We’ve gathered a Forex Glossary to help with understanding the complex world of Forex trading.
Trading and performing all operations on the currency market is based on specific terminology, which certainly complicates the work in this area.
Professional terminology must be properly understood in order to correctly interpret the processes and changes that occur in the forex market. A lack of understanding Forex terminology can hinder a trader’s progress in the industry.
For this reason we have developed a simplified Trading Forex Glossary to help you on your journey.
Adjustable (correctable) peg – the form of the exchange rate at which the currency is fixed in relation to a strong foreign currency, but adjusted periodically in accordance with the established criteria. For example, Singapore dollar is sometimes pegged to the US Dollar.
It contains information about the transactions and the client account with a broker for the selected period.
The growth of unit value of one currency expressed in units of another currency.
Risk-free type of trading where the same currency is simultaneously bought and sold against each other to make a profit due to the difference in the prices of the two counterparties.
Offer price – the price of the seller. The price at which a customer can buy the desired currency (a large figure of a bilateral quotation).
One-hundredth of a percent; used in relation to interest rates.
A market participant who is bearish on prices
“bear” market price (quotation) is characterized by a decrease.
The price at which the client can sell his desired currency (lower figure in the bilateral quotation).
A debt investment in which an investor loans money to an entity (typically corporate or governmental)
Mediator producing trades on behalf of clients for a commission.
Sudden movement of the course through some conditional border (previous top or bottom level of consolidation).
A market participant, bullish prices
“Bull” market characterized by rising prices (quotes).
Graphical representation of price changes (course)
Verbal or written confirmation of the broker regarding a transaction.
Risk associated with changes in the political and economic situation in the country.
Brokers commission fee for using their services
Figure charting, characterizes price movement (course) in a direction without certain increasing or decreasing trends
The exchange rate of two currencies, neither of which is the US dollar.
A method of storing and sending data so that only those for whom the data is meant for can read it.
A transaction order, which is valid for the day
Trading operations performed within one day
Market participant who trade the company’s assets (the bank which employed him).
Presentation of the cost of foreign currency units in the national currency units.
The interest rate at which the central bank lends to the country’s financial institutions
The discrepancy between the direction of the market price movements exhibited by the price chart and the direction of motion of a technical indicator.
Trading in several markets (multiple instruments) to reduce commodity price risks.
Figure charting, when the rate fell twice at a certain level and then raised again.
Figure charting, when the rate was raised twice to a certain level, and then fell again.
Dow Jones Average
The Dow Jones index, which characterizes the business activity of the US stock market.
The price moving down.
Electronic Communication Network; the bridge that links smaller participants in the market with tier-1 liquidity providers through an ECN broker.
Elliott Wave Analysis
A method of market technical analysis, based on Elliott wave theory (Ralph Nelson Elliott).
Currency held in deposit accounts with banks in countries other than the country issuing the currency.
Risk of changes in value of the currency
The balance of the account based on profit or loss of open positions.
Short-term movement of the course through some conditional border (previous top or bottom level of consolidation), and then return and movement in the opposite direction.
A sequence of numbers obtained by the Italian mathematician Leonardo Fibonacci. These numbers are widely used in technical analysis to determine the price levels (support and resistance) on the market.
It uses macroeconomic development indicators to predict the market situation.
Agreement on the exchange of a certain amount of one currency for another in the future at a price fixed at a particular time.
Standardized forward contract which is the subject of purchase / sale on the stock exchange.
The price range within which there were no quotes, forms a gap on the chart.
Good-Till-Cancelled (GTC) Order
An order for the transaction, available until it is canceled by the customer or executed by the broker.
A freely convertible currency, without restriction exchanged for other currencies.
The combination of long and short positions in different instruments in which the foreign currency risk is reduced.
Head and Shoulders
Figure charting, reminiscent of the shoulder line, the neck and head of a person.
Reverse quotation. Presentation of the unit value of the national currency in foreign currency units.
International Bank for Reconstruction and Development.
International Monetary Fund.
Shared account, between 2 or more traders
The ratio between debt and equity.
The interest rate at which major London banks lend to each other.
The maximum size of an open position.
Market, in which is always possible to make a deal (during business hours), is considered liquid.
With respect to a particular currency – Open position at which the amount of the purchased currency exceeds the amount sold in the same currency. Buy position.
Meaning “Over the Counter” type of products. Forex market is an OTC market.