Forex Glossary

The identification and assessment of the risk level, as well as taking actions to eliminate the risk to a new desired level and monitoring that new risk level. Includes all dealers of forex and sets rules for fixation of commissions and regulations for forex transactions in India. Settlement of spot transactions usually occurs within two business days. Trend line The lines connecting a series of extreme upper or extreme lower points on a price chart. Alligator Alligator is an indicator created to identify the trends and their directions.

Base Currency - In general terms, the base currency is the currency in which an investor or issuer maintains its book of accounts. In the FX markets, the US Dollar is normally considered the ‘base’ currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other Glossary of Forex Terms.

Which regulation to choose?

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Futures, options, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website.

The past performance of any trading system or methodology is not necessarily indicative of future results.

Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice.

We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results. Forex Trading Terminology Part 3: Introduction to Forex Charting Part 8: Common Forex trading mistakes and traps Part What is Technical Analysis Part The Psychology of Forex Trading Part Checkout Nial's Professional Trading Course here.

The party who places the order to buy or sell; they can be the principal trader or act as a counterpart. This is most likely due to influences across a market. One that reveals insight into economic growth, such as GDP, trade deficits, employment rates, production, etc. One of the most important forex terms, a percentage of how much one currency changes in value compared to another over time, influenced by changes in supply and demand. Can refer to either the U. Includes all dealers of forex and sets rules for fixation of commissions and regulations for forex transactions in India.

First In First Out: Positions in a currency pair get liquidated in a specific order. This reflects the same pattern in which they were opened.

These are typically set through Fed Fund interest rates. Here, the pip is the second digit to the right of the decimal point. These are different because the currency is in general devalued against most other pairs. A multiple by which an amount traded is larger than the margin needed to trade the monetary value.

Also refers to the use of credit or margins in trading. An order in which one buys at a specific price, when the market declines to it, or sells at a pre-determined price if it moves up to that. In regards to market volume and activity, the cost effectiveness of trades and orders. The more liquid a market, the more frequent the ask price will be lower. Larger transactions will also not impact interest rates as much. When there are enough buyers and sellers so prices can move smoothly in a given direction.

These forex terms are the most common. The four most heavily traded pairs on the forex market. The manager acts as an advisor for a fee. A minimum deposit needed to keep a position open or maintain it. The term used margin refers to an amount to keep the position open, while free margins are amounts used to maintain them. A notification telling a trader their account has fallen below the money needed to keep a position open.

It asks the trader to add money or close an open position. Traders can enter positions one-tenth as large as the standard forex account. Currencies outside of the most commonly traded ones. Any order in which the trader buys at the currently listed Ask price. A re-evaluation of open positions, based on current prices.

The value of open trades are shown on account balances, which is now done electronically. New values are used to re-set margins. Also called nominal quote or nominal price, the quote a futures exchange or broker generates for contracts not traded for a given time. Stop loss order is designed to limit possible losses and is set at a price worse than the price of position opening or the price of pending order execution. The exchange rate at which the buyer of a call has the right to purchase a specific currency pair or at which the buyer of a put has the right to sell a specific currency pair.

Also known as the 'exercise price. Support is one of the key concepts of technical analysis. Support is defined as a price level at which the activity of asset buyers is quite significant to prevent the further sale and decrease in its price.

The size of swap is proportional to the volume of the position and depends on the current difference of interest rates of base and quoted currencies or assets in the interbank lending market. The Symmetric triangle graphical price pattern is a chart pattern of an existing trend continuation, which may be formed both in an uptrend and in a downtrend, and serves to confirm its further directions.

Take Profit is designed to close a position once the targeted profit level has been reached by setting it at a price better than the price of position opening or the price of pending order execution. Technical analysis is used to forecast future changes in financial and commodity markets based on the history of price changes, i.

Technical indicators are the inseparable part of technical analysis. Their aim is to predict the direction of the market to help a trader. There is a great number of indicators used by traders for determining the market movement. Some traders prefer to use those indicators which have proved to be efficient in trading in the past, while others try using new indicators.

Bill Williams' indicators, Oscillators, Trend and Volume indicators may serve as examples. Trailing Stop mode maintains the mechanism of automatic shift of a linked Stop Loss order according to the following rule: The costs, incurred by a trader when buying or selling currencies or commodities, which include the commission fee of a broker. Trend continuation patterns graphical models, patterns are formed during the pause in the current market trends, and mark the movement continuation rather than its reversal.

The lines connecting a series of extreme upper or extreme lower points on a price chart. The Trend Reversal patterns are graphical models patterns , which are formed after the price level reaches its high in the current trend and indicate high probability of trend reversal.

The Triple bottom graphical price pattern is usually formed in a downtrend and serves as a sign of its further reversal. The Triple top graphical price pattern is usually formed in an uptrend anticipating its further reversal and decrease in prices. The currency pair, formed from the US dollar and the Canadian dollar, indicates how many Canadian dollars are needed to purchase one US dollar.

The US dollar and the Swiss franc currency pair, where the US dollar is the base currency and the Swiss franc is the quoted currency. The US dollar and the Japanese yen currency pair.

In this currency pair the US dollar is the base currency while the Japanese yen is the quoted one. Date on which counterparties must deliver funds, that is when the currency bought is received and the currency sold is paid. A measure of risk, usually a statistical indicator, which evaluates the degree of the price fluctuation of an asset.

The Volume of deals characterizes the activity of market participants involved in asset trading, its strength and intensity. The wedge refers to short-term graphical price patterns of trend continuation indicating that its direction will remain unchanged in the near future. For example, on the daily chart the pattern is often formed within a week or two. The objective of the indicator is to determine the overbought or oversold conditions of the asset and the possible reversal points.

Your capital is at risk. Leveraged products may not be suitable for everyone. About Us About Us. Alligator Alligator is an indicator created to identify the trends and their directions. Arbitrage Simultaneous purchase of an undervalued financial asset and sale of its overvalued equivalent in order to make further risk-free profit from the price difference of assets which emerged as a result of temporary market inefficiency.

Ascending Triangle The Ascending triangle graphical price pattern is a chart pattern of an existing trend continuation, which is usually formed in an uptrend and confirms its further direction. Ask price The ask price is the price at which one buys any financial instrument. Asset An instrument which has an economic value and may generate income in future.

Automated Trading Automated trading gives an opportunity to make the trading process absolutely automated. Average Directional Index ADX Average Directional Index ADX is a technical indicator developed by Welles Wilder to determine the strength of a trend and the further price movement by analyzing the dynamics and the differences between the lowest and highest trading prices.

Awesome Oscillator Awesome Oscillator AO is an indicator which reflects precise changes in the market driving force which helps to identify the strength of a trend including the points of its formation and reversal. Bar chart This type of chart contains four values of an asset price for each time interval: Base currency The first currency in a currency pair in the Forex market. Bear Market A market, which is characterized by falling prices quotes.

Bearish Rectangle The rectangle graphical pattern serves to confirm the direction of the existing trend. Bid Price The bid price is the price at which one sells any financial instrument. Bill Williams Chaos Theory Bill Williams developed his unique theory combining trading psychology with the Chaos theory and their impact on markets.

Bollinger Bands Indicator The Bollinger Bands indicator reflects the current market volatility changes, confirms direction, warns about the opportunities of trend continuation or trend end, consolidation periods, increasing volatility for breakouts, as well as indicates the local highs and lows. Broker A company or an individual which acts as an intermediary in giving access to markets and organizing trading financial instruments for its clients.

Bull Market A market which is characterized by an increase in prices quotes. Bullish Rectangle The rectangle graphical pattern serves to confirm the direction of an existing trend. Candlestick chart This type of chart shows the opening and closing prices and also the highest and the lowest prices during a period.

Channel The Channel is a sustainable corridor of fluctuations in the asset price with a constant width. Chart Charts are graphical reflections of price changes of a financial instrument over time. Clearing The procedure of settling orders between transacting parties. Commodity currencies Currencies of the countries, whose exports are mainly based on natural resources.

Cross pair An exchange rate between two currencies derived from their corresponding rates with a third currency. Currency Cross Pairs Those currency pairs that do not include the US dollar in foreign exchange market trade are referred to as cross currency pairs or crosses.

Daily chart A chart of the market movement, where one day is the time unit. Dealer A company or an individual which acts as a leading executor or a counterparty to the transaction. DeMarker DeM Indicator This indicator was developed as a tool to identify emerging buying and selling opportunities.

Derivative A financial contract, the value of which depends on the value of one or more underlying assets. Descending Triangle The Descending triangle graphical price pattern is a chart pattern of an existing trend continuation, which is usually formed in a downtrend and confirms its further direction. Double Bottom The double bottom graphical price pattern is a sign of a reversal of an existing downtrend.

Double Top The double top graphical price pattern is a sign of a reversal of an existing uptrend. Economic calendar An economic calendar is a calendar of events provided by brokers and other financial companies through which traders track the events affecting the price movements of assets. Envelopes Indicator The Envelopes indicator reflects the overbought or the oversold state of the price, thus allowing to determine the entry and exit points from the market, as well as the moments of the possible trend break-down.

Euro A monetary unit used in 19 countries of the European Union: Expiration The last day, when the deal on a derivative contract futures, option, etc. Flag The Flag refers to short-term graphical price patterns of trend continuation which show that its direction will remain unchanged in the near future. Force Index The Force Index is an indicator developed by Alexander Elder to measure the power of price movements interpreting the changes of its components: Foreign Exchange Forex The market where participants have the opportunity to buy, sell, exchange and speculate on currencies.

Forex Dealer A Forex dealer is a financial company authorized to organize foreign currency trading. Forex Resistance Price level which acts as a ceiling and caps the rise of the current currency price. Forward transaction Forward transaction is an urgent transaction in which the seller and the buyer agree to deliver the sold asset currency, commodity on a certain date in the future, while the price of the asset is decided at the moment of making the deal.

Fractals Indicator Fractal is an indicator, which displays the local highs and lows where the price movement has stopped and reversed. Fundamental analysis The analysis of economic and political events, which may affect the future direction of prices in financial markets.

Gap A break between prices, when the asset is having a big move up or down without trades occurring. Head and Shoulders The head and shoulders graphical price pattern indicates the end of an existing trend and the further change in the direction of the price movement.

Ichimoku Indicator The Ichimoku indicator is a comprehensive technical analysis tool introduced in by Tokyo columnist Goichi Hosoda. Inflation A process of a persistent rising of general level of prices of goods and services. Inverse Head and Shoulders The inverse head and shoulders graphical price pattern is a sign of a trend reversal. Leverage A credit provided by the broker to his client for making large volume deals with a relatively small amount of capital.

Forex Glossary Aggregate The price expressed in terms of yield maturity or annual rate of return. Basis Trading Taking opposite positions in the cash and futures market with the intention of profiting from favorable movements in the basis. Basis Forex . Part 2: Forex Trading Terminology - The Forex market comes with its very own set of terms and jargon. So, before you go any deeper into learning how to trade the Fx market, it's important you understand some of the basic Forex terminology that you will encounter on your trading journey. Learn Forex Basic Terminology for all foreign exchange related terms and phrases.