Forex Glossary - Basic Concepts and Definitions

Forex trading for beginners Part 1: Financial Markets

30 Rules of a Successful Forex Trader

Smart Forex Glossary - Basic Concepts and Definitions

Description

ARBITRATION

Arbitrage is a financial transaction in which financial instruments are simultaneously purchased and sold in two or more related markets or within the same Market but with a time difference in order to benefit from the difference in prices.

BASIC POINT

The basis point is one hundredth of a percent. The term basis point is usually used in relation to the Central Bank’s interest rates. Any change in interest rates is measured in basis points. If the interest rate rises from 4.00% to 4.25%, then the rate is said to have increased by 25 basis points or 25 bp.

BASE CURRENCY

Base currency – the first Currency in a currency pair. A trade transaction is carried out with the base Currency for the quote currency. The deal volume is always calculated in the base currency, while the point value is in the quote currency. For example, for the EUR/USD pair, the base Currency will be EUR, and the quote currency will be USD.

BALANCE

Balance – a value that reflects the status of the Client’s account without taking into account the operations carried out by the Client at the current moment. After positions are closed, the balance changes accordingly depending on the Profit or Loss made.

BAR CHART

Bar chart – a graph of changes in the rate of a financial instrument in the form of sticks – bars that display rate fluctuations for each equal period. The bar chart indicates four key prices: high and low prices, on the basis of which a vertical line is drawn, as well as open and close prices, which are marked with dashes to the left and right of the vertical line, respectively. You can change the chart type to a bar chart using the Alt+1 key combination or the Charts -> Bars menu command.

BROKER

Broker – a person or organization that purchases and sells securities (commodities, other assets) in the financial markets for third parties and acts on behalf of clients for a certain commission. The broker performs intermediary functions, i.e., plays the role of an agent.

BULL

Bull (Bull) – a market participant who believes that the price of a certain financial instrument will grow and performs a corresponding trading operation. All participants in the Forex currency market are divided into bulls and bears. Bulls play to raise prices, that is, the opposite of “bears”. The name comes from the behavior of the animal: the bull raises the opponent on the horns.

BULL MARKET

Bull market – a market characterized by a gradual increase in price over a certain period. In a bull market, all major trends are up. The main players in the bull market are the so-called “bulls”. These are traders who play to increase prices in the Market: they buy and wait for the moment of sale.

CURRENCY

Currency is any form of money issued by a government or central bank and used as legal tender. Currency is also called credit and payment documents, expressed in foreign monetary units and used in international settlements.

CURRENCY INTERVENTION

Currency intervention (Intervention) – active actions of the central bank in the Market in order to change the exchange rate of a certain currency. Typically, intervention operations are carried out by central banks and the treasury through the mass sale or purchase of Currency, securities, and the provision of loans in order to tightly control the exchange rate to normalize the state of the financial System.

CURRENCY PAIR

Currency pair – two currencies that make up a quote on the Forex currency market. For example, EUR/USD is a currency pair. A currency pair is a financial instrument – an object of a trading operation in the Forex market, reflecting the change in the value of one Currency in relation to another.

WEIGHTED MOVING AVERAGE

A weighted moving average is a moving average in the calculation in which each price value is given a certain weight. Usually, the most recent indicator is given more weight. Currently, several types of moving averages are used: a simple moving average is calculated from prices over a user-defined number of periods, summed up, and divided by the number of periods. The average is superimposed on the price chart, and the points of their intersection are considered: the price chart and moving averages. When the price rises, its chart is above the average – the Market has strength. The crossing of the price chart by the moving average from Top to Bottom means a decrease in prices and a weakening of the Market. Moving averages are lagging indicators: they summarize prior information,

OTC MARKET

The over-the-counter Market (OTC) is a term used to describe any transactions that take place over the counter. It can also be a market network of dealers who sell and buy securities. In the OTC market, transactions with securities can be concluded using electronic means of communication.

INTRADAY TRADER

Intraday trader (Day trader) – a financial market participant who opens and closes positions in the Market during the exchange session and does not leave open positions between sessions. An intraday trader’s trading in the Forex market is called intraday or day trading, i.e., within one day.

MARKET VOLATILITY

Market volatility (Volatility) – a statistical measure of price movement over a certain period. Market volatility is a measure of price movement, both up and down, regardless of the direction of the trend. All market volatility calculations are based on historical price fluctuations. The value of future volatility cannot be obtained since this indicator depends directly on the emotions of market participants.

ELLIOTT WAVE THEORY

Elliott Wave Theory is a price movement analysis and forecasting system based on the theory of R.N. Elliott. The main point of the Wave Theory is that prices move in five waves in the direction of the main trend, followed by three corrective waves. Elliott Wave Theory, developed in the 1930s, is a system of empirically derived rules for interpreting market behavior. In accordance with the Elliott Wave Theory, the social-mass behavior of financial market participants goes through the stages of expansion, enthusiasm, euphoria, calm, decline, and depression.

UP TREND

Uptrend – an increase in prices, accompanied by the formation of a series of increasing highs and lows (each new price peak is higher than the previous one). The rising bottom prices of market swings characterize an uptrend or uptrend. The trend line that limits the uptrend from below and passes through the lows is the main support line for the uptrend.

COUNTER CURRENCY

Counter Currency – The second Currency in a pair of currencies. The counter Currency may also be referred to as the quote currency. For example, in the EUR/USD pair, the US dollar is the counter Currency; in the USD/JPY pair, the Japanese yen is the counter Currency. It is in the counter Currency that the value of a point is measured.

ACCOUNT STATEMENT

Account Statement – a document (hard copy or electronic copy) that contains information about conducted trading operations, cash flow, and the status of the Client’s account for a certain period. Real account holders receive monthly account statements (Monthly Statement) and daily account statements (Daily Confirmation) if at least one transaction is made per day.

GRAPHIC

Chart – a graphical representation of changes in the price (rate) of a certain financial asset over a certain period, including a currency pair, stock, stock index, and any other instrument. In the MetaTrader 4 terminal, to display changes in Forex and CFD instruments, you can select a line chart, a bar chart, a candlestick chart, as well as a tick chart for displaying changes by ticks, a volume chart to take into account the number of rate fluctuations, and indicator charts.

GEP

Gap, gap (Gap)—a situation when the price of a financial asset at the opening of a trading session differs from the price fixed at the close of the previous trading session, forming an unfilled price range. A gap is represented on the price chart as a gap in the price range within which there were no quotes.

VALUATION DATE

Value date – the date on which the parties to a financial transaction agree to fulfill their obligations, that is, to make payments. The value date must be a business day in the countries that issue the base Currency and the counter Currency. For arbitrage currency transactions, the settlement date Spot is the second business day from the date of the transaction. The change of the value date all over the world occurs synchronously – at 00:00 Kyiv time. All financial statements are generated according to the value date.

DOUBLE TOP

Double Top is a reversal pattern in technical Analysis. With a double top, the rate rises to a certain level twice, and then the rate turns down. A double top is a reversal pattern for an uptrend; it looks like the letter M. The double top level is the resistance level of the financial instrument. A double top is a weaker signal than a triple top.

DOUBLE BOTTOM

Double Bottom (Double Bottom) – a reversal pattern of technical Analysis, which makes sense only if there is a clearly defined previous trend. A double bottom is a reversal pattern for a downtrend; it looks like the letter W on the chart. The double bottom level is the level of support for the financial instrument. A double bottom is a weaker signal than a triple bottom.

DEPOSIT

Deposit (Deposit) – funds deposited by the Client to his trading account. The Company has a minimum initial deposit of $100 for Business accounts and $1000 for VIP accounts. There is no limit on the maximum deposit amount in the Company.

DERIVATIVES

A derivative is a derivative financial instrument based on tradable securities: option, future, warrant, or swap based on exchange rates, securities, or commodities. For example, the prices of futures contracts are determined by the value of the goods sold under them. A derivative allows its owner to fix favorable prices for buying or selling from his point of view. Sellers are brokerage houses or banks that take the risk of unfavorable price movements for their clients. Derivatives, or derivatives, can be used to hedge a position or to establish a “synthetic” open position.

RANGE

Range (Range) – the distance between the highest and lowest prices for a particular trading session. During the session, rates fluctuate within a certain price range; the highest and lowest levels of the rate reached during a certain period are the price range or range.

DIVERGENCE

Divergence—from lat. “diverge”—detect a divergence. Divergence is a technical analysis situation when the price chart of a financial instrument and the indicator chart are directed in different directions. A distinction is made between positive divergence when the price sets a new low and the indicator rises and negative divergence when the price of the instrument sets a new high while the indicator chart goes down.

LONG POSITION

Long Position—a trading position in which the Profit increases with the growth of the market price. Example: When a market participant buys the base Currency of a pair when opening a position, they are said to be in a long position. Typically, a long position involves the purchase of financial assets (commodities, currencies, or securities) accompanied by a corresponding sale. A long position is not always the result of buying assets, as the buyer can cover a previously opened short position with it.

EURO

Euro (Euro) is the Currency of the European Monetary Union, the single European Currency that replaced the ECU (European Currency Unit). The euro was introduced into non-cash circulation on January 1, 1999, and into cash circulation on January 1, 2002. The official code for the euro, according to the ISO-4217 standard, is EUR. The official graphic designation of the euro – the letter of the Latin alphabet, “epsilon” € – is a symbol of the continuity of the ideas of European unity. Back in the 7th century, it was depicted on the Byzantine pentanummi coin, which circulated from the Iberian Peninsula to Armenia.

EUROPEAN MONEY UNION

European Monetary Union (EMU) – The main goal of the European Monetary Union is to create a single European currency, or euro, which officially replaced the currencies of the EU member countries in 2002. In January 1999, the first stage of the introduction of the euro began. The euro is now used as a full means of payment and is in circulation in the EU countries. The main goal of the formation of the European Monetary Union was to create a single market for more than 370 million Europeans, ensuring the freedom of movement of people, goods, services, and capital. The European Monetary Union has facilitated mutual settlements between member countries, stabilized exchange rates, and emerged a single strong and stable European currency that could compete on equal terms with the dollar in world markets.

ECB

ECB, European Central Bank (ECB, European Central Bank) is the central bank of the European Monetary Union. The ECB was founded on January 1, 1999, in Frankfurt, Germany. The European System of Central Banks (ESCB), which united the central banks of all member countries, operates under the authority of the European Central Bank:

The National Bank of Belgium (Banque Nationale de Belgique);
Bundesbank (Deutsche Bundesbank);
Bank of Greece
Bank of Spain (Banco de España);
Bank of France (Banque de France);
The Monetary Institute of Luxembourg.

But only the ECB is a legal entity. The European Central Bank administers the ESCB. Jean-Claude Trichet is the head of the European Central Bank. The aim of the European Central Bank (ECB) is to maintain price stability in the Eurozone, i.e., ensuring the inflation rate is not higher than 2%.

CLOSED POSITION

Closed Position – a market position on which a reverse trade was made and the corresponding calculation of profit/loss was made—closed Position – a position with a zero balance. After the Position is closed, currency fluctuations do not affect it. In the trading terminal, position closures are indicated in the “Account History” tab of the “Terminal” window.

INFLATION

Inflation is a state of the economy in which the prices of consumer goods rise and consumers’ purchasing power declines. It is the depreciation of money when the rise in prices for goods and services is not due to an increase in their quality. Inflation is caused by the overflow of money circulation channels with an excess money supply in the absence of adequate growth in the mass of commodities.

CABLE

Cable (Cable) – the British pound sterling or the exchange rate of the GBP / USD currency pair (slang). The name of the cable of this currency pair is based on a historical fact: in the 19th century, the transatlantic cable served as a way to transfer the exchange rate of pounds sterling against the US dollar. It was thanks to this cable that pound quotes began to be transmitted to the American continent.

CLEARING

Clearing, settlement (Clearing) – completion of mutual settlements on the transaction. Clearing can also be characterized as a system of non-cash payments for goods, securities, and services based on the offset of mutual claims and obligations. There are bank clearing, currency clearing, simple clearing, and multilateral clearing.

COMMISSION

Commission (Commission)—a commission charged by a broker (or other intermediary) for conducting transactions on behalf of the Client. The amount of the commission is determined based on the number of shares, bonds, and options and their dollar value. Forex Ltd does not charge a commission for transactions with Forex market instruments, and the commission for CFD contracts is 0.1% of the transaction.

CONSOLIDATION

Consolidation is a figure of Technical Analysis of the market situation: it is characterized by the movement of the price (rate) of a financial asset “to the side” (without a definite upward or downward trend). In other words, consolidation is a lateral price movement of a small amplitude within a price corridor or rate stabilization after a directional movement.

SHORT POSITION

Short Position – a position whose Profit increases when the market price decreases; that is, the amount of Currency sold exceeds the amount bought of the same Currency. When a market participant sells the base Currency of a pair when entering a position, they are said to be taking a short position. For example, selling GBP/USD means that a short position on the pound is open – in this case, the pound is sold. But at the same time, this means that a long position on the dollar is open (because dollars are being bought).

CORRECTION

Correction (Retracement) – reverse price movement or price rollback from the previous high or low. The correction is usually expressed as a percentage. Correction is a temporary cessation of a trend movement, which usually resumes after a while. To measure the depth of correction or to estimate the probability of a rollback, use the numbers of the Fibonacci series. Correction is not always a reverse price movement; sometimes, there is a flat correction – practically no recoil exchange rate fluctuations – partial return movements in a very narrow range from the maximum or minimum point.

CREDIT SHOULDER

Leverage – the ratio of the volume of the transaction to the required amount of security. The ratio between the amount of collateral (own funds) and the broker’s capital allocated for it by providing a loan. Leverage shows how many times the Profit changes with an increase in revenue. When providing Leverage, the broker does not allow the Client to lose his entire Deposit, terminating the Client’s service at a certain loss.

CROSS COURSE

Cross-rate—The exchange rate of two currencies, neither of which is the US dollar. For example, EUR/GBP, CHF/JPY, and AUD/NZD pairs are cross rates. Cross rates against the US dollar are foreign currencies. Cross-rate quotes are calculated by comparing the rate of each of the currencies in the pair to the third Currency; the differences between direct and cross-rates are leveled by currency arbitrage.

COURSE

Course (Rate) – the price of one currency, expressed in units of another currency. As a rule, the rates of various currencies are expressed in relation to the US dollar. For example, if the exchange rate of the British pound sterling is 1.57 US dollars, this means that in the Forex currency market, the pound and the dollar are exchanged in the ratio of 1 to 1.57. There are exchange (fluctuating, floating) exchange rates established at exchange auctions and fixed exchange rates arising from the currency parity established by international bodies.

LINE CHART

Line chart – a graph of changes in the price of a financial instrument in the form of a line. Closing prices are used to plot the chart, i.e., prices of the latest quotes in each period (every minute, hour, etc.). Straight lines connect the points obtained as a result of plotting the graph. You can change the chart type to a line chart in the MetaTrader 4 terminal using the Alt+3 key combination or the Charts -> Line menu command.

TREND LINE

Trendline – A line on a price chart that connects a series of rising or falling highs. The trend line is graphically built on at least two, called critical points on the chart, and represents a support or resistance corridor. For an upward “bullish” movement, the trend line is built on the points of local minima and is located below the price chart. For a downward “bearish” movement, the trend line is built on the points of local highs and is located above the price chart. Its geometric meaning is to indicate the direction of the trend. The trend line is, in fact, a technical analysis tool.

FALSE BREAKOUT

False breakout – a short-term movement of the price (rate) of a financial asset through a certain conditional border – a support or resistance level (previous Top or Bottom, consolidation level), and then a return and movement in the opposite direction. Unlike a false breakout, a true breakout involves a further movement of the course in the direction of the breakdown.

LOT

Lot – the size and unit of measurement of the deal. The size of the transaction is expressed as a whole or fractional number of lots. The broker sets the lot and indicates the minimum volume of the currency contract required to conclude a transaction. Usually, trading on the Market is carried out in whole lots – the standard lot is $100,000; some brokers provide the opportunity to trade in fractional lots.

MARGIN TRADING

Margin trading is trading operations in the financial markets conducted by the Client using a margin account opened with a broker (another intermediary). Buying securities on a margin account involves the Client paying part of the cost of the transaction with his funds (making a margin), and the broker providing the rest on credit using Leverage.

MARGIN SECURITY

Margin, margin (Margin) – the required amount of funds or guarantee deposited by a market participant to maintain an open position or a position that the Client intends to open. For each instrument, to ensure the conduct of trading operations, the broker determines its Margin, which is usually expressed as a percentage as the ratio of the amount of collateral to the amount of the transaction (for example, 25%) or as a ratio of shares (for example, 1:4).

MARKET MAKER

Market makers are large banks and financial companies that determine the current level of the exchange rate due to a significant share of their operations in the total market volume. The market maker constantly monitors the buying and selling rates of various currencies and enters into transactions on them. A market maker is a market participant who has undertaken to provide liquidity for a particular instrument by placing buy and sell orders during a trading session.

BEAR

Bear (Bear) is a market participant who believes that the price of a certain financial instrument will decrease and makes a corresponding trading operation. All participants in the Forex currency market are divided into bulls and bears. Bears play for a fall in prices, that is, the opposite of bulls. The name comes from the behavior of the animal: the bear beats opponents with its paw from above.

BEAR MARKET

A bear market is characterized by a gradual decrease in price over a certain period. In a bear market, all major trends are down. Due to persistent stereotypes that any market should go up, the bear market has received another second name—”bad.” Most traders view a bear market as anticipating an opportunity to get rich on a subsequent uptrend rather than a downturn already in progress.

INTERBANK RATE

Interbank rate (Interbank rate) – the average interest rate on interbank loans, announced by large international banks for other international banks, or the prices of currencies relative to each other, declared by large international banks among themselves. The list of quoted banks is regularly reviewed in accordance with the rating requirements.

DOWNTREND

The downtrend is a gradual, directed decrease in the price (rate) of a financial asset over a certain period. A downtrend can also be called a bearish trend. The trend line, in this case, acts as a resistance line and is drawn along the highs of the course.

OSCILLATOR

Oscillator is a term used in the technical Analysis of financial markets: a rating curve that fluctuates around the zero line (or between 0 and 100%), a technical indicator that shows the Market is overbought or oversold. When the oscillator reaches its maximum value, the Market is in an overbought state; when the minimum value is reached, it is in an oversold state. The meaning of the oscillator is a time derivative of the price with some time shift. Oscillators are inherently secondary in the Forex market, i.e., any of their signals requires several confirmations, and not other oscillators, but independent indicators from trend models.

ROLLBACK

Rollback (Rebound)—a change in the direction of movement of market prices after a long-term trend of their growth or fall has led to the fact that market participants consider the prevailing price levels to be too high or too low. Such terms as correction, consolidation, and rollback are absolutely equivalent; they can be distinguished only by the shape of the technical Analysis figure created on the chart.

OPEN POSITION

Open Position – a deal to buy or sell a financial asset, for which a reverse deal to sell or buy, respectively, has not been made. A position is opened when an order to a broker (automatically adjusted Order) to buy or sell is executed. At the same time, the actual supply of the Currency is not provided, which in turn entails the obligatory closing of the Position to fix profits.

OVERBUYED

Overbought is a market condition that occurs after a significant increase in the price (rate) of a financial asset. In this situation, a corrective decline is possible. Usually, an overbought market is associated with an opportunity to sell. As overbought/oversold indicators, oscillators can tell the trader that the Market is overstretching and, therefore, a possible correction. When the oscillator reaches its maximum value, it is believed that the Market has risen too high, and there is a high probability of its decline.

FIBONACCI SEQUENCE

The Fibonacci Sequence is a sequence of numbers created by the Italian mathematician Leonardo Fibonacci. These numbers are widely used in technical Analysis to determine different price levels. Many years ago, mathematicians discovered a coefficient that describes how the petals of a flower grow around their pedicel, how the snail shell twists around the center, and how the galaxy expands from the middle. The Fibonacci ratio describes the relationship of consecutive numbers to each other, called the “golden ratio”, equal to 0.618, and was discovered by the mathematician Leonardo Fibonacci in the 13th century. The Fibonacci sequence is a series of numbers in which each subsequent is equal to the sum of the previous two. Ultimately, the ratio of two consecutive numbers tends to be 0.618. With the help of the Fibonacci sequence, the movement of markets is predicted with great accuracy. The trend often moves up and down, then pauses, rolls back (consolidates or corrects), and moves forward again. For these retracements, the Market often has to go part of the way in the original trend, and these stretches can be predicted using Fibonacci ratios.

BREAKDOWN

Breakout—crossing support, resistance, or any other conditional level by the chart. It is believed that when the level is broken, the price will move further in the direction of the breakdown. If the resistance level breaks down, then this level becomes support; if the support level breaks down, then the level becomes resistance accordingly.

REACTION

Reaction—price (rate) movement against the prevailing trend in the financial Market: the price moves in the opposite direction to the prevailing trend. In other words, this is a state of the Market when, after a long rise, prices rapidly fall.

RISK

Risk (Risk) is exposure to change, the probability of which is unknown. It is most often used in a negative sense to indicate the likelihood of unfavorable changes in the Market for the trader. Risk management is the basis of each Forex market participant’s strategy.

MARKET ORDER

Market order—the Client’s Order to open or close a position on the selected financial instrument in a certain amount. A market order, unlike a pending order, is processed immediately. The MetaTrader 4 client terminal allows you to use commands to execute trading operations and monitor and manage the state of open positions. The terminal uses the following market orders: a buy order and a sell order. The remaining orders are of other types.

CANDLE CHART

Candlestick chart – a graph of changes in the exchange rate of a financial instrument in the form of candlesticks that display exchange rate fluctuations for each equal period. A candlestick chart, like a bar chart, indicates four key prices: high and low prices, as well as open and closed prices. Usually, a candle consists of a body (the thick part of the candle) and two thin parts. A candle with a filled body indicates an increase in the rate in a given period, and a candle with a hollow body indicates a fall. You can change the chart type to a candlestick chart using the Alt+2 key combination or the Charts -> Candles menu command.

FREELY CONVERTIBLE CURRENCY

Freely convertible Currency (Hard Currency) – from lat. Converter change, convert – a currency that is universally accepted in payments at the current market rate; freely convertible Currency can be used by any holder for settlements on any international transactions: trade, investment, credit, etc., without any restrictions. Convertible currencies are considered to be the currencies of countries that have abolished currency restrictions, at least on current transactions; less than 20 leading countries of the world have fully convertible currencies (including freedom of financial transactions). The hard Currency includes the US dollar, the euro, the Canadian dollar, and the national currencies of Great Britain, Sweden, and Japan. A special category of freely convertible Currency is the reserve (key).

SWAP

Swap is the simultaneous sale and purchase of the same amount of a certain currency with different value dates. Usually, swapping is performed when an open position is rolled over to the next day. Swapping an open currency position means saving the state of the Position (size and sign) for a certain period in the future. With regard to a swap, the date of execution of a closer transaction is called the value date, and the date of execution of a more distant reverse transaction is the swap end date (maturity).

SPOT

Spot (Spot) – a transaction that is carried out immediately, while the transfer of money usually occurs within two days from the moment the transaction is concluded. Spot or spot date means the value date, which occurs two business days from the date of the transaction. The Market where goods are sold for cash and delivered immediately is called the spot market (Forex spot), which is also considered the international currency market for current conversion transactions.

SPOT PRICE

Spot price – the current market price at which a real commodity or financial asset is sold at a specific time and place on an immediate delivery basis. Spot trades usually settle two business days after they are entered into.

SPREAD

Spread—the difference between the purchase price (Ask) and the sale price (Bid) in a two-way quote, measured in points (Points, Pips). The spread reflects the difference between the bid and ask prices—the so-called bank margin used to determine the market’s liquidity. A smaller bank margin (narrow spread) usually means higher market liquidity.

TECHNICAL ANALYSIS

Technical Analysis is a method of predicting the development of the situation in financial markets by analyzing price charts of financial assets and readings of technical indicators. It is a way of predicting price changes in the future based on the Analysis of price changes in the past using a set of various tools—stock chart figures, indicators, signals, and oscillators. Technical Analysis is based on the Analysis of time series and price charts.

TECHNICAL INDICATOR

A technical indicator is a mathematical transformation of the price and volumes of a financial instrument to predict future price changes. Based on the signals of technical indicators, decisions are made regarding how and when to open a position or close it. Among the technical indicators, there are indicators of the moment – most software trading terminals contain RSI, stochastic indicators, MACD, and many other technical indicators. The standard components of charting are moving averages.

TRADING SESSION

A trading session is a period during which transactions are made with securities and financial assets. The largest volumes of foreign exchange transactions occur during the European trading session because the banks of the Eurozone countries, Great Britain and Russia, as well as divisions of American and Asian banks, work at this time.

TRADING CORRIDOR

Trading range: Often, fluctuations in the exchange rate take place in a certain corridor—a channel. In this case, the lower boundary forms the support level (support line), and the upper one is the resistance level (resistance line). The situation when prices fluctuate between horizontal levels of support and resistance is called a trading range, channel trading range, or channel width.

TRADE TURNOVER

Trade turnover (Turnover) – the total value in monetary terms of all executed transactions for the considered period. In technical analysis, trade volume is an indicator of the efficiency and intensity of use and

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The Complete Forex Dictionary

Account Statement  – account statement. Contains information about the transactions performed and the status of the client account with the forex broker for the selected period.
Appreciation  – an increase in the value of a unit of one Currency, expressed in units of another currency.
Arbitrage  – arbitration. A risk-free type of trading is when the same Currency is simultaneously bought and sold against another for Profit due to the difference in prices between the two counterparties.
Ask (Offer) Price  – the price of the seller. The price at which a Forex client can buy the Currency he is interested in (a large figure in a two-way quote).

Basis Point  – basis point. A hundredth of a percent is used in relation to forex interest rates.
Bar chart – image of the price chart in the form of a bar chart.
Bear  – “Bear”. A participant in the forex market who plays for a fall in prices.
Bear Market  – a “bear” market characterized by a decrease in prices (quotes).
Bid Price  – buyer’s price. The price at which a Forex client can sell the Currency he is interested in (the lower figure in the two-way Quote).
Bond  – a bond (government security).
Broker  – broker. An intermediary who performs Forex trading operations on behalf of a client for a commission.
Breakout  – a sharp movement of the rate through some conditional border (previous top or bottom, consolidation level).
Bull – “bull”. A market participant who plays for a price increase.
Bull Market  – A “bull” market is characterized by an increase in prices (quotes).

Chart  – chart. Graphical representation of price (rate) changes.
Confirmation  – verbal or written confirmation of a forex broker about a completed transaction.
Country Risk  – the risk associated with changes in the political and economic situation in the country.
Commission  – Forex broker’s commission for conducting operations on behalf of a client.
The commodity is a commodity.
Consolidation is a technical analysis figure that characterizes the movement of the price (rate) to the side without a certain increasing or decreasing trend.
Credit risk – the risk of non-fulfillment of credit obligations.
Cross-Rate  – cross rate. The exchange rate of two currencies, neither of which is the US dollar.
Currency swap: the simultaneous conclusion of two Forex transactions opposite in direction for the exchange of two currencies with different terms of delivery.

Day Order  – Forex order to make a deal, valid during the day.
Day Trading  – Forex trading operations are performed within one day.
Dealer  – dealer. A participant in the forex market who performs trading operations at the expense of the Company (bank) in which he works.
Direct Quote – Direct Quote. Representation of the cost of a unit of foreign currency in units of the National Currency.
Discount Rate  – the interest rate at which the central bank provides loans to financial institutions in the country.
Divergence  – divergence. A price chart and a technical indicator chart depict the divergence between forex market trends.
Diversification  – diversification. Trading on several forex markets (several instruments) to reduce price risks.
Double Bottom—A technical analysis figure shows when the rate falls twice to a certain level and then rises again.
Double Top – “double top”. A technical analysis figure shows when the rate rose twice to a certain level and then fell again.
Dow Jones Average – Dow Jones index characterizing the business activity of the US stock market.
Downtick  – price movement down.

Elliott Wave Analysis is a market analysis method based on the Elliot wave theory (Ralph Nelson Elliott).
Eurocurrency is a currency held on deposit accounts in banks in countries other than the country that issued the Currency.
Exchange risk – the risk of changes in the value of the Currency (currency risk).
Equity – the balance of funds on the trading account, calculated in the Currency of the security deposit.

FalseBreakout – false penetration. Short-term movement of the forex rate through some conditional border (previous top or bottom, consolidation level), and then return and movement in the opposite direction.
The Fibonacci Sequence is a sequence of numbers created by the Italian mathematician Leonardo Fibonacci. These numbers are widely used in technical Analysis to determine price levels (support and resistance) in the Market.
Fiscal Policy  – fiscal policy.
Fundamental Analysis – Fundamental Analysis. It uses macroeconomic indicators of the economy to predict the situation in the Market.
FLAT (SQUARE)  – (closed) neutral Position when all positions are closed.
Forward contract – forward contract. An agreement to exchange a specified amount of one currency for another at a fixed price at a specific point in time in the future.
Futures Contract  – futures contract. A standardized forward contract that is bought/sold on an exchange.

Gap – gap. The price range, within which there were no quotes, forms a gap on the price chart.
Good-till-canceled (GTC) Order—an order to make a deal that is valid until it is canceled by the Client or executed by the broker.

Hard Currency is a freely convertible currency that can be exchanged without restrictions for other currencies.
Hedging – hedging. A combination of short and long positions in different instruments reduces the forex currency risk.
Head and Shoulders – “head and shoulders”. A technical analysis figure resembling a line of a person’s shoulders, neck, and head.

Indirect Quote – reverse quote. Representation of the cost of a national currency unit in foreign currency units.
Inverse Head and Shoulder  – inverted “head and shoulders” in forex analysis.
IBRD  – World Bank for Reconstruction and Development.
IMF  – International Monetary Fund.

Joint Account – joint account, joint account.

Leverage – leverage the ratio between borrowed and owned funds.
Libor – Forex interest rate with which the leading London banks lend to each other.
Limit Order  – (limit order) an instruction to the broker to buy a lot of a certain instrument and volume of assets at a specified price or below it or sell it at a specified price or higher. The specified price is called the limit price.
Limit Position  – the maximum allowable size of an open forex position.
Liquidity—liquidity. The Forex market is liquid, and you can always make a deal (during business hours).
Long Position – a long position (in relation to a certain currency). An open forex position is one in which the amount of the purchased Currency exceeds the amount of the sold one of the same Currency.
Loss—a decrease in the volume of invested assets as a result of transactions or an excess of the transaction’s costs over the income received from it.
Lot  – a certain number of units or the number of assets accepted to carry out a transaction on the Market for a certain instrument (usually, the number of volume units in a lot is a multiple of 100).

Maturity Date  – the date of fulfillment of previously accepted obligations.
Margin  – margin (collateral). Client funds held by a forex broker as collateral for trading operations by a client.
Margin Account  – margin account. An account whose owner receives a brokerage loan to carry out transactions.
Margin call – the broker’s requirement to deposit additional collateral to the forex account.
Market Order—(market order) an order to buy or sell a lot of a certain instrument and volume, which the broker executes at the best price available when the Order is received.
Market Price (market rate): In an open market, these are the dynamically changing prices of buyers and sellers for a certain market instrument. In terms of the exchange, it is the last announced sale price.
Mechanical System – a mechanical (computer) trading system that generates entry (exit) signals in the forex market.
Monetary Policy  – monetary policy.
Moving average – moving (dynamic) average. An indicator used in technical Analysis to determine trends in the Forex market.

Narrow Market – “narrow market”. A market with a small number of participants, characterized by low volumes and significant price fluctuations.
Necessary Margin – a necessary margin for opening a forex position.

Offer  – price offered by the seller. An offer to sell at a certain price.
Opened Position (Trade)  – (open position) market volume of contracts for pending transactions. When playing for an increase, the Position is called “long”; when playing for a fall – “short”.
Order  – (Order) an instruction to the broker to buy or sell a lot of a certain instrument and volume at a given rate.
Overbought  – “overbought”. The situation that arises in the Market after a rapid and significant increase in price (rate).
Oversold  – “oversold”. A situation that arises in the Market after a rapid and significant decrease in price (rate).
Overnight  – a deal for a period before the start of the next Forex business day.

Pips (Point) are the minimum changes in the currency’s value; as a rule, they are 0.01 or 0.0001 of the integer part in the currency quote.
They are pyramiding – building a trading pyramid—a trading tactic consisting of a gradual increase in the existing open forex position.
Position Limit – the maximum allowable size of an open forex position.
Principal – principal. A participant in the Forex market that carries out operations with its funds.
Profit Taking – closing a forex position with a profit.

Rally  – a rapid rise in prices (quotes) in the Forex market.
Range  – price range. The highest and lowest levels of the forex price (rate) reached within a certain period.
Profit/Loss  – profit/loss on settled (closed by reverse deals) positions.
Recession  – recession, decline in business activity.
Resistance  – resistance. The price level at which a significant number of sellers are expected to enter the Forex market or sell orders are concentrated.
Retracement – the level of possible return (correction) of the price (rate) calculated in the technical Analysis after the rise or fall.
Risk Control  – using trading rules to limit losses.
Rollover  – transfer of an open position to the next delivery (value) date.

Scalper is a trader who earns Profit on Forex from insignificant (minimum) price (rate) changes.
Settled (Closed) Position  – (closed Position) a settled market position on which a reverse transaction was made and settled.
Short Position—a short position (in relation to a certain currency) is an open position in which the amount of the currency sold exceeds the amount of the same currency bought.
Slippage  – slippage. The situation when a Stop forex order is executed at a worse rate than it was ordered when it was placed to the broker. This phenomenon occurs during a rapidly changing market. For example, this can happen after the release of important fundamental data during speeches by well-known political figures. It is not possible to execute an order at a given rate if the Quote overcomes the given level with a sharp jump. The amount of slippage can vary from one point to several tens of points. Slippage often occurs at the opening of trading on a Sunday evening, when the opening rates differ from the closing rates.
Soft Currency – a currency that can be exchanged for other currencies with some restrictions.
A speculator is a person who is ready to risk money when making trading operations to receive Forex profit.
Spike  – spike. There is a significant difference between the next Quote and the previous one. A graphic depiction of a market climax that characterizes the most violent “collision” between buyers and sellers. It characterizes the nervousness of the Market. Spikes can appear at the moment of the release of news that is especially important for the Market. There are situations when spikes appear on the screen for no good reason; this is found in a narrow market. This is either “pampering” operators or a special loosening of the Market.
Spot Date  – spot date. In the Forex market, the date of delivery of currencies is on the second business day from the date of the transaction.
Spread – the difference between the price of the seller (ask) and the buyer (Bid) in a two-way forex quote.
Stop Order – an order to a forex broker to conclude a deal when the price reaches the specified level.
Square  – “square” (slang). Lack of open positions in Forex.
Support  – support. The price level at which a significant number of buyers are expected to enter the Forex market or buy orders are concentrated.

Technical Analysis – Technical Analysis. Using the price chart and technical indicators to predict the situation on the Market.
Technical Indicators: Technical indicators. Mathematical formulas are used to build auxiliary charts that facilitate the Analysis of the forex market.
Trader – a trader who performs Forex transactions with his funds or funds entrusted to him by investors.
Trend – a trend. Steady long-term movement of the price (rate) in the Market in a certain direction.
Two–Way Quote – a two-way quote in which the dealer quotes the buy rate and the sell rate.

Value Date – currency delivery date.
Volatility – volatility (variability, volatility). This term characterizes the degree of volatility of the exchange rate in a certain period. For example, when there are sharp price fluctuations with a large amplitude in the Forex market, they say that the volatility is high.

Unrealized (Floating) Profit/Loss – non-fixed profit/Loss, unrealized until the Position is settled, i.e., covered by a reverse transaction.
Uptick – price movement up.
Useable Margin – (available Margin) the amount of funds on the margin account available for settlements based on the results of ongoing transactions. It is calculated as the difference between the current account balance, taking into account unrealized profits, and the amount of funds blocked to cover open positions.
Used Margin – the amount of funds on the account, blocked to cover possible losses on open positions. It is a tool for regulating client risks when playing on the terms of margin trading.

Yard – yard. In the Forex market, it is 1 billion US dollars (slang).
Yield – income in the form of interest on invested capital, calculated for one year.

Ask (Ask) – the rate of purchase; The price at which a financial instrument is purchased.

Base currency – the first Currency in the currency pair designation, which is bought or sold for the quoted Currency. For example, in the EURUSD currency pair, the base currency is EUR. The volume of the transaction is expressed in the base Currency.

Balance — the financial result of the trading account, excluding open trading positions.

Bid—selling rate: The price at which a financial instrument is sold.

Broker (Broker) – a company that ensures the performance of trading operations in the Financial Market, carrying out all necessary calculations for lending.

Currency (Currency) – the monetary unit of the state.

Quote currency, Quote currency — the second Currency in the designation of the currency pair, in which the price of the base currency is expressed. For example, in the EURUSD currency pair, the quote currency is USD.

Exchange rate (Currency quote, Rate) – the number of monetary units of one country for one monetary unit of another country. For a currency pair: the number of units of the quote currency for one unit of the base Currency. For example, the exchange rate EURUSD = 1.6000, which means that 1 euro is valued at 1 dollar 60 cents.

Currency pairs are financial instruments for trading on the Forex market. There are two currencies – base and Quote – from the exchange rate. The most liquid currency pairs in the Forex market are EURUSD, GBPUSD, USDCHF, USDJPY, USDCAD, AUDUSD, and NZDUSD.

Volatility – the degree of volatility of the exchange rate over a certain period.

Chart — a graphical representation of the quote flow.

Value date — the date of fulfillment of obligations under the transaction. On the Forex market, the value date Spot (Spot) is accepted – the settlement is made on the second business day after the transaction.

Diversification – the distribution of capital investments between different financial instruments to reduce risks.

Long Position (Long, Buy-position) is the purchase of a financial instrument (for a currency pair: purchase of the base Currency for the quote currency) in the expectation of a price increase.

Close Position—a transaction in which a financial instrument is bought or sold, fulfilling the obligations incurred by the trader under the previous position opening transaction and calculating profit/loss.

Indicator (Indicator) is a mathematical derivative of the price or volume of a financial instrument, which is used for market analysis and forecasting.

Instrument, Financial instrument (Instrument)—an asset on which a transaction is concluded to make a profit.

A contract for difference is a financial instrument that allows you to profit from changes in the exchange rate of the contract’s underlying asset without owning the asset itself. The underlying asset can be stocks, commodities, indices, or futures.

Short Position (Short, Sell position): the sale of a financial instrument (for a currency pair: the sale of the base Currency for the quote currency) in the expectation of a price decrease.

Quoting is the provision of a stream of quotes to a trader by a broker for trading operations.

Quote — information about the current exchange rate of a financial instrument in the form of Ask and Bid prices.

Leverage, Leverage – the ratio between borrowed and own funds. Expressed as 1:10, 1:50, and 1:100. Leverage 1:100 means that in order to make a trading operation, a trader needs to have an amount on the trading account that is 1% of the volume of the operation.

Cross-rate (cross-currency) is the ratio of two currencies, resulting from their exchange rate, to a third currency (traditionally, USD).

Liquidity is the ability to easily sell or buy a financial asset at a market price. High liquidity implies high activity and trading volume.

Trendline – a straight line on the price chart connecting local lows in an uptrend and local highs in a downtrend. The trend line graphically reflects the current trend in the Market; its breakthrough is a signal of a possible change in trend.

Lock, Hedge — opposite positions (buy and sell) opened on a trading account for one financial instrument of the same volume.

Lot is a unit of measure for the volume of a financial instrument, a standard contract size. An integer number of lots measures the trade volume. A standard lot in the Forex currency market is 100,000 units of the base Currency.

Margin is a pledge amount against which the broker provides a loan for trading operations. The security deposit provides coverage for potential losses on open positions.

Margin trade – trading using a loan provided by a broker against a security deposit. Leverage determines the ratio between collateral and credit. The volume of transactions in margin trading significantly exceeds the insurance deposit (100 or more times).

Mechanical trading system – automated trading rules executed by software and hardware without the participation of a trader.

Mini Forex (Mini Forex) – the ability to make trading operations with volumes less than a standard lot. For example, 0.2 lots is 20,000 units of the base Currency.

Order (Order) — an order from a trader to a broker to open or close a position, indicating the type of transaction (buy/sell), financial instrument, volume, and price. A market order is executed immediately at the current market price. A pending order is executed in the future when the price reaches the level specified in the Order and is valid until it is executed, canceled by the trader, or deleted if there is insufficient Margin.

An open position is a transaction of buying or selling a financial instrument, as a result of which the trader must carry out an opposite transaction in the same volume for the same financial instrument.

Floating profit/loss — profit/Loss on open positions at current exchange rates.

Support, Support Level — the price level at which active purchases are likely, with a possible reversal of the downward trend.

Breakout – overcoming the price of a significant border (level of local highs/lows, support/resistance level, trend line).

Point, Pip, (Point, Pip) – the minimum change in the exchange rate. For most currency pairs (EURUSD, GBPUSD, USDCHF), a pip is 0.0001; for USDJPY, it is 0.01.

Swap is the transfer of an open position to the next day.

Spread — the difference between the Bid (sell) and Ask (buy) prices, expressed in points.

Resistance, Resistance Level — price level at which active sales are likely with a possible reversal of an uptrend.

Stop Out — forced closure of client positions by the broker due to exceeding the allowable level of losses on open positions.

Stop Loss — a pending order to close a position at a specified price, used to limit losses.

Storage (Storage) — the swap board.

Take Profit is a pending order to close a position at a specified price, used to fix profits.

Technical Analysis (Technical Analysis) is a method of predicting the movement of the Market based on the study of price dynamics for previous periods using graphical and mathematical methods.

Trade operation – purchase or sale of a financial instrument in a certain volume and at a certain price. Margin trading in the Forex currency market involves the successive performance of two opposite trading operations: a purchase followed by a sale and a sale followed by a purchase.

Trading strategy or trade system (Trading strategy, Trade system) is a set of rules and conditions for conducting trading operations.

Trading account, Trade deposit (Trade account, Deposit)—an account opened by a broker for the trader to perform trading operations at his own expense by placing orders. When trading on Margin, it is enough to have a certain part of the transaction volume in the trading account.

Trading terminal, Trading platform (Trade terminal)—software for receiving a stream of currency quotes, conducting trading operations in real time (by placing orders), recording and recording them, and analyzing the market situation.

A trader is an individual or legal entity that performs trading operations in financial markets to profit from fluctuations in the prices of financial assets.

Trading (Trading) – speculative operations in the financial markets.

Trend (Trend)—a stable trend (direction) in price movement: ascending (uptrend) or descending (downtrend). A bull market is a market with a pronounced upward trend in the exchange rate. A bear market is a market with a pronounced downward trend in the exchange rate.

Flat (Flat) – the absence of a stable trend (trend) in price movements.

Forex (Forex) – Foreign Exchange – the international currency market, the entire set of operations for the exchange of currencies of the countries of the world.

Fundamental Analysis is a method of forecasting market movements based on the Analysis of economic data, political events, news, rumors, and expectations.

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