Application Programming Interface, used in forex to automate trading.
Exchange rate regimen where a currency's exchange rate is pegged (fixed) in relation to a stronger currency, such as the US dollar or the euro. The pegged rate is adjusted occasionally in an attempt to improve the country's competitive position.
Total demand for goods and services in the economy from within and outside its borders.
Total supply of goods and services in the economy from domestic sources (including imports).
An automated trader whose system is based on complex mathematical formulas.
Extrapolates the behavior of an element (such as volatility) from a certain time period to a full year.
Increase in the value of an asset or currency.
Profiting from temporary discrepancies in the price of a currency pair when it is traded on more than one market.
The price at which sellers are willing to sell a currency pair, also known as The Offer. Orders to buy on Margin FX Trading Platform are executed at the Ask Price.
An item that has value.
Dividing funds among many different markets for diversification purposes in order to reduce risk.
An item that has value; an investment such as stocks, options, or forex.
An instruction given to a dealer to transact at the best rate possible.
Traders' nickname for the Australian Dollar.
Depending on the regulatory body, a dealer authorized to deal in forex.
A trader who uses an automated system to input trades without any human input.
See Bank of Japan.
The area within a bank that is responsible for settlement, transfer of funds, opening accounts, and other administrative duties.
Balance of Payments
A term used to describe the economic transactions for a country during a given period.
Balance of Power
Balance of Power indicator shows the strength of the bears vs. the bulls. Applicable to Mobile version only.
Balance of Trade
In economics, a country's exports minus its imports.
In countries where the currency is pegged, the range in which the rates are permitted to fluctuate.
Central bank issued paper that is considered legal tender.
The rate at which a central bank lends to members of its banking system.
The center of operations within a bank where funds (including customer deposits and bank assets) are kept, received, disbursed, and recorded.
Bank of Japan
The central bank of Japan.
Days of the week when banks are open for business in the country where the particular currency traded.
A popular format for studying the price action of currency pairs.
A type of option where the payout depends on whether or not the underlying asset reaches a predetermined price.
The Currency mentioned first in the currency pair. USD-YEN, USD is the base currency.
Synonymous with prime rate, but used in the UK to refer to the rate that banks lend to their best customers.
One hundredth of one percent, or 0.0001.
An option with an underlying asset made up of a basket of securities (stocks or commodities).
Basket of USD Shorts
A number of operations where the USD is being sold against various currencies.
An extended period where prices decline for a single security or for the market in general.
Bear Put Spread
A type of options strategy used when an option trader expects a decline in the price of the underlying asset. This effect is achieved by purchasing put options at a specific strike price while also selling the same number of puts at a lower strike price. The maximum profit to be gained using this strategy is equal to the difference between the two strike prices, minus the net cost of the options.
When traders who are in a short position have to desperately cover their positions because markets are rising rapidly. See Short Squeeze.
A trader who believes prices will fall.
An attempt to fill an order at the next available price in light of above average order flow.
See Bid Price.
The price at which buyers want to buy a currency pair. Orders to sell on Margin FX trading platform are executed at bid price.
The first couple of digits of a forex rate or price which doesn't usually fluctuate.
A technical analysis overlay that plots three bands onto the underlying price curve. One is the moving average while the other two are bands of volatility
The total number of currency positions a dealer has at any given moment. Typically, the dealer aims to have a net position of zero in terms of risk. This means that for the aggregate, all customer's long and short positions balance each other out.
Used to describe sudden movement of currency prices outside of a previous range.
A gap in price when a new trend forms.
The location of the historic conference held in 1944 to establish the first foreign exchange system which was tied to US Dollars that were, in turn, backed by gold.
Bull Call Spread
Buying a call option and selling another call option, both with the same expiry date. The call option sold usually has the higher strike price. The money paid buying the call option is offset with the money received for selling the other call option. Losses are capped, as are profits.
An extended period where prices rise for a single security or for the market in general.
A trader who believes that prices will rise.
See Banking Day.
An option strategy combining a bull and bear spread that uses three strike prices. The lower two strike prices are used in the bull spread, and the higher strike price in the bear spread. Both puts and calls can be used. In a long Butterfly Spread, you go long one call with a high strike price, long one call with a low strike price, and short two calls with a middle strike price.
Buy Limit Order
An order to transact at a specific price (the limit) or lower.
A stop order to buy that is placed above the current market. A buy stop is used to close out a short position.
Buying on Margin
Taking a position in a currency pair when only a portion of the total value is paid for. The portion paid for is called margin.
See Clearing House Interbank Payment System.
See Continuous Linked Settlement.
This overlay is used to plot the close ask, average and bid prices.
See Consumer Price Index.
The exchange rate for the British Pound/US Dollar (GBP/USD) currency pair, so named in reference to how rates for the two currencies were previously communicated by transatlantic cable.
Holding long and short positions of the same option with different expiration dates.
A popular chart used for technical analysis purposes consisting of a body (the edges showing opening and closing prices) and vertical lines extending upwards and downwards from the body (showing respectively the highest and lowest ask/bid rates reached during the interval). Candlestick charts were made popular by Japanese rice merchants to track the price of rice over time.
The net of investment flowing in and out of a country.
Risk where banks have to deal with another bank or financial institution who may not be able to uphold its side of the bargain.
The cost of keeping a position open overnight. Each currency has a different interest rate associated with it. You are paid interest on the currency you are long in, and must pay interest on the currency you are short. The difference is the carry, sometimes referred to as the cost of carry.
High interest rate currencies.
A carry trade where you are long the high interest currency and short the low interest currency. Excluding the volatility of the currency pair, this strategy is profitable based on the interest rate differential between the two countries.
A carry trade where you are long the high interest currency and short the low interest currency. Excluding the volatility of the currency pair, this strategy is profitable based on the interest rate differential between the two countries.
Spot and futures contract settlement procedure where, instead of taking physical delivery, profits or losses are settled in cash.
Cash on Deposit
Funds deposited in a trading account.
Central Bank Intervention
When the central bank enters the spot forex market to buy or sell forex in order to stabilize the country's currency, usually when supply or demand forces are unbalanced.
A country's main bank, overseen by the government, whose role is to regulate other banks and financial institutions, and to enact monetary policy.
Someone who uses charts of past price movements (technical analysis) to predict future prices.
Instead of a bid and ask price where there is a definable spread, a choice market is one where all trades, whether buy or sell, go through at the same price.
The trade settlement process.
Clearing House Interbank Payment System
An international wire system used by major banks.
Close Of Business Day
See Daily Cut-Off.
A transaction that offsets the number of units in a previous open position. In the case of a long position, selling the exact number of units so that your exposure in the market is zero.
Closing a Position
See Closed Position.
A secondary account holder.
Usually an asset that has value, given to secure a loan. For our margin FX, collateral means the fund that the customer has deposited and the realized profit and loss by closing the trades.
The fee that a broker may charge clients for dealing on their behalf.
An exchange where various commodities and derivatives products are traded, including wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, metals, and so on. The Chicago Board of Trade and New York Mercantile Exchange are the largest and most well-known commodity exchanges in the world.
Written statement that acknowledges a trade occurred, providing important information such as date, quantity, price, and total amount involved. On Margin FX Trading Platform, confirmation is done through pop-up message on the screen, the end of day statement and end of month statement.
Consumer Price Index
A month to month economic indicator which gauges changes in the cost of living by measuring price changes in a common basket of goods and services that most people use, such as food, clothing, transportation, and entertainment.
When an economic crisis spreads from one market to another. An example is the fall of the Indonesian Rupiah in 1997 and its subsequent effect on other Asian and Latin economies.
Continuous Linked Settlement
A means of settling foreign exchange transactions between major banks so as to eliminate settlement risk.
A formal agreement to buy or sell a specific amount of a certain currency.
The value of one currency exchanged for another currency.
A currency that can be exchanged for another without special permission.
The return on an investment, usually calculated in percentage terms.
A statistical term that refers to a relationship between two seemingly independent things. In forex for example, one could argue that the Euro and the Sterling have a higher correlation than, for example, the Euro and the Korean Won.
A foreign bank that performs services for another bank that has no branch in the foreign location. Wiring funds through correspondent banks usually results in higher charges as the correspondent bank's fees would be deducted from the amount sent.
Cost of Carry
See Quote Currency.
The other party in a forex deal. In online spot forex, the counterparty is the market maker.
By virtue of economic, political, and geographical factors, some countries are more stable than others. Country risk in reference to forex means the stability of the currency and the creditworthiness of its bonds.
A method of exchange rate adjustment in which the rate is fixed/pegged, but adjusted at certain intervals in line with the results of various economic or market indicators.
The risk that a debtor will not repay.
A foreign exchange deal in which neither currency is the US Dollar.
The exchange rate involved in a cross deal. Quite often, the rate is derived from exchanging one currency for the US Dollar and then exchanging US Dollars for the second currency.
A medium of exchange of value to define by reference to the geographical location of the authorities responsible for it. A currency is represented by a three-character ISO code.
Exchange rate relationship between two currencies, where one currency is expressed in terms of the other. For example, EUR-USD (Euro dollar against the US dollar) is a currency pair.
For many businesses, the movement of forex rates presents a risk which may erode profits from foreign sources held in foreign currency.
A contract between two counterparties to exchange interest streams from two different currencies and then also exchange the lump sums at a future date.
Deutsche Aktien Xchange, Germany's primary stock index.
A particular point in the day chosen by a dealer to demarcate the end of one trading day and the beginning of the next, for administrative and logistical reasons.
A buy or sell order to automatically expire at the end of the current trading day.
A trade that is opened and closed on the same trade date.
A trader who tries to profit from short-term price movements, often taking and closing a position within the same trade day.
The trading style of a Day Trader.
A list of all the deals that were done in a trading day.
The date a transaction is entered.
An individual or firm that buys and sells assets from their own portfolio, acting as a principal or counterparty to a transaction.
Used loosely as the place where dealers facilitate pricing and executing trades.
Computer networks that link up banks to create the forex market. Examples of dealing systems are Reuters terminals and Bloomberg machines.
A term for breaching a contract.
In economics, when the balance of trades or payments are negative.
A deep and long-lasting decrease in the price of goods and services within an economy. It is the opposite of inflation which is an escalation in prices. An extended period of deflation can lead to a deflationary spiral - this is a decrease in prices resulting from reduced demand for goods and services which leads to lower employment. With fewer people earning wages, demand falls even more and further perpetuates the cycle.
The equivalent of the effect of inflation when one considers the difference between real and nominal GDP. See Gross National Product.
Date When a forex contract matures, usually two days after the transaction is entered. In the scope of online forex trading, delivery of the actual currencies is not taken. Rather, profits and losses are credited or debited from one's account balance.
Risk where a counterparty is not able to fulfill his side of the deal even though he is willing to do so.
When the value of a particular currency falls substantially.
Depth of Market
The volume of buy and sell orders waiting to be transacted for a particular currency pair at a particular point in time.
A financial contract whose value changes in relation to an underlying security. For example, an option changes value according to the asset that underlies it.
When a government allows the value of its currency to weaken in relation to other currencies.
Exchange rate policy where the value of a currency is allowed to fluctuate, but the central bank will intervene from time to time.
An account where a customer allows the institution to make trading decisions and buy and sell on his or her behalf.
Diversified Carry Basket
A portfolio of carry trade positions that is distributed among different carry currencies and funding currencies in order to limit losses in one particular carry trade position.
The exchange rate of a foreign currency as quoted against the US dollar (USD). Some currencies are typically only quoted against the US dollar, such as the Algerian dinar (DZD) and the Andorran franc (ADF). The exchange rate of the Algerian dinar against the Andorran franc is thus computed from DZD-USD and ADF-USD.
The interest rates that apply to deposits or borrowing of a particular foreign currency. These rates are similar to those offered within the foreign country to citizens who keep money in deposit accounts.
The size of a drop in the value of an account from its peak to its low.
Durable Goods Order
An economic indicator that marks the change in sales levels of products that have a lifespan of three years or more.
The top functionaries of the European Central Bank (ECB) hold regular press conferences in which they outline Central Bank decisions and concerns.
See European Central Bank.
Electronic Funds Transfer.
Refers to either a small price decline in a currency or when a central bank engages in monetary policy to spur spending. An example of central bank easing would be lowering of interest rates.
A statistic that is used to gauge current economic conditions. See Consumer Price Index and Durable Goods Order as examples.
Effective Exchange Rate
Explanation of a country's currency strength or weakness entirely on its trade balance.
Elliot Wave Principle
An attempt to explain market activity by ascribing a pattern of eight waves to any complete cycle. The eight wave patterns consists of a five-stage advance and a three-stage correction.
End of Day Mark to Market
The value of all open positions in a dealer's book based on the closing market rates. In addition, any profits or losses are recorded.
Ownership interest in a corporation in the form of common stock or preferred stock.
Total assets minus total liabilities; also called net worth.
A segregated account where customer money is kept separate from a dealer's operating funds.
A currency that is deposited in a financial institution located outside the currency's country of origin.
US dollars deposited in a bank outside the USA.
European Central Bank
Established in Frankfurt in 1998, the ECB is responsible for all monetary policy decisions that influence the Euro currency. Based on the Maastricht Treaty, the ECB's main responsibility is to ensure price stability. To this end, it is authorized to issue the Euro and is responsible for setting interest rates for those countries that have converted to the Euro.
The group of European countries joined together to promote economic, political, and social co-operation.
Excess Margin Deposits
Deposited funds in a trading account above and beyond what is required for margin requirements.
The physical location of trading activity. Some famous examples include the New York Stock Exchange or the Chicago Mercantile Exchange.
Various devices a central bank uses for controlling the movement of foreign exchange so as to not deplete a country's reserves.
The number of one currency needed to buy another.
Exchange Rate Risk
The potential loss that could be incurred from a movement in bid/ask prices, or exchange rates. For traders, risk is measured by the open currency position.
Completing a trade.
In the case of a long position, the sale of the long currency. In a short position, the purchase of the short currency, resulting in a closed position.
As opposed to the major currencies which are heavily traded, exotics are the less traded currencies.
In Margin FX Trading Platform, this means the net of all long and short positions for a particular currency. Based on the traders' positions for all currencies, his/her exposures can result in either loss or gain.
See The Federal Open Market Committee.
An acronym for Forex.
Investment managers can use FXManager as a resource when trading their clients' funds in the FX market.
An economic indicator that marks the change from one period to another of the orders for durable and nondurable goods. More orders mean economic growth whereas the opposite signifies a slowdown.
Strong buying and/or selling pressure in the market, in which prices often gap and move too quickly to be disseminated.
See Federal Reserve.
Fed Fund Rate
The interest rate on Fed fund account balances that is closely monitored to gauge the Fed's view on the economy. The accounts are held by member banks and are usually used for lending or borrowing from one another.
Account balances held by banks at their local Fed Bank.
The Federal Reserve System (the Fed) is the US central bank responsible for conducting US monetary policy by influencing money and credit conditions in the economy. The Federal Reserve Board of Governors and the Federal Open Market Committee (FOMC) hold regularly scheduled and special meetings that are followed closely by market watchers.
Federal Deposit Insurance Corporation
The US regulatory agency that administers bank deposit insurance.
Federal Open Market Committee
Committee made up of Federal Reserve members who meet eight times a year to discuss current monetary policy and its effect on the present economy, and to address any possible changes needed.
The Central Bank of the United States.
Federal Reserve Board
The senior members of the Federal Reserve, each of whom is appointed by the US President. The chairman of the Fed Reserve Board serves a 4-year term, while the other members serve 14-year terms.
The price at which a buy or sell order goes through.
Completing an order to buy or sell.
Financial Accounting Standards Board's Statement Number 8
Standardized accounting rules dictating how companies should translate foreign currency into US Dollars on their balance sheets.
An organization primarily established to offer and perform financial services. Examples of financial institutions include brokerages and banks.
The possibility that a business won't be able to meet its financial obligations.
Currency trading at the New York Cotton Exchange.
When a buyer or seller requests a firm quote, the dealer provides a bid and ask quote that can be immediately executed if the buyer or seller wishes. See Indicative Quote.
Using tax policy to affect economic conditions.
The effect of interest rates on international money movement such that money moves into currencies paying higher interest rates.
Fixed Exchange Rate
Foreign exchange policy where a central bank maintains an official rate for their currency, often intervening to keep the rate fixed within a limited range.
Determining rates by selecting a level which, as well as possible, balances buying and selling pressure. An example is London Gold Fixing.
Flexible Exchange Rate
An exchange rate that is fixed, but is re-evaluated frequently.
Floating Exchange Rate
An exchange rate whose value is determined by market forces.
A statistical analysis of the markets whereby a percentage chance is assigned to a given price movement occurring. A forecast of the foreign exchange markets is similar to a weather report in that both assign a probability to the occurence of an identified market or climatic change.
Financial services that provide professional traders and investors with an unbiased second opinion and reliable support throughout the financial decision-making process. Any professional with international business relations can use the forecasting services to reduce their foreign exchange risks due to currency price fluctuations and get up-to-date information anytime.
Foreign Exchange Centers
The largest forex center in the world is London. Other financial centers which follow the sun across the sky are New York, Tokyo, Hong Kong, Singapore, and Zurich. Trading passes from one center to the next, the traders in one bank's dealing desk handing off the trading book to their colleagues in another center.
Buying or selling one currency against another currency.
Acronym for Foreign Exchange.
A transaction that settles at a future date. The buyer and seller are bound by the contract to settle on the specified date.
Differential added to or subtracted from the spot rate to calculate the forward rate. The differential is based on anticipating future conditions and fluctuates accordingly.
An exchange rate that differs from the spot exchange rate by forward points. The forward points are either added to or subtracted from the spot rate depending on anticipation of future conditions.
A transaction that settles at a future date.
Fractals show the high and low points. Used in conjunction with the Alligator indicator, fractals are useful as a signal until it is attacked by the Alligator ("eaten" by the mouth) or until a more recent fractal signal appears. Applicable to Mobile version only.
The study of economic factors (GDP, Trade Balance, Employment, and so on) that can influence prices in financial markets.
An investor who uses fundamental analysis.
Economic factors (GDP, Trade Balance, Employment, and so on) that can influence prices in financial markets.
The seven leading industrialized countries, namely Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
G7 and Russia.
G7 plus Belgium, The Netherlands, and Sweden.
A group composed of the following 20 countries: Argentina, Australia, Brazil, Canada, China, European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, the United Kingdom and the United States.
The purchase of a currency pair.
Selling a currency pair by first borrowing it, then returning it at a later time by buying it back (hopefully once prices are lower). See Selling Short.
A commitment made by certain countries to fix the prices of their domestic currencies in terms of a specified amount of gold. Also known as the Bretton Woods System, the Gold Standard was enacted in 1946 and created a system of fixed exchange rates that allowed governments to sell their gold to the United States treasury at a fixed price.
In technical analysis, when two moving averages intersect, usually a short one like a 20 day and a long one such as 40 day. This is considered a favorable sign that the underlying currency will move in the same direction.
Good Until Canceled
An order that does not expire at the end of the trading day.
Gross Domestic Product
The total value of a country's output produced within its physical borders.
Gross National Product
GDP plus production and income from nationals abroad.
A currency that investors have confidence in. Examples could be the US Dollar or the Euro.
Head and Shoulders
A price trend pattern which has three peaks, the middle one higher than the surrounding two forming what looks to be a head with two shoulders on either side. This pattern is seen as an indicator of a trend reversal.
A private fund which usually solicits investments from wealthy individuals. It is unregulated as it's assumed that the investors are knowledgeable and realize the speculative nature of the fund. It usually invests in high risk, short term instruments in order to achieve above-average returns.
A term used to describe reducing risk associated with adverse market movements by using two counterbalancing investments, thereby minimizing any losses caused by price fluctuations. For example, if you sell a house in Holland to relocate to the UK (your new base currency), you are in a long Euro (EUR) position and short Pounds Sterling (GBP). To offset this position you would need to sell the equal amount of EUR to make up for the short GBP position.
A transaction strategy used by traders and investors in foreign exchange to protect an investment or portfolio against currency price fluctuations. A current sale or purchase is offset by contracting to purchase or sell at a specified future date in order to defer a profit or loss on the current sale or purchase. In this way risk due to currency price fluctuations is effectively reduced.
See International Monetary Fund.
A rise in prices or a drop in the purchasing power of money.
Initial Margin Requirement
When entering a position, the minimum amount that must be paid in cash.
The first deposit by a customer which determines a corresponding maximum trade size.
A market in which financial institutions can trade. The term refers to short term money or foreign exchange markets that are only accessible to banks or financial institutions. There is no physical market place; the transactions take place over communication networks such as Bloomberg or Reuters.
Currency prices that reflect market rates among financial institutions for transactions typically over US $1 million. Interbank prices are different from retail prices.
Positions that are opened and closed within the same trading day.
Same as Interbank Market.
The rate charged or paid for the use of money. An interest rate is expressed as an annual percentage of the principal. Interest rates often change as a result of inflation and Central Bank policies.
International Monetary Fund
Supranational organisation established in 1946 to provide international liquidity and loans to member countries.
International Monetary Market
The futures trading arm of the Chicago Mercantile Exchange.
International Organisation for Standardisation
The organisation responsible for developing the standardised forex trading codes used by traders, such as EUR for Euros or CAD for the Canadian Dollar.
Refer to a widely used currency for trade and transactions. The US Dollar and the Euro are examples.
Intra Day Position
Positions that are opened and closed within the same trade day.
The International Standards Organisation, a worldwide standard-setting body. We use ISO 4217 currency codes in all of our services.
Java is a programming language originally developed by Sun Microsystems. It is used to enable interactive Web applications, including Margin FX Trading Platform.
A trader whose strategy is to enter and exit trades quickly for small but frequent profit, without carrying a position overnight.
Traders' term for the New Zealand Dollar.
London Inter-Bank Offered Rate.
London International Financial Futures Exchange.
Economic indicators that change after the overall economy has changed, used to confirm effects of Fed policy. An example is the Consumer Price Index (CPI).
Economic indicators used to predict future economic activity, such as the levels of the S&P 500 index.
Refer to the bid quote, which is the price at which customers who sell the currency or sell a long position.
The ratio of margin to the maximum position size. With a deposit of $10000 and a leverage of 20, a trader could enter a position with a face value of $200,000. Leveraging allows you to profit quickly, but lose money just as fast.
The obligation to deliver currency as part of a spot transaction. In speculative forex trading, currency is not delivered. All profits and losses are subtracted from margin deposits.
An order to transact at a specified price or better. See Buy Limit Order and Sell Limit Order.
The specified price as part of a limit order.
The simplest form of charting, a line chart plots a series of lines connecting the various price levels over a specified time period.
Term used to describe a market where there are lots of buyers and sellers generating a great deal of volume.
See Long Position.
When a currency pair is long, the first currency is bought while the second currency is sold. To go long on a currency means that you buy it. A long position is expressed in terms of the base currency.
The minimum margin that must be available in an account to support all open trades.
Exchange rate policy where central banks regularly intervene to stabilise and/or steer the direction of their currency.
The minimum deposit required to maintain an open position.
An account that allows leverage buying and short selling on credit.
The situation where all open positions in an account are closed immediately and automatically because the value of the account has fallen below the minimum margin needed to cover the size of existing positions.
For an open position, what its value would be if it were closed out at the current market rates.
A dealer who provides a two-way quote—a bid and ask price—in which they stand ready to buy or sell. In this way, dealers are also known as market makers.
An order for immediate execution at the best available price.
The most current quote for a currency pair.
The risks that occur when demand and supply pressures in the market cause the value of an investment to fluctuate.
This overlay is used to plot the maximum ask average and bid prices.
A theory suggesting that prices and returns eventually move back towards the mean or average.
This overlay is used to plot the minimum ask, average and bid prices.
A portion of a program that carries out a specific function and may be used alone or in combination with other modules of the same program.
The tendency of the market to continue moving in the same direction in which it is currently moving.
People who believe that money and monetary policy have a strong effect on capacity and growth in the economy. Monetarists focus on the work of Milton Friedman.
Required and non-required deposits made at the central bank by member banks and the currency in circulation.
When a central bank encourages spending by easing monetary controls. An example would be lowering interest rates.
Central bank attempts to influence the economy through money supply levels.
A person who is responsible for the entire financial portfolio of an individual or other entity. A money manager receives payment in exchange for choosing and monitoring appropriate investments for the client.
Method of smoothing out data on price charts so that trends are easier to spot. Average refers to a mathematical average or a statistical mean that is plotted over the original curve.
Net Asset Value. The total value of an asset less liabilities. In the case of a trading account, the NAV is the balance of deposits, realized and unrealized profit/loss, and interest, minus withdrawals.
Non-Farm Payroll. Reported monthly, this figure represents the total number of paid U.S. workers of any business, excluding farm employees, general government employees, private household employees, and employees of nonprofit organizations that provide assistance to individuals. The NFP report also includes estimates of the average work week and average weekly earnings of all non-farm employees.
Negative Carry Pairs
A carry trade where you are long the lower interest currency and short the higher interest currency. This type of trade might be part of a hedging strategy
Negative Sloping Yield Curve
A yield curve is a graph that plots the various yields (usually government bonds) beginning with short term rates on the left side of the graph and extending towards long term rates to the right. Negative sloping refers to the fact that on such a curve short term rates are actually higher than long term rates. This is contrary to normal yield curves as dictated by the time value of money.
Net Interest Rate Differential
The difference in the interest rates associated with two currencies.
Currency positions that have not been offset with opposite positions.
Settlement method where only the difference (profit or loss) is settled at the close.
An investor who bases his/her decisions on the outcome of a news announcement and its impact on the market.
The term used to describe market activity that does not always match overall market sentiment, resulting in a series of variables that do not match their modeled counterparts. In general, the shorter the time frame, the more difficult it is to separate the meaningful market movements from the noise.
See One Cancels the Other Order.
See Over the Counter.
A non-standard transaction size. In forex, a standard lot is usually 100,000 units of a particular currency.
A business entity that may or may not be physically located in a country, but whose operations and regulation fall outside the country, primarily because it is incorporated elsewhere.
Also known as the Ask Price, it is the price at which a seller is willing to sell.
An account that one futures commission merchant carries for another in which the transactions of multiple individual account holders are combined. The identities of the individual account holders are not revealed to the holding merchant.
One Cancels the Other Order
Two orders that are submitted simultaneously. If either one is executed, the other one is automatically cancelled.
Buy or sell order that does not expire until canceled. In theory the order does not expire. However, it usually does so at the end of the trading month rather than lasting forever.
A position whether long or short that is subject to market fluctuations and thus profits or losses. See also Closed Position.
An overlay used to mark your long and short orders.
This overlay is used to plot the open ask, average and bid prices.
An overlay used to mark your long and short trades.
The right, but not the obligation, to buy (long call) or sell (long put) an underlying asset.
Instructions to buy or sell.
Technical analysis tools that provide buy and sell signals, characterized by a signal that oscillates between overbought and oversold levels.
Out of the Money
When the strike price of the option is more expensive than the underlying asset's current price.
Over the Counter
Refers to trading that is not done over a formal exchange. Traditional forex is traded over the counter, meaning traders entered into forex transactions with one another over telephones or electronic devices. Counter refers to counterparty, in that with forex one trades with a counterparty instead of through an exchange. In online forex trading, the counterparty is the market maker.
An economy with inflation and high interest rates.
A dealer's net position that is carried into the next trading day.
Trades that extend past the current trade day into the next.
A system where a currency's value is tied with that of another currency.
Refers to the forex reserves as a result of oil sold by oil producing nations.
The smallest upward or downward price movements quoted in forex. In EUR/USD, a movement of 0.0001 is one pip (for example, from 1.4515 to 1.4514). In USD/JPY, a movement of 0.01 is one pip (for example, from 92.137 to 92.136).
One-tenth of a pip.
Pivot Points are calculated from previous-period prices, and are used to determine resistance and support levels.
Point & Figure Charts
Technical analysis graphs that focus solely on price without any consideration of time.
Changes in government policy or to a wider extent, government instability that might have negative effects on the currency.
A trade that is still in effect. See Open Position and Closed Position.
The cost of purchasing a second currency in terms of a first currency.
The change in the price of a currency over a specified time period.
Price point or pip
One basis point: 0.0001.
The ability of all market participants to trade at the same price.
The original amount invested.
Producer Price Index
An economic indicator that gauges the month-to-month price change that producers receive for their output.
Closing a position in order to realize a gain.
Purchasing Power Parity
Refers to functional equivalency. It is the relationship between the amount of currency needed to buy a common good in one country and the amount needed to buy the same good in the second country. This is one way to establish an exchange rate between two currencies.
A technique used to analyze an observed behavior by employing complex mathematical and statistical modeling, measurement, and research.
Quantitative easing is a monetary tool used by central banks to encourage spending within an economy. It works by making more money available to commercial banks thereby increasing the liquidity levels which "eases" the availability of money within the system. One of the most well-known instances of quantitative easing remains the Bank of Japan's attempts to fight domestic deflation in the early 2000s. Interest rates during this time were already close to zero and further cuts could not be implemented so the Bank flooded commercial banks with excess funds to promote lending and by extension, encourage spending.
When both a bid and ask price are provided for a currency pair.
The second currency of two in a currency pair. For the EUR/USD, USD is the quote currency. The exchange rate quoted is how many units of the second currency you will receive for one unit of the base currency. See Base Currency.
A period where prices surge upward.
The difference between the highest and lowest price of a currency pair during a given trading period.
The difference between the interest rates of two countries. The country with the higher interest rate will attract investment that will be financed in the lower rate country.
Rate of Return
The percentage of money gained or lost on an investment relative to the amount of money invested.
The price at which one currency can be bought or sold for another currency.
The profit and loss that is generated by closing a position.
The typical definition is any period of time when GDP falls for two consecutive quarters. However, the official definition from the National Bureau of Economic Research (who officially declares a recession) defines it as a 'significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real-GDP, real income, employment, industrial production, and wholesale-retail sales'.
A market in which a government agency monitors and regulates industry activity to protect investors.
Indicates the forecasted price movements for each of the eight currencies in the Currency Ranking service due to expected medium-term rate fluctuations. The relative strength for each currency is computed from a correlation between a Trading Model-generated forecast and the currency's price history. The strength of each currency can range from a minimum -1.0 to a maximum +1.0.
A ceiling which prices aren't able to penetrate because there is consistent selling activity at that price level.
Retail FX Market
Comprises a wide range of non-institutional traders, from large organizations to individual investors. In less than 10 years, a relatively small number of online currency brokers and market makers have had a massive effect on this market by efficiently exploiting technology, driving a five-fold decrease in the cost of trading.
Currency prices which reflect commissions and special charges that a bank or exchange agency demands to convert currencies for noncorporate customers. These commissions and special charges vary among countries, banks, and exchange agencies. Please inquire at your local bank or travel agency, or consult available travel guides for more information on specific commissions and special charges which may be charged for converting currencies.
The sale of services, goods, or commodities in small quantities directly to consumers.
A rate, possibly historical (as in the closing rate for the previous trading day), which is used to revalue a dealer's position or book.
Right Hand Side
Refers to the ask or offer price. This is the price at which traders buy.
The amount of money one could risk without impinging on one's accustomed lifestyle.
The use of strategies to control or reduce financial risk. An example is a stop-loss order that minimizes maximum loss.
Extending the settlement value date on an open position to the next trade date.
Amount credited to a trader's account when the long currency of a currency pair has a higher yielding interest rate than the shorted currency.
Amount debited from a trader's account because of an overnight rollover, when the long currency of a currency pair has a lower yielding interest rate than the shorted currency.
Generally, the daily rollover interest rate is the amount a trader either pays or earns, depending on the currency pairs in question. Margin FX Trading Platform does not use rollover rates. Instead, interest is calculated second by second.
The buying and selling of a currency pair and having the profit or loss applied to one's account currency.
Simple Moving Average (SMA)
Simple Moving Average helps to smooth the price curve for better trend identification.
Society for Worldwide Interbank Telecommunications.
Sell Limit Order
An order to enter a position only at a specified price (the limit) or higher. Margin FX Trading Platform limit orders are executed as soon as the market price reaches the quote.
A limit order with a limit placed below the current market price. Once triggered, the limit order becomes a market order.
Same as the Ask or Offer rate.
Selling a currency pair that involves being short the base currency and long the quote currency, with the intent of buying the currency pair at a later time when prices are lower in order to make a profit.
Loss as a result of one's counter-party being unable to settle.
See Short Position.
Buying the exact same units of a currency pair to offset an earlier short sale of the same currency pair.
When a currency pair is short, the first currency is sold while the second currency is bought. To go short on a currency means that you sell it. A short position is normally expressed in terms of the base currency.
See Selling Short.
When short sellers frantically scramble to cover their short positions as the market is experiencing a sharp upward movement. The attempt exacerbates the problem because more buying makes the prices higher and more difficult for other short sellers to cover their positions.
Where there are more sellers than buyers resulting in the potential for a quick downtrend.
Risk that a country will default on its bonds.
The condition where there is no guarantee that money will be made and tremendous risk that you will lose all your capital. The attraction to speculative trading is that you can make a great deal of money very quickly. However, you can also lose it just as fast.
A larger than usual price movement. It can be caused by a financial institution entering an erroneous price that appears as a valid price, even though it gets corrected almost immediately.
Buying and selling forex with the current date's price for valuation, but where settlement usually takes place in two days. Trades on Margin FX Trading Platform are settled immediately.
The current market price of a currency traded in the spot market.
Spot Settlement Basis
The value difference between the bid and ask price of a currency pair.
A condition where all positions in a dealer's books are closed.
Central bank attempts to reduce the money supply in order to increase the price of money.
A market that can accommodate huge volumes of buying and selling without large moves. The trading of the EUR/USD pair is an example.
The process by which central banks offset intervention in the forex market by activities in the domestic money market.
Another name for the British Pound (GBP).
The stochastics oscillator is a special type of oscillator used for technical analysis. Each type is derived from a different equation and focuses on different aspects of price action.
An agent in the buying and selling of stocks or other securities.
Traders' term for the Swedish Krona.
Stop Loss Order
See Stop Losses.
Stop Loss Strategy
A trading strategy that involves setting limit orders at different price levels to avoid incurring further losses.
A limit order to close a position when a given limit is reached. When long, the stop loss order is placed below the current market price. When short, the stop loss order is placed above the current market price.
A buy order for a currency price that is above the current market, or current price. It becomes a market order when the specified price is reached. Stop-buys are used by traders to establish positions in markets which they perceive to be rising in value.
The HSBC platform allows users to segregate their accounts into various sub-accounts to simplify various trading and hedging strategies.
A level or floor beneath which it is difficult for a currency to fall, characterized by strong buying pressure.
A transaction that moves the maturity date of an open position to a future date. See Roll-Over.
Trader's nickname for the Swiss Franc.
See Treasury Bills.
See Treasury Bonds.
See Treasury Notes.
A limit order that is placed above the market with a long position or below the market with a short position. When the market reaches the limit price, the position is closed thereby locking in a profit.
Take the Offer
A verbal order where a trader agrees to the price with which to sell a currency pair to a dealer.
The use of historical rates, price charts, and other market data to forecast future prices.
A price adjustment based on technical factors like resistance and support levels, as well as overbought and oversold levels, instead of market sentiment.
Short-term trends that technical analysts use to predict future price movements of securities and/or commodities. Also called technicals, technicalities.
The use of historical rates, price charts, and other market data to forecast future prices by means of statistical analysis.
An investor who uses technical analysis.
Short-term trends that technical analysts use to predict future price movements of securities and/or commodities. Also called technicals, technical indicators.
The smallest possible change in a price, either up or down. Also known as a pip.
Streaming display of the current or recent historical price of a currency pair.
The period of time over which a forecast (such as a Directional Forecast or a Trading Recommendation) of the foreign exchange markets is made. Traders generally look at forecasts over several time horizons before making a trading decision. Typical time horizons presented by HSBC for its financial services are:
- one day (24 hours)
- five days
- four weeks
- three months
The date on which a position is opened.
The smallest transaction size allowed.
Trading Margin Excess
Extra funds beyond the margin requirements for existing positions that can be used to enter new positions or increase existing positions.
A sophisticated program that provides you with expert buy/sell recommendations for trading currencies on the foreign exchange markets. A Trading Model, based on its evaluation of historical analyses, forecasts, and your trading profile, makes recommendations about currency positions by anticipating fluctuations in the foreign exchange markets and capitalizing on these movements.
A software application used for trading forex, usually over the Internet.
The Trading Recommendations
A Trading Recommendation is the latest position of a Trading Model for a given market and one or more currency pairs. Trading Models are constantly reacting to the market as they receive each new price quote from live data suppliers.
Trailing Stop Loss
Similar to a stop loss in that it limits potential losses in an open order. But unlike a simple stop loss where the threshold does not change, a trailing stop loss can be instructed to automatically adjust the limit price closer to the market price when the market price moves in your favor.
The cost involved in buying or selling a currency pair. Some consider the transaction cost to be the actual value of the contract, while others feel it is the price of facilitating the trade, such as commissions and spreads.
The date on which a position is opened or closed.
Buying or selling a currency pair.
US government short-term obligations with 13-, 26-, and 52-week maturities.
US government long-term obligations with 15-year or more maturities.
US government medium-term obligations with 2- to 10-year maturities.
Lines, arcs, or other visual cues plotted on a line chart used to predict possible future market directions. Trend lines are often projected from historical points on the graph that are considered significant (retracements, highs, lows, and so on).
The current direction of the market, whether up or down or sideways (which is sometimes referred to as non-trending or trading market).
Ultimate Oscillator uses weighted sums of 3 oscillators (typically 7, 14 and 28 period time frames) to smooth out the variations that occur in indicators which only use one time period.
The currency of the United States of America.
US Prime Rate
The interest rate at which banks in the US will lend to their most valued customers.
The department within the United States government that is responsible for issuing Treasury bills, notes, and bonds.
A currency that cannot be exchanged for another because of foreign exchange regulations.
When a currency is below its purchasing power parity it is considered undervalued.
A widely used quantity of currency. In MFX, one unit of USD is equal to one United States dollar, while one unit of EUR is one euro. For JPY, one unit is equivalent to one yen. One unit is the smallest trade size in MFX.
A hypothetical valuation of the current position and the resultant profit or loss if the position were to be liquidated at that moment.
A trade that must be executed at a price higher than the previous trade. Certain rules on the New York Stock Exchange require this during sessions of extreme volatility.
The process of determining the value of an asset or company.
The settlement date for a currency contract, usually two business days. For USD/CAD it is one business day.
Measure of how much the price of a currency changes over time.
An account of a foreign bank held at a domestic bank where the foreign bank has no branches. It is used for cash management purposes. Vostro means yours in Latin. See Nostro Account.
Weighted Moving Average (WMA)
Weighted Moving Average helps to smooth the price curve for better trend identification.
See World Trade Organization.
Wealth Creation Business
A professional service that includes a combination of investment advice, tax services, and estate planning.
Refers to when a position is taken and a stop loss is created. The market moves down to trigger the stop loss and then turns around. In this way, the trader suffers two losses.
Analyst predictions about earnings or economic indicators. They're considered whispers because they are not made public, but inevitably become public through leaks. Some people call them rumours and attribute as much credibility to them as they do rumours.
The sale of services, goods, or commodities in large quantities to individual clients.
Electronic transfer of funds from one bank to another.
When the banks in the country of origin for a particular currency are open for business. For currency pairs, this is compounded by the fact that both banks must be open.
World Trade Organisation
A global organisation of countries that trade with one another and set rules by which trading is conducted.
Traders' term for a billion as in a billion dollars.
A curve that shows the relationship between yields and maturity dates for a set of similar bonds, usually Treasuries, at a given point in time.
The return on an investment. The yield is usually calculated in percentage terms.
Currency symbol for the South African Rand.