Glossary Forex Terms EN

UNREALIZED GAIN OR LOSS – The theoretical gain or loss made on an open position and valued at current market rates. Unrealized gains/losses become profits/losses when the position is closed. TRENDING – Trending refers to the phenomenon by which price movements tend to persist in a particular direction during a particular period of time. Market trends indicate upwards , downwards , and sideways market movements over time.

Sentiment Analysis – A study to predict a crowd psychology or herding behavior to determine the direction of the price movement of a security. The crowd psychology is often derived from an expectation of an outcome. This type of trading strategy is called Trading the Market Sentiment. Safe Haven Currency – At times of uncertainty in the forex market, investors trigger the safe haven appeal by investing in Gold and other forex currencies. The most popular safe haven currencies are the Japanese Yen and the Swiss Franc. Safe Heaven – The term safe haven refers to the situation when an investor looks for the safer assets to invest in at times of uncertainty in the market.

32) Major security-based swap participant The term “major security-based swap participant” has the meaning given the term in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c). Hybrid instrument The term “hybrid instrument” means a security having one or more payments indexed to the value, level, or rate of, or providing for the delivery of, one or more commodities. A graphic representation of market yield for a fixed income security plotted against the maturity of the security.

Canadian Dollar

Any index of securities that does not meet the legal definition of narrow-based security index. An option pricing model initially developed by Fischer Black and Myron Scholes for securities options and later refined by Black for options on futures. A measure of the variability of rate of return or value of a stock or portfolio compared to that of the overall market, typically used as a measure of riskiness. A market in which prices generally are declining over a period of months or years. A contract that allows the holder to convey his rights to a third party.

As a result, traders are able to participate in the market whenever and wherever it is most convenient for them. It also suggests that trading is continuous and offers opportunities for profit for traders. In general, the forex market offers traders a variety of opportunities to engage in the buying and selling of different currencies in a dynamic, constantly changing marketplace.

CURRENCY PAIRS

The difference between the yield on the debt securities of a particular corporate or sovereign borrower and the yield of similar maturity Treasury bills, notes, or bonds. A put option that makes a payoff in the event the issuer of a specified reference asset defaults. An option pricing model developed by John Cox, Stephen Ross, and Mark Rubinstein that can be adopted to include effects not included in the Black-Scholes Model (e.g., early exercise and price supports). A temporary decline in prices during a bull market that partially reverses the previous rally. An account for which trading is directed by someone other than the owner.

Selling a futures contract or other instrument with the idea of delivering on it or offsetting it at a later date. The act of fulfilling the delivery requirements of the futures infinox media client reviews contract. A contract for the sale or future delivery of a single security or of a narrow-based security index. A form of auction where buyers submit one concealed bid .

• Contrary to popular belief that a spike can only describe an upward trend, in the world of forex, it has also been used to describe a downward trend.
• In that regard, they hold an opposite view to bulls, who believe that a market is going upwards.
• The changes in the exchange rate against a trade weighted basket including the currencies of the county’s principal trading partners.
• Refers to those swaps transactions on swap execution facilities that are subject to the trade execution mandate and thus must be traded on a SEF or DCM.

After a round of bidding has closed, submitted bids are compared and the person with the highest bid wins the award and pays the amount of his bid to the seller. A quantity of a commodity equal in size to the corresponding futures contract for the commodity. A spot contract that provides for delivery of a commodity on the next calendar day or the next business day. A spread between the municipal bond futures contract and the Treasury bond contract, also known as munis over bonds. A mixed swap is a swap that has characteristics of both a swap and a security-based swap. For example, a credit default swap on a single firm that includes contingencies based on the price of a commodity, would be considered a mixed swap.

Inside Day

A standardized measure of financial instruments, which varies by asset class, traded on an exchange. In currency trading, contract size is measured in lots, each lot being the equivalent of 100,000 units of the base currency. What’s important when trading on leverage is to always keep an eye on your free margin. Your free margin equals your total equity (account size + any unrealized profits/losses), minus your used margin. If your free margin drops to zero, you’ll receive a margin call and all your open trades will be closed at the current market rate.

TICK – Refers to the minimum upward or downward movement in the price of a futures or options contract during a trading session specified by the terms of the contract. TAKE PROFIT – A take profit order, also shortened to T/P, is a risk management tool allowing a position to be closed automatically, once it reaches a specific preset profit goal. This protects against profits being lost in an unanticipated reversal of price direction before the investor can close the position. NEW YORK STOCK EXCHANGE – Also known by the name NYSE, or the Big Board, it is the world’s biggest equity exchange based on the total market capitalization of its listed securities.

A three-legged option spread in which each leg has the same expiration date but different strike prices. For example, a butterfly spread in soybean call options might consist of one long call at a $5.50 strike price, two short calls at a $6.00 strike price, and one long call at a $6.50 strike price. A forward pricing sales arrangement in which the cash price is determined either by the buyer or seller within a specified time. At that time, the previously-agreed basis is applied to the then-current futures quotation. Market situation in which futures prices are progressively lower in the distant delivery months. For instance, if the gold quotation for January is $360.00 per ounce and that for June is $355.00 per ounce, the backwardation for five months against January is $5.00 per ounce.

Day Trade

During an uptrend, prices will find resistance at the lines above the 45 degrees line. Consequently, prices are expected to find support at the lines below the 45 degrees line. Geometric mean of a trade shows by how many times the capital changed after each trade on average.

It’s placed above the CMP if a trader expects that the price will soar further on the breakage of a certain level. WORLD BANK – An international agency that channels aid funds to developing countries, and raises funds by selling bonds on world capital markets. TWO-WAY PRICE – A term meaning that both a bid and offer rate has been quoted for a forex transaction. TRAILING STOP – A trailing stop lets a trade keep rising in value when the market price moves in the right direction for the investor. However, if the market price suddenly moves a preset amount in an unfavourable direction then the trade is automatically closed. TECHNICAL ANALYSIS – Technical analysis is a means of assessing the price direction of an instrument, based on price charts and historical performance.

While this list is not all-inclusive, it covers the 15 most common terms regularly used by Forex traders. If you’re a beginner in the Forex market, chances are you’ve stumbled upon an article or forum post that include terms such as “pips”, “cross-pairs”, “margin” and others. Exchange rate regime in which a currency is pegged by the Central Bank so that it cannot fluctuate against other currencies.

An order to buy or sell a financial instrument at the best possible price at the time the order is placed. A series of positions and open orders that are built with a predetermined spread defined by the trader. An order instruction provided to a broker that does not expire at the end of the trading day, although normally terminates at the end of the trading month. Funds that are available to you for the settlement of a foreign exchange transaction. A Central Bank provides financial and banking services for a country’s Government and Commercial Banks.

High-Frequency Trading (HFT)

It is used to analyse a company’s financial performance and profit potential where the company is undergoing a restructure or if its rent expenses are higher than average. Bond convexity is a measure of the relationship between a bond’s price and interest rates. It is used to assess the impact that a rise or fall in interest https://day-trading.info/ rates can have on a bond’s price – which highlights a bond holder’s exposure to risk. Cash flow is the amount of money coming into and going out of a company’s accounts, as reported in earnings announcements. Capital gains tax , is the tax levied by the government on the profits made from financial asset sales.

A price level usually defined as a previous top, where selling pressure overcomes buying pressure. As a result, prices may find it difficult to break above. When a broker is not able to fill a trader’s order at the specific price due to an unusually rapid price movement. The broker would then quote the next best available price, seeking the trader’s confirmation to fill the order.

The amount of money in the economy, which can be measured in a number of ways. Comprises the acceptance and re-lending of deposits on the money market. A market maker is a person or firm authorised to create and maintain a market in an instrument.

The Upper and Lower Lines are parallel to and equidistant from the Trendline. The distance between either Line and the Trendline, represents the maximum close price deviation from the Regression Trendline. A price chart that uses only the closing price for each period.

It refers to an instruction to buy or sell a specific instrument at a certain price. In the case that the order is not executed during the trading day it was placed on, it automatically expires. The effective exchange rate is an index that shows how strong a currency is in relation to a basket of other major currencies.