Ask

The price at which a trader wants to sell a certain currency. Also, it can be called an offer.

Ask price Ask price

The number of national currency units required to purchase a financial instrument (another currency, option, futures, etc.).

b

Base Currency Base Currency

The first currency declared in a currency pair on Forex. For example, in USD/RUB the base currency is USD (US dollar).

Bid price Bid price

The number of units of the national currency for which the seller agrees to sell a certain financial instrument (another currency, option, futures, etc.).

Broker Broker

A mediator, an individual or a legal entity that fulfills the clients' trading requirements, thereby binding buyers and sellers.

Bullish market Bullish market

The growth of securities and assets market.

c

Central Bank Central Bank

The main member of the country's monetary system, which has a monopoly right to issue banknotes, regulates the monetary policy of the state and controls the activities of commercial banks.

CFD CFD

A trading tool that allows you to earn on increasing or lowering the price of assets in the world's stock markets.

Commission Commission

The amount paid by the trader or investor for the services of the broker.

Confirmation Confirmation

Notification of the trader about the transaction completion by the broker or a document that records the transaction`s details or agreement`s.

Cross course Cross course

Quotation of a currency pair, which is carried out through the ratio of two currencies to a third (most often, to the US dollar).

Currency basket Currency basket

A conditional set that consists of two or more currencies, helping to determine the weighted average rate of one currency.

d

Daily trading Daily trading

Trade in the market, in which transactions do not remain open at night and are closed during the session on the exchange.

Deal Deal

The operation of buying or selling a trading tool.

Dealer Dealer

A market participant, an individual or a legal entity that participates in trading in the financial market or exchange without intermediaries and performs the sale and purchase of goods on its own behalf.

Delay Delay

The time interval between the placement and execution of the order. The minimum delay is an indicator of the quality of service provision which depends on the reliable operation of the server.

Double bottom Double bottom

The figure in the technical analysis, in which the trend line twice fell to a certain level and then rose higher.

Downtrend Downtrend

Downward price movement on a certain time period of the chart.

f

Flat Flat

1. Slang expression, which means the absence of open positions on the trading account. 

2. Market conditions, in which the price fluctuations are minimal, there are no pronounced trends.

Forex - Foreign Exchange Market Forex - Foreign Exchange Market

The international financial market, whose members carry out free currency exchange and earn on the difference in rates. The Forex market is regulated by the largest national banks with the help of such tools, as: changes in interest rate, interventions, transactions with financial instruments, etc.

Forex quote Forex quote

The established exchange rate of the currency or commodity at which the purchase and sale transactions take place.

Forex tool Forex tool

A currency pair or contracts for difference (CFD).

Fractal Fractal

An indicator of technical analysis, which is a collection of five or more candlesticks, the central of which is at the level of the highest or lowest price in a certain area of the chart. Fractals are used in combination with other technical analysis indicators to identify the most appropriate points for opening or closing trading positions.

Fundamental analysis Fundamental analysis

The method of forecasting prices in the foreign exchange market, which is based on an analysis of economic indicators and political events related to one or a group of countries.

g

Graphic figures Graphic figures

Figures expressed by trend lines, which are used in technical analysis to predict subsequent movements in the exchange rate.

h

Hedging Hedging

A method of reducing the risks of trading in the foreign exchange market, which provides for the opening of opposite transactions in order to reduce the possible losses from sharp price drops.

i

Indicators Indicators

Add-ons for the MetaTrader program designed to predict the exchange rate. Indicators provide the user with information on whether to trade, what deviations are possible, and also give a possibility to predict a trend change.

Interest rate Interest rate

The rate of return paid by the recipient for the use of funds.

j

Japanese Candles Japanese Candles

An indicator of technical analysis, which illustrates the nature of changes in the price of a financial instrument over a certain period of time. It is a rectangle, the bottom edge of which corresponds to the minimum price, and the upper one - to the maximum. If the opening price exceeds the rate at which the position was closed, the candle gets a black color. Otherwise, it is white. In Asian countries, green candles are used to indicate rising prices and red ones to indicate a decline.

l

Leverage Leverage

The ratio between the deposit of the trader and the amount that the broker is ready to provide for the execution of transactions with a large volume.

Lot Lot

The standard quantity of goods for sale. In the Forex market, 100 000 units of the base currency are accepted for 1 lot.

m

Margin Margin

Financial resources that the client provides to the broker to secure an open position. Margin size is determined by the type of tool that is being traded.

Margin trading Margin trading

Trade, in which the money provided by the broker is used as collateral (leverage). The use of margin trading is the basis for speculative currency trading.

n

Necessary margin Necessary margin

The amount of money that must be at the disposal of the trader so that he can open a trading position of a certain volume. The size of the margin depends on the leverage that the trader himself determines: the smaller the leverage, the greater the percentage of the margin from the total amount of the trading position, and vice versa.

Net Position Net Position

The difference between the amount of purchased and sold currency, which is not blocked by countertrades.

o

Open Position Open Position

The position set up for sale or purchase, but for which a transaction between market participants has not yet been completed.

Order Order

The trader's requirement to open or close a trading position.

Overnight position Overnight position

An open position, which was moved to the next business day. In case the deal was opened on Friday, the transfer is made on Monday.

p

Partnership Partnership

The form of cooperation, in which the shares of the enterprise (business) belong to several individuals or legal entities.

Pending Order Pending Order

The requirement of the trader for the purchase or sale of the tool when certain conditions are met. Thus, the trader notifies of his desire to trade only at the specified price level.

Pip, point Pip, point

The minimum characteristic of the currency price. Most often, the item (pip) is the last figure in the quotation.

q

Quote currency Quote currency

The currency that is the second in the currency pair and denotes the amount for which you can buy the unit of the base currency.

r

Rollover Rollover

Transfer of an open position to the next date. For this transfer, the broker takes a swap.

s

Scalping Scalping

A type of trade, which is characterized by the opening of a large number of positions at relatively short intervals for a quick profit.

Short position Short position

Trade based on the expectation of a decline in the price of a commodity or currency.

Slippage Slippage

The difference between the price at the Stop Order and the price when this order was used in the market. Usually, slippage occurs when the server is heavily loaded or if there are no offers for sale in the market.

Spike Spike

A kind of a candle with a small body and large shadows, which are much higher (or lower) than the highs and lows of previous days.

Spread Spread

The difference between the prices of purchase/sale and the real value of a trading instrument. It is the basis of income of brokerage companies.

Stop-loss Stop-loss

A mandatory order to establish and close a transaction at the time when the instrument reaches the level of loss that the trader is ready to incur.

Stop-Out Stop-Out

The requirement for compulsory closing of the position without the client's consent in case of lack of funds to keep the position open.

Swap Swap

The fee charged by the broker for transferring the position to the next trading day.

t

Take Profit Take Profit

A trade order established at a certain price level of a financial instrument, upon reaching which an open position is automatically closed and profit is charged.

Technical Analysis Technical Analysis

The method of predicting the movement of prices, based on the principle that all processes in the currency market are subject to certain patterns. It is a study of price charts for the purpose of detecting figures that signal in which direction the price will move.

Tick Tick

The minimum value of the change in the price of a financial instrument. It can contain one or more items.

Transaction Transaction

A trading operation aimed at acquiring or selling a financial instrument.

u

Unprofitable option Unprofitable option

A term used by binary options traders. It is used to designate a contract for the transfer of assets, the price of which, upon expiration to a side that is unprofitable for the trader, differs from the value of this asset at the time of the option purchase.

v

Value date Value date

The day of delivery of financial funds and the completion of a financial transaction.

Volatility Volatility

The range of price fluctuations in the time interval, which characterizes its uncertainty.