Glossary
a b c d e f g h i j k l m n o p q r s t u v w x y z
A
Account
A transaction log or a dedicated personal account established with the company by a client. This account serves to balance out the commitments of both the client and the dealer arising from the agreements made under the current contract.
Account History
A comprehensive roster of all completed transactions and non-trading activities associated with a specific trading account.
Account Currency
It is the base of the account that you open with your broker. Your profits and losses will be calculated and displayed in the denomination of your Account Currency.
Appreciation Currency
When a currency increases in value due to heightened demand in the online forex market, it is described as “appreciating.”
Ask Price
The “ask” is the price at which the market offers to sell the currency pair. It’s the price set for traders who want to buy the currency pair. It represents the rate at which Forex brokers sell a currency.
Asset
Any object that holds economic value. The primary assets in forex include currencies, CFDs, commodities and indices.
B
Balance
The sum of money held in an account.
Base currency
The base currency is the first currency in a currency pair. For example, if you were looking at the EUR/USD currency pair, the euro would be the base currency.
Bear Market
A market characterized by falling prices.
Broker
A person or company that facilitates transactions between buyers and sellers, typically for a fee or commission.
Bull Market
A market characterised by increasing prices.
Buy limit
This is a pending buy order positioned below the current market price. This is a pending buy order positioned above the current market price.
C
Contract for Difference (CFD)
A financial derivative that enables traders to speculate on the price movements of various financial instruments, including forex pairs, without owning the underlying assets.
Base currency
The base currency is the first currency in a currency pair. For example, if you were looking at the EUR/USD currency pair, the euro would be the base currency.
Bear Market
A market characterized by falling prices.
Broker
A person or company that facilitates transactions between buyers and sellers, typically for a fee or commission.
Bull Market
A market characterised by increasing prices.
Buy limit
This is a pending buy order positioned below the current market price. This is a pending buy order positioned above the current market price.
C
Contract for Difference (CFD)
A financial derivative that enables traders to speculate on the price movements of various financial instruments, including forex pairs, without owning the underlying assets.
Customer Support
Services provided by a broker to assist clients with inquiries, technical issues, account management, and other related matters.
Copy Trading
A feature that allows clients to automatically replicate the trading activities of experienced traders, in their own accounts.
Cryptocurrency Trading
The buying and selling of cryptocurrencies, such as Bitcoin or Ethereum, through a broker’s platform.
Charting Tools
Software features offered by brokers allow traders to analyze price movements, identify trends, and make informed trading decisions using various technical indicators, chart patterns, and drawing tools.
Commission
The fee charged by a broker for executing a trade in the forex.
Currency Pair
This is a pending buy order positioned below the current market price. This is a pending buy order positioned above the current market price.
D
Dealing Desk
A department within a forex broker’s organization is responsible for executing client orders, often involving market-making activities where the broker acts as the counterparty to client trades.
Derivatives
Financial instruments whose value is derived from the performance of underlying assets, such as currencies, stocks, or commodities, are often traded through forex brokers as contracts for difference (CFDs).
Deposit Bonus
An incentive offered by brokers to encourage clients to fund their trading accounts, typically in the form of a bonus amount credited to the client’s account upon meeting specified deposit requirements.
Drawdown
The reduction in a trader’s account balance from its peak value to its lowest point, often expressed as a percentage, indicates the extent of loss experienced during a trading period.
Demo Account
A simulated trading environment offered by forex brokers allows traders to practice trading strategies, explore platform features, and familiarize themselves with market conditions without risking real money.
Day Trading
A trading strategy where positions in the forex market are opened and closed within the same trading day, with the aim of profiting from short-term price movements.
Depth of Market (DOM)
A trading tool provided by brokers that displays the current market liquidity and order book depth, allowing traders to assess the supply and demand dynamics at different price levels.
Diversification
A risk management strategy employed by traders and investors to spread their capital across multiple assets, markets, and instruments, reducing the overall impact of adverse events or market fluctuations.
E
Execution
The process of completing a trade in the market, including the submission of an order, its processing by the broker, and its fulfilment at the prevailing market price.
ECN (Electronic Communication Network)
A technology infrastructure used by forex brokers to facilitate direct access to interbank markets, allowing clients to interact with liquidity providers and other market participants.
Expert Advisor (EA)
A software program or algorithm designed to automate trading decisions and execute trades on behalf of traders, often integrated with broker platforms to enable algorithmic trading.
Equity
Equity in Forex simply tells traders how much money they currently have when trading orders are active. Equity equals trading balance +/- current profits or losses from active trades.
Economic Calendar
A tool that displays upcoming economic events, data releases, and key indicators, allowing traders to anticipate market volatility and plan their trading strategies accordingly.
Exotic Currency Pair
Exotic currencies refer to the currencies of developing or emerging market countries that are not widely traded and are less liquid compared to major currencies in the forex market.
Exchange Rate
The price at which one currency can be exchanged for another in the forex market, determined by supply and demand dynamics, economic fundamentals, and geopolitical factors.
Execution Speed
The time taken by a forex broker to process and execute client orders, influenced by factors such as server latency, network connectivity, and market liquidity.
F
Foreign Exchange
Also known as forex or FX, it refers to the global market where currencies are traded. It’s the largest and most liquid financial market in the world, where participants buy, sell, exchange, and speculate on currencies.
Forex Market
The marketplace where participants trade currencies. It operates 24 hours a day, five days a week, across major financial centres worldwide.
Fundamental Analysis
A method of evaluating the intrinsic value of an asset by analyzing related economic, financial, and qualitative factors. In forex trading, fundamental analysis involves assessing economic indicators, central bank policies, geopolitical events, and other factors to forecast currency movements.
Fixed Spread
A constant difference between the bid and ask prices of a currency pair, maintained by a forex broker regardless of market conditions. Fixed spreads provide traders with certainty about trading costs but may widen during times of high market volatility.
Forex Signals
Recommendations or alerts provided by professional traders, analysts, or automated systems, indicating potential trading opportunities in the forex market. Forex signals can include entry and exit points, stop-loss and take-profit levels, and market analysis.
Forex Broker
Forex brokers provide trading platforms, access to liquidity providers, and other services, often earning revenue through spreads, commissions, or fees.
Fibonacci Retracement
Fibonacci retracement (or Fib retracement) is a tool used by technical analysts to identify key support and resistance levels. The support and resistance levels are plotted as horizontal lines and used to estimate likely reversal points during an uptrend or downtrend
G
Gateway
A gateway in crypto trading can refer to a platform or service that enables the conversion of traditional fiat currency to cryptocurrencies or vice versa.
Gearing (Leverage)
Both in forex and crypto trading, gearing, or leverage, allows traders to control larger positions with a smaller amount of capital. Brokers provide this feature, which amplifies both profits and losses.
Gateway Fee
In the context of crypto trading, a gateway fee may refer to charges associated with converting fiat currency to cryptocurrency or vice versa through a cryptocurrency exchange or payment gateway.
Guaranteed Negative Balance Protection
This feature, offered by some forex and crypto brokers, ensures that traders cannot lose more than their initial investment.
Gas Limit
In Ethereum, this term indicates the maximum gas a user is willing to spend on a transaction. It must be sufficient to execute the required code, and any unused gas is refunded after the transaction.
H
Hedging
A risk management strategy used by traders to offset potential losses by taking opposite positions in related markets or assets.
High Volatility
Refers to significant and rapid price movements in the forex or crypto markets, which can present both opportunities and risks for traders.
HODL
A term originating from a misspelling of “hold” in the crypto community, referring to the strategy of holding onto cryptocurrency investments rather than selling them, regardless of price fluctuations.
Hard Fork
In the context of cryptocurrencies, a hard fork occurs when a blockchain splits into two separate chains, resulting in the creation of a new cryptocurrency.
Hash Rate
The measure of the computational power of a cryptocurrency network, indicating the speed at which miners are able to solve complex mathematical problems to validate transactions and secure the network.
HFT (High-Frequency Trading) Bot
An automated trading bot that uses high-frequency trading strategies to execute trades in the forex or crypto markets at extremely fast speeds.
Heikin Ashi
It is a charting technique used to display prices that, at a glance, look similar to a traditional Japanese candlestick chart.
I
Intraday Trading
A trading strategy where positions are opened and closed within the same trading day, aiming to profit from short-term price movements.
Initial Margin
The initial margin is the minimum amount you’ll need to put up to open a position.
Indicators
In forex trading, indicators are tools used to analyze price movements and identify potential trading opportunities, such as moving averages, RSI (Relative Strength Index), and MACD (Moving Average Convergence Divergence).
Introducing Broker (IB)
A person or company that refers clients to a broker in exchange for a commission or rebate on trading volume generated by those clients.
Institutional Investors
Large financial institutions, such as banks, hedge funds, and pension funds, that trade in the forex market or invest in cryptocurrencies on behalf of their clients or shareholders.
ICO (Initial Contract Offering)
In the context of forex trading, an ICO refers to the initial offering of contracts for difference (CFDs) or other derivative products to investors.
Immutable Ledger
A characteristic of blockchain technology where once data is recorded on the blockchain, it cannot be altered or deleted, ensuring transparency and security in cryptocurrency transactions.
J
Japanese Candlesticks
A popular method used in technical analysis to analyze price movements in the forex and cryptocurrency markets. Candlestick charts display open, high, low, and close prices for a specific time period.
J Curve
In forex trading, the J curve represents the pattern of a country’s trade balance following a devaluation of its currency. Initially, the trade balance may worsen (forming the downward part of the J), but over time, it improves (forming the upward part of the J)
Junk Coin
Slang term used in the cryptocurrency community to refer to a cryptocurrency that has little to no value or potential for success.
Jobber
A term used in forex trading to describe a trader who engages in short-term speculative trades, aiming to profit from small price movements.
Jawboning
A strategy employed by central banks or government officials to influence market sentiment or exchange rates through public statements or speeches.
Jackpot Trade
A highly profitable trade in forex or cryptocurrency markets that yields significant returns for the trade.
K
KYC (Know Your Customer)
KYC is the process of a business, involved with financial transactions, to identify and verify the identity of customers.
Key Currency
In the forex market, a key currency refers to a widely traded and highly liquid currency, such as the US dollar (USD), euro (EUR), or Japanese yen (JPY).
L
Leverage
A financial tool offered by brokers allowing traders to control larger positions with a smaller amount of capital, amplifying both potential profits and losses.
Liquidity
The degree to which a market, such as the forex market or cryptocurrency market, can easily facilitate the buying and selling of assets.
Limit Order
An order placed by a trader with a forex broker or cryptocurrency exchange to buy or sell an asset at a specified price or better. The trade will only be executed if the market reaches the specified price or better.
Long Position
A trading position is where a trader buys an asset, such as a currency pair in forex trading or a cryptocurrency, with the expectation that its value will increase over time, allowing for profit upon selling.
Low Spread
The difference between the bid and ask prices of a currency pair or cryptocurrency, which represents the cost of trading. A low spread indicates tight liquidity and lower trading costs for traders.
Leading Indicator
A statistical or economic indicator that tends to change before the overall economy or market conditions change, often used by forex traders and analysts to predict future price movements.
Liquidation
The process of closing out a trader’s position by a broker when their account balance falls below the required margin level due to losses.
Lightening Market
The Lightning Network is a fast, off-chain peer-to-peer system designed for making small cryptocurrency payments. It provides features like instant payments, scalability, low costs, and cross-chain capabilities. Users don’t need to publicize each transaction on the blockchain, and security is maintained through smart contracts.
M
Margin
The amount of funds required by a trader to open and maintain a leveraged position in the markets. It is often expressed as a percentage of the total position size.
Market Order
An order placed by a trader with a broker to buy or sell an asset at the current market price. Market orders are executed immediately at the best available price.
Moving Average (MA)
A technical analysis indicator used in forex and cryptocurrency trading to smooth out price data over a specified period and identify trends. Common types include simple moving averages (SMA) and exponential moving averages (EMA).
Margin Call
A notification from a broker to a trader when their account balance falls below the required margin level, requiring additional funds to cover potential losses or risk having their positions automatically liquidated.
Market Maker
A broker that provides liquidity to the market by offering to buy or sell assets at quoted bid and ask prices. Market makers facilitate trading by ensuring that there is always a counterparty available for transactions.
Market Sentiment
The overall attitude or perception of traders and investors towards the market, which can influence price movements and trading decisions.
Minor
In the context of cryptocurrency, a miner is a participant in the network who uses computational power to validate transactions, secure the network, and add new blocks to the blockchain. Miners are rewarded with newly created coins as well as transaction fees.
N
NFP (Non-Farm Payrolls)
A measure of the number of people employed in the U.S. excluding farming, private households, non-private and active military employees and proprietors.
NZD (New Zealand Dollar)
The currency code for the currency of New Zealand, often traded in the forex market.
Narrow Spread
Refers to a small difference between the bid and ask prices of a currency pair, indicating high liquidity and low trading costs.
Nikkei
Japan’s primary stock market index, which can influence currency movements as it reflects the performance of major Japanese companies.
Negative Correlation
Occurs when two currency pairs move in opposite directions, meaning when one pair rises, the other falls, and vice versa.
O
Order
A request to execute a trade in the forex market, specifying the price and quantity of the currency pair.
Overbought
A condition in which the price of a currency pair has risen too steeply and quickly, potentially signaling an imminent reversal..
Oversold
The opposite of overbought, indicating that the price of a currency pair has declined too steeply and quickly, possibly signaling a rebound.
Oscillator
A technical analysis tool used to identify overbought and oversold conditions in the forex market, such as the Relative Strength Index (RSI) or Stochastic Oscillator.
P
Pip (Percentage in Point)
The smallest price movement in the forex market, usually the fourth decimal place in most currency pairs.
Position
The amount of a currency pair held by a trader, either long (buy) or short (sell), often measured in lots.
Profit Margin
The difference between the buying price (bid) and selling price (ask) of a currency pair, representing the potential profit for traders.
Price Action
The movement of a currency pair’s price over time, often analyzed without the use of indicators to determine future price movements.
Q
Quote Currency
The second currency in a currency pair, representing the value of one unit of the base currency.
Quantitative Easing (QE)
A monetary policy implemented by central banks to stimulate economic growth by purchasing government securities or other financial assets.
Quiet Market
A period of low volatility and trading activity in the forex market, often observed during holidays or major economic events.
Quantitative Analysis
The use of mathematical and statistical models to analyze past data and forecast future price movements in the market.
R
Resistance
A price level at which a currency pair tends to encounter selling pressure, preventing further upward movement.
Retail Trader
An individual trader who participates in the forex market for personal investment purposes, as opposed to institutional traders.
Range
The difference between the highest and lowest prices of a currency pair within a specific period, indicating the extent of price fluctuations.
Rollover
The process of extending the settlement date of an open position in the forex market to the next trading day, often associated with swap rates.
Risk Management
The practice of identifying, assessing, and mitigating potential risks associated with trading to protect capital and maximize returns.
S
Spread
The difference between the bid and ask prices of a currency pair.
Support
A price level at which a currency pair tends to encounter buying pressure, preventing further downward movement.
Stop Loss
An order placed by a trader to close a position automatically at a predetermined price level to limit potential losses.
Scalping
Scalping is an aggressive, fast-paced trading strategy that seeks to profit from small price movements in financial markets by executing a high volume of trades each day.
T
Technical Support
The study of past price movements and chart patterns to forecast future price movements in the forex market..
Trend
The general direction in which the price of a currency pair is moving over time, categorized as uptrend, downtrend, or sideways trend..
Trading Platform
Software provided by brokers that allows traders to execute trades, analyze charts, and manage their accounts in the forex market.
Trailing Stop
A dynamic stop loss order that adjusts automatically as the price of a currency pair moves in a favorable direction, helping to lock in profits while allowing for potential further gains. A trailing stop automatically closes the trade if the market price suddenly moves in an unfavorable direction by a specified distance.
Take Profit
A Take Profit (TP) order is a type of trading order that instructs a broker to close a position once the market reaches a specified profit level.
U
USD
The currency code for the currency of the United States, the most widely traded currency in the forex market.
Unemployment Rate
An economic indicator that measures the percentage of the labor force that is unemployed and actively seeking employment, influencing currency movements.
Underlying Asset
The financial instrument or asset on which a derivative contract, such as a forex option or futures contract, is based.
Uptick
A small increase in the price of a currency pair from the previous transaction, often used in reference to a bullish market sentiment.
Used Margin
It is the margin that has been used up or locked and hence cannot be used to place any trades.
V
Volatility
The degree of variation in the price of a currency pair over time, indicating the risk and potential return associated with trading.
Volume
The total amount of a currency pair traded within a specific period, often used as an indicator of market liquidity and interest.
Verification
The process of confirming the identity and financial information of forex traders by brokers to comply with regulatory requirements.
w
Wipsaw
A whipsaw is a slang term used by traders that describes the condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.
Weekend Gap
An opening price difference between the closing price on Friday and the opening price on Monday in the forex market, often caused by weekend news events.
Weighted Moving Average (WMA)
A technical analysis indicator that calculates the average price of a currency pair over a specified period, giving more weight to recent prices.
X
XAU/USD
A currency pair representing the price of gold (XAU) quoted in terms of the US dollar (USD), commonly traded in the forex market.
Y
Yield
The return on investment generated from holding a particular currency or financial asset in the forex market, often expressed as a percentage.
Yen
The currency of Japan, abbreviated as JPY, and one of the major currencies traded in the forex market.
YTD (Year-to-date)
A financial metric that indicates the performance of a currency or financial asset from the beginning of the current calendar year to the present date.
Yen Carry Trade
A forex trading strategy that involves borrowing Japanese yen at a low interest rate and investing in higher-yielding currencies or assets to profit from the interest rate differential.
Yield Curve
A graphical representation of the relationship between the yields of bonds with different maturities, often used as an indicator of future economic conditions.
Z
Zigzag Indicator
A technical analysis tool used to identify trends and potential reversals in the forex market by connecting significant price peaks and troughs.
ZAR (South African Rand)
The currency code for the currency of South Africa, often traded in the forex market due to its volatility and correlation with commodity prices.
ZEW Economic Sentiment
A monthly survey conducted by the Centre for European Economic Research (ZEW) to measure the economic sentiment and outlook in Germany and the Eurozone.