Forex Trading Terms Explained

A comprehensive listing of forex and CFD trading related terms. The most commonly used terms in fx trading, including essential financial and investment terms, basic trading terminology and widely used trading slang, appear on this listing. Created with the purpose of serving as a starting point for the inexperienced forex trader, our Fx Glossary includes information on technical and fundamental analysis, indicators, oscillators and automated trading tools, trading instruments and financial assets, trading orders and platform commands, trading strategies and techniques, information regarding regulatory authorities and foreign exchange trading practices and much more.

A


Accelerator/Decelerator

A technical indicator that shows the acceleration or deceleration of the current market driving force

Account Value

How much somebody’s trading account is worth

Accumulation/Distribution

An indicator that reflects cumulative inflows and outflows of money by comparing closing prices with corresponding highs and lows

Aggregate Risk

The total amount of exposure a bank has with a customer for spot and forward contracts

Algorithmic Trading

Automating the trading procedure using algorithms that conduct trading transactions based on predetermined criteria (e.g. over a specified period of time or/and on a specific price); the software used is usually known as Expert Advisors

Alligator

An indicator created to identify trends and their directions. It uses three smoothed moving averages (which are Fibonacci numbers), set at five, eight, and 13 periods

Analysis

Is an attempt to understand and predict the market and it is generally divided in two scales; Fundamental and Technical (see below for more info)

Appreciation

The rise in value of a currency against another which has a floating rate

Arbitrage

A type of trading on which opposite transactions on the same instrument are carried out simultaneously in order to benefit from small price differences

Ascending Triangle

A graphical price pattern or chart pattern of an existing trend continuation, which is usually formed in an uptrend and confirms its further direction

ASIC

Australian Securities and Investments Commission; the regulating authority of Australia's markets and financial services

Ask Price

The price that is offered to an investor to buy a financial instrument

AUD

The Australian Dollar (also called the “Aussie”)

Automated Trading

A practice that makes the trading process completely automated

Average Directional Index (ADX)

A technical indicator that determines the strength of a trend and the further price movement by analyzing the differences and the dynamics between the lowest and highest trading prices

Average True Range Indicator (ATR)

An indicator that measures market volatility

Awesome Oscillator (AO)

An indicator that shows precise changes in the market’s driving force, helping to identify the strength of a trend including the points of its formation and reversal

B


Balance (Account Balance)

The total result of all completed transactions and operations on a trading account

Bar Chart

A chart that contains four values of an asset price for each time interval: high, low, opening, and closing price. High and low price is indicated by a vertical line, while the opening and closing price is indicated by a horizontal line. The line on the left of the bar is the opening price, while the line on the right of the bar is the closing price

Base Currency

The first of the two currencies in a forex pair

Bear

A trader whose tactics depend on the decline in an asset’s value

Bear Market

A market that is dominated by declining prices

Bearish Rectangle

A graphical pattern that confirms the direction of an existing trend. It is formed in a downtrend and indicates high probability for further decrease in the asset price

Benchmark Interest Rate

The minimum interest rate that investors expect when they are to buy securities

Bid Price

The price at which one may sell a financial instrument

Bidder

The buyer

Bid/Ask Spread

The difference between the Bid and the Ask price

Big Figure Quote

The numbers appearing to the left of the decimal point in an asset’s rate

Binary Options

A type of Options on which the payout is either a predetermined, fixed amount or nothing at all

Bollinger Bands Indicator

An indicator that shows the current market volatility changes, confirms direction, warns about the opportunities of trend continuation or trend end, indicates increasing volatility for breakouts and consolidation periods, as well as the local highs and lows

Bond

A financial instrument of indebtedness of the bond issuer to the holders

Book

A summary of a trader’s positions

Break

A swift price drop

Breakout

The breakdown of the price below the support level, or above the resistance level; it is commonly followed by heavy volume and increased volatility

Broker

An individual or a Brokerage Company that acts as an intermediary between the traders and the markets and serves the purpose of giving access to the markets and organizing the trading procedure for their clients

Bull

A trader whose tactics depend on the rise in an asset’s value

Bull Market

A market that is dominated by increasing prices

Bullish Rectangle

A graphical pattern that confirms the direction of an existing trend. It is formed in an uptrend and indicates high probability for further growth of the asset price

C


CAD

The Canadian Dollar (also called the “Loonie”)

Cancel

A trader’s order to cancel Stop-Loss and Take-Profit orders

Candlestick Chart

A chart on which price is indicated with the help of Japanese Candles. An essential tool of technical analysis, it is used to showcase the trading range for the day as well as opening/closing prices

Change

The difference between the current price of a trading instrument and its price on the closing of the previous day

Channel

A sustainable corridor of fluctuations in the asset price with a constant width. The area on a chart within which price movements take place

Chart

Graphical representation of price changes of financial instruments over time

Chartist

A person that studies charts of historic data with the purpose of finding trends and predicting trend reversals via recognizing and analyzing patterns and characteristics of the charts

CHF

The Swiss Franc (also called the “Swissy”)

Clearing

A trade settlement procedure

Clearing Price

The actual value an instrument has at a given point in time; it’s the price at which a seller agrees to sell and a buyer agrees to buy.

Closed Position

A trading position that has been ended or terminated

Close Order

The procedure of closing an order

Collateral

A trader’s insurance deposit

Commission

The transaction fees charged by a brokerage; if not charged separately it is usually implemented in the Spread. The word is also used to describe the reward a broker will give to an affiliate or Introducing Broker for referring customers

Commodity

A basic good used in commerce that is interchangeable with other commodities of the same type; they are most often used as inputs in the production of other goods. The trading of commodities is usually carried out through futures contracts on exchanges

Commodity Channel Index (CCI)

An indicator originally developed to identify new trends, but nowadays widely used to measure the current price level in relation to its average value

Commodity Pairs

USD/CAD, USD/AUD, USD/NZD

Consolidation

The lack of a clear trend in a certain trading range; it usually takes place after uptrends or downtrends

Contract

A trade agreement

Contract for Difference (CFD)

A contract between two market participants, usually named “buyer” and “seller”, to exchange the difference in the value of an instrument between the time the contract is opened and the time it is closed. CFDs are financial derivatives that allow traders to take advantage of price movement on underlying assets and are frequently used to speculate on the respective markets

Convergence

The procedure of futures and spot prices approaching one another

Copy Trading

A type of trading that enables traders in the financial markets to automatically copy the trading positions of a selected investor, commonly by using a social trading network or platform. Usually this type of trading links a part of the copying trader's funds to the account of the copied investor

Correlation

A measurement of the relationship between two different instruments

Counter Currency

The quote currency (appears second in the fx pair)

Cover

The action of closing a trading position

Cross Pair

A forex currency pair that does not include the US Dollar (also known as “Crosses”)

Currency Pair

A financial instrument representing the operation of buying/selling of one currency for another. For example, USDJPY is the US Dollar / Japanese Yen pair

Currency Rate

The price rate of one fx currency against another

Currency Code (or Symbols)

The letter symbols that represent a specific currency (e.g. CNY for Chinese Yuan)

Cycle

The repetition of a particular pattern of price movement at time intervals

CySEC

Cyprus Securities and Exchange Commission; the financial regulatory authority of Cyprus

D


Daily Chart

A chart reflecting the market movement, on which the time unit is one day

Day Order

An order to buy or sell a security, which is valid until the end of the trading day and expires automatically in case it was not executed on the day of issue

Day Trading

Trading operations which are performed within one day

Dealer

An individual or company that acts as a leading executor or counterparty to a transaction, who deals with buying and selling on their own account

Debenture

A medium to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest

Delivery

The settlement of a transaction by receipt or tender of financial instrument

DeMarker Indicator (DeM)

An indicator created to identify emerging buying and selling opportunities. It demonstrates the stages of the probability of price changes that usually correspond to the highs and lows of a price

Depreciation

A decline in the value of a currency due to market demand

Derivative

A contract that derives its value from the performance of an underlying entity that can be an index, asset, or interest rate; the more common types of derivatives include forwards, futures, options and swaps

Descending Triangle

A graphical pattern of an existing trend continuation, which is usually formed in a downtrend and confirms its further direction

Devaluation

A downward change in the official parity of the exchange rate of a currency from that at which it was previously set, as a result of official action by the relevant authorities

Diamond

A graphical pattern of a subsequent reversal of an existing trend, usually formed in an uptrend

Direct Market Access (DMA)

Electronic trading facilities that provide market participants a way to interact with the order book of an exchange. Using DMA, buy side firms and other private traders utilize the IT infrastructure of sell side firms such as investment banks and the market access that those firms have, but maintain over control the way a trading transaction is managed, rather than passing the order over to a broker's own dealing desk for execution

Direct Quote

A forex rate quoted as the domestic currency per unit of the foreign currency

Divergence

A pattern in technical analysis in which the relationship between an oscillator indicator and price action is measured

Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits; allocated as a fixed amount per share

Double Bottom

A graphical pattern that signifies a reversal of an existing downtrend. The rate goes down to a specific level twice and then ascends. The longer the formation of the pattern, the more reliably is considered to indicate a reversal

Double Top

A graphical pattern that signifies a reversal of an existing uptrend. The rate goes up to a specific level twice and then declines. The longer the formation of the pattern, the more reliably is considered to indicate a reversal

Downtick

Descending movement of an asset’s price; the sale of an instrument at a price that is lower than the previous sale

Downtrend

A descending price trend; describes the price movement of an asset when the overall direction is downward

Drawdown

The reduction in a trading account from a trade or a series of trades; a measure of peak-to-trough decline, usually given in percentage form

E


Economic Calendar

A calendar of events provided by financial institutions through which traders track the events affecting the price movements of assets

Economic Indicator

A fundamental analysis tool that indicates general trends in economy; a measurement on the economy that provides an insight of how the economy is doing, which could influence a trading instrument’s value

Electronic Communication Network (ECN)

A type of computerized network that facilitates the trading of financial products by matching “buy” and “sell” orders for securities. It connects market participants in a way they can trade directly between them without going through a middleman. It offers faster processing, better price transparency, and increased liquidity

Elliot Wave Theory

A popular theory according to which price movement has a waveform (5 waves in the direction of the main trend, are followed by corrective 3 waves)

End of Day Order (EOD)

An order to buy or sell that closes at the end of the trading day

Entry Order

An order used to enter a trade at a specified price. If the asset never reaches that price level then the order is not executed

Envelopes Indicator

An indicator that shows the overbought or the oversold state of the price, allowing to determine the entry and exit points to and from the market, as well as the points of possible trend break-down

Equity

The funds on a trader’s account, minus the current loss of the open positions, plus the current profit of the open positions

EUR

The Euro. It’s the monetary unit used in the European Union

Exchange Rate

The rate of buying/selling one currency for another

Exchange Traded Fund (ETF)

A type of investment fund traded on stock exchanges. It holds assets such as bonds, commodities and stocks, and trades close to its net asset value during the trading day. Most ETFs track an index (such as a bond or stock index)

Exotic Currency

A currency that is not commonly traded (called an “Exotic”) and not belonging in the list of the eight major currencies (called “Majors”)

Expert Advisor (EA)

An automated trading software created based on algorithms to work on trading platforms, programmed to automatically execute trades on a trading account

Expiry Date

The last day on which the holder of an Option can exercise his right to buy or sell the underlying security

F


FCA

Financial Conduct Authority; the regulating authority of the United Kingdom’s markets and financial services

Financial Instrument

A monetary contract between parties; Financial Instruments can be created, traded, modified and settled. They can be Derivatives (Forwards, Futures, Options or Swaps), Stocks (Shares or Equities), or Debt (Bonds, Loans and Mortgages)

FINMA

Swiss Financial Market Supervisory Authority; the government body responsible for financial regulation in Switzerland

Fill Price

The price at which an order was executed

First In First Out (FIFO)

A rule implemented by the NFA in 2009, according to which positions are closed in the order they were originally opened, effectively prohibiting hedging

Flag

A graphical pattern of trend continuation, which indicates that its direction will not decline rapidly in the near future

Flat (Price)

A price that is neither rising nor declining. Being neither long nor short on a certain currency. Also known as “being square”

Flip

The point at which a trader switches from having more long positions to more short positions

Force Index

An indicator created to measure the power of price movements interpreting the changes of its components: direction, magnitude and volume

Forecast

An estimation of future trends in price movement, taking under consideration historical data and current macro-economic indicators

Foreign Exchange

A Market in which participants can buy, sell, exchange and speculate on currencies. Participants include; retail investors, retail FX Brokers, commercial banks, central banks, investment companies etc.

Forex

An over-the-counter marketplace where buyers and sellers perform buying and selling transactions of currencies. Forex is traded in three different ways: the spot market, the forwards market and the futures market

Forward Contract

A non-standardized contract between two market participants to buy or to sell an asset at a specified time at a price agreed upon today; a type of derivative instrument

Forward Points

The interest rate differential between two fx currencies expressed in exchange rate points

Forwards Market

One of three ways that foreign exchange is being traded. An over-the-counter marketplace that deals in Contracts (that represent claims to a certain currency type), which are bought and sold between two parties, who determine the terms of the agreement between them

Forex Resistance

A price level which acts as a cap on the rise of the current currency price

Fractals Indicator

An indicator that displays the local highs and lows, where the price movement has stopped and reversed (Peaks and Troughs)

Free Margin

A trader’s funds that are not used as a pledge to open positions

Fundamental Analysis

Analysis of macroeconomic events (economic and political events), which may affect the direction of prices in the financial markets. It aims to analyze what the current economic data shows about the current market conditions, what is fundamentally driving the market and where it’s heading

Futures Contract

An agreement to trade an asset at a predefined price to be delivered and paid for on a later date; a type of derivative product

Futures Market

One of three ways that foreign exchange is being traded. An over-the-counter marketplace that deals in Contracts (that represent claims to a certain currency type), which are bought and sold based upon a standard size and settlement date on public commodities markets

G


Gap

A break on the price chart that is caused by the difference between the opening price of the current day and the closing price the previous day

Gator Oscillator

An appendix to the Alligator Indicator, showing the degree of convergence/divergence of its three smooth moving averages and pointing at the Alligator's trending or non-trending periods of price movement

GBP

The Great British Pound (British Pound Sterling, also called the “Old Lady”)

Good Until Cancelled

An instruction to a brokerage that a certain order does not expire at the end of the trading day (instead, it terminates at the end of the trading month)

H


Head and Shoulders

A graphical price pattern that shows the end of an existing trend and the further change in the direction of the price movement and is typically formed in a developed uptrend

Hedging

A trading strategy/practice that involves making a second investment, in order to reduce the risk of adverse price movements on a specific asset. In fx trading usually hedging involves taking an offsetting position in a related instrument

High/Low

The highest and lowest price of an instrument during a trading day

Hit the Bid

Purchasing at the ask price or selling at the bid price

I


Ichimoku Indicator

A technical analysis tool based on the concept of quickly understanding the direction of the trend, its dynamics and its strength. Also known as Equilibrium Chart, it estimates future price momentum and determines future areas of support and resistance

IFSC

International Financial Services Commission; the Belize government agency responsible for financial regulation

Index

A statistical measure of the changes in a portfolio of securities, representing a portion of the overall market; in the stock and bond market indices consist of a representative portfolio of securities representing a particular market or a portion of it.

Indicator

A statistic which gives information used to measure current conditions, to predict changes in trends or price patterns on a traded instrument, as well as to forecast financial or economic trends on the general state of economy or financial market

Indirect Quote

A quotation in the fx markets that represents the amount of foreign currency required to buy or sell one unit of the domestic currency

Initial Margin

The percentage of the purchase price of financial instruments that the investor has to pay for with their own funds; usually an initial deposit which is invested as a guarantee for future transactions

Instant Execution

A type of order execution on which the broker will aim to execute an order using the latest price that you have seen in your platform. Thus, there it is possible that the price changes while your order is being processed. Should the change be bigger than the deviation parameter specified, the broker will need to respond with a re-quote. The advantage of this execution type is that one can have a specific order executed at a known desired price.

Interbank Rate

The rate of interest charged on short-term loans made between banks; the price at which banks conduct wholesale foreign exchange transactions. In forex trading such rates are available only to the most credible financial institutions, and they tend to result in tighter spreads.

Intraday Trading

Trading during a single trading day

Inverse Head and Shoulders

A graphical price pattern that shows signs of a trend reversal and is usually formed in a developed downtrend

Islamic Account

A swap-free trading account (implies no swap or rollover interest on overnight positions, which is against Islamic faith); offered by forex brokers to clients following the Muslim faith

J


JPY

The Japanese Yen (JPY)

L


Last

The average of the last bid and ask values; the price of last transaction

Leverage

Credit provided by a broker to their clients for making large volume deals with a relatively small amount of capital. It’s expressed in the ratio between the investors own funds and the funds borrowed from the broker (e.g. 1:50)

Liability

In forex trading, the obligation to deliver to a counterparty an amount of fx currency either in respect of a balance sheet holding at a specified future date, or in respect of an un-matured spot or forward transaction

Limit Order

An order to buy at market below the current market price, or to sell at market above the current price, if the order price is reached

Liquidation

The closing of an open trading position

Liquidity

An asset’s or security’s ability to be quickly/easily bought or sold in the market without significant change in its price

Long Position

A "buy" position

Long Term Trading

A trading style in which the investor will hold on to a trading position for a long period of time (raging from weeks to years); also known as “Position Trading”

Lot

The standardized quantity of a financial instrument; measures the amount of the transaction

M


Maintenance Margin

The minimum balance necessary to maintain open positions when trading on margin

Major Currency Pairs (Majors)

EUR/USD, USD/JPY, GBP/USD, USD/CHF

MAM Accounts

Multi Account Manager are accounts designed for Money Managers that trade on behalf of other traders/investors and manage multiple accounts from a single interface

Managed Account

An account on which the account holder gives power to another to choose which instruments to trade and handle buy/sell transactions; also known as a Discretionary Account

Margin

The equity required from a trader to open and maintain positions. An “insurance” amount which provides cover for possible losses from a marginal trade

Margin Call

A broker's demand on a trader using margin to deposit additional funds so that the margin account is brought up to the minimum maintenance margin; it is triggered when the value of the assets purchased falls below the initial margin; it is usually accompanied by a message from the broker to inform the trader

Market Execution

A type of order execution on which your order will open a position at the most recent price even when it is different than the one that appears on your trading platform. This type of execution allows trading without re-quotes and usually results in faster order execution and in guaranteed opening of the position, however, slippage can be large during volatile market conditions

Market Facilitation Index

An index that evaluates the market willingness to move the price

Market Order

The order of the purchase or sale of a financial instrument at the best current market price

Market Price

The current price at which a financial instrument can be bought or sold

Maturity

The date of settlement for a financial obligation

Mirror Trading

A type of trading that allows traders in financial markets to select a trading strategy offered by an investor and automatically “mirror” the trades executed on their own trading account, commonly via the use of a social trading network or platform

Momentum Indicator

An indicator that shows the direction of a trend and calculates the speed of the price change based on a comparison of the current and previous values.

Money Flow Index (MFI)

An indicator that evaluates money inflow intensity into an asset by comparing price increases and decreases over a specific time period, taking under consideration trading volumes

Moving Average

The average of prices of an instrument over a given time period

Moving Average Convergence/Divergence Indicator (MACD)

An indicator that reflects the convergence/divergence of moving averages and is designed to assess the direction and strength of a trend, as well as to identify the possible reversal points

Moving Average Indicator

Moving Average is a technical analysis tool which shows the average price of an asset price over a certain period of time, smoothens price fluctuations and thus, reflects the direction and strength of a trend.

MT4

MetaTrader 4 is the most popular electronic trading platform in retail forex trading to date. It has been developed by MetaQuotes Software and released in 2005

N


Net Position

The amount of forex currency bought or sold that has not been offset by opposite transactions

NFA

National Futures Association; the self-regulatory organization for the U.S. derivatives industry (including retail forex)

NZD

The New Zealand Dollar (also known as “Kiwi”)

O


Offer

The price at which a buyer has requested to buy an instrument

On-Balance Volume (OBV)

A cumulative indicator based on the index of trade volumes, and reflecting the relation between the volume of deals and asset price movements

One Cancels Other Order (OCO)

An instruction given when placing two orders simultaneously; if one part of an order on a security is executed, then the other part is canceled

One-Click-Trading

A trading platform feature that allows the trader to open a new position with only one click

Open Order

An order which will be executed when a specified price is reached

Open Position

An active trade (that has yet to be closed)

Option

A contract that gives the buyer (the owner/holder of the option) the right (but not the obligation), to buy or sell an instrument or underlying asset at a specific strike price on a specified date, depending on the type of the Option

Order

A trader’s order to a brokerage to perform a sell or buy transaction at a specified price

Oscillator

A tool of technical analysis utilized for discovering short-term overbought or oversold conditions

Oscillator of Moving Average (OsMA)

An indicator that shows the momentum of price action, calculated by taking the difference between a shorter-term moving average and a longer-term moving average

Overbought

A condition in which the price of an underlying asset has risen over its true value; usually a short term effect

Overnight Position

A position that stays open until the next trading day

Oversold

A condition in which the price of an asset has declined below its true value; usually it is a result of market overreaction and is a short term effect

Over the Counter (OTC)

A market conducted directly between market participants as opposed to being conducted via a trading floor

P


PAMM

Percentage Allocation Management Module, also known as “Percentage Allocation Money Management”, is a type of software application used by forex brokers to allow their clients to attach money to a specific trader (Money Manager) managing one or multiple trading accounts. The traders/investors get to allocate their funds to a Money Manager that may manage multiple fx trading accounts aiming to generate profits

Parity

A state when two currencies are of equal value (the exchange rate being equal to 1)

Pip (or Point)

The smallest possible value change in a currency pair (the minimum change of quotation)

Parabolic Indicator

An indicator developed to confirm or reject trend direction, to determine the emergence of the correction phase or sideways movement, as well as to determine possible closing points for positions

Pennant

Short-term graphical price patterns of trend continuation, indicating that its direction will be unchanged in the near future

Portfolio Trading

The simultaneous purchase or sale of a basket of securities, combined in a portfolio based on some criteria

Position

The amount/quantity of an instrument that is owned (or borrowed) and then sold by a trader or dealer

Price Action

A financial instrument’s price movement

Q


Quotation

The highest bid price and the lowest ask price currently available for a trading instrument

Quote

An instruments quoted price; the last price at which an asset was traded

Quote Currency

The second currency in a pair; also called “Counter Currency”

R


Rally

A price recovery after a period of decline for a trading instrument

Range

The difference between the high and the low price of an instrument over a specified period of time

Relative Strength Index (RSI)

An indicator developed to measure the strength or the weakness of a trend, as well as the speed of the price change by comparing its increases and decreases on the basis of closing prices

Relative Vigor Index

An indicator created to determine the direction of the prevailing trend. It’s behavior is based on the idea that closing prices are significantly higher than opening prices in a bullish market and lower in a bearish market

Resistance

The estimated price level at which traders will sell

Resistance Level

The level where the price tends to find resistance as it rises

Retracement

A temporary reversal in the direction of a trading asset’s price that moves against the prevalent trend

Relative Strength Index (RSI)

An indicator used in technical analysis, that compares the magnitude of recent gains and losses over a specified time period in order to estimate speed and change of price movements of a security, aiming to identify oversold and overbought zones

Risk

A chance in which an effect will occur (mainly a negative effect)

Risk Capital

The capital a trader is willing to lose

Risk Management

The ability, process or strategy to eliminate or limit various types of risk in trading

Rollover

The extending of a trading position at the end of the trading day without settling

Rollover Rate

The interest paid or earned for holding a trading position overnight

Round Trip

The buying and selling of a specified amount of forex currency

S


Scalping

A trading strategy that aims to make profit benefitting from small price changes by placing a large number of trades

Security

A tradable financial instrument which represents ownership position in a publicly-traded corporation (stock), a creditor relationship with governmental body or a corporation (bond), or rights to ownership as represented by an option. A security is a fungible, negotiable financial asset that represents a type of financial value. Securities are broadly categorized into Debts, Equities and Derivatives

Share

A unit of account for various investments; it often represents the stock of a corporation, however, it is also used for collective investments

Short Position

A "sell" position

Signal (Trading)

A trading signal is a recommendation for opening a trading position on an instrument, usually at a specific time and price, generated either by software or a by human trader supplied to a subscriber of a forex signal service either via software or via email or sms (or other type of text message)

Slippage

The difference between the expected fill price and the actual fill price

Social Trading

A type of online trading through which traders/investors rely on user generated content as the major source of information for making financial decisions, and via which they are able to copy trades, strategies and techniques

Speculating

The act of investing in a financial asset, expecting to make a profit when the asset appreciates or depreciates over time

Spot Contract

A contract of buying or selling a security, currency, or commodity for settlement (payment and delivery) on the spot date

Spot Market

One of three ways that foreign exchange is being traded. An over-the-counter marketplace where currencies are bought and sold according to the current price

Spot Price

The current market price of a trading instrument

Spot Trade

The trading transaction of an instrument for immediate delivery

Spike

A large movement (either upward or downward) of a price in a brief time period

Spread

The difference between the Bid and Ask price

Spread Betting

A type of speculation on the outcome of an event that involves betting on the price movement of an asset; the investor does not own the underlying asset but rather just speculates on the price movement of the asset

Stochastic Oscillator

An indicator that determines the position of the current closing price in the price range of the last few periods, based on the idea that the price tends to the upper bound of fluctuations in an uptrend and to the lower bound- in a downtrend

Stock

Partial ownership of a company’s assets and profits; Stocks of companies can be bought and sold in stock markets

Stop-loss (SL)

An order to close a trading position in order to limit losses should the market moves towards the opposite direction than anticipated

Stop Limit Order

An order entered when a designated price point is hit; essentially two order types combined, having a stop price and an equal or different limit attached

Stop Order

An order to buy at market above the current market price and sell at market below the current price, if the order price is reached. Essentially, an order to buy or sell an instrument when its price surpasses a predefined point, ensuring greater probability of achieving a predefined exit or entry price, limiting the investor's loss, or ensuring their profits

Straight Through Processing (STP)

Transaction processing method that enables the entire trade process for capital market and payment transactions to be conducted electronically without the need for re-quotes or manual (dealing desk) intervention

Support Level

The price level at which the activity of asset buyers is quite significant to prevent the further sale and decline in an asset’s price. A price level at which buying is expected to happen

Swap

A derivative in which two market participants exchange cash flows of one party's financial instrument for those of the other party's financial instrument

Swap Fee

An overnight or rollover interest (that is earned or paid) for holding positions overnight

Swap Points

The points calculated in advance for transferring an open position to the next day with the help of a rollover operation

Symmetric Triangle

A graphical pattern of an existing trend continuation, which may be formed both in an uptrend and in a downtrend, and serves to confirm its further directions

T


Take-profit (TP)

An order to close a trading position at a specified price (once a certain profit has been made) in order to secure profits

Technical Analysis

A type of analysis based on the history of price changes, used to predict future price direction with the assistance of price chart indicators and pattern studying

Technical Indicators

The tools of technical analysis; their purpose is to determine market movement in order to predict the direction of the market

Thin Market

A market with a low number of buyers and sellers; in such a market, assets are often less liquid prices are more volatile, which usually results in larger spreads

Tick

The minimum movement of a trading instrument’s price

Trading Platform

Software via which traders can open, manage and close trading positions. They are usually offered by brokers free of charge. The most popular forex trading platforms are currently MT4 and MT5 (developed by Metaquotes), cTrader (by Spotware), Currenex (by State Street Global Markets) and Sirix (by Leverate)

Trailing-stop

An order that can be set at a predefined percentage or amount away from an asset's current market price. It is designed to protect gains by enabling a trading position to stay open for as long as the price is moving in the right direction, but closing the position if the price changes direction by a specified percentage

Transaction

The operation of opening and closing of a trading position

Transaction Cost

Payment for buying or selling a financial instrument, which includes the commission fee of a broker

Transaction Date

The date a transaction is executed

Trend

A term used to represent the general direction of an instrument’s price or the general direction of a certain Market

Trend Continuation Patterns

Patterns that are formed during the pause in the current market trends, and mark movement continuation

Trend Line

The straight line connecting a series of maximum values or minimum values on a price chart

Trend Reversal Patterns

Patterns that are formed after the price level reaches its high in the current trend and indicate high probability of trend reversal

Triple Bottom

A price pattern that is usually formed in a downtrend and serves as a sign of its further reversal. The rate goes down to a specific three times and then ascends

Triple Top

A price pattern that is usually formed in an uptrend anticipating its further reversal and decrease in prices. The rate goes up to a specific level three times and then declines

Two-way Quote

A type of quote that gives both the bid and the ask price of an asset, informing of the current price at which an investor could buy or sell the security. It also indicates the spread between the bid and the ask, providing traders a notion of the current liquidity

U


Underlying Asset

The financial instrument (such as stock, futures, a commodity, a currency or an index) on which a derivative's price is based

Unrealized Gain/Loss

Theoretical gain or loss of an open trading position according to current market prices

Uptick

Ascending movement of an asset’s price; a transaction for an instrument at a price that is higher than the previous transaction

Uptrend

An ascending price trend; describes the price movement of an asset when the overall direction is upward

USD

The U.S. Dollar (also called “The Dollar”)

V


Value Date

The date of maturity of a contract, when the final settlement of a transaction is made (when the transaction terms are implemented). Also known as Delivery Date

Variation Margin

Money that a brokerage has to request from a trader in order to bring an equity account up to the margin level

Volatility

A measuring of the amount by which an instrument’s price is expected to fluctuate over a given period of time

Volume

Trading activity level during a specific time period

Volume Indicator

An indicator which reflects the trading activity over specified periods of time

Virtual Private Server (VPS)

A virtual machine sold or rented as a service by a hosting provider. Essential in online trading for keeping trading platforms and other trading software running 24/7, avoiding latency and interruptions

W


Wedge

Short-term graphical price pattern of trend continuation indicating that its direction will remain unchanged in the near future

Williams Percent Range Indicator

An indicator that determines the overbought or oversold conditions of the asset and the possible reversal points and is used to establish entry and exit points in the market

X


XAG

The symbol for Silver

XAU

The symbol for Gold

Y


Yield

The percentage return from an investment