To support your journey, we’ve crafted a comprehensive glossary that defines hundreds of trading terms

Glossary

Name	Description
Account Balance	In forex trading, account balance represents the sum of all deposits made into the account, including profits from successful trades and losses from unsuccessful trades. It is important to note that the account balance does not include any open positions or pending orders.
Account Equity	Account equity is calculated by adding the account balance to the unrealized profits or losses of all open positions. It provides traders with a snapshot of their financial standing in the market at any given time.
Arbitrage	Arbitrage is a trading strategy that takes advantage of price discrepancies in different markets to make a profit. In the context of the foreign exchange market (Forex), arbitrage involves buying and selling currency pairs at different prices in different markets to exploit temporary pricing inefficiencies.
Ask (Offer) Price	The price at which the market is prepared to sell a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can buy the base currency. In the quotation, it is shown on the right side of the quotation. For example, in the quote USD/CHF 1.4527/32, the ask price is 1.4532; meaning you can buy one US dollar for 1.4532 Swiss francs.
Bar Chart	A type of chart which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line of the right of the bar.
Base Currency	The first currency in a Currency Pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6215 then one USD is worth CHF 1.6215 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 currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.
Bear Market	A market distinguished by declining prices.
Bid Price	The bid is the price at which the market is prepared to buy a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can sell the base currency. It is shown on the left side of the quotation. For example, in the quote USD/CHF 1.4527/32, the bid price is 1.4527; meaning you can sell one US dollar for 1.4527 Swiss francs.
Bid/Ask Spread	The difference between the bid and offer price.
Big Figure	The first two or three digits of a foreign exchange price or rate. Examples: If the USD/JPY bid/ask is 115.27/32, the big figure is 115. On a EUR/USD price of 1.2855/58 the big figure is 1.28. The big figure is often omitted in dealer quotes. The EUR/USD price of 1.2855/58 would be verbally quoted as “55/58″.
Broker	An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a ‘dealer’ commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.
Bull Market	A market distinguished by rising prices.
Candlestick Chart	A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.
Central Bank	A government or quasi-governmental organisation that manages a country’s monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.
Closed Position	Exposures in Foreign Currencies that no longer exist. The process to close a position is to sell or buy a certain amount of currency to offset an equal amount of the open position. This will ‘square’ the postion.
Commission	A transaction fee charged by a broker.
Confirmation	A document exchanged by counterparts to a transaction that states the terms of said transaction.
Contract	The standard unit of trading.
Cross Currency Pairs	A pair of currencies that does not include the U.S. dollar. For example: EUR/JPY or GBP/CHF.
Currency Pair	The two currencies that make up a foreign exchange rate. For Example, EUR/USD
Currency Risk	The probability of an adverse change in exchange rates.
Currency symbols	AUD – Australian Dollar CAD – Canadian Dollar EUR – Euro JPY – Japanese Yen GBP – British Pound CHF – Swiss Franc
Currency	Any form of money issued by a government or central bank and used as legal tender and a basis for trade.
Current Account	The sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). The balance of trade is typically is the key component to the current account.
Day Trader	Speculators who take positions in commodities which are then liquidated prior to the close of the same trading day.
Depreciation	A fall in the value of a currency due to market forces.
Devaluation	The deliberate downward adjustment of a currency’s price, normally by official announcement.
Discount Rate	Interest rate that an eligible depository institution is charged to borrow short-term funds directly from the Federal Reserve Bank.
Economic Indicator	A government issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.
EURO	The official currency of the Eurozone, which consists of 19 of the 28 member states of the European Union: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
European Central Bank (ECB)	The central bank for the euro and administers monetary policy of the Eurozone, which consists of 19 EU member states and is one of the largest currency areas in the world.
Federal Reserve (Fed)	The Central Bank for the United States.
Foreign Exchange – (Forex, FX)	The simultaneous buying of one currency and selling of another.
Fundamental Analysis	Analysis of economic and political information with the objective of determining future movements in a financial market.
Futures Contract	An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange-Traded Contracts – ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.
FX	Foreign Exchange.
Going Long	The purchase of a stock, commodity, or currency for investment or speculation.
Going Short	The selling of a currency or instrument not owned by the seller.
Gold Certificate	A certificate of ownership that gold investors use to purchase and sell the commodity instead of dealing with transfer and storage of the physical gold itself.
Gold Contract	The standard unit of trading gold is one contract which is equal to 10 troy ounces.
Gross Domestic Product	Total value of a country’s output, income or expenditure produced within the country’s physical borders.
Hedge	A position or combination of positions that reduces the risk of your primary position.
Inflation	An economic condition whereby prices for consumer goods rise, eroding purchasing power.
Initial Margin	The initial deposit of collateral required to enter into a position as a guarantee on future performance.
Introducing Broker	A person or corporate entity which introduces accounts to specfic broker for a fee.
Kiwi	Slang for the New Zealand dollar.
Leading Indicators	Statistics that are considered to predict future economic activity.
Leverage	Also called margin. The ratio of the amount used in a transaction to the required security deposit.
LIBOR	The London Inter-Bank Offered Rate. Banks use LIBOR when borrowing from another bank.
Limit order	An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/JPY is 117.00/05, then a limit order to buy USD would be at a price below 117.00.
Liquidity	The ability of a market to accept large transaction with minimal to no impact on price stability.
Long position	A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.
Lot	A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.
Manufacturing Production	Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only measure the 13 sub sectors that relate directly to manufacturing. Manufacturing makes up approximately 80% of total Industrial Production.
Margin Call	A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the customer.
Margin	The required equity that an investor must deposit to collateralize a position.
Market Maker	A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.
Market Risk	Exposure to changes in market prices.
Net Position	The amount of currency bought or sold which have not yet been offset by opposite transactions.
Offer (ask)	The rate at which a dealer is willing to sell a currency. See Ask (offer) price
Open order	An order that will be executed when a market moves to its designated price. Normally associated with Good ’til Cancelled Orders.
Open position	An active trade with corresponding unrealised P&L, which has not been offset by an equal and opposite deal.
Order	An instruction to execute a trade at a specified rate.
Overnight Position	A trade that remains open until the next business day.
Personal Income	Measures an individuals’ total annual gross earnings from wages, business enterprises and various investments. Personal income is the key to personal spending, which accounts for 2/3 of GDP in the major economies.
Pips	The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.
Political Risk	Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.
Position	The netted total holdings of a given currency.
Price Transparency	Describes quotes to which every market participant has equal access.
Profit/Loss	The actual “realized” gain or loss resulting from trading activities on Closed Positions, plus the theoretical “unrealized” gain or loss on Open Positions that have been Mark-to-Market.
Quote	An indicative market price, normally used for information purposes only.
Rally	A recovery in price after a period of decline.
Range	The difference between the highest and lowest price of a future recorded during a given trading session.
Rate	The price of one currency in terms of another, typically used for dealing purposes.
Resistance	A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.
Retail Sales	Measures the monthly retail sales of all goods and services sold by retailers based on a sampling of variety of different types and sizes. This data gives a look into consumer spending behavior, which is a key determinant of growth in all major economies.
Risk Management	The employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.
Risk	Exposure to uncertain change, most often used with a negative connotation of adverse change.
Short Position	An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.
Simple Moving Average (SMA)	A simple average of a pre – defined amount of price bars. For example, a 50 period Daily chart SMA is the average closing price of the previous 50 daily closing bars. Any time interval can be applied here.
Spot Market	A physical market in which foreign currencies and commodities are bought and sold for cash at the current market price, settled “on the spot” and delivered immediately.
Spot Price	The current market price. Settlement of spot transactions usually occurs within two business days.
Spot Trade	The purchase or sale of a foreign currency or commodity for immediate delivery (as opposed to a date in the future). Spot contracts are settled electronically.
Spread	The difference between the bid and offer prices.
Stop Loss Order	Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor’s position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.
Support Levels	A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.
Swap	The overnight or rollover interest (which is earned or paid) for having open positions running up to the next trading day.
Technical Analysis	An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.
Tick	A minimum change in price, up or down.
Transaction Cost	The cost of buying or selling a financial instrument.
Transaction Date	The date on which a trade occurs.
Unemployment Rate	Measures the total workforce that is unemployed and actively seeking employment, measured as the percentage of the labor force.
Unrealized Gain/Loss	The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains’ Losses become Profits/Losses when position is closed.
Value Date	The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.
Wedge Chart Pattern	Chart formation that shows a narrowing price range over time, where price highs in an ascending wedge are incrementally less, or in a descending wedge, price declines are incrementally smaller. Ascending wedges typically conclude with a downside breakout, and descending wedges typically terminate with upside breakouts.