Forex Glossary

To increase your understanding of trading terminology, we have gathered the most important terms and definitions that you may encounter on your trading journey.

Abandoned Baby

An Abandoned Baby is a Japanese candlestick pattern signalling a possible reversal. It consists of three candles. In a downtrend, a long red candle is followed by a Doji that gaps lower. The third candle has a long green body and gaps above the Doji's high.

Absolute Drawdown

An absolute drawdown is the reduction of one's capital after a series of losing trades to zero or a very low amount.

Account History

This refers to the history of all the closed trades on a specific account on the MT4 platform.

Accumulation/Distribution

A technical Indicator developed by Mark Chaikin. Chartists can use this indicator to affirm a security's underlying trend or anticipate reversals when the indicator diverges from the security price.

Actionary Waves

Actionary Waves Theory is a method of market analysis that is based on the idea that the market forms the same types of patterns on a smaller timeframe that it does on a longer timeframe and that these patterns provide clues as to what might happen next in the market.

ADP Non-Farm Employment Change

Estimated change of US employed people, excluding the farming and the government sector.

Affiliate

An Affiliate is a member of the BDSwiss' Partners' program. BDSwiss' Affiliates use their own online resources (websites, social media) to direct traffic to BDSwiss and receive a compensation for successful referrals.

Aggregation

The policy under which all futures positions owned or controlled by one Trader are combined to determine reportable positions and speculative P&L.

Algorithmic Trading

Algorithmic trading is the process of using computers for placing trades.

Alligator

A technical Indicator designed by Dr. Bill Williams. It consists of 3 moving average lines: The Alligator's Jaw (blue line) is a 13-period Smoothed Moving Average shifted into the future, by 8 bars. The Alligator's Teeth (red line) is an 8-period Smoothed Moving Average shifted into the future by 5 bars. The Alligator's Lips (green line) is a 5-period Smoothed Moving Average shifted into the future by 3 bars.

Altcoin

The word "altcoin" is an abbreviation of "Bitcoin alternative," and thus describes every single cryptocurrency except for Bitcoin. Altcoins aim to replace or improve upon at least one Bitcoin component. The term has stuck among cryptocurrency traders and is still used to refer to lower cap cryptocurrencies.

Appreciation

A condition whereby the value of a financial instrument increases in response to the demand in the market.

Arbitrage

The concurrent purchasing and selling of a financial asset at two separate prices in two separate markets, yielding profits with minimal risks

Ascending Trendline

An upward sloping line connecting two or more bottoms.

Asian Session

Trading activity between 11:00 pm (GMT+2) and 08:00 am (GMT+2). About 20% of all transactions within a day occur during the Asian trading session.

Ask

The price at which a trader accepts to buy a security.

Ask Rate

Also referred to as offer. It is the lowest price at which a seller agrees to sell a financial asset.

Asset

The underlying instrument essential for determining a futures contract (CFD). It can be a commodity, stock, currency pair, or index.

Asset Allocation

Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals and risk tolerance.

At the Money

When a trade breaks even - the trader does not make any profit or loss.

ATR (Average True Range)

The Average True Range is an indicator developed by Welles Wilder to measure volatility. Wilder believed that high ATR readings occur at bottoms after a strong downtrend characterized by "panic" sell-off. Low ATR readings are usually found at tops and during periods of consolidation.

Attorney in charge

An individual granted the mandate to trade in the financial markets on behalf of another trader.

AUD

Australian Dollar. The currency of Australia, Christmas Island, the Cocos (Keeling) Islands, Kiribati, Nauru, Norfolk Island and Tuvalu. It is subdivided into 100 cents.

Aussie

Aussie is a slang term that is used to refer to the Australian dollar.

Authorized Dealer

A financial entity that has been given the certification to engage in foreign currency transactions.

Automated trading system

A computer program that submits orders to electronic exchanges based on a set of predefined instructions.

Average Hourly Earnings

A change in the labour pay excluding the farming sector. Released monthly by the Bureau of Labor Statistics.

Buy Order

To place an order to own a financial instrument.

Buy Limit

A pending order to buy at a predefined price lower than the market price in anticipation that the market will eventually rise.

Business Confidence

A monthly report excluding January. It's a survey of the business outlook in the next 12 months.

Business Climate

A Monthly report outlining the relative level of current business conditions and expectations for the next 6 months.

Bushel

A unit of measurement for agricultural commodities.

Bundesbank

Germany's Central Bank.

Bullish Reversal

Certain price formations that signal the end of a downtrend and the beginning of an uptrend.

Bullish

The belief that the market or a specific financial instrument will rise.

Bull Trap

A short-lived breakout above a top, triggering a buy entry. After the false breakout, prices switch direction.

Bull Market

A bull market is a financial market of a group of securities in which prices are rising or are expected to rise.

Bull Candle

The close of this candlestick is higher than the open price, revealing positive sentiment.

Building Permits

The number of housing building permits approved in the previous month, released monthly by the Census Bureau.

Building Approvals

Number of building approvals released monthly by the Australian Bureau of Statistics.

Broker

A company or individual that executes buy and sell orders on behalf of financial and commercial institutions and/or the general public.

Brent Oil

A type of sweet crude oil that is used as a benchmark for the prices of other crude oils.

Breakaway Gap

A breakaway gap represents a gap in the movement of a stock price supported by levels of high volume.

Breakaway (bullish)

A five-candle bullish reversal formation. The first candle has a long red body trading in the direction of the decline, showing off the bears' strength. The second candle is also red, and of a regular size gaping below-reaffirming the downward move. The third and fourth candles have red bodies of regular size, closing lower than the previous close. Finally, a long green body is formed that closes in the gap created by the first two candlesticks.

Breakaway (bearish)

A five-candle bearish reversal formation. The first candle has a long green body trading in the direction of the uptrend, showing the bulls' strength. The second candle is also green, and of a regular size gaping above-reaffirming the upward move. The third and fourth candles have green bodies of regular size, higher than the previous close. Finally, a long red body is formed that closes in the gap created by the first two candlesticks.

Break Even

A term used to describe when there is no overall profit or loss experienced in a transaction.

Bottom

A significant low on the price chart where buying pressure overcomes selling pressure.

Bond Yield

The annual interest divided by the value the bond was purchased.

Bond

A debt instrument, where the issuer borrows money from the buyer, with the obligation to repay the principal and predefined interest at the maturity date.

Bollinger Bands

A technical indicator developed by John Bollinger. The upper band is drawn 2 standard deviations above a simple moving average and the lower band 2 standard deviations below the simple moving average. Bollinger Bands measure volatility and display price extremes.

Blue Chip

Shares of large and well-established organizations.

Blockchain

A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions.

Cable

Cable is a slang term used among forex traders referring to the exchange rate between the U.S. dollar and the British pound sterling. This term supposedly derives from the advent of the telegraph in the mid-19th century. The pound was the dominant currency at the time, and transactions between the pound and dollar were executed via transatlantic cable.

CAD

Canadian Dollar. The currency of Canada. It is subdivided into 100 cents.

Caixin Manufacturing PMI

A monthly economic report, that is released by Markit and is based on a survey of about 400 purchasing managers in China. A reading above 50 indicates expansion of the manufacturing sector and the economy in general, whereas a reading below 50 indicates contraction.

Candlestick Chart

A price charting method that originated in Japan in the 18th century. A standard Candlestick chart contains a series of multiple individual candlestick data points. Colour schemes are used to illustrate the real bodies of the candles, which is the difference between a lower close than the open (red) and a higher close than the open (green).

Capacity Utilization

The capacity utilization rate measures the proportion of a country's resources used by manufacturers, mines and utilities. A high reading is positive for the country's currency whereas a low reading is negative. This report is released by the Federal Reserve.

Capital Expenditure

Capital expenditures represent major investments of capital that a company makes to maintain or, more often, to expand its business and generate additional profits.

Capital Gains

Capital gain is an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold.

Capital Loss

The result of selling a capital asset at a lower price than the purchased price.

Carry-over Charge

A charge for the storage of physical commodities.

Cash Flow

The amount of money going into and out of a business.

CB Consumer Confidence

The Consumer Confidence Index (CCI) is a monthly release from the Conference Board, a non-profit business group that is highly regarded by investors and the Federal Reserve. CCI is a distinctive indicator, formed from survey results of more than 5,000 households and designed to gauge the relative financial health, spending power and overall confidence of the average American consumer.

Centred Moving Average

A moving average type where more weight is assigned to the middle of the period (time span). Used in cycle analysis.

Central Bank

A state's financial institution that oversees monetary policy and manages a state's currency, inflation and interest rates.

Central Bank Intervention

A Central Bank buys or sells its currency in the foreign exchange market in order to raise or lower the value of its currency in respect to another currency

CFD (Contract for Difference)

A CFD is a financial derivative which allows traders to speculate on a number of assets without owning them. It is basically an agreement between an investor and an investment institution. When the agreement expires, the parties exchange the difference between the opening and the closing prices of a particular financial asset.

CFTC (Commodities Futures Trading Commission)

The US Commodity Futures Trading Commission was created in 1974 with the aim of fostering open, transparent, competitive, and financially sound markets.

Channels

A technical analysis tool, similar to the concept of a trendline. At times prices fluctuate between two parallel lines, the basic trendline and the channel or return line. Channels may be used to trigger buy/sell signals and calculate price targets.

Chart

A Graphical representation of price using a candlestick, bar or line chart.

Chartist

An individual who uses charts or graphs of a security's historical prices or levels to forecast its future trends.

CHF

Swiss Franc. The currency of Switzerland and Liechtenstein. It is subdivided into 100 Rappen.

Chicago PMI

The Chicago Purchasing Managers' Index is a monthly survey where purchasing managers (in Illinois, Indiana and Michigan) are asked to rate employment, production, new orders, prices, supplier deliveries and inventories. A reading above 50 is bullish for the US Dollar while a reading below 50 is bearish. This report is released monthly by ISM-Chicago Inc.

Choppy Market

A sideways market.

Claimant Count - UK

A monthly report that measures unemployment in the United Kingdom. Released by the United Kingdom's Office of National Statistics (ONS).

Cleared Funds

Funds in an account that are available for withdrawal or investment.

Client Terminal

Part of the MT4 Trading Platform that allows traders to receive live incoming prices, open and manage orders, perform technical analysis, write, back test and optimize trading robots, and develop indicators and scripts.

Closed Position

When a position is closed, the transaction has been completed - whether the position was long or short, or whether it was profitable or incurred losses.

Closing Market Rate

Otherwise known as closing price, this is the final rate that a security is traded at on a specific day, candle or timeframe.

Closing Price

The final price at the end of a period (i.e. timeframe).

CNY

Chinese Yuan Renminbi. The currency of the People's Republic of China. It is divided into 10 jiao and 100 fen.

Collateral

An asset offered by the borrower to the lender to secure the loan.

Commission

An amount the trader is charged by the broker for facilitating a trade.

Commodities Futures Trading Commission

The US Commodity Futures Trading Commission was created in 1974 with the aim of fostering open, transparent, competitive, and financially sound markets.

Commodity

A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type

Consumer Price Index (CPI)

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.

Continuing Jobless Claims

A US report that indicates the number of individuals on unemployment benefits. A high reading is negative for the US Dollar, whereas a low reading is positive. This report is released monthly by the US Department of Labour.

Contract Market

A board of trade designated by the CFTC to trade futures or options contracts on a particular commodity. Commonly used to mean any exchange on which futures are traded.

Contrarian Trading

The principle of contrarian trading assumes that when the larger majority of traders agree on the direction of the market then they are usually wrong. A true contrarian will therefore trade in the opposite direction.

Convergence

The tendency for prices of physical commodities and futures to approach one another, usually during the delivery month.

Core Consumer Price Index

A US economic indicator used to measure inflation based on measurement of price movements of a representative shopping basket of goods and services, excluding food and energy. A high reading is positive for the country's currency whereas a low reading is bearish. Released monthly by the Bureau of Labour Statistics.

Core Durable Goods Orders

A US Monthly report that measures the change in the overall value of initial orders for manufactured goods except transportation items. Released by the Census Bureau.

Core Retail Sales

U.S. aggregate retail sales excluding automobile and gasoline sales, which are excluded due to their volatility. The figures are released monthly by the U.S. Department of Commerce about two weeks after the end of the reference month. As consumer spending accounts for more than two-thirds of the U.S. economy, the core retail sales data is an important indicator about the health of the overall economy.

Correction

A temporary interruption of the prevailing trend in the opposite direction.

Corrective Wave

In Elliott Wave Theory, a corrective wave is a wave against the trend. Waves 2, 4 and a-b-c are considered corrective.

Cost of Living Index

The average cost of a "basket" of products and services.

Counter Currency

The second currency in a currency pair quotation. Also called quote currency.

Cover

To close out a short position by buying currency or securities that have been sold short.

Credit risk

Risk of loss that may arise on outstanding contracts should a counterparty default on its obligations.

Cross Rate

The exchange rate between two currencies that do not involve the US Dollar.

Crude Oil

Unrefined petroleum found in liquid form and composed mostly of hydrocarbons, organic compounds and small amounts of metal.

Crude Oil Inventories

Crude Oil Inventories is a weekly report that measures the change in Crude Oil stocks (i.e. barrels). It includes domestic and Customs-cleared foreign crude oil stocks held at refineries, in pipelines, in lease tanks and in transit to refineries. The report is released by the Energy Information Administration.

Cryptocurrency

Digital currency in which encryption is used to regulate the generation of units of currency. It operates independently of the traditional banking system. Bitcoin, Ethereum and Litecoin are among the most popular cryptocurrencies.

Currency

Currency is a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy.

Currency Appreciation

Currency appreciation is an increase in the value of one currency in terms of another.

Currency Pair

A currency pair is the quotation and pricing structure of the currencies traded in the forex market

Currency Peg

A currency peg is a country or government's exchange-rate policy of attaching, or pegging, the central bank's rate of exchange to another country's currency.

Cycle Lines

A technical analysis tool that draws vertical lines at equal intervals on the price chart to forecast future cycles.

Cyprus Securities and Exchange Commission (CySEC)

The independent public supervisory authority responsible for the supervision of the investment services market and transactions in transferable securities carried out in the Republic of Cyprus.

Daily Chart

A graph that illustrates the intraday movements of a financial instrument.

Danish Krone (DKK)

Danish Krone. The currency of Denmark, Greenland and the Faroe Islands. It is subdivided into 100 Ã¸re.

DAX

Deutscher Aktien Index (German Stock Index) is an index of 30 large German company shares.

Day Order

An order that if not executed expires automatically at the end of the trading session on the day it was entered.

Day Trading

The opening and closing of positions in the market on the same day without holding them overnight.

Deficit

A state in which liabilities exceed the value of assets or losses exceed profits.

Deflation

Deflation is a contraction in the supply of circulated money within an economy, and therefore the opposite of inflation. In times of deflation, the purchasing power of currency and wages are higher than they otherwise would have been.

Derivative

A financial instrument, traded on or off an exchange, the price of which is directly dependent upon the value of one or more underlying securities, equity indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or arrangement.

Demo Account

A trading account which is funded with virtual money, giving the trader an opportunity to explore the markets and test the trading platform they're using before investing real money in a live trading account.

Depression

Depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts two or more years.

Depreciation

Depreciation can refer to a fall in the valve of a currency due to markets forces rather than to official action.

Depth of Market

The number of open buy and sell orders placed for a financial instrument at varying prices.

Direct Quote

The exchange rate of a currency pair expressed in terms of the foreign currency for 1 unit of domestic currency.

Derivative

A financial contract whose worth relies upon or is derived from the performance of one or more underlying assets. Examples of underlying assets are stocks, bonds, commodities and indices.

Discretionary Trading

Trading based on the trader's experience and intuition, to decide whether to take a trade or not, under the current market conditions.

Discount rate

The interest rate charged on loans by the Federal Reserve to member banks

Discretionary Account

An arrangement by which the owner of the account gives written power of attorney to someone else, usually the broker or a Commodity Trading Advisor, to buy and sell without prior approval of the account owner. Also referred to as a Managed Account.

Divergence

In technical analysis, traders make transaction decisions by identifying situations of divergence, where the price of a stock and a set of relevant indicators are moving in opposite directions.

Dividend

A portion of a company's profits paid to every shareholder.

DJIA (Dow Jones Industrial Average)

A stock market index composed of 30 stocks of large American companies. It's based on Charles Dow's 1884 stock market average composed of nine railroad and two manufacturing companies. The index grew to include 30 stocks by the year 1928. It is used to gauge stock market activity and the country's economic health.

DKK

Danish Krone. The currency of Denmark, Greenland and the Faroe Islands. It is subdivided into 100 Ã¸re.

Doji

A Japanese candlestick formation that has equal (or almost equal) opening and closing price. A Doji looks like a cross, inverted cross or plus sign and signals indecision.

Double Bottom

A technical analysis reversal price pattern. After an established downtrend, the last bottom fails to move lower than the previous bottom and prices rise above the last top.

Double Top

A technical analysis reversal price pattern. After an established uptrend, the last top fails to exceed the previous top and prices fall below the last bottom.

Dovish

This term refers to the tone of language that policy makers use when referring to inflation. For example, a dovish statement implies that no drastic measures may be taken to raise interest rates.

Dow Jones Industrial Average

Dow Theory

The Dow Theory is an approach to trading developed by Charles H. Dow, who with Edward Jones and Charles Bergstresser founded Dow Jones & Company Inc. and developed the Dow Jones Industrial Average.

Downtrend Channel

A Technical Analysis tool where prices are trending downwards between two parallel lines.

Drawdown

When the value of an investment drops, the length between its peak and its low is called the drawdown.

Durable Goods

Consumer products such as house appliances, devices and equipment that usually last more than 3 years.

Durable Goods Orders

An economic indicator released monthly by the Bureau of Census that reflects new orders placed with domestic manufacturers for delivery of factory hard goods (durable goods) in the near term or future. Durable goods orders come in two releases per month: the advance report on durable goods and the manufacturers' shipments, inventories and orders.

Earnings per Share (EPS):

The fraction of an organization's earnings apportioned to every outstanding share of common stock.

Easing

A modest decline in price.

Effective exchange rate

An attempt to summarize the effects on a country's trade balance of its currency's changes against other currencies.

Elliott Wave

The Elliott Wave Theory is the theory named after Ralph Nelson Elliott, who concluded that the movement of the stock market could be predicted by observing and identifying a repetitive pattern of waves.

ECN Broker

A brokerage firm that employs electronic communication networks (ECNs) to provide its clients direct access to other participants in the currency markets.

Electronic Order

An order placed electronically (without the use of a broker) either via the Internet or an electronic trading system.

Electronic Trading Systems

Systems that allow participating exchanges to list their products for trading electronically.

Equity

1) In the context of margin trading, the value of securities in a margin account minus what has been borrowed from the brokerage.2) A stock or any other security representing an ownership interest. This may be in a private company (not publicly traded), in which case it is called private equity.

Exchange Rate

The rate at which one currency can be exchanged for another.

Exchange Traded Fund (ETF)

An ETF, or exchange-traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange.

Execution

When a trade is carried out and completed.

Expert Advisor

A script that enables the analytical and trading processes in the trading platform to be carried out with little or no manual control.

Expiry time/date

Also called expiration. It's the time and date when a trade of a financial instrument expires.

Exposure

This refers to the amount invested in a security and exposed to market risk.

Failure Swing

A reversal pattern. During the course of an uptrend as defined by successively higher tops and higher bottoms, the last top fails to exceed the previous top and prices fall below the last bottom.

Federal Open Market Committee (FOMC)

The Federal Open Market Committee (FOMC) is the branch of the Federal Reserve Board that determines the direction of monetary policy for the U.S.

Federal Reserve (The)

The Federal Reserve Bank is the central bank of the United States and arguably the most powerful financial institution in the world. The Federal Reserve Bank was founded by the U.S. Congress in 1913 to provide the nation with a safe, flexible, and stable monetary and financial system.

Fed's Monetary Policy Statement (FOMC Statement)

After each regular meeting, the FOMC issues a statement that summarizes the Committee's economic outlook and the policy decision at that meeting.

Fibonacci

A popular tool used by technical analysts to identify potential support and resistance levels based on some key numbers. These numbers possess a number of interrelationships, such as the fact that any given number is approximately 1.618 times the preceding number.

Fibonacci numbers and ratios

An infinite series of numbers such that any number in the series is the sum of the preceding two numbers. The sequence is: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233 etc.

Fibonacci Retracement

It is a technical analysis tool attached from bottom to top in a rising market and from top to bottom in a declining market. The horizontal lines show the Fibonacci Retracement levels (ratios): 0.236, 0.382 and 0.618.

Fill

The process of executing an order on the trading platform.

Fill or Kill

When an investor has a very specific price they want to carry out a transaction at, they place a Fill or Kill order - this means that if the order is not filled at the desired price, it is terminated, or killed.

Financial Instrument

Any type of a tradable asset. Examples include currencies, futures, options, and CFDs.

Flat

A situation whereby a trader does not have any running positions in the market.

Floating Exchange Rate

When an exchange rate is not fixed, but adjusts depending on the supply and demand for a particular currency relative to other currencies.

Floor Trader

An individual who is a member of an exchange and trades for his own account on the floor of the exchange.

FOMC Funds Rate

The federal funds rate is the rate at which depository institutions (banks) lend reserve balances to other banks on an overnight basis.

FOMC Meeting Minutes

Minutes of the most recent meeting giving insights of the future of the US interest rate. Released eight times per year by the Federal Reserve.

Force Index

The Force Index is an oscillator that fluctuates above and below zero. It combines price movement and volume to assess the force behind price movements and spot potential trend changes.

Forex

The forex market is the market in which participants can buy, sell, exchange, and speculate on currencies.

Forex Chart

A digital chart that plots the price movements of currency pairs, to help investors make informed trading decisions.

Forex Scalping

Forex scalping is a trading strategy used by forex traders to buy or sell a currency pair and then hold it for a short period of time in an attempt to make a profit.

Forint (HUF)

The currency of Hungary. It is subdivided into 100 filler.

Forward rate

A forward rate is an interest rate applicable to a financial transaction that will take place in the future.

Fractals

Developed by Bill Williams, fractals are a type of pattern used in technical analysis to predict a reversal in the current trend. A fractal pattern consists of five bars.

Fundamental Analysis

Fundamental analysis is a method of evaluating a security in an attempt to measure its intrinsic value, by examining related economic, financial and other qualitative and quantitative factors.

Futures Contract

A futures contract is a legal agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

G20 Meeting

A group of 20 countries represented at the highest level by heads of state/government and at the ministerial level by ministers of finance and central banks governors.

Gap

A gap is a break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between.

GBP

Pound Sterling. The currency of United Kingdom of Great Britain and Northern Ireland, Guernsey, Isle of Man, Jersey. It is subdivided into 100 pence.

GDP

Gross domestic product (GDP) is the total value of goods and services a country produces in a one year period. GDP is calculated annually but it can also be calculated quarterly.

German Flash Services/Manufacturing PMI

An estimate of the Manufacturing Purchasing Managers' Index (PMI) for a country based on about 85% of total PMI survey responses each month. It is intended to provide an accurate advance indication of the final PMI data.

German Ifo Business Climate

Monthly survey looking at the current economic conditions and future outlook for the next 6 months. It is released monthly by the Ifo Institute for Economic Research.

German Retail Sales

German Retail Sales measures the change in the total value of inflation-adjusted sales at the retail level, excluding automobiles and gas stations. It is the primary indicator of consumer spending, which accounts for the majority of economic activity. A higher than expected reading is considered positive/bullish for the EUR, while a lower than expected reading can be taken as negative/bearish for the EUR.

German ZEW Economic Sentiment

The German Zentrum fÃ¼r EuropÃ¤ische Wirtschaftsforschung (ZEW) Economic Sentiment Index gauges the six-month economic outlook. A level above zero indicates optimismbelow indicates pessimism.

Go Long

To buy a financial instrument with the expectation that it will rise in price.

Go Short

To sell a financial instrument with the expectation that it will decline in price.

Golden Cross

A bullish term used when one or more shorter term moving average cross above a longer term moving average.

Generally, generates a buy signal.

Good till Cancelled (GTC)

A pending order that remains in effect until it is executed or cancelled by the trader.

Goods Trade Balance

The goods trade balance is the difference in value between imported and exported goods during the reported month. A positive number (i.e. more exports than imports) is good for the currency.

Grid

It's an MT4/MT5 chart property. When selected, grid is shown on the price chart.

Gross Domestic Product (GDP

Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well.

Gross Loss

The monetary sum of all unprofitable trades.

Gross National Product (GNP)

Gross national product (GNP) is an estimate of total value of all the final products and services produced in a given period by the means of production owned by a country's residents. GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports, and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents.

Gross Profit

The monetary sum of all profitable trades.

Halifax HPI

The Halifax House Price Index measures the change in the house prices throughout the UK. It is released monthly by the Halifax Bank of Scotland as an annualized change.

Hammer

A Hammer is a Japanese candlestick pattern signalling a bullish reversal. The presence of a hammer at the end of a downtrend or decline alerts for a possible bullish reversal.

Harami

A two-candle candlestick pattern that can been seen to mark tops and bottoms. The second candle of this formation is contained within real body of the prior session's candle.

Hard Currency

Any one of the major world currencies that is well traded and easily converted into other currencies.

Hawkish

The term "hawkish" refers to the tone of language that policy makers use when referring to inflation. For example, a hawkish statement implies that drastic measures may be taken to raise interest rates.

Head and Shoulders

In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal. It consists of three tops and two bottoms. The highest top is known as the Head where the top to the left is known as the Left Shoulder and the top to the right is known as the Right Shoulder.

Hedge

Hedging involves placing two opposing investments to minimize the losses which could be incurred by price fluctuations.

High Frequency Trading

Automated trading, placing a big number of trades on high volumes and speed.

High Price

The highest price that a financial instrument is traded during a specific timeframe.

HKD

Hong Kong Dollar. The currency of Hong Kong. It is subdivided into 100 cents.

Housing Starts

Housing starts are the number of new residential construction projects that have begun during any particular month. Housing start statistics are released on or around the 17th of each month by the U.S. Commerce Department. The report includes building permits, housing starts and housing completions data.

Halifax HPI

The Halifax House Price Index measures the change in the house prices throughout the UK. It is released monthly by the Halifax Bank of Scotland as an annualized change.

Hammer

A Hammer is a Japanese candlestick pattern signalling a bullish reversal. The presence of a hammer at the end of a downtrend or decline alerts for a possible bullish reversal.

Harami

A two-candle candlestick pattern that can been seen to mark tops and bottoms. The second candle of this formation is contained within real body of the prior session's candle.

Hard Currency

Any one of the major world currencies that is well traded and easily converted into other currencies.

Hawkish

Head and Shoulders

Hedge

Hedging involves placing two opposing investments to minimize the losses which could be incurred by price fluctuations.

High Frequency Trading

Automated trading, placing a big number of trades on high volumes and speed.

High Price

The highest price that a financial instrument is traded during a specific timeframe.

HKD

Hong Kong Dollar. The currency of Hong Kong. It is subdivided into 100 cents.

Housing Starts

January Barometer

This is the theory that if the stock market ends higher in January, the rest of the year will also end higher. Conversely, if January ends on a low note, stock prices will be lower for the end of the year.

Japanese Candlesticks

A charting method that has gained a lot of popularity recently, because the charts are more visually appealing than other bar charts. They are also generally easier to read and interpret.

Japanese Yen (JPY)

It is the currency of Japan, which is the third most-traded currency in the forex market.

JOLTS Job Openings

A survey done by the United States Bureau of Labour Statistics to help measure job vacancies. It collects data from employers including retailers, manufacturers and different offices each month. The JOLTS data is published monthly and by region and industry.

K Wave (Kondratieff Cycle)

One of the longer cycles in Time Cycle Analysis, discovered by the Russian Economist Nikolai D. Kondratieff. He supported that a cycle of approximately 54 years is present in prices and many areas of economic activities.

Kill

An order that is to be cancelled (that is to say "killed") if it cannot be wholly filled in the market.

Kitchin Wave

One of the popular cycles in Time Cycle Analysis. Discovered by Joseph Kitchin. He supported that a 40-month cycle was present in the stock markets.

Kiwi

The slang term for the New Zealand Dollar.

Labour Productivity

Labour productivity is a measure of economic growth within a country. Labour productivity measures the amount of goods and services produced by one hour of labour.

Specifically, labour productivity measures the amount of real gross domestic product (GDP) produced by an hour of labour. Growth in labour productivity depends on three main factors: investment and saving in physical capital, new technology, and human capital.

Latency

In the financial markets, latency refers to time units (usually milliseconds) required for a trade order to be sent and executed by the broker's server.

Leverage

Leverage in trading simply refers to the ability to increase the size of your trade or investment by using credit from a broker. When trading using leverage, you are effectively borrowing from your broker, while the funds in your account act as collateral. The use of leverage in trading magnifies both gains and losses. Leverage is expressed as a ratio form, so if it is 1:100 for example, a trader's buying power is magnified by 100 times.

Limit Order

A limit order is a take-profit order to buy or sell a set amount of a financial instrument at a specified price or better.

Because a limit order is not a market order, it may not be executed if the price set by the investor cannot be met during the period of time in which the order is left open.

Line Chart

A price chart that uses only the closing price for each period. A line connects all closing prices on the chart. Extra information such as open, high and low prices are sacrificed for simplicity.

Linear Regression Channel

A Technical Analysis tool used for trend identification for a set of prices under a period of study. It is attached on the chart by selecting the first price representing the beginning of the trend and then dragging the mouse to the second price in the direction of the trend.

Liquidity (Liquid Market)

Market liquidity refers to the extent to which a market, such as a country's stock market, allows assets to be bought and sold at stable prices. Cash is considered the most liquid asset, while real estate, fine art and collectibles are all relatively illiquid.

Litecoin

A decentralized digital currency used for peer-to-peer transactions. A total of 84 million litecoins are scheduled to be put into circulation.

Long

The act of opening a buy position in the market.

Long Position

Taking a long position on a currency means that you buy it. In a currency pair, you buy the first of the two currencies - the base currency.

Loonie

The nickname of the Canadian Dollar (CAD).

Lot

A lot is a standardized quantity of the instrument you are trading. In forex, one lot equals 100,000 units of the base currency.

Low Price

The lowest price that a financial instrument is traded during a specific timeframe.

Maintenance Margin

A set minimum amount (per outstanding futures contract) that a customer must maintain in his margin account to retain any open positions. Maintenance margin is also referred to as "minimum maintenance" or "maintenance requirement."

Make a market

An action whereby a dealer stands by ready, willing and able to buy or sell a particular security at the quoted bid and ask price

Managed float

The regular intervention of the monetary authorities in the market to stabilize the rates or aim the exchange rate in required direction

Margin

An amount of money deposited by traders to ensure performance of their orders. It is basically the amount of deposit needed to ensure the running positions in the market are kept active.

Margin Call

A margin call is a broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. This is a notification which alerts you that you need to deposit more money in your trading account so there can be sufficient margin to keep existing positions open.

Market Order

An investor makes a market order through a broker or brokerage service to buy or sell an investment immediately at the best available current price.

Market Rate

The current quote for a currency pair.

Market Risk

The likelihood that a trader will incur losses when the market conditions do not behave as initially expected.

Micro Lot

A micro lot is equal to 1,000 units of the base currency in a currency pair.

Microeconomics

The study economic activity as it applies to individual firms or well-defined small groups of individual or economics sectors. Microeconomics shows how and why different goods have different values, how individuals make more efficient or more productive decisions, and how individuals best coordinate and cooperate with one another.

Momentum

The measure of the rate of change in prices.

Moving Averages

Moving averages come in various forms, but their underlying purpose remains the same: to help technical traders track the trends of financial assets by smoothing out the day-to-day price fluctuations, or noise.

Moving Average Convergence Divergence (MACD)

Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

NASDAQ

A global electronic marketplace for buying and selling securities, as well as the benchmark index for U.S. technology stocks. Nasdaq was created by the National Association of Securities Dealers (NASD) to enable investors to trade securities on a computerized, speedy and transparent system, and commenced operations on February 8, 1971.

Net Performance

An increase or decrease in net asset value exclusive of additions, withdrawals and redemptions.

New Home Sales

An economic indicator that measures sales of newly built homes. Released by the U.S. Department of Commerce's Census Bureau, it includes both quantity and price statistics. It is considered to be a lagging indicator of demand in the market and to affect mortgage rates.

New York Stock Exchange (NYSE)

The New York Stock Exchange (NYSE) is a stock exchange based in New York City that is considered the largest equities-based exchange in the world, based on total market capitalization of its listed securities. Formerly run as a private organization, the NYSE became a public entity in 2005 following the acquisition of electronic trading exchange Archipelago.

New Zealand Dollar (NZD)

New Zealand Dollar. The currency of New Zealand, the Cook Islands, Niue, Pitcairn and Tokelau. It is subdivided into 100 cents.

News (Tab)

A tab in the Terminal (MT4) listing all News by Subject, Category and incoming Time.

NFP (Non-Farm Payroll Report)

Nonfarm payroll is a term used in the U.S. to refer to any job with the exception of farm work, unincorporated self-employment, and employment by private households, the military and intelligence agencies. Proprietors are also excluded. The U.S. Bureau of Labour Statistics releases closely-followed monthly data on nonfarm payrolls as part of its Employment Situation Report. The headline figure, the change in the total number of nonfarm payrolls compared to the previous month, is used as a gauge of economic health.

Nikkei

Nikkei is short for Japan's Nikkei 225 Stock Average, the leading and most-respected index of Japanese stocks. It is a price-weighted index comprised of Japan's top 225 blue-chip companies traded on the Tokyo Stock Exchange. The Nikkei is equivalent to the Dow Jones Industrial Average Index in the United States.

No Dealing Desk

When traders have direct access to the interbank market and there is no dealing desk involved in their transactions.

Noise

Random price movement. In a broad analytical context, noise refers to information or activity that confuses or misrepresents genuine underlying trends.

Nominal Value

Also known as face value or par value. It is the price shown on the face of a financial instrument.

Norwegian Krone (NOK)

The currency of Norway and Bouvet Island. It is subdivided into 100 ore.

OPEC

The Organization of Petroleum Exporting Countries (OPEC) is a group consisting of 12 of the world's major oil-exporting nations. OPEC was founded in 1960 to coordinate the petroleum policies of its members, and to provide member states with technical and economic aid. OPEC is a cartel that aims to manage the supply of oil in an effort to set the price of oil on the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.

Open

The period at the beginning of the trading session officially designated by the exchange during which all transactions are considered made "at the open."

Open Position

A position taken on a financial instrument that is subject to profits or losses.

Open Price

The initial price at the beginning of a trading period (i.e. timeframe).

Open order

An order that is running in the market until the trader chooses to close it.

Opening Range

The range of prices at which buy and sell transactions took place during the opening of the market.

Open Trade Equity

The unrealized gain or loss on open positions.

Oscillator

An oscillator is a technical analysis tool that is banded between two extreme values and built with the results from a trend indicator for discovering short-term overbought or oversold conditions. As the value of the oscillator approaches the upper extreme value, the asset is deemed to be overbought, and as it approaches the lower extreme, it is deemed to be oversold.

OTC (Over the Counter)

The traditional way of trading forex was âover the counter', meaning traders made forex transactions over the telephone or on electronic devices.

Out of the Money

A phrase that is used to illustrate a loss in a trade.

Overnight Position

A trading position that continues to run until the next trading day.

Overtrading

The dangerous habit of engaging in uncouth and excessive trading practices without carrying out appropriate due diligence.

Overbought

When the market rises too far oscillators will reflect that rise with extreme high readings above the middle/equilibrium line, hence identifying overbought conditions. An oscillator at extreme high conditions can be an alert for a reversal. Oscillators usually give false signals in the beginning of a trend as they move too fast in the overbought area.

Oversold

The Condition of a specific move when the market price has fallen and is in a position for corrective rally or a period of consolidation: the opposite of overbought.

Payout

The amount of money earned from a successful trade.

Pip (Percentage in points)

A pip is the smallest price move that a given exchange rate makes based on market convention. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal pointfor most pairs, this is the equivalent of 1/100 of 1%, or one basis point. For example, the smallest move that the USD/CAD currency pair can make is $0.0001, or one basis point.

Pivot Points

The mathematical calculation formula used to determine the support or resistance ranges in given time period. These formulas can be used to calculate intraday, daily, weekly, monthly, or quarterly range.

Pit

The area on the trading floor where trading in futures or options contracts is conducted by open outcry. Also referred to as a ring.

Platform

A trading platform is a software through which investors and traders can open, close and manage market positions through a financial intermediary.

Position

A commitment, either long or short, in the market. A position can be profitable or unprofitable, depending on market movements.

Position Limit

The highest number of CFDs or forex (units) an investor is allowed to hold on one underlying security.

Principal Value

The initial capital that an individual invests for trading in the financial markets.

Product Price Index

An index that shows the cost of goods and services to producers and wholesalers.

Profit Taking

Closing a position to make a profit.

Pump and Dump

Pump and dump schemes are a type of market manipulation in which an asset is bought up in order to raise its price. The rise in value attracts other traders wanting to benefit from the move, who also buy in, raising the price even more. Eventually the perpetrators of the scheme dump their holdings at the new inflated price.

Quantitative Easing

Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Quote Currency

The second currency in a currency pair quotation. Also called counter currency. This reflects the value of one unit of the first currency in the pair (Base Currency).

Range

The difference between the high and low price of a commodity during a given trading session, week, month, year, etc.

Rate

The price of one currency compared to another one. Also referred to as the exchange rate.

Relative Strength Index

The relative strength index (RSI) is a momentum indicator developed by noted technical analyst Welles Wilder that compares the magnitude of recent gains and losses over a specified time period to measure speed and change of price movements of a security. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset.

Reportable Positions

The date on which foreign exchanges contracts settle.

Resistance

Resistance or resistance level is a price point on a bar chart for a security in which upward price movement is impeded by an overwhelming level of supply for the security that accumulates at a particular price level. Resistance levels are characteristically found at the upper levels of range bound markets

Risk Capital

The amount of cash that an individual is ready to invest in the financial markets.

Risk Management

In the trading world, risk management is the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions. Essentially, risk management occurs any time an investor or fund manager analyses and attempts to quantify the potential for losses in an investment and then takes the appropriate action (or inaction) given his investment objectives and risk tolerance.

Scalping

A trading strategy that involves opening and closing short-term positions with the intention of making accumulated profits.

Security

A security is a fungible, negotiable financial instrument that holds some type of monetary value. For BDSwiss traders, the term security is used to refer to an ownership position in a publicly-traded corporation (via stocks.

Segregated Account

A special account used to hold and separate customers' assets for trading on futures exchanges from those of the broker or firm. Also referred to as Customer Segregated Funds.

Selling rate

Rate at which a bank is willing to sell foreign currency.

Settlement Price

The last price paid for a futures contract on any trading day. Settlement prices are used to determine open trade equity, margin calls and invoice prices for deliveries. Also referred to as Closing Price.

Shooting star

The candle that forms at tops of markets where the shadow is at least twice the length of the real body and the real body forms near the low for the session with little or no shadow at the bottom. This candle resembles an inverted hammer.

Short

The position in a futures market where a trader sells a contract with the intention of buying it back at a lower price for a profit or if at a higher price for a loss.

Slippage

Slippage refers to the difference between the expected price of a trade and the price at which the trade is actually executed. Slippage often occurs during periods of higher volatility when market orders are used, and also when large orders are executed when there may not be enough interest at the desired price level to maintain the expected price of trade.

Speculators

A speculator is a person who trades derivatives, commodities, bonds, equities or currencies with a higher -than-average risk in return for a higher-than-average profit potential.

Spot

Usually refers to a cash market for a physical commodity where the parties generally expect immediate delivery of the actual commodity.

Spread

The difference between the ask price and the bid price of a financial instrument.

Spike

A sudden upward or downward movement in price that happens in a short time period.

Stochastic

The stochastic oscillator is a momentum indicator comparing the closing price of a security to the range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result.

Stock

Representation of a share in the ownership of a company that is available for trading on the financial markets.

Stop Loss Order

An order designed to limit an investor's loss by buying (or selling) a financial instrument once its price sails above (or falls below) a certain stop price. These orders are placed to limit loss on a position.

Support

Support or support level refers to the price level below which, historically, a stock has had difficulty falling.

Take Profit Order (T/P)

An order placed to close a position once it hits a specific price.

Technical Analysis

Technical analysis is a trading tool employed to evaluate securities and attempt to forecast their future movement by analysing statistics gathered from trading activity, such as price movement and volume. Unlike fundamental analysts who attempt to evaluate a security's intrinsic value, technical analysts focus on charts of price movement and various analytical tools to evaluate a security's strength or weakness and forecast future price changes.

Tick

The smallest increment of price movement for a futures contract. Also referred to as Minimum Price Fluctuation.

Three crows

A candlestick pattern consisting of three red candles that close on or at their lows. After an extended advance, this formation can be a strong reversal pattern.

Three white soldiers

A candlestick pattern consisting of three candles that close at their highs and can indicate a continued advance. This pattern is a reliable indication that prices are moving higher, especially if they develop after a longer period of consolidation at a bottom opposite of three crow's formation.

Trader

An investor engaging in transactions in the financial markets.

Trailing stop

A unique type of stop loss order useful for locking profits on winning trades.

Transaction Date

The date upon which the trading of a financial instrument takes place.

Trade Balance

The difference between a country's exports and imports. More exports than imports result in a trade surplus. If there are more imports than exports, it results in a trade deficit.

Forex Glossary

Start your trading journey today Brand that makes a difference

Disclamer:

Risk Warning:

Forex Glossary

Start your trading journey today Brand that makes a difference

Disclamer:

Risk Warning:

Start your trading journey today Brand that makes a difference