Forex Terminology

Account Balance The account balance signifies the capital in your account, excluding the profit/losses associated with your current open positions.

Account Equity Equity represents the sum of your balance and the floating profit/loss from your open positions.

Algorithmic Trading (Algo Trading) The use of computer algorithms to execute trading strategies automatically.

Appreciation When a currency strengthens in price due to market demand, it is said to 'appreciate.'

Arbitrage The practice of exploiting price differences in different markets for the same currency pair.

Arbitrageur An individual or entity that engages in arbitrage, taking advantage of price differences for the same asset in different markets.

Ask Price The price at which a trader can buy a currency pair. It represents the minimum price a seller is willing to accept.

At Best An instruction to a dealer to buy or sell at the best obtainable rate.

At or Better An order to execute a deal at a specific rate or a rate that is more favorable.

Bar Chart A chart type comprising four key points: the high and low prices forming the vertical bar, the opening price marked by a small horizontal line to the left of the bar, and the closing price marked with a small horizontal line to the right of the bar.

Base Currency The first currency in a currency pair, against which the exchange rate is quoted. For example, in the EUR/USD pair, EUR is the base currency.

Bear Market A market characterized by falling prices. Traders who expect prices to fall are referred to as "bears."

Bearish Divergence A situation in technical analysis where the price of an asset makes a higher high, but a technical indicator makes a lower high. It may indicate a potential downward reversal.

Bid Price The price at which a trader can sell a currency pair. It represents the maximum price a buyer is willing to pay.

Bid/Ask Spread The difference between the bid and offer prices.

Big Figure The initial two or three digits of a foreign exchange price or rate. For instance, in USD/JPY bid/ask 115.27/32, the big figure is 115. In EUR/USD 1.2855/58, the big figure is 1.28. Often excluded in dealer quotes, the EUR/USD price of 1.2855/58 would be verbally quoted as “55/58.”

Binary Options Options with a fixed payout that depends on whether an event will occur within a specified period. Traders bet on the outcome, and the payout is either a fixed amount or nothing.

Black Swan Event An unpredictable event that has a major impact, often deviating from what is normally expected.

Bonds Debt securities that represent a loan made by an investor to a borrower, typically a government or corporation. Bonds pay periodic interest and return the principal at maturity.

Book In a professional trading setting, a 'book' is the summary of a trader’s or desk’s total positions.

Bretton Woods Agreement An agreement established in 1944 that pegged major world currencies to the U.S. dollar and set the framework for fixed exchange rates. The agreement collapsed in 1971, leading to the adoption of floating exchange rates.

Broker An individual or firm acting as an intermediary, connecting buyers and sellers for a fee. In contrast, a 'dealer' commits capital and takes a position, aiming to earn a spread by closing it out in a subsequent trade.

Bull Market A market characterized by rising prices. Traders who expect prices to rise are referred to as "bulls."

Bullish Divergence A situation in technical analysis where the price of an asset makes a lower low, but a technical indicator makes a higher low. It may suggest a potential upward reversal.

Bundesbank Germany’s Central Bank.

Candlestick Patterns Specific formations created by the patterns of one or more candlesticks on a price chart, often used in technical analysis to predict price movements.

Candlestick A type of price chart that displays the open, high, low, and closing prices for a specific period. Candlestick charts are often used in technical analysis.

Carry Cost The cost associated with holding a position overnight, including interest paid or earned on the position.

Carry Trade A strategy in which traders borrow money in a currency with a low interest rate and invest in a currency with a higher interest rate to capture the interest rate differential.

Cash Market The marketplace for the actual financial instrument underlying a futures or options contract.

Central Bank Intervention Actions taken by a country's central bank to influence its currency's value, often by buying or selling it in the forex market.

Central Bank The institution responsible for managing a country's money supply, interest rates, and currency value. Examples include the Federal Reserve (USD) and the European Central Bank (EUR).

Chartist An individual who employs charts, graphs, and historical data interpretation to identify trends and forecast future market movements. Also known as a Technical Trader.

Cleared Funds Funds readily available for settling a trade.

Clearing The process of finalizing a trade.

Closed Position Foreign currency exposures that have been eliminated. Closing a position involves selling or buying a specific amount of currency to offset an equal amount of the open position, effectively 'squaring' the position.

Collateral An asset provided as security for a loan or as a guarantee of performance.

Commission A fee charged by a broker for facilitating a transaction.

Commodities Physical goods or raw materials that are bought and sold on commodities exchanges. Examples include gold, silver, oil, and agricultural products.

Confirmation A document exchanged between transaction counterparts, detailing the terms of the transaction.

Contract The standardized unit of trading.

Contracts for Difference (CFDs) Derivative products that allow traders to speculate on the price movements of financial instruments without owning the underlying asset.

Copy Trading A form of trading where individuals can automatically copy the trades of experienced and successful traders.

Correlation The statistical measure of the relationship between two currency pairs. Positive correlation means the pairs move in the same direction, while negative correlation means they move in opposite directions.

COT Report (Commitments of Traders Report) A report published by the Commodity Futures Trading Commission (CFTC) providing information about the positions of large traders in futures markets.

Counter Currency The second currency listed in a Currency Pair.

Counterparty One of the participants involved in a financial transaction.

Country Risk Risk associated with cross-border transactions, encompassing factors such as legal and political conditions.

CPI (Consumer Price Index) A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is an important indicator of inflation.

Cross Currency Pairs Pairs of currencies that do not involve the U.S. dollar. Examples include EUR/JPY or GBP/CHF.

Cross Rate An exchange rate between two currencies that does not involve the U.S. dollar. Cross rates are often used for currencies that are not the official currency of the country where the quote is provided.

Cryptocurrencies Digital or virtual currencies that use cryptography for security. Examples include Bitcoin, Ethereum, and Ripple.

Currency Any form of money issued by a government or central bank, serving as legal tender and a basis for trade.

Currency Basket A group of currencies used to measure the value of a country's currency relative to others.

Currency Crisis A situation in which a country experiences a sudden and sharp depreciation of its currency, often leading to economic instability.

Currency Pair The two currencies being traded. The first currency is the base currency, and the second is the quote currency.

Currency Peg A government's decision to tie the value of its currency to another major currency or a basket of currencies to maintain stability.

Currency Risk The likelihood of an unfavorable change in exchange rates.

Currency Symbols AUD – Australian Dollar CAD – Canadian Dollar EUR – Euro JPY – Japanese Yen GBP – British Pound CHF – Swiss Franc

Current Account The aggregate of the balance of trade, net factor income (e.g., interest and dividends), and net transfer payments (e.g., foreign aid). The balance of trade typically holds significant importance within the current account.

Day Trader Speculators who establish positions in commodities and subsequently close them before the end of the same trading day.

Day Trading A trading strategy in which positions are opened and closed within the same trading day.

Dealer An individual or firm acting as a principal or counterpart in a transaction. Principals take one side of a position, aiming to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an intermediary connecting buyers and sellers for a fee or commission.

Deficit A negative balance of trade or payments.

Deflation The opposite of inflation, deflation is a decrease in the general price level of goods and services.

Delivery An FX trade where both parties physically make and take delivery of the traded currencies.

Depreciation A decrease in the value of a currency influenced by market forces.

Derivative A financial instrument whose value is derived from the value of an underlying asset, index, or rate.

Devaluation The intentional downward adjustment of a currency's price, typically announced officially.

Dirty Float A system where a currency's exchange rate is determined by market forces but is subject to occasional government intervention to stabilize or influence the currency's value.

Discount Rate The interest rate at which an eligible depository institution is charged to borrow short-term funds directly from the Federal Reserve Bank.

Divergence A situation where the price of an asset is moving in the opposite direction of a technical indicator, signaling a potential reversal.

Dovish A term used to describe central bank policies or statements that suggest a cautious or accommodative approach to monetary policy.

Drawdown Limit A predetermined level of loss that a trader is willing to tolerate before closing a position or stopping trading temporarily.

Drawdown The peak-to-trough decline during a specific period for an investment, trading account, or strategy.

ECB (European Central Bank) The central bank for the eurozone, responsible for monetary policy within the Euro area.

Economic Calendar A calendar that displays scheduled economic events, such as economic indicators, announcements, and speeches.

Economic Indicator A government-issued statistical measure that reflects the current state of economic growth and stability. Key indicators encompass employment rates, Gross Domestic Product (GDP), inflation, retail sales, and others.

Elliot Wave Theory A technical analysis approach that suggests that the market moves in waves, and understanding these patterns can help predict future price movements.

End Of Day Order (EOD) An order to buy or sell at a specified price, remaining active until the close of the trading day, typically at 5 PM ET.

Entry Point The price at which a trader enters a position in the market.

Equity The total value of a trader's account, including profits and losses.

ETFs (Exchange-Traded Funds) Investment funds that are traded on stock exchanges. ETFs hold a basket of assets (stocks, bonds, commodities) and aim to track the performance of an index.

EURO The official currency of the Eurozone, comprising 19 of the 28 European Union member states: 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 governing the euro and responsible for administering monetary policy within the Eurozone. The Eurozone consists of 19 EU member states, representing one of the world's largest currency areas.

European Monetary Union (EMU) The primary objective of the EMU is to establish a unified European currency known as the Euro, gradually replacing the national currencies of most EU countries since 2002. The Euro has been adopted by 19 EU member states.

Eurozone Organization for Economic Co-operation and Development (OECD) Leading Indicator A monthly index generated by the OECD to gauge overall economic health. It combines ten leading indicators, including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads.

Exchange Rate The price of one currency in terms of another. It shows how much of the quote currency you need to spend to purchase one unit of the base currency.

Exit Point The price at which a trader exits a position in the market.

Exotic Pairs Currency pairs that include one major currency and one currency from a developing or small market, such as USD/TRY or EUR/SEK.

Federal Reserve (Fed) The central bank overseeing the United States' monetary system.

Fibonacci Retracement A technical analysis tool that uses horizontal lines to indicate areas of support or resistance at the key Fibonacci levels before the price continues in the original direction.

Financial Derivative A financial instrument whose value is derived from the value of an underlying asset, index, or rate.

First In First Out (FIFO) Under the FIFO accounting rule, open positions are closed in the order they were initially opened within a specific currency pair.

Flag Pattern A technical analysis pattern that represents a temporary consolidation after a strong price movement, typically forming a rectangular-shaped flag on a chart.

Flat/Square Dealer terminology referring to a position that has been entirely reversed, for example, buying $500,000 and then selling $500,000, resulting in a neutral (flat) position.

FOMC (Federal Open Market Committee) The policy-making body of the Federal Reserve in the United States, responsible for setting monetary policy.

Forex (Foreign Exchange) The market where currencies are traded. Traders buy one currency and sell another, with the aim of profiting from changes in exchange rates.

Forex Scam Fraudulent schemes that seek to deceive individuals or companies into sending money or providing sensitive information under false pretenses.

Forex Signal A recommendation to enter a trade on a particular currency pair, usually provided by analysts, trading algorithms, or signal services.

Forward A predetermined exchange rate for a foreign exchange contract settling on an agreed future date, determined by the interest rate differential between the two involved currencies.

Forward Contract An agreement between two parties to buy or sell a currency pair at a future date at a predetermined price.

Forward Points The pips added to or subtracted from the current exchange rate to determine a forward price.

Forward Rate The exchange rate at which a currency pair can be traded for a future delivery date.

Fundamental Analysis The analysis of economic, political, and social factors that can affect the value of a currency.

Futures Contracts that obligate the buyer to purchase or the seller to sell an asset (like commodities or financial instruments) at a predetermined future date and price.

FX Abbreviation for Foreign Exchange.

G20 (Group of Twenty) A forum for major advanced and emerging market economies that aims to discuss and coordinate international financial stability.

G7 (Group of Seven) An informal forum of seven major advanced economies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

Gapping A situation in which the price of a currency pair jumps from one level to another without trading at the levels in between. Gaps often occur during periods of high volatility.

GDP (Gross Domestic Product) The total value of all goods and services produced by a country in a specific time period.

Going Long The act of acquiring a stock, commodity, or currency with the intention of investment or speculation.

Going Short The practice of selling a currency or instrument without possessing it, typically for speculative purposes.

Gold Certificate A form of ownership certificate employed by gold investors to facilitate the buying and selling of the commodity, eliminating the need for dealing with the transfer and storage of physical gold.

Gold Contract The standardized unit for trading gold, with one contract equivalent to 10 troy ounces.

Good ‘Til Cancelled Order (GTC) An order to buy or sell at a specified price that remains active until it is filled or until the client decides to cancel it.

Grid Trading A trading strategy that involves placing buy and sell orders at regular intervals above and below the current market price.

Gross Domestic Product The aggregate value of a country’s output, income, or expenditure generated within the physical borders of the country.

Gross National Product Gross domestic product extended to include income derived from investments or work conducted abroad.

GTC Order (Good 'til Cancelled Order) An order that remains in effect until it is either executed or canceled by the trader.

Hard Currency A currency that is widely accepted around the world and is expected to remain stable, often from a politically and economically stable country.

Hawkish A term used to describe central bank policies or statements that suggest a more aggressive or tightening approach to monetary policy.

Hedge Funds Investment funds that pool capital from accredited individuals or institutional investors and use various strategies, including leverage and derivatives, to generate returns.

Hedged Margin Level The margin level that accounts for the potential impact of existing hedged positions.

Hedging A strategy to protect against potential losses by opening a trade in the opposite direction of an existing position.

High-Frequency Trading (HFT) A type of algorithmic trading characterized by the use of high-speed computers to execute trades at extremely fast speeds.

Hit the Bid The act of agreeing to buy at the offer or sell at the bid.

Indices Measures of the performance of a group of stocks or other assets. Examples include the S&P 500, Dow Jones Industrial Average, and NASDAQ Composite.

Industrial Production Quantifies the total value of output generated by manufacturers, mines, and utilities. This data is known for its swift responsiveness to the fluctuations of the business cycle, serving as a leading indicator for employment and personal income.

Inflation The rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of a currency.

Initial Margin The initial collateral deposit required to initiate a position, serving as a guarantee for future performance.

Interbank Rates Foreign exchange rates at which major international banks quote one another.

Interest Rate Differential The difference in interest rates between two currencies, affecting the cost of carrying a trade overnight.

Intervention The action taken by a central bank to influence the value of its currency by participating in the market. Coordinated intervention involves multiple central banks collaborating to manage exchange rates.

Introducing Broker An individual or corporate entity that introduces accounts to Tickmill for a fee.

ISM Manufacturing Index An index evaluating the condition of the US manufacturing sector by surveying executives about their expectations for future production, new orders, inventories, employment, and deliveries. Values above 50 generally indicate expansion, while values below 50 signify contraction.

ISM Non-Manufacturing An index that surveys service sector firms for their outlook, encompassing the remaining 80% of the U.S. economy not covered by the ISM Manufacturing Report. Values above 50 typically signal expansion, while values below 50 indicate contraction.

Japanese Economy Watchers Survey This survey gauges the sentiment of businesses directly catering to consumers, such as waiters, drivers, and beauticians. Readings surpassing 50 typically indicate positive changes in sentiment.

Japanese Machine Tool Orders This metric quantifies the overall value of newly placed orders with machine tool manufacturers. Machine tool orders serve as an indicator of the demand for machinery used in manufacturing, acting as a leading indicator for future industrial production. Robust data generally suggests an enhancement in manufacturing and signals an expansion phase in the economy.

Kiwi New Zealand dollar.

Lagging Indicators Economic indicators that follow changes in the overall economy and are used to confirm trends.

Leading Indicators Indicators or statistics considered predictive of future economic activity.

Leverage Ratio The ratio of the size of a position to the amount of margin held by the trader.

Leverage The ability to control a large position with a relatively small amount of capital. It magnifies both potential profits and losses.

LIBOR (London Interbank Offered Rate) The benchmark interest rate at which major global banks lend to one another in the international interbank market.

Limit Order An order to buy or sell a currency pair at a specified price or better. It is used to enter or exit the market at a specific target.

Liquidation The process of closing an existing position by executing an offsetting transaction.

Liquidity Provider A financial institution or individual that provides liquidity to the market by offering to buy or sell financial instruments.

Liquidity The ease with which an asset can be bought or sold in the market without affecting its price.

Long Position Buying a currency pair with the expectation that its value will rise.

Lot Size The volume or quantity of a trade. Standard lots are 100,000 units of the base currency, while mini lots and micro lots are 10,000 and 1,000 units, respectively.

Lot A standard unit of trading size. In forex, a standard lot is 100,000 units of the base currency.

MACD (Moving Average Convergence Divergence) A trend-following momentum indicator that shows the relationship between two moving averages of a security's price. Major Pairs The most traded currency pairs in the forex market, including EUR/USD, USD/JPY, and GBP/USD. Majors, Minors, and Exotics Terms used to categorize different currency pairs. Majors include major world currencies, minors include currencies from smaller economies, and exotics involve one major and one currency from a developing or smaller economy. Manufacturing Production This measures the overall output within the manufacturing segment of Industrial Production figures. It specifically covers the 13 sub-sectors directly associated with manufacturing, constituting approximately 80% of the total Industrial Production. Margin Call Level The minimum margin level required to keep a position open. If the margin falls below this level, a trader may receive a margin call. Margin Call A situation where a trader's account balance falls below the required margin, and additional funds must be deposited to keep the position open. Margin Level The ratio of equity to used margin, expressed as a percentage. It helps traders assess the health of their trading accounts. Margin The necessary equity that an investor is required to deposit to secure a position. Margin The amount of money required to open a leveraged position. It is a percentage of the total trade size and serves as a security deposit. Mark-to-Market The process of reassessing all open positions using current market prices. These updated values determine the necessary margin requirements. Market Maker A financial institution or individual that provides liquidity to the market by quoting both buy and sell prices for financial instruments. Market Order An order to buy or sell a currency pair at the current market price. Market Risk Exposure to fluctuations in market prices. Market Sentiment The overall attitude of traders toward a particular currency pair or the market as a whole. Sentiment can be bullish (positive) or bearish (negative). Maturity The specified date for settlement or expiration of a financial instrument. Micro Lot A trading size that is one-hundredth the size of a standard lot, or 1,000 units of the base currency. Mini Lot A trading size that is one-tenth the size of a standard lot, or 10,000 units of the base currency. Minor Pairs (Cross Currency Pairs) Currency pairs that do not involve the U.S. dollar, such as EUR/GBP or AUD/JPY. Moving Average (MA) A widely used technical indicator that smoothens price data to create a single flowing line, helping identify the direction of the trend. Municipal Bonds Bonds issued by state or local governments to raise capital for public projects. Interest income from municipal bonds is often tax-exempt. Mutual Funds Investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.

National Futures Association (NFA) A self-regulatory organization for the U.S. derivatives industry, including forex. It establishes standards for its members and monitors their compliance.

Net Position The quantity of currency purchased or sold that has not yet been counteracted by opposing transactions.

Offer (Ask) The rate at which a dealer is willing to sell a currency. Refer to the Ask (Offer) price.

Offsetting Transaction A trade that is conducted to cancel or offset some or all of the market risk associated with an open position.

One Cancels the Other Order (OCO) A label for two orders wherein the execution of one part automatically cancels the other.

Open Order An order that will be executed when the market reaches its specified price. Typically associated with Good 'til Cancelled Orders.

Open Position An active trade with corresponding unrealized P&L that has not been countered by an equal and opposite deal.

Options Financial derivatives that give the holder the right (but not the obligation) to buy or sell an underlying asset at a predetermined price before or at expiration.

Order An instruction to execute a trade at a specified rate.

Order Book A real-time, continuously updated list of buy and sell orders in a particular market, showing the current market depth.

Order Flow The flow of buy and sell orders in the market, influencing price movements.

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

Overbought A condition in which the price of an asset has risen to a level that may be unsustainable, suggesting a potential reversal.

Overnight Position A trade that remains open until the next business day.

Oversold A condition in which the price of an asset has fallen to a level that may be unsustainable, suggesting a potential reversal.

Peer-to-Peer Lending Online platforms that connect borrowers with individual lenders, allowing individuals to lend money directly to other individuals.

Pegged Exchange Rate A fixed exchange rate system where a currency's value is tied to the value of another currency or a basket of currencies.

Personal Income Quantifies an individual's total annual gross earnings from wages, business enterprises, and diverse investments. Personal income serves as the linchpin for personal spending, constituting two-thirds of the GDP in major economies.

Pip Spread The difference between the bid and ask prices, measured in pips.

Pip Value The monetary value of a pip, which varies depending on the lot size and the currency pair.

Pip The smallest price move that a given exchange rate can make. Most currency pairs are quoted to four decimal places, so a pip is typically 0.0001.

Pipette A fractional pip, often used to quote exchange rates more precisely.

Political Risk Exposure to changes in governmental policy that may adversely impact an investor's position.

Position The netted total holdings of a specific currency.

PPI (Producer Price Index) A measure of the average change over time in the selling prices received by domestic producers for their output. It is often considered a leading indicator of consumer inflation.

Preferred Stocks Stocks that have a higher claim on assets and earnings than common stocks. Preferred shareholders have priority over common shareholders in the event of liquidation.

Premium In the currency markets, it characterizes the amount by which the forward or futures price exceeds the spot price.

Price Transparency Refers to quotes that every market participant can access equally.

Profit/Loss The actual "realized" gain or loss resulting from trading activities on Closed Positions, along with the theoretical "unrealized" gain or loss on Open Positions that have been Mark-to-Market.

Qualitative Analysis An analysis method that considers non-numeric factors, such as political events, economic policies, and market sentiment.

Quantitative Analysis A method of market analysis that focuses on mathematical and statistical models to predict price movements.

Quantitative Easing (QE) A monetary policy in which a central bank purchases financial assets to increase the money supply and stimulate economic growth.

Quantitative Tightening (QT) The opposite of quantitative easing, involving a reduction in the money supply by a central bank.

Quote An indicative market price, typically employed for informational purposes only.

Quote Convention The way in which currency pairs are expressed. For example, EUR/USD is quoted as the amount of USD needed to purchase one EUR.

Quote Currency The second currency in a currency pair, quoted in relation to the base currency. In EUR/USD, USD is the quote currency.

Quoting Convention The manner in which currency pairs are quoted in the forex market. For example, in the EUR/USD pair, the EUR is the base currency, and the quote shows how much USD is needed to buy one unit of EUR.

Rally A rebound in price following a period of decline.

Range The span between the highest and lowest prices of a future recorded during a given trading session.

Range-Bound Market A market characterized by horizontal price movement, where the price fluctuates within a specific range.

Rate The value of one currency in terms of another, commonly used for transactional purposes.

Real Estate Investment Trusts (REITs) Companies that own, operate, or finance income-generating real estate across various sectors. Investors can buy shares in a REIT.

Regulatory Body An organization that oversees and enforces regulations within the forex market. Examples include the CFTC (Commodity Futures Trading Commission) and FCA (Financial Conduct Authority).

Requote A situation where the execution of a trade is requested at a certain price, but the broker offers a different, less favorable price.

Resistance A term in technical analysis signifying a specific price level at which analysis predicts people will sell.

Retail Sales This metric gauges the monthly retail sales of all goods and services sold by retailers, based on a sampling of various types and sizes. This data provides insights into consumer spending behavior, a pivotal factor in the growth of major economies.

Revaluation An escalation in the exchange rate for a currency resulting from central bank intervention. The opposite of Devaluation.

Reversal Pattern Chart patterns that indicate a potential change in the direction of the current trend, such as head and shoulders or double tops/bottoms.

Reversal A change in the direction of a price trend, often indicating the end of an existing trend.

Risk Appetite The level of risk a trader is willing to accept in pursuit of potential profits.

Risk Exposure to uncertain change, typically used with a negative connotation of adverse change.

Risk Management Strategies and techniques employed by traders to control and minimize potential losses.

Risk-Adjusted Return A measure of the profitability of an investment or trading strategy, taking into account the level of risk involved.

Risk-Free Rate The theoretical return on an investment with zero risk of financial loss.

Risk-On/Risk-Off (RO/RO) A market environment in which investors are either willing to take on risk (risk-on) or avoid risk (risk-off).

Risk/Reward Ratio A ratio that compares the potential profit of a trade to its potential loss.

Risks of Ruin The probability of losing a certain percentage of trading capital, leading to an inability to recover and continue trading.

Rollover (Swap) The interest paid or earned for holding a currency position overnight. It is influenced by the interest rate differential between the two currencies in a pair.

Round Trip The process of buying and selling a specified amount of currency.

RSI (Relative Strength Index) A momentum oscillator that measures the speed and change of price movements, helping identify overbought or oversold conditions.

Safe Haven Currency A currency that is expected to remain stable or appreciate during times of economic uncertainty or market turmoil, such as the U.S. dollar, Swiss franc, or Japanese yen.

Scalping A trading strategy that involves making numerous small trades to take advantage of minor price movements.

Settlement The procedure by which a trade is officially recorded in the books and records of the parties involved in a transaction. Settlement of currency trades may or may not involve the actual physical exchange of one currency for another.

Short Position Selling a currency pair with the expectation that its value will fall.

Simple Moving Average (SMA) A straightforward average of a predefined number of price bars. For instance, a 50-period Daily chart SMA is the average closing price of the preceding 50 daily closing bars. This concept can be applied to any time interval.

Slippage The difference between the expected price of a trade and the price at which the trade is actually executed. Slippage can occur during volatile market conditions.

Soft Currency A currency that is not widely accepted globally and may be subject to high volatility due to economic and political instability.

Spot Market A tangible market where foreign currencies and commodities are traded for cash at the prevailing 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 immediate purchase or sale of a foreign currency or commodity (as opposed to a future date). Spot contracts are settled electronically.

Spread The difference between the bid and ask prices. It represents the cost of trading and is measured in pips.

Square When purchase and sales are in balance, the dealer has no open position.

Stochastic Oscillator A momentum indicator that shows the location of the current close relative to the high-low range over a set number of periods.

Stocks (Equities) Shares of ownership in a company. Investors buy stocks with the expectation that the company will grow and the stock price will increase.

Stop Order An order to buy or sell a currency pair when the market reaches a specified price, known as the stop price. It is used to limit losses or protect profits.

Stop-Loss Order An order placed to limit potential losses by automatically closing a trade when a specified price level is reached.

Structured Products Financial instruments created to meet specific needs that may not be addressed by conventional financial instruments. They often combine various traditional instruments.

Support Levels A technique in technical analysis indicating specific price levels at which a given exchange rate is likely to automatically correct itself. The opposite of resistance.

Swap The overnight or rollover interest (earned or paid) for holding open positions until the next trading day.

Swing Trading A trading strategy that aims to capture short to medium-term gains in a market, typically holding positions for a few days to weeks.

Swissy Market slang for the Swiss Franc.

Take-Profit Order An order placed to lock in profits by automatically closing a trade when a specified profit level is reached.

Technical Analysis The analysis of historical price and volume data to predict future price movements.

Technical Indicator A mathematical calculation based on the historical price, volume, or open interest of a security. Common examples include moving averages, RSI, and MACD.

Tick The smallest change in price, whether upward or downward.

Tomorrow Next (Tom/Next) The simultaneous buying and selling of a currency for delivery on the following day.

Trade Balance Quantifies the difference in value between imported and exported goods and services. Nations with trade surpluses (exports exceeding imports), like Japan, often experience currency appreciation, while countries with trade deficits (imports exceeding exports), such as the US, may see their currencies weaken.

Trading Session A specific period during which forex markets are open for trading, corresponding to major financial centers around the world.

Transaction Cost The expense associated with buying or selling a financial instrument.

Transaction Date The date on which a trade is executed.

Treasury Bills (T-Bills) Short-term debt securities issued by governments, typically with maturities ranging from a few days to one year.

Trend Reversal A change in the direction of a prevailing market trend.

Trendline A line drawn on a price chart to connect a series of prices, helping to identify the direction of the trend.

Triangular Arbitrage A trading strategy that exploits the price differences between three currencies to generate profit.

Turnover The overall monetary value of all completed transactions within a specific time period; also referred to as volume.

Two-Way Price When both a bid and offer rate are quoted for an FX transaction.

Unemployment Rate Quantifies the total workforce actively seeking employment and currently unemployed, expressed as a percentage of the labor force.

Unrealized Gain/Loss The hypothetical gain or loss on Open Positions assessed at current market rates, determined solely by the broker. Unrealized Gains/Losses become Profits/Losses upon the closure of the position.

Uptick A fresh price quote at a value higher than the preceding quote.

US Prime Rate The interest rate at which U.S. banks lend to their prime corporate customers.

Value Date The agreed-upon date on which parties involved in a financial transaction settle their respective obligations, involving the exchange of payments. For spot currency transactions, the value date typically occurs two business days in the future. Also referred to as the maturity date.

Variation Margin Funds that a broker must request from the client to ensure the required margin is deposited. This term commonly denotes additional funds needed due to unfavorable price movements.

Volatility Index (VIX) A popular measure of market volatility often referred to as the "fear gauge."

Volatility Smile A graphical representation of the implied volatility of options at various strike prices, forming a smile-like shape on a chart.

Volatility A measure of the price fluctuations of a currency pair over a specific period. Higher volatility indicates larger price swings.

Warrants Financial instruments that give the holder the right, but not the obligation, to buy the underlying security at a specific price within a certain timeframe.

Wedge Chart Pattern A chart pattern depicting a converging price range over time. In an ascending wedge, the highs show incremental decreases, while in a descending wedge, the declines exhibit incremental reductions. Ascending wedges typically result in a downside breakout, and descending wedges usually lead to upside breakouts.

Wedge Pattern A technical analysis pattern characterized by converging trendlines, indicating a potential reversal or continuation of the existing trend.

Whipsaw A situation in which a trader is caught in a series of losing trades due to rapid and unexpected price reversals.

White Label A product or service that is produced by one company but rebranded and sold by another.

Zigzag Indicator A technical analysis tool that helps identify trends and trend reversals by connecting significant price peaks and valleys.