Welcome to the Forex Glossary page!

In this page, i have tried my best to list down the most commonly used terms and slang in Forex Trading, which may be helpful if you have just started out in Forex Trading.

As this page is not intended to be a Forex dictionary, therefore you may need to google some of the terms not listed here

If you have already been in Forex Trading arena for a century, pls ignore this page : )

A

Arbitrage – This is a term used to describe the buying and selling of a financial instrument simultaneously, taking advantage of small price difference between the exchanges

Ask (Offer) Price – The price which the market is prepared to sell to you. Normally, you can find the offer price on the right side of the quotes in your trading platform.

At or Better – The price which you would like to buy or sell at a specific price, or buy below or sell above the current prevailing market price.

Aussie – A slang for the currency pair AUD/USD

B

Bar Chart – I don’t think i can explain it in words, and confuse you, and i think the best option is to google it for an example.

Base Currency – The currency on the left in a Currency Pair is the base currency.  For example, in the USD/CHF currency, USD is the base currency.

Bear Market – A market where you see prices declining over a period of time.

Bid Price – This is the price which the current market is willing to buy from you. It is normally on the left side of the quotes in your trading platform.

Bid/Ask Spread – It’s the difference between the bid and offer price.

Broker – A firm that acts as a middleman in putting together buyers and sellers for a fee or commission. Some brokers commits capital and takes the other side of your position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.

Bull Market – A vice versa of a Bear Market.

Bundesbank – Germany’s Central Bank.

C

Cable – A slang for the currency pair GBP/USD

Candlestick Chart – This chart was developed by Japanese rice traders in the 16th century, which provides a greater visual details than the bar chart. Pls google it for examples.

Central Bank – A government organization that manages a country’s monetary policy. For example, the US central bank is the Federal Reserve, the German central bank is the Bundesbank, and Singapore central bank is Monetary Authority of Singapore.

Contract – The standard unit of trading.

Cross Currency Pairs – A pair of currency that does not include the U.S. dollar. For example: GBP/JPY, CHF/SGD, EUR/JPY….etc

D

Day Trader – Trader who enter and exit their positions in the same day without holding any overnight positions.

Derivative – A contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.

Devaluation – This is a deliberate downward adjustment of a currency’s price, normally by its individual country.

E

Economic Indicator – A government statical report that is issue periodically, indicating the current economic growth and stability.

End Of Day Order (EOD) – This is an order which you place to buy or sell at a specified price. This order remains open until the end of the trading day or filled.

European Central Bank (ECB) – The Central Bank for the new European Monetary Union.

F

Federal Reserve (Fed) – The Central Bank for the United States.

Filled – When your open orders are being confirmed.

FX – Foreign Exchange.

G

Good ‘Til Cancelled Order (GTC) – An order to buy or sell at a specified price. This order remains open until filled or until you cancel it.

H

Hedging – A practice of opening several positions at once to minimize the risk of your primary position.

I

Inflation – It is an economic situation whereby the consumer goods rise, resulting the the decline of purchasing power.

Interbank Rates – The currency rates at which are quoted between large international banks.

Intervention – Action by a central bank to effect the value of its currency by entering the market.

Introducing Broker – A person or a company which introduces accounts to brokers for a fee.

K

Kiwi – A slang for New Zealand currency.

L

Leading Indicators – Statistics reports that are used to predict future economic situation.

Leverage – It is the ratio of the amount used in a transaction to the required security deposit.

LIBOR – It is the term for London Inter-Bank Offered Rate

Limit order – An order to buy or sell a particular currency at a specified price. You should take note that certain market conditions (during major economic data release) may not allow you to get filled at your specific price.

Liquidation – To close or to exist a position.

Liquidity – It is the ability of a market to accept large transactions with minimal to no impact on price stability.

Long position – Another word for buy position.

M

Margin – The required equity that an investor must deposit to collateralize a position.

Margin Call – A call from your broker for additional funds if your position that has moved against you.

Market Maker – A dealer who regularly quote both bid and ask prices and sometimes taking an opposite direction of your trades.

O

One Cancels the Other Order (OCO) – A contingent order providing that one part of the order is cancel if the other part is executed.

Open order – An order that will be executed when a market moves to its specified price.

Open position – A position that has not been closed.

Over the Counter (OTC) – Used to describe any transaction that is not conducted over an exchange.

Overnight Position – A position that is left until the next day.

P

Pips – The smallest price increment  for any currency. Usually the fourth or the last digit after a decimal point.  Sometimes, it is also called points or ticks in Forex trading.

R

Rally – An increase in price after a period of downtrend.

Range – The difference between the highest and lowest price.

Resistance – Used in technical analysis to indicate a specific price which many people will sell (related to support).

Revaluation – An opposite of Devaluation

Roll-Over – A rollover is the simultaneous closing of an open position for today’s value date and the opening of the same position for the next day’s value date at a price reflecting the interest rate differential between the two currencies.

S

Short Position – Opposite of Long Position.

Spit – Slang for false break-out

Spread – The price difference between the bid and offer price.

Sterling – Slang for British Pound.

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 a position.

Support – Opposite of Resistance

Swap – A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

Swissy – Slang for Swiss Franc.

W

Whipsaw – Slang for a high volatile market condition.

Y

Yard – Slang for a billion