 |
 |
Forgot Password? |
Glossary
This list mentions some of the most common terms used in the Foreign Exchange market.
Base Currency – The currency appearing first in a currency pair. It shows how much the currency is worth measured against the second currency. (i.e. in the USD/CAD pair, the US dollar is the base currency) If the quote in this example is 1.0519, then one US dollar is worth 1.0519 in the Canadian market.
Bear Market – A market characterized by declining prices.
Buy/Sell Spread – The difference in price between the buy quote and the sell quote. Commonly known as the bid and ask spread in the stock market. The buy price is higher than the sell price, therefore creating the spread.
Bull Market – A market characterized by rising prices.
Cable - An industry term referring to the GBP/USD exchange rate.
Closed Position – Exiting a trade. Exposure in the market that no longer exists.
Counter Currency – The second currency listed in a currency pair.
Cross Currency – A currency pair that does not include the US dollar.
Example: EUR/CHF or GBP/JPY
Currency Pair – Comprised of two currencies that represent a foreign exchange rate. Currency pairs are globally standardized.
Currency Symbols
USD - United States Dollar
AUD – Australian Dollar
CAD – Canadian Dollar
CHF – Swiss Franc
EUR - Euro
GBP – British Pound
JPY – Japanese Yen
Entry Order - Placing an order to enter the market at a specific price that the market is not currently offering.
EURO – The currency of the European Monetary Union (EMU)
Foreign Exchange - Also known as the currency, forex or FX market referring to the buying and selling of standardized world currencies.
Going Long – The purchase of a currency expecting it to appreciate in value.
Going Short – The selling of a currency not owned by the seller expecting it to depreciate in value.
KIWI – Slang for the New Zealand dollar.
Limit Order – A targeted price in the direction a trader expects a specific currency to move. When the limit order price is reached profit is automatically booked and the position is closed.
Long Position – An investment position that profits from an appreciating market when the base currency in the pair is bought.
Lot – A unit measuring the dollar amount being invested.
Market Risk – Exposure to changes in market prices.
Moving Average – Represents the average value of a financial instrument’s price over a set period of time. This is a technical indicator useful in emphasizing the direction of a trend, measuring momentum and defining areas of potential support and resistance. Upward momentum is implied when a short-term average (e.g. 20-day) crosses over a longer-term average (e.g. 50-day). Downward momentum is implied when a short-term average crosses below a longer-term average.
Open Position – An active position where profit or losses have not been realized (closed).
Pips – The smallest unit of price for any currency. For example one cent is equal to 100 pips.
P/L – Profit/Loss
Rally – Price appreciating after a period of decline.
Range – The difference between a high and low price a currency is continually bouncing off of.
Range Trading – Buying and or selling within an established high and low price.
Resistance – A term used in technical analysis identifying a high price level that has not been surpassed after numerous attempts, often indicating a sell opportunity.
RSI – Relative Strength Index attempts to indicate overbought and oversold conditions. It ranges from 0 to 100. A high RSI reading is implying overbought conditions. A low RSI reading is implying oversold conditions.
Short Position – An investment position that profits from a declining market when the base currency is sold.
Spread – The difference between the buy and sell price of a currency.
Trailing Stop – In a profitable trade a stop loss order can be set at a specific quantity of pips determined by the trader to protect profits. The stop loss continually moves up or down depending on the position of the trade (long or short).
Trend – Pertaining to direction (up or down).
Sterling – A slang term for British Pound.
Stop Loss Order – A specific price set by traders that would automatically close their position if the market moved against them. Unlike the stock market stop loss orders in the Forex market are easily filled and can protect traders from accruing additional losses.
Support – A term used in technical analysis identifying a low price level that has not been surpassed after numerous attempts, often indicating a buy opportunity.
Technical Analysis – A method used to forecast potential moves in the market by studying chart patterns, price trends, moving averages, and other technical indicators.
Volatility – Refers to the change in value of a financial instrument over a period of time.
Whipsaw Action - A slang term referring to a highly volatile market where a sharp movement in price is very quickly followed by a sharp reversal.
Base Currency – The currency appearing first in a currency pair. It shows how much the currency is worth measured against the second currency. (i.e. in the USD/CAD pair, the US dollar is the base currency) If the quote in this example is 1.0519, then one US dollar is worth 1.0519 in the Canadian market.
Bear Market – A market characterized by declining prices.
Buy/Sell Spread – The difference in price between the buy quote and the sell quote. Commonly known as the bid and ask spread in the stock market. The buy price is higher than the sell price, therefore creating the spread.
Bull Market – A market characterized by rising prices.
Cable - An industry term referring to the GBP/USD exchange rate.
Closed Position – Exiting a trade. Exposure in the market that no longer exists.
Counter Currency – The second currency listed in a currency pair.
Cross Currency – A currency pair that does not include the US dollar.
Example: EUR/CHF or GBP/JPY
Currency Pair – Comprised of two currencies that represent a foreign exchange rate. Currency pairs are globally standardized.
Currency Symbols
USD - United States Dollar
AUD – Australian Dollar
CAD – Canadian Dollar
CHF – Swiss Franc
EUR - Euro
GBP – British Pound
JPY – Japanese Yen
Entry Order - Placing an order to enter the market at a specific price that the market is not currently offering.
EURO – The currency of the European Monetary Union (EMU)
Foreign Exchange - Also known as the currency, forex or FX market referring to the buying and selling of standardized world currencies.
Going Long – The purchase of a currency expecting it to appreciate in value.
Going Short – The selling of a currency not owned by the seller expecting it to depreciate in value.
KIWI – Slang for the New Zealand dollar.
Limit Order – A targeted price in the direction a trader expects a specific currency to move. When the limit order price is reached profit is automatically booked and the position is closed.
Long Position – An investment position that profits from an appreciating market when the base currency in the pair is bought.
Lot – A unit measuring the dollar amount being invested.
Market Risk – Exposure to changes in market prices.
Moving Average – Represents the average value of a financial instrument’s price over a set period of time. This is a technical indicator useful in emphasizing the direction of a trend, measuring momentum and defining areas of potential support and resistance. Upward momentum is implied when a short-term average (e.g. 20-day) crosses over a longer-term average (e.g. 50-day). Downward momentum is implied when a short-term average crosses below a longer-term average.
Open Position – An active position where profit or losses have not been realized (closed).
Pips – The smallest unit of price for any currency. For example one cent is equal to 100 pips.
P/L – Profit/Loss
Rally – Price appreciating after a period of decline.
Range – The difference between a high and low price a currency is continually bouncing off of.
Range Trading – Buying and or selling within an established high and low price.
Resistance – A term used in technical analysis identifying a high price level that has not been surpassed after numerous attempts, often indicating a sell opportunity.
RSI – Relative Strength Index attempts to indicate overbought and oversold conditions. It ranges from 0 to 100. A high RSI reading is implying overbought conditions. A low RSI reading is implying oversold conditions.
Short Position – An investment position that profits from a declining market when the base currency is sold.
Spread – The difference between the buy and sell price of a currency.
Trailing Stop – In a profitable trade a stop loss order can be set at a specific quantity of pips determined by the trader to protect profits. The stop loss continually moves up or down depending on the position of the trade (long or short).
Trend – Pertaining to direction (up or down).
Sterling – A slang term for British Pound.
Stop Loss Order – A specific price set by traders that would automatically close their position if the market moved against them. Unlike the stock market stop loss orders in the Forex market are easily filled and can protect traders from accruing additional losses.
Support – A term used in technical analysis identifying a low price level that has not been surpassed after numerous attempts, often indicating a buy opportunity.
Technical Analysis – A method used to forecast potential moves in the market by studying chart patterns, price trends, moving averages, and other technical indicators.
Volatility – Refers to the change in value of a financial instrument over a period of time.
Whipsaw Action - A slang term referring to a highly volatile market where a sharp movement in price is very quickly followed by a sharp reversal.
