Forex Trading Terminology

Forex Trading Terminology

Account : Record of all transactions. Account Balance : Same as balance. Accumulation Line : See Distribution Line. Aggressor : A trader dealing on an existing price in the market. All or None : A limit price order that instructs the broker to fill the w... AMD : ISO 4217 currency code, Currency used in Armenia, called Drams. Apics Survey : Economical indicator, A composite diffusion index of natio... At the price stop-loss order : A stop-loss order that must be executed at... At-the-Money : An option whose strike-exercise price is equal to or near ... Attorney in Fact : Person who is allowed to transact business and execute...

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B

Bearish Harami : A two day pattern that has a small body day completely c... Bearish Harami doji : A two day pattern similar to the Harami. The differ... Bid Price : The price at which an investor can place an order to buy a cu... Big Figure : Refers normally to the first three digits of an exchange rat... Bilateral grid : An exchange rate system that links all the central rates... Bollinger bands : A quantitative method that combines a moving average wi... Broker : An agent, who executes orders to buy and sell currencies and rel... Bullish Harami cross : A two day pattern similar to the Harami. The diffe... Business firms establishment survey : See Business firms survey. Buying Rate : Rate at which the market and a market maker in particular i...

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C

CBOT : Chicago Board of Trade. CDF : ISO 4217 currency code, Currency used in Congo/Kinshasa, called Con... Classes of options : The types of options: calls and puts. Cleared Funds : Funds that are freely available, sent in to settle a trad... Collateral : Something given to secure a loan or as a guarantee of perfor... Combination spread : Synthetic future. A compound option strategy that co... Condor spread : A compound option strategy that consists of either four s... Counter Currency : The second listed Currency in a Currency Pair. Currency Risk : The possibility of an unfavorable change in exchange rate... CVE : ISO 4217 currency code, Currency used in Cape Verde, called Escudos...

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D

Day Trade : A trade opened and closed on the same trading day. Day Trader : Speculators who take positions which are then liquidated pri... Deal Date : The date on which a transaction is agreed upon. Delta : The change in the value of the option premium made fully paid by ... Devaluation : Deliberate downward adjustment of a currency against its fi... Diamond : A minor reversal pattern that resembles a diamond shape. Discount forward spread : A forward price that is deducted from a spot pr... Distribution Line : A technical indicator that attempts to quantify the f... Durable Goods Orders : Economical indicator, Durable goods orders reflect... DZD : ISO 4217 currency code, Currency used in Algeria, called Algeria Di...

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E

EOD : See End Of Day Order Eurocurrency : A currency domiciled outside its country of origin normall... European Commission : The executive body of the European Economic Communi... European Joint Float Agreement : European monetary system established in ... European Monetary Cooperation Fund : EMS fund established to manage the E... European Monetary Union : Abbreviated EMU. The principal goal of the EMU ... European Option : An option that can be exercised only on its expiration ... Exercise Price : See Strike price. Exercise strike price : The price at which the underlying currency will b... Exotic : A less broadly traded currency.

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F

Factory Orders : Economical indicator, The dollar level of new orders for... Fed Funds : Cash balances held by banks with their local Federal Reserve ... Federal Reserve Board : The board of the Federal Reserve System, appointe... Fill Price : The price at which a buy or sell order was executed. Financial Accounting Standards Board s Statement Number 52 : Abbreviated ... Financial Risk : The risk that a firm will be unable to meet its financia... Floor traders locals : Exchange members who execute their own trades by b... FOMC : See Federal Open Market Committee. Forward Deal : A deal with a value date greater than the spot value date. Forward Operations : Foreign exchange transactions, on which the fulfillm...

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G

G5 : The Group of Five. The five leading industrial countries, being US, ... Gap : A mismatch between maturities and cash flows in a bank or individua... GDP : See GROSS DOMESTIC PRODUCT. Genetic algorithms : Method used to optimize a neural network. Trial and ... GGP : ISO 4217 currency code, Currency used in Guernsey, called Pounds. GNP : See Gross National Product. Golden cross : An intersection of two consecutive moving averages that mo... Good Until Canceled : (GTC) An instruction to a broker that unlike normal... Gross National Product Deflator : See Gross National Product Implicit Def... GYD : ISO 4217 currency code, Currency used in Guyana, called Dollars.

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H

Hammer : A candlestick with a long lower shadow and small real body. The ... Harami : A candlestick that forms within the real body of the previous ca... Harmonised Index of Consumer Prices : Economical indicator, The harmonise... Head and Shoulders : Pattern in price trends which chartists consider ind... HICP : See Harmonised Index of Consumer Prices. Historical Volatility : The annualized standard deviation of percentage c... HKD : ISO 4217 currency code, Currency used in Hong Kong, called Dollars. HNL : ISO 4217 currency code, Currency used in Honduras, called Lempiras. HTG : ISO 4217 currency code, Currency used in Haiti, called Gourdes. HUF : ISO 4217 currency code, Currency used in Hungary, called Forint.

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I

IFO Business Climate in industry and trade : Economical indicator, The If... IMF : See International Monetary Fund. Implied Volatility Skews : The implied volatility varies for different st... Inflation : Continued rise in the general price level in conjunction with... Initiation margin : A margin paid by the trading party in order to trade ... Interest rate risk : Amount of mismatches and maturity gaps among transac... Interest-Rate Carry : The income or cost associated with keeping a foreig... Introducing Broker : A person or corporate entity which introduces accoun... Inverted hammer : See Shooting star. Irikubi : A bearish two-day candlestick combination. It consists of a mod...

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J

J-Curve theory : Devaluation of a currency will trigger export gains in t... JEP : ISO 4217 currency code, Currency used in Jersey, called Pounds. Jittai Body of the candlestick : (See Candlestick chart.) JMD : ISO 4217 currency code, Currency used in Jamaica, called Dollars. Jobber : A trader who trades for small, short-term profits during the cou... Jobless Claims : Economical indicator, A weekly compilation of the number... JOD : ISO 4217 currency code, Currency used in Jordan, called Dinars. Journal of Commerce Index : Index that consists of the prices of 18 indus... JPY : ISO 4217 currency code, Currency used in Japan, called Yen.

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K

Kabuse : See Kabuse (dark cloud cover). Karakasa (hangman at the top, hammer at the bottom) : A bearish candlestick... Kirikomi : A bullish two-day candlestick combination. It consists of a bl... Kiwi : Slang for the New Zealand dollar. Knock In : A process where a barrier option (European) becomes active as ... Knock Out : Has a corresponding meaning although the option may permanent... Knockin : A plain vanilla option that does not exist until the trigger is... Koma : See Koma (spinning tops). KWD : ISO 4217 currency code, Currency used in Kuwait, called Dinars. KYD : ISO 4217 currency code, Currency used in Cayman Islands, called Dol...

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L

Last Trading Day : The day on which trading ceases for an expiring contra... LIBID : See London Interbank Bid Rate. Limit : (1)The maximum price fluctuation permitted by an exchange from th... Limit Order : An order to buy or sell a specified amount of a security at... Liquid Markets : The ability of a market to buy and sell at ease with no ... London Interbank Offered Rate : Abbreviated LIBOR. The rate charged by on... London International Financial Futures Exchange and Options Exchange : Ab... Long Position : In foreign exchange, when a currency pair is bought, it i... Long white line : This is a bullish line. It occurs when prices open near... LSL : ISO 4217 currency code, Currency used in Lesotho, called Maloti.

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M

MAD : ISO 4217 currency code, Currency used in Morocco, called Dirhams. Margin Account : An account that allows leverage buying on credit and bor... Market Maker : A market maker is a person or firm authorized to create an... MFI : See Money Flow Index. MGA : ISO 4217 currency code, Currency used in Madagascar, called Ariary. Ml : Money supply measure that is composed of currency in circulation (ou... MM : Money Markets. Momentum : An oscillator designed to measure the rate of price change, no... Money Markets : Refers to investments that are short-term (i.e. under one... Morning Doji star : This a doji star in a downtrend followed by a long, w...

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N

Naked intervention (unsterilized intervention) : A central bank interventio... NAPM : See National Association of Purchasing Managers Index. National Association of Purchasing Managers Index : Abbreviated NAPM. A s... Nearby Month : The nearest actively traded delivery month, a.k.a. current... Net Position : The number of futures contracts bought or sold which have ... Netting : A process that enables institutions to settle only their net po... Neural networks : Computer systems that recognize patterns. They may be u... Neutral spread : See Neutral spread (delta-neutral spread). Neutral spread (delta-neutral spread) : A compound option strategy that con... NPR : ISO 4217 currency code, Currency used in Nepal, called Nepal Rupees...

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O

OCO : See One Cancels the Other. OECD : See Organization for Economic Cooperation and Development. OMIC : See Open Market Investment Committee. Open Market Operations : Central Bank operations in the markets to influe... Open Order : Buy or sell order that remains in force until executed or ca... Optimal options : Options that refer to the most favorable rate of the un... Option writers : Option sellers. Options : An agreement that allows the holder to have the option to buy/s... Over Bought or Over Sold : See long and short. Overnight Position : Trader´s long or short position in a currency ...

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P

Parabolic SAR : A technical chart overlay that attempts to show where pri... Percentage Volume Oscillator : Abbreviated PVO. The PPO indicator applied... Philadephia Fed Survey : Economical indicator, A composite diffusion inde... PIBOR : See Paris Inter-bank Offered Rate. Points : See Pips. Price : The price at which the underlying currency can be bought or sold. Price Channels : Technical overlays that form boundaries above and below ... Producer Price Index (PPI) : PPI is a measure of the average level of price... Purchasing power parity : Abbreviated PPP. Model of exchange rate determi... Put-call-forward exchange parity theory : Abbreviated PCFP theory. A rela...

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Q

QAR : ISO 4217 currency code, Currency used in Qatar, called Rials. Quota : (1) A limit on imports or exports. (2) A country´s subscrip... Quote : An indicative price. The price quoted for information purposes bu...

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R

Rate of change : Abbreviated ROC. A momentum oscillator in which the olde... Reaction : A decline in prices following an advance. Reserve Tranche : The 25% of its quota to which a member of the IMF has u... Reserves : Funds held against future contingencies, normally a combinatio... Resistance level : The peaks representing the price level at which supply... Revaluation Rates : The revaluation rates are the market rates used when ... Risk Position : An asset or liability, which is exposed to fluctuations i... Rounded top (saucer) : A bearish reversal pattern that consists of a very s... RSI : See Relative Strength Index. RUB : ISO 4217 currency code, Currency used in Russia, called Rubles.

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S

SDG : ISO 4217 currency code, Currency used in Sudan, called Pounds. Settlement Price : The official closing price for a future set by the cle... Shooting star : The inverted hammer and shooting star look exactly alike,... Snake : The nickname of the European Joint Float Agreement´s 2.25 p... Speedlines : Support or resistance lines that divide the range of the tre... Spot Next : The overnight swap from the spot date to the next business da... Stochastic Oscillator Full : See Stochastic Oscillator (Fast, Slow, and F... StochRSI : A technical indicator that helps traders see what the RSI indi... Stocky : Market slang for Swedish Krona. SZL : ISO 4217 currency code, Currency used in Swaziland, called Emalange...