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RISK WARNING:

Trading of complex financial products, such as Stocks, Futures, Foreign Exchange (‘Forex’), Contracts for Difference (‘CFDs’), Indices, Options, or other financial derivatives, on ‘margin’ carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any of these markets you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading these markets, and seek advice from an independent financial advisor if you have any questions or doubts. Please carefully read our full ‘General Risk Disclosure’ and ‘Risk Disclosures for Financial Instruments & Investment Services’.

Glossary

Use our glossary to get adjusted to the common words, phrases and terms used by other forex traders

A

The overview of your account - base currency, cash available, value, unrealized margin profit/loss, and margin utilization.

Overview of the current balance and of changes in the balance of each account.

The status and trading activity of an account.

The current value of the account - Cash balance, unrealized value of positions, and not booked Transactions.

The study and analysis of historic price data for anticipating the future price movements.

The strengthening of a currency comparative to another.

A technical indicator system that is used for determining whether or not an instrument is trending and the strength ofn its trend.

The quoted price at which a customer can buy a currency pair (also referred to as the 'offer,' 'ask price,' or 'ask rate').

Slang for the Australian Dollar.

The funds available for margin trading.

B

Represents a financial institutions area responsible for settlement, administration and reporting.

For foreign exchange, the base currency is the first currency in a currency pair.

An investor who believes that prices are going down.

A period of generally falling prices.

The price at which a trader can sell a currency pair ( also known as the 'bid price' or 'bid rate').

The difference in pips between the bid and the ask price.

A technical indicator that allows users to compare volatility and relative price levels over a period of time.

The site of the conference which in 1944 led to the establishment of the post war foreign exchange system that remained intact until 1971. The conference resulted in the formation of the International Monetary Fund (IMF). The system fixed currencies in a fixed exchange rate system with 1% fluctuations of the currency to gold or the dollar.

Brings the buyers and sellers together for a commission paid by the initiator of the transaction. They do not take market positions.

An investor who believes that prices are going up.

A period of generally rising prices.

The Central Bank of Germany.

A limit order to buy at the current Ask Price (offer price).

C

Slang for the GBP/USD rate.

A form of Japanese charting that has become popular in the West. A narrow line shows the day's price range. A wider body marks the area between the open and the close. If the close is above the open, the body is green or blue; if the close is below the open, the body is red.

Represents the current value of the cash funds in your account.

A country's main regulatory bank; its primary responsibility is development and implementation of the monetary policy.

A CFD is a contract between two parties, 'buyer and seller'. The seller will agree with the buyer to pay the difference between the current value of an asset and its value at contract time. If the CFD is applied to Forex (currency pairs) this enables the investor to speculate on the currency movements without the need of ownership.

The fee that the broker could charge its clients for a service or performed trade.

The process by which an asset or liability denominated in one currency is exchanged for an asset or liability denominated in another currency.

Slang for the Danish krone

The other organization with whom the exchange deal is being performed.

economic, political and geographical factors.

To hedge or close an existing trade.

An exchange rate between two currencies.

The two currencies that make up a foreign exchange rate. As an example, EUR/USD is considered a currency pair.

D

Speculators who take positions in financial markets which are then liquidated before the close of the same trading day.

The opening and closing of the same position or positions within one day's trading.

A fall in the value of a currency.

All the information required to finalize a foreign exchange transaction, for example dates, instrument, point of delivery, rate.

A candlestick formation with a body so small that the open and close prices are equal. A Doji occurs when the open and close for that particular day are the same, or close to being the same.

Quoting in fixed units of foreign currency against variable amounts of the domestic currency.

E

Modest decline in price.

Statistics which indicate current economic growth rates, trends and health of the local economy such as retail sales and employment.

Electronic Fund Transfer.

Abbreviation for European Monetary System being an agreement between member nations of the European Union to maintain an alignment between the exchange rates of their currencies.

An order to buy or sell a foreign currency against another at a specific price. They might not be filled in case the market moves away from the price that was specified`.

A single European currency - the Euro, which replaced the national currencies of the EU member countries.

What one currency is worth in terms of another. Currencies traded in foreign-exchange markets have a spot rate and a forward rate. Countries can determine their exchange rates in several ways:
A flexible peg system
- This is a combination of an officially fixed rate and frequent small adjustments that in theory work against a build-up of speculation about a revaluation or devaluation;
A fixed exchange-rate system, where the value of the currency is set by the government and/or the central bank.
A floating exchange rate system, where the currency finds its own level in the market.

The risk associated with holdindg a currency.

F

The rapid movement in a market caused by strong interest by buyers and/or sellers. In these kinds of cases, price levels may be omitted and bid and offer quotations may occur too rapidly to be reported.

The Central Bank of the United States.

The Fibonacci number sequence (1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,...) is constructed by adding the first two numbers to arrive at the third. The ratio of any number to the next number is 61.8 percent, which is a popular Fibonacci retracement number. The inverse of 61.8 percent is 38.2 percent, also used as a Fibonacci retracement number. It is the ratio of the Fibonacci sequence that is important and valuable, not the actual numbers in the sequence.

The purchase or sale of a currency against another.

A term used when referring to the foreign exchange market.

The macro economic factors that form the foundation for the relative value of a currency, including the growth, inflation, trading balance, interest rates and government deficit.

The analysis of economic and political data for determining future movements in a financial market.

A term used when referring to the foreign exchange market.

G

The seven leading industrial countries - United States, Germany, Japan, France, UK, Canada and Italy.

The ten industrialized nations - G7 countries + Belgium, Netherlands and Sweden. Switzerland is sometimes involved.

The purchase of currency for investment or speculation.

The selling of a currency or instrument not owned by the seller.

''Good Till Cancelled''. It is an order to buy or sell at a fixed price. The order remains in place until it is cancelled by the client.

H

The practice of undertaking one investment activity in order to protect against loss in another.

The highest traded price and the lowest traded price for the instrument for the current trading day.

Selling at the bid by the trader.

I

International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. It supports countries with payment of balanced problems with the provision of loans.

International Monetary Market, part of the Chicago Mercantile Exchange that lists a number of currency and financial futures implied volatility; this is a measurement of the market's expected price range of the underlying currency futures based on the traded option premiums.

Is the required initial deposit to enter into a position.

The foreign exchange rates at which large international banks quote other large international banks

Action by a central bank to affect the value of its currency by entering the market.

K

Slang for the New Zealand dollar.

L

The usage of a margin to trade on a larger capital base. In foreign exchange a trader's leverage is often represented as a percentage of margin requirements. The high degree of leverage that is obtainable in the trading of foreign currency can work against the trader as well as for the trader. Leverage can lead to large gains as well as large losses.

An order to buy or sell a foreign currency against another at a specific price.

Price charts that connect periodical prices of a given market over a span of time that form a curving line on the chart.

The ability of the market to accept big transactions.

It represents a market position where the trader has bought a currency.

Slang for the Canadian Dollar.

M

The minimum margin which a trader must keep at all times in respect of each open contract.

The equity required in an account to guarantee funds in order to open positions.

If the account equity falls below the margin requirement, the trading platform will trigger an order to close all open positions.

A market order is an instruction to buy or sell a Financial Instrument which is accepted by the Company for transmission to a third party.

The study of economic activity as it applies to individual firms or well defined small groups of individuals or economic sectors.

A technical indicator showing an average of data for a certain number of time periods. By definition, a moving average lags the market.

О

A contingent order where the execution of one part of the order automatically cancels the other part.

A technical indicator that determines when a market is in an overbought or oversold condition.

A technical condition that occurs when prices are considered too high and susceptible to a decline.

A trade from one day until the next business day.

A technical condition that occurs when prices are considered too low and ripe for a rally.

Used to describe any transaction that is not conducted over an exchange.

P

The value of one currency in terms of another.

A Pip is the last decimal place of a quotation. The Pip is how you measure your profit or loss.For example: If EUR/USD is 1.2444 to 1.2446 then we can see here that it has increased by '2 pips'

Q

An indicative market price.

R

A recovery in price after a period of decline.

The distance between the high price and the low price for a given time period.

The price of one currency in terms of another.

A popular oscillator developed by Welles Wilder, Jr. and described in his self-published 1978 book ''New Concepts in Technical Trading Systems''. RSI is plotted on a vertical scale from 0 to 100. Values above 70 are considered overbought and values below 30, oversold. When prices are over 70 or below 30 and diverge from price action, a warning is given of a possible trend reversal.

A price level at which you would expect selling to take place.

A price recognized by technical analysts as a price which is likely to result in a rebound but if broken through is likely to result in a significant price movement.

The identification of a potential loss and the handling of the risk, usually under strict guidelines.

Where the settlement of a trade is rolled forward to another value date based on the interest rate differential of the two currencies, the rollover/swap is also called Tomorrow Next, Tom-Next or T/N.

Buying and selling of a specified amount of currency.

S

A transaction that matures on the day the transaction takes place.

In Forex, this is the currency that the investor pays with or receives when trading.

The actual delivery of currencies made on the maturity date of a trade.

The date upon which foreign exchange contracts settle.

To go 'short' is to have sold an instrument without actually owning it.

It`s a moving average that gives equal weight to each day's price data.

Refers to the depreciating pip value between where a stop loss order becomes a market order and where that market order may be filled.

The part of the market calling for spot settlement of transactions. The precise meaning of spot depends on local custom for a commodity, security or currency. In the UK, US and Australian foreign-exchange markets, spot means delivery two working days hence.

It is the difference between the bid and the ask price. Generally speaking, more liquid currency pairs have smaller bid/ask spreads. Less liquid currency pairs have larger spreads.

British pound, also known as cable.

A technical momentum indicator developed by George Lane that measures the price of a security relative to the high/low range over a set period of time. The indicator oscillates between 0 and 100, with readings below 20 considered oversold and readings above 80 considered overbought.

Slang for Swedish Krona.

Forex stop orders are used to exit positions and to protect investments when the market moves against an open position.

An instruction to buy or sell a currency pair when it trades beyond a specified price. During times of extreme volatility it can be difficult or impossible to execute orders.

A price level at which there is an expectation of buying to take place, a break in the support often leads to lower prices.

The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another.

Slang for Swiss Franc.

T

Represents an effort to forecast the future market activity, by analyzing the market (charts, price trends, and volume).

A minimum change in price, up or down.

An individual who is on the other side of the trade and whose objectives are to gain and profit from the price movements.

A stop-loss level set above or below the current price that adjusts as the price fluctuates. For a long position, a trailing stop would be set below the current price and would rise as the price advances.

Represents the buying or selling of currencies that results from the execution of an order.

The direction of prices.

Straight lines drawn on a chart below reaction lows (in an uptrend) or above rally peaks (in a downtrend) that determine the steepness of the current trend.

U

A transaction executed at a price greater than the previous transaction.

W

Slang for a condition of a highly volatile market (a sharp price movement is quickly followed by a sharp reversal).

Y

Slang for a billion.

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