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  • Daniel#MD
    Daniel#MD

    Forex Trading Glossary

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    A

    • Ask - Asking quoted price at which the customer can buy a currency pair.
    • Aussie - Slang for the Australian dollar

    B

    • Base Currency -The Forex is the base currency refers to the first currency in a currency pair.
    • Basis Point - the last decimal places displayed for trading. In most currency pairs, it is equivalent to 1/10,000. The most popular exception to the rule is the USD/JPY, where the basic unit 1/100
    • Bear - an investor who believes that prices will fall
    • Bear market - down market, generally with a longer period of falling prices
    • Bid - Ask Spread is the difference in pips supply and demand
    • Bull Market - generally longer period of price growth
    • Bundesbank - Central Bank of Germany

    C

    • Cable - term used in the foreign exchange market for GBP
    • Cash Market - The market for physical buying and selling of currencies
    • Central Bank - the main national regulatory bank traditionally, its primary responsibility is the development and implementation of monetary policy
    • Chartist - is an individual who studies graphs and historical data in order to find trends and predict their changes, including compliance with certain patterns and characteristics of the charts to be found: the level of support and resistance, the formation of "head and shoulders”, double bottom or double top of which is considered to indicate a trend reversal
    • Closed Position - This position is closed equal but opposite transaction. The transaction was closed with a gain or loss
    • Convertible Currency - the currency that can be freely changed for other currencies or gold without special permission from the appropriate central bank
    • Currency Pair - two currencies that make up the exchange rate. For example, the EUR / USD is a currency pair
    • CAC 40 – The French stock market index

    D

    • Day Trading - refers to opening and closing the same position or multiple positions in the course of a trading day
    • DAX 30 - The index of the German stock exchange
    • DJ 30 - Dow Jones industrial index
    • Double Top - a chart of price, which displays two prominent peaks. The turnaround is complete when the punctured hull. Double (double) bottom of the mirror image of this chart.

    E

    • Economic indicator - A government-issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc. 
    • End of day order (EOD) - An order to buy or sell at a specified price that remains open until the end of the trading day, typically at 5pm / 17:00 New York. 
    • EST/EDT  - The time zone of New York City, which stands for United States Eastern Standard Time/Eastern Daylight time. 
    • Euro -  single European currency officially replaced the national currencies of member states of the European Union

    F

    • FED, Federal Reserve - Central Bank of the United States
    • FTSE 100 - Represents the index of the 100 largest companies on the London Stock Exchange in the U.K.
    • Fed Fund Rate - the interest rate at which banks can be registered to borrow money from the Fed.
    • First In First Out (FIFO) - All positions opened within a particular currency pair are liquidated in the order in which they were originally opened. 
    • FOMC, Federal Open Market Committee - the committee that sets the target money supply in the U.S., which tends to be implemented through Fed Fund interest rates, etc.
    • Forex - a term is used when talking about the foreign exchange market
    • Fundamental Analysis - detailed analysis of the economic and political situation with the aim of determining the future

    G

    • GMT, Greenwich Mean Time - The most commonly referred time zone in the forex market. GMT does not change during the year, as opposed to daylight savings/summer time. 
    • Going Long - buying shares, commodity or currency for investment or speculation
    • Going Short - selling currency or instrument not owned by the seller
    • Gross Domestic Product - The total value of a country's production, income, and expenditure within the physical boundaries of a country
    • Gross domestic product (GDP) - Total value of a country's output, income or expenditure produced within its physical borders. 
    • Gross national product - Gross domestic product plus income earned from investment or work abroad. 
    • Guaranteed order- An order type that protects a trader against the market gapping. It guarantees to fill your order at the price asked. 
    • Guaranteed stop - A stop-loss order guaranteed to close your position at a level you dictate, should the market move to or beyond that point. It is guaranteed even if there’s gapping in the market. 

    H

    • Handle - Every 100 pips in the FX market starting with 000. 
    • Hedge - A position or combination of positions that reduces the risk of your primary position. 
    • Hit the bid - To sell at the current market bid. 
    • Hedged Position One - open positions for buying and selling open positions in the same currency

    I

    • IBEX35 - most important index of the Spanish stock exchange
    • IMM,International Monetary Market -  the Chicago-based currency futures market, that is part of the Chicago Mercantile Exchange. 
    • Inflation - permanent increase in the general level of prices combined with falling purchasing power .Sometimes referred to as an excessive movement in the level of prices.
    • Interbank rates  - The Foreign Exchange rates which large international banks quote to each other. 
    • Interest - Adjustments in cash to reflect the effect of owing or receiving the notional amount of equity of a CFD position. 
    • Introducing broker - A person or corporate entity which introduces accounts to a broker in return for a fee. 

    K

    • Kiwi - Slang for the New Zealand dollar
    • Knock-ins -  Option strategy that requires the underlying product to trade at a certain price before a previously bought option becomes active. Knock-ins are used to reduce premium costs of the underlying option and can trigger hedging activities once an option is activated. 
    • Knock-outs -  Option that nullifies a previously bought option if the underlying product trades a certain level. When a knock-out level is traded, the underlying option ceases to exist and any hedging may have to be unwound

    L

    • Leverage - Use of the margin to trade higher core capital. In Forex - to leverage, some traders are often presented as a percentage of the required margin. For example, a 1% margin will give you 100:1 leverage, so that a trader with a deposit of $10,000 to be held open positions in the amount of $1,000,000, which is 100 times more than its capital.
    • Long position - market position where the client has bought a currency that has not previously held. It is usually expressed in the base currency
    • Leverage - Also known as margin, this is the percentage or fractional increase you can trade from the amount of capital you have available. It allows traders to trade notional values far higher than the capital they have. For example: leverage of 100:1 means you can trade a notional value 100 times greater than the capital in your trading account.* 
    • Liquidity - The ability of a market to accept large transactions with minimal to no impact on price stability. 
    • Long position - A position that appreciates in value if market price increases. When the base currency in the pair is bought, the position is said to be long. This position is taken with the expectation that the market will rise. 
    • Loonie - slang for the Canadian dollar
    • Lot - A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

    M

    • Margin - amount of money or pledge, which must be answered first, and then maintained as security for losses on open positions
    • Margin Call - a request for additional funds sent by the clearing houses, brokers, dealers, banks or other financial institutions to provide the client required a minimum pledge to maintain position
    • Market order -  An order to buy or sell at the current price. 
    • Models -  Synonymous with black box. Systems that automatically buy and sell based on technical analysis or other quantitative algorithms. N

    N

    • NASDAQ 100 - The index of the American stock exchange
    • Net position -  The amount of currency bought or sold which has not yet been offset by opposite transactions. 
    • Nikkei 225 - index of major Japanese exchanges

    O

    • Offer (the Ask price) - The price at which the market is prepared to sell a product. Prices are quoted two-way as Bid/Offer. The Offer price is also known as the Ask. The Ask represents the price at which a trader can buy the base currency, which is shown to the right in a currency pair. For example, in the quote USD/CHF 1.4527/32, the base currency is USD, and the ask price is 1.4532, meaning you can buy one US dollar for 1.4532 Swiss francs. 
    • Open Position - Any position that is not resolved by physical payment, or the same, or counter transaction on the same day.
    • Order - An instruction to execute a trade. 
    • The overbought technical condition - that occurs when prices are high and expected to fall
    • The oversold technical condition - that occurs when prices are considered too low and are ready to rise
    • Overnight position  - A trade that remains open until the next business day.

    P

    • Pair - The forex quoting convention of matching one currency against the other. 
    • Pip – a term used in the currency market and represents a slight shift of that course can do. Depending on the context, it is usually one basic pips (0.0001 in the case of EUR/USD, GBP/USD, USD/CHF and 01 in the case of USD/JPY, EUR/JPY)
    • Position -  The net total holdings of a given product. 
    • Profit Taking - closing position to realize profits

    Q

    • Quote indicative market price - depending on the market, it can show only an indicative price at which it traded, or the actual price at which it traded
    • Quote Currency - second currency in the pair. For example, the USD/JPY currency pair, the Japanese yen was quoted currency. Also referred to as a secondary currency or the counter currency.

    R

    • Range - the distance between the highest and lowest prices for a certain period.
    • Rate - the price of one currency in terms of another.
    • Resistance price - level at which it is expected that sales will prevail.
    • Risk Management Identification - of potential losses and risk management usually under strict guidelines.

    S

    • S&P 500 Index - consists of the price of 500 shares that are actively traded in the U.S.
    • Short - means to sell an instrument without actually owning and hold a short position with expectations that the price will fall, so that he can redeem in the future at a lower price and make a profit.
    • Sterling - British Pound
    • Stop loss hunting  -  When a market seems to be reaching for a certain level that is believed to be heavy with stops. If stops are triggered, then the price will often jump through the level as a flood of stop-loss orders are triggered. 
    • Stop order -  A stop order is an order to buy or sell once a pre-defined price is reached. When the price is reached, the stop order becomes a market order and is executed at the best available price. It is important to remember that stop orders can be affected by market gaps and slippage, and will not necessarily be executed at the stop level if the market does not trade at this price. A stop order will be filled at the next available price once the stop level has been reached. Placing contingent orders may not necessarily limit your losses. 
    • Stop entry order -  This is an order placed to buy above the current price, or to sell below the current price. These orders are useful if you believe the market is heading in one direction and you have a target entry price. 
    • Stop loss order -  This is an order placed to sell below the current price (to close a long position), or to buy above the current price (to close a short position). Stop loss orders are an important risk management tool. By setting stop loss orders against open positions you can limit your potential downside should the market move against you. Remember that stop orders do not guarantee your execution price – a stop order is triggered once the stop level is reached, and will be executed at the next available price. 
    • Support price – a level at which the expected purchase, punching level of support often leads to further price falls

    T

    • Technical Analysis - attempt to predict future market activity by analyzing market data, such as charts, trends in prices and trading volume.
    • Trend - refers to the direction of movement of prices

    V

    • Volatility statistical measure - movement of the securities market over time, calculated using standard deviation. The high degree of volatility is associated with a high degree of risk.

    W

    • Wedge chart pattern -  Chart formation that shows a narrowing price range over time, where price highs in an ascending wedge decrease incrementally, or in a descending wedge, price declines are incrementally smaller. Ascending wedges typically conclude with a downside breakout and descending wedges typically terminate with upside breakouts. 
    • Withdrawal - Taking money out from an account (opposite of depositing)

    Y

    • Yield - The percentage return from an investment. 
    • Yuan - The Yuan is the base unit of currency in China. The Renminbi is the name of the currency in China, where the Yuan is the base unit.

     


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