Forex glossary equity

A notification, often received by email or SMS, of a market event such as a stock or currency reaching a target price. A currency is said to appreciate when price rises in response to market demand; an increase in the value of an asset. Taking advantage of countervailing prices in different markets by the purchase or sale of an instrument and the simultaneous taking of an equal and opposite position in a related market to profit from small price differentials.

The Available Margin acts as collateral against losses, therefore when the Available Margin hits zero or below, this results in a margin call among most brokers. The Available Margin is derived from subtracting the Used Margin requirements from the Equity.

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The Available Margin is also known as Usable Margin or Free Margin. The departments and processes related to the settlement of financial transactions i. A record of a nation's claims of transactions with the rest of the world over a particular time period. These include merchandise, services and capital flows.

The value of a country's exports minus its imports. A type of chart which consists of four significant points: The currency in which an investor or issuer maintains its book of accounts; the currency that other currencies are quoted against. A market distinguished by a prolonged period of declining prices accompanied with widespread pessimism. Believing that a particular security, sector, or the overall market is about to fall.

There are many ways to measure a Bear Market. A reversal pattern characterized by a large candlestick followed by a much smaller candlestick. The second candle is located within the range of the prior candle's body, and is always smaller than the previous body.

Such a pattern is an indication that the previous upward trend is coming to an end. A formation of either one or numerous candlesticks, indicating that the prior downtrend is about to end. The price at which an investor, trader or institution is willing to sell the security. Dealer phrase referring to the first few digits of an exchange rate.

These digits rarely change in normal market fluctuations, and therefore are omitted in dealer quotes, especially in times of high market activity. A technical indicator forming an envelope around the trading price. The envelope is calculated using standard deviations and shows price volatility.

Bonds are tradable instruments debt securities which are issued by a borrower to raise capital. They pay either fixed or floating interest, known as the coupon. As interest rates fall, bond prices rise and vice versa. Bretton Woods Agreement of The agreement lasted until , when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.

An individual, or firm that acts as an intermediary, putting together buyers and sellers usually for a fee or commission. A market distinguished by a prolonged period of rising prices Opposite of bear market. Bull markets are accompanied by high confidence and market rallies.

Bullish refers to having a positive outlook on a particular security or an investment The shadows or tails of the small candlestick are short, which enables the body of the large candlestick to cover the entire candlestick from the previous day.

A candlestick chart pattern in which a large candlestick is followed by a smaller candlestick whose body is located within the vertical range of the larger body.

A formation of either one or numerous candlesticks, indicating that the prior uptrend is about to end. A candlestick chart is a style of bar-chart used primarily to describe price movements of a security finance , derivative, or currency over time.

Candlestick charts provide a quick visual picture of the relationship between opening and closing prices and their relative strengths or weaknesses, especially for extended periods. The body, which looks like a candle, represents the difference between opening and closing prices.

The rectangle represents the body of the candle and indicates the difference between the opening and closing price. Markets for medium to long term investment usually over 1 year. These tradable instruments are more international than the 'money market' i. Government Bonds and Eurobonds. For example, the US central bank is the Federal Reserve.

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Other central banks include the ECB, BOE, and BOJ. A chart is a collection of historical price action that is represented visually. An individual who uses charts and graphs and interprets historical data to find trends and predict future movements.

Also referred to as Technical Trader. 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 position. The final price at which a security is traded on a given trading day.

The price of the last transaction for a given security at the end of a given trading session. Also known as the 'close'. A basic good, such as food, grains, and metals, which is interchangeable with. A document exchanged by counterparts to a transaction that confirms the terms of said transaction.

To be cautious or risk averse in an investment strategy. A period of indecisiveness where the price moves within a trading range. The participant, either a bank or customer, with whom the financial transaction is made. An exchange rate between two currencies. The cross rate is said to be non-standard in the country where the currency pair is quoted.

Any form of money issued by a government or central bank and used as legal tender and a basis for trade. The two currencies that make up a foreign exchange rate. The risk of incurring losses resulting from an adverse change in exchange rates. A chart pattern where a black candlestick follows a long white candlestick. This will indicate the possibility of an upcoming bearish trend. Opening and closing the same position or positions within the same trading session. An individual that acts as a principal to a transaction and is the responsible for the company's risk by reviewing the customer margin, the trading rates, the deal size, etc.

An actual delivery where both sides transfer possession of the currencies traded. A decline in the value of a currency due to market forces. 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.

The deliberate downward adjustment of a currency's value, normally by official announcement. A statistic that indicates about the economic situation and that is issued by the government or a non-government institution i.

Gross Domestic Product GDP , Employment Rates, Trade Deficits, Industrial Production, and Business Inventories. EMU - European Monetary Union: A monetary union is an arrangement where several countries have agreed to share a single currency amongst them.

The European Economic and Monetary Union EMU consists of three stages coordinating economic policy, achieving economic convergence that is, their economic cycles are broadly in step and culminating with the adoption of the euro, the EU's single currency. End Of Day Mark-to-Market: Traders account for their positions in two ways: An accrual system accounts only for cash flows when they occur, hence, it only shows a profit or loss when realized. Any profit or loss is booked and the trader will start the next day with a net position.

The price at which an investor closes his open position. The exit point is usually decided as part of a premeditated trading strategy meant to mitigate investment risk and take the emotion out of trade decisions.

Executing a deal or deals that results in balancing the exposure in a specific currency or of the entire exposure, so there is no risk to the trader's investment regardless to the exchange rate. The percentage of exposure that is covered by funds. Exposure coverage is calculated by dividing your Total Equity by your Net Exposure. Fixed Exchange Rate Representative Rate: An official exchange rate set by monetary authorities for one or more currencies.

To be neither long nor short is the same as to be flat or square. FOMC - Federal Open Market Committee: The Federal Reserve the U. Forex - Foreign Exchange: The simultaneous buying of one currency and selling of another in an over-the-counter market. Most major FX is quoted against the US Dollar. A Forex deal which its value date is more than Spot 2 business days. The rate of a Forward deal is different from the rate of Spot deal, as it considers the interest rate differences.

The pips added to or subtracted from the current exchange rate to calculate a forward price. FRA - Forward Rate Agreements: Front and Back Office: Front office is a business term that refers to a company's departments that come in contact with clients, including the marketing, sales, and service departments. In our case, also the trading room. A back office is a part of most corporations where tasks dedicated to running the company itself take place. Analysis of economic and political information with the objective of determining future movements in a financial market.

In finance, a futures contract is a standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality at a specified future date at a price agreed today the futures price. The contracts are traded on a futures exchange. Futures contracts are not "direct" securities like stocks, bonds, rights or warranties. They are still securities, however, though they are a type of derivative contract.

The five leading industrial countries, being US, Germany, Japan, France, UK. The seven leading industrial countries, being US, Germany, Japan, France, UK, Canada, Italy. GDP - Gross Domestic Product: Total value of a country's output, income or expenditure produced within the country's physical borders.

GNP - Gross National Product: An Order which is given to a Dealer to buy or sell one asset against the other at a specific price. The Order will remain intact until executed or cancelled. A position or combination of positions that reduces the risk of the trader's primary position. Usually the highest traded price and the lowest traded price for the underlying instrument for the current trading day. IMF - International Monetary Fund: The IMF is an international organization of most of the UN member countries.

It was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment. An economic condition where there is an increase in the price of consumer goods, thereby eroding purchasing power. The initial deposit of collateral required to enter into a position as a guarantee on future performance.

A market in which financial institutions can trade. The term refers to short term money or foreign exchange markets that are only accessible to banks or financial institutions. There is no physical market place; the transactions take place over communication networks such as Bloomberg or Reuters.

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. Concerted intervention refers to action by a number of central banks to control exchange rates.

IRS - Interest Rate Swaps: An exchange of two debt obligations that have different payment streams. The transaction usually exchanges two parallel loans; one fixed the other floating. Economic variables that are considered to predict future economic activity i. Unemployment, Consumer Price Index, Producer Price Index, Retail Sales, Personal Income, Prime Rate, Discount Rate, and Federal Funds Rate. The ratio of the amount used in a transaction to the required security deposit.

Libor - London Interbank Offered Rate: The London Inter-Bank Offered Rate. Large international banks use LIBOR when borrowing from another bank. The closing of an existing position through the execution of an offsetting transaction. The ability of a market to accept large transaction with minimal to no impact on price stability.

In finance, a long position in an asset, such as a stock or a bond, or equivalently to be long in a security, means the holder of the position owns buys the asset and will profit if the price appreciates. 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. A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

The ratio between the available funds that an investor has, to his exposure. The percentage of the available margin utilized. Margin Utilization is calculated by dividing your Used Margin by your Total Equity. The higher the value is, the higher the risk is and the chance that the transactions will be closed due to insufficient funds.

A market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity, hoping to make a profit on the bid-offer spread, or turn. This means that the price of the security can change dramatically over a short time period in either direction.

A lower volatility means that a security's value does not fluctuate dramatically, but changes in value at a steady pace over a period of time. Refers to investments that are short-term i. Examples include Deposits, Certificates of Deposit, Repurchase Agreements, Overnight Index Swaps and Commercial Paper. Short-term investments are safe and highly liquid. Money supply figures and M1 specifically, once were the most important release to watch in the Treasury market, as the Fed directly targeted M1 growth in the early s.

The focus on money supply has long since been abandoned, however. To the extent that money supply is still monitored by the market, M2 is the favored monetary aggregate.

The Fed still targets both M2 and M3 in a rhetorical sense, but these targets mean little when it comes to policy decisions. If the Fed misses its target, it is more likely to change the target than it is to change policy. In , the Fed finally abandoned the targets altogether, thereby removing any remaining emphasis on this one-time star release. MPC - Monetary Policy Committee: A committee of the central Bank of England that is responsible for the monetary policy decisions.

OCO - One Cancels the Other: A set of 2 Limit orders, where the execution of one of them automatically cancels the other one. ASK price - the price, or rate, that a seller usually the Market Maker is willing to sell at and the investor to buy at. An order that will be executed when a market moves to its designated price. Normally associated with Good 'til Cancelled Orders. A derivative financial instrument that establishes a contract between two parties concerning the buying CALL or selling PUT of an asset at a reference price during a specified time frame.

The price of an option derives from the value of an underlying asset commonly a stock, a bond, a currency or a futures contract plus a premium based on the time remaining until the expiration of the option. An order is an instruction, from a client to a broker to trade. An order can be placed at a specific price or at the market price. Also, it can be good until filled or until close of business. Refers to trading that is not done over a formal exchange.

Traditional trading is done over the counter, meaning traders entered into transactions with one another over telephones or electronic devices. Counter refers to counterparty, in that with trading one trades with counterparty instead of through an exchange. In online trading with a market maker, the counterparty is the market maker.

The smallest upward or downward price movements quoted in online trading. Spreads play a significant factor in profitable online trading. When we compare to the average spread to the average daily movement many interesting issues arise. Namely, some pairs are more advantageous to trade than others. Secondly, retail spreads are much harder to overcome in short-term trading than some may anticipate.

Third, a "larger" spread does not necessarily mean the pair is not as good for day trading when compared to some lower spread alternatives. The term used in currency market to represent the smallest incremental move an exchange rate can make. Depending on context, normally one basis point 0. A binding commitment to buy or sell a given amount of financial instruments, such as securities, currencies or commodities, for a given price.

In the Option markets, this is the payment for buying or selling an option. In the Margin Trading markets, it is the amount of points added to the spot price to determine a forward or futures price. The act of artificially inflating or deflating the price of a security.

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. The second currency of two in a currency pair. The exchange rate quoted is how many units of the second currency you will receive for one unit of the base currency.

The difference between the highest and lowest price of an asset during a given trading session.

This type of trade involves the sale and later re-purchase of an instrument, at a specified time and date. Occurs in the short-term money market. A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above.

Recurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line. Individual investors who buy and sell securities for their personal account, and not for another company or organization. Risks can come from uncertainty in financial markets. The strategies to manage risk include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.

A ratio used by many investors to compare the expected returns of an investment to the amount of risk undertaken to capture these returns. The process by which a trade is entered into the books and records of the counterparts to a transaction.

The settlement of currency traders may or may not involve the actual physical exchange of one currency for another. 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.

A transaction that occurs immediately, but the funds will usually change hands within two business days after deal is struck. The current market price. Settlement of spot transactions usually occurs within two business days.

The difference between the bid and offer ask prices; used to measure market liquidity. Narrower spreads usually signify high liquidity. A currency swap is the simultaneous sell and buy of the same amount of a given currency. An effort to forecast prices by analyzing market data, i. Simultaneous buying and selling of a currency for delivery the following day. A systematic method for screening and evaluating stocks, determining the amount of risk that is or should be taken, and formulating short and long-term investment objectives.

Most plans require the use of various types of technical analysis tools. The mark-to-market Profit or Loss that occur from an Open Position, according to the relevant market rate in case of liquidation. The interest rate at which US banks will lend to their prime corporate customers.

The amount of funds that is set aside to keep the transactions open. The Used Margin acts as collateral for your net exposure per instrument, and is essentially locked away until such exposure is closed. Once transactions are executed, the required Used Margin is deducted from the Available Margin until such exposure is closed. The Used Margin is also known as Required Margin. The Used Margin calculation is according to the Margin Requirements and its calculation is available within the trading platform.

The date on which counterparts to a financial transaction agree to settle their respective obligations, i. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date. A statistical measure of a market or a security's price movements over time and is calculated by using standard deviation.

Associated with high volatility is a high degree of risk. The number, or value, of securities traded during a specific period.

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Online Trading Glossary A glossary of CFD and forex terms. Record of all transactions.

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Amount of money in an account. The riskier alternative among trading scenarios. The price, or rate, that a willing seller is prepared to sell at. The Australian Dollar Available Margin: One hundredth of a percent.

Bundesbank, Central Bank of Germany Bull: A situation where groups of financial securities are rising. A candle stick pattern. The end of the two shadows represents the high and low of the candle. The process of settling a trade. A transaction fee charged by a broker. The standard unit of trading. ECB - European Central Bank: The Central Bank for the European Monetary Union. The currency of the European Monetary Union EMU. The date on which a trade occurs.

Fed - Federal Reserve: The Central Bank for the United States. See "Forward" FRA - Forward Rate Agreements: A trade that remains open until the next business day. Profit and Loss Pip: It can refer to the amount of a currency either bought or sold by an investor. An indicative market price on a security at any given time.

A recovery in price after a period of decline. The price of one currency in terms of another. Process whereby the settlement date of a deal is rolled forward.

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