|52 Week High||As we are all aware of the fact that there are 52 weeks in a year. During an year price reaches a maximum level.This maximum level or price is called 52 week high.|
|52 Week Low||In a given year the lowest price at which the security is traded is called 52 week low.|
|Affiliate Program||A promotional scheme in which the person who promotes the broker is compensated.In return, the affiliate is paid either a fixed amount or a share of the revenue generated by the referred traders.|
|Arbitrage||Arbitrage is a system that includes exploiting value inconsistencies of a similar security, being exchanged at various exchanges|
|Ask||The cost at which the seller is happy to sell the security.It is also known as offer cost .|
|AUD||The ISO naming convention for Australian Dollar.|
|Available Margin||The amount of funds available in an account to execute a new transaction or to increase the position in the existing trades.|
|Average Price||It is a price based on average of high,low and close.|
|Back testing||Back testing is the process of testing one’s trading strategy using historical data. Back testing shows how your trading system would have performed historically.|
|Bar chart||A bar chart is a type of chart that shows the open, close, high and low in the price in a single bar.|
|Base currency||The first currency in a currency pair. This is the base value.|
|Base rate||The interest rate that a central bank charges for lending to commercial banks.|
|Basis point||A basis point is a unit of measurement of change expressed differently instead of a percentage. |
It is also called bps.
A 50 bps simply means 0.50%.
Basis point is widely used in central bank interest rate setting.
|Bear||An investor or a trader who believes that the price of the security will fall.|
|Bearish||Bearish is a market sentiment is used to describe the pessimistic view of the traders.|
|Bid||The price at which the buyer is willing to buy the security or the asset. |
The bid price is usually lower than the ask price
|Binary Options||Binary option is a type of option that pays a fixed amount or nothing at all. |
They are sometimes referred to as all or nothing options. With binary options, the risk is always fixed.
|BOC||The Bank of Canada is the central monetary policy and rate setting institution for Canada|
|BOJ||The Bank of Japan is the central monetary policy and rate setting institution for Japan|
|Bollinger Bands||Bollinger bands are volatility bands created by John Bollinger. Bollinger bands expand when prices are volatile and contract when prices trade in a flat range|
|Bond||A bond is a debt instrument issued by sovereign governments and corporates. When a bond is issued the issuer pays interest at fixed intervals and after the tenure of the bond, the principle is returned to the lender|
|Break even||Breakeven is the price level at which you do not have any risk left from the trade. When you reach break even level, you are trading without leaving any risk on the table.|
|Breakout||A breakout occurs when price has been moving in a sideways range or has been flat. Following this consolidation, price breaks out strongly from the range|
|Brent||Brent crude oil is the crude oil that is sold internationally.|
|Buba||Nickname of the German central bank, the Bundesbank|
|Bull||An investor or a trader who believes that the price of the security will rise|
|Bullish||Bullish is a market sentiment that is used to describe the optimistic view of the traders. When traders are bullish, the price of the security appreciates, or rises in value|
|Buy Limit||It is a pending order that is set at a price that lower than the current market price in anticipation that price will continue to rise|
|Buy Stop||It is a pending order that is set at a price that is higher than the current market price in anticipation that price will continue to rise|
|Cable||The nickname given to the GBPUSD currency pair. The name derives from the old days when an undersea cable connected New York and London|
|CAD||The ISO naming convention for the Canadian dollar|
|CALL||A CALL option is a contract where the option buyer expects the price of the security to rise before maturity|
|Candlestick chart||Candlestick charts are visual charts that represent the open and close in a hollow cylinder while the highs and lows are plotted as a wick. Candlestick charts were initially conceived in Japan and therefore are known as Japanese candlestick charts|
|Capital markets||Capital markets are those markes where the maturity of the issued security is longer than a year|
|Carry trade||Carry trade is a strategy where the trader borrows currency that has a lower interest rate and invests the proceeds in another currency which has a higher interest rate. Thus, using carry trade, investors are able to make a profit due to the differential interest rates|
|CBOE||The Chicago board of options exchange, the CBOE is an options and a futures trading exchange|
|CFD||Contract for Difference is a derivative of the underlying security. With CFD you only speculate on the price difference and do not own the underlying security|
|CFTC||Commodities and Futures Trading Commission is the regulatory authority for overseeing the futures market in the U.S.|
|CHF||The ISO naming convention for the Swiss franc|
|Chunnel||The nickname given to the EURGBP currency pair. The name is derived from the English Channel that connects mainland Europe to the UK|
|CME||Chicago Mercantile Group, is a futures trading trading exchange based in the U.S.|
|Commodities||Commodities are those securities that have an actual underlying delivery. Examples of commodities include Gold, Silver, Oil, Natural Gas, to name a few. Commodities are mostly traded as futures or CFD’s|
|Consolidation||Consolidation is a period where price tends to trade flat. It is also known as a sideways trend or a range|
|Correction||A correction occurs within a trend. It usually moves in the opposite direction to the trend. A correction allows prices to retrace part of the previous trend before resuming the direction of the original trend|
|CoT Report||Commitment of Traders report. It is released weekly by the CFTC and shows the holdings in various assets and securities of large institutions and commercials|
|CPA||Cost per acquisition or CPA is a type of compensation model where the forex affiliate is given a pre-determined fixed amount in compensation for referring a depositing client|
|CPI||Consumer price index. It is a measurement of the value of a basket of goods. Also known as inflation, CPI shows whether prices of commonly used goods are rising or falling|
|CPL||Cost per lead is a compensation model where the forex affiliate gets paid a pre-determined amount for refering a forex trader who opens an account|
|Cross rate||Cross rate is the exchange rate between two currencies that do not include the U.S. dollar|
|cTrader||cTrader is the trading platform from Spotware. It is a free to use trading platform which allows traders to analyze the charts and to execte trades|
|Currency pair||In forex, currency pairs are a combination of two currencies. The value is determined based on the exchange rate of one currency, relative to the other|
|DAX30||A list of top 30 market weighted stocks trading in Germany.|
|Day trading||Day trading is a concept where the trader trades the markets during the intraday sessions. |
All positions are closed before the close of business.
|Dealing Desk||A dealing desk is where the forex broker acts as a counterparty to the trader. |
With a dealing desk, the forex broker acts as market maker
|Death Cross||When a short term moving average cuts below its long term moving average, it is known as a death cross. |
A death cross signals a bearish market.
|Depth of market||Depth of market or DOM is a measure of the total number of open buy and sell orders at different price levels.|
|Derivative||A financial contract whose value is derived from the underlying security or the asset.|
Examples of derivatives include CFD’s, options, futures. Derivatives are used primarily for hedging and also for speculative purposes.
|Discount||Discount is when the price of a security is said to be undervalued|
|DJIA||Dow Jones Industrial Average, also known as the US30 or DJ30 is a market weighted index of the top 30 blue-chip companies in the United States.|
|DMA||Direct Market Access refers to the direct access to the exchange or broker’s order books that facilitate the daily transactions.|
|Dovish||Dovish is a term given to central bank monetary policy decisions. When a central bank is dovish, it is pessimistic about the economy and expects interest rates to fall.|
|Downtrend||A downtrend is formed when traders are bearish and expect price of the security to fall.|
Price makes lower Highs and Lower Lows.
|ECB||The European Central Bank, based in Frankfurt is the official central bank for the Eurozone.|
It is made up of the governing council who are regional central bank heads in the Eurozone.
|ECN||Electronics communication network or ECN for a short connect smaller brokers to a larger liquidity pool. |
An ECN allows for better liquidity in the markets
|Economic calendar||A calendar that lists the day’s or the week’s economic events. It includes various economic indicators such as GDP, Inflation, unemployment, trade deficit etc.|
|EIA||Energy Information Administration. The U.S. leading authority on oil and gas. |
The EIA relases the weekly crude oil inventory report on the total crude oil stockpiles for commercial use in the United States
|EMA||Abbreviation for the Exponential moving average, EMA is a type of moving average that gives more weight-age to the recent price thus making it more responsive.|
|Equity||Equity is used to raise cash by companies. |
Equity is issued in shares.
When investors buy the shares, they give money to the corporate and in return own a small piece of the company.
|ETF||Exchange Traded Funds are funds that are traded at an exchange.|
The ETF’s are managed by a fund manager and comprises of a selective pool of securities in the fund.
|EUR||The ISO naming convention for the Euro currency.|
|EURIBOR||European Interbank Offered Rate.|
Banks that are domiciled in the Euro area use EURIBOR rates as a the base for lending in EUR.
|Euro Stoxx50||A list of top 50 blue chip stocks across various major economies in the Eurozone.|
|Exotic Currency Pairs||Exotic currency pairs are those from emerging markets. Exotic currencies always include the USD. Examples include USD/TRY, USD/ZAR, USD/BRL.|
|Expert Advisor||Expert Advisor or an EA for short is a program that can automatically trade when certain conditions are met.|
EA’s are also known as trading bots or algorithms.
|Fakeout||A fakeout is failed breakout. |
A fakeout usually traps traders tricking them into believing that price will continue to move in the direction of the breakout only to reverse direction.
|Fed||Fed is the short for the U.S. Federal Reserve Bank. |
It is the central bank for the United States which is the only official institution that can print money legally.
The Fed also sets the interest rates for the United States
|Fed funds rate||The 30-day Fed funds rate is the rate set by the Federal Reserve Bank in the United States. |
The central bank influences the markets by setting the short term rates
|FIFO||First in, first out is a policy that requires traders to close the oldest or the first trade made when there are several open positions.|
|Fixed Exchange rate||Fixed exchange rate is where the value of one currency is fixed to another currency, usually the USD|
|Flash estimates||Initial or preliminary estimates for an economic report.|
|Floating Exchange rate||Floating exchange rate is where the value of the currency pair is determined by the open markets.|
|FOMC||The Federal Open Markets Committee is the rate setting committee for the Federal Reserve. |
It meets 8 times a year to determine interest rates and monetary policy
|FOMC||Federal Open Markets Committee is the policy setting committee of the U.S. Federal Reserve.|
|Forex||The forex or the foreign exchange market is one of the largest markets in the world, traded over the counter. |
In forex, one currency is traded against the other, which is determined by the exchange rate.
|Fractional pricing||Fractional pricing is when a forex broker offers quotes in the 5th decimal.|
Fractional pricing is 1/10th of a pip and is used for better price execution
|Fundamental Analysis||Fundamental analysis is the study of the economic and financial factors in an effort to predict whether the price of the security is undervalued or overvalued.|
|Futures||Futures markets are those where a contract is agreed upon where the buyer receives the delivery of the underlying security or asset at a pre-determined date while the seller receives a pre-determined amount.|
|Futures exchange||An exchange where futures contracts are traded.|
|Gap||A market phenomenon where price opens above or below the closing price of the previous session.|
Gaps occur where there is extreme buying or selling pressure.
This leads price to leave a gap from the previous session’s closing price
|GBP||The ISO naming convention for the British pound.|
|GDP||Abbreviation for Gross domestic product.|
It is a measurement of the total value of goods and services bought and sold within an economy.
|GFD||Also known as Good for the day, this is a type of a pending order that will remain as a pending order only until the end of the day unless it is automatically executed during the day.|
|Golden Cross||When a short term moving average cuts above its long term moving average, it is known as a golden cross.|
A golden cross signals a bullish market.
|Greenback||The nickname for the U.S. dollar.|
|GTC||Also known as Good till Cancelled, this is a type of a pending order that will remain as a pending order until it is cancelled or automatically executed.|
|Hawkish||Hawkish is a term given to central bank monetary policy decisions.|
When a central bank is hawkish, it is optimistic about the economy and expects interest rates to rise.
|Hedging||Hedging is a strategy that is used to offset a potential loss on one investment by transferring the risk into another investment.|
|Heikin Ashi chart||A Japanese candlestick chart which depicts trends based on its unique way of calculation.|
|Ichimoku Cloud||A Japanese trading indicator and trading system, the Ichimoku cloud is a dynamic support and resistance plotted in the form of a cloud.|
|Index||An index is a group of securities or assets.|
It measures the total value of the section of the assets in the index.
|Indicator||An indicator is derived from a mathematical formula from the price of the security.|
It is plotted on the chart and can show various aspects of price such as trends, momentum, volatility
|Indices||Indices is the plural for Index.|
It is a collection of various indexes where in, each index tracks a select group of assets or securities.
|JPY||The ISO naming convention for the Japanese yen.|
|Kiwi||Nickname for the New Zealand dollar.|
|Leverage||Leverage is a strategy where the investor borrows money in order to increase the returns on their investments.|
|LIBOR||London Interbank Offered Rate.|
Banks use the LIBOR rates as a base rate for lending in USD, GBP, JPY.
|Limit Order||A limit order is an order that is set a few points above or below the markets.|
You can set both a stop loss or a take profit order as a limit order
|Line chart||A line chart, as the name suggests is merely a line that plots only the closing price continously.|
|Liquidate/Liquidation||The process of closing an existing position by using an offsetting transaction. |
For example, to liquidate a long position, you would go short, or vice-versa.
|Long||Long or long position is when you hold a Buy position or want to hold a buy position.|
|Loonie||The nickname given to the USDCAD currency pair. |
The name is derived from the picture of the Loonie bird on the Canadian dollar coin
|Lot||A lot is the minimum amount of units that you can trade in forex.|
|Major Currency pairs||Major currency pairs are those which includes the USD. Ex. EURUSD, USDJPY, GBPUSD, USDCHF, etc.|
|Margin||Margin trading is a way to trade by using borrowed funds. This is similar to trading with leverage.|
|Margin call||A margin call is a broker’s demand to the trader who is using margin or trading on leverage to deposit additional funds.|
A trader is always required to maintain a certain percentage of the margin amount on their account. When this amount falls below the threshold, it results in a margin call.
|Mark-to-Market||Also known as MTM, it is the process of marking up the current prices (especially in derivatives) to the current market price.|
|Market maker||A market maker is a specialist who makes the market. They act as a liquidity provider for the traders.|
A market maker usually charges a spread
|Market Order||A market order is when the trade is executed at the current market price.|
|Median Line||Median line is another name for Pitchfork tool.|
|Median price||The median price is the mid-point in price that is the average of the high, and Low.|
|Micro Lot||A micro-lot is 1000 units of a currency pair|
|Mini Lot||A mini-lot is 10,000 units of a currency pair.|
|Minor Currency Pairs||Minor currency pairs are those which does not include the USD, but has some of the major currencies. Ex: EURGBP, EURAUD, GBPJPY.|
|Momentum||Momentum is the measure of the strength of the price. Momentum in trading is similar to that in physics which states when an object is moving in a direction it continues to move unless it is acted upon by an external force.|
|Monetary policy statement (MPS)||Monetary policy statement is a summary from a central bank on the decision it has taken. |
MPS is usually released after a central bank interest rate meeting
|Money markets||Money markets are those markets where the maturity of the issued security is shorter than a year.|
|Moving Average||An indicator that constantly plots the average price of the security based on the number of periods it is being calculated for.|
|MPC||Monetary policy committee is the rate setting committee of a central bank.|
|MT4||Metatrader version 4 is a popular forex trading platform that is available for free for the user.|
Using the MT4 platform, traders can conduct their chart analysis and also execute trades
|MT5||Metatrader version 5 is the latest forex trading platform.|
It is similar to the MT4 but offers more advanced features and larger markets for trading
|Net Deposits||Net deposits is the difference between the total deposits and the total withdrawals.|
It is one of the ways used in a forex affiliate program as a qualifying criteria for forex affiliates
|Non-dealing desk||A non-dealing desk is another name for STP. |
In a non-dealing desk, the trades are executed directly and matched with the liquidity pool.
|NYSE||New York Stock Exchange is one of the leading stock exchanges in the United States.|
|NZD||The ISO naming convention for the New Zealand dollar.|
|OCO||One-cancels-other is a type of order where two orders are placed.|
However, if one of the orders are executed, the other order is cancelled automatically
|Offer||The price that the seller is offering to sell the security or the asset. This is also known as the ask price|
|Open interest||The total number of outstanding positions that are currently open on a particular day. |
Open interest is widely used in options and futures trading.
|Open trades||The number of trades that are currently opened.|
|Option Contract||A contract that gives the buyer the right but not the obligation to take delivery of the underlying security.|
The seller or underwriter of the option is compensated by means of a premium that is paid by the buyer.
|Order book||A book, usually maintained by the exchange or a broker that shows the volume of trades at which traders want to buy or sell.|
|Oscillator||An oscillator is an indicator.|
The only difference is that an oscillator moves between fixed values and it is plotted on the sub-window of the chart.
|OTC||Short for Over the Counter, this is where securities are traded away from an exchange.|
The Forex markets are traded over-the-counter, while stocks are traded at an exchange.
|Parity||Parity in forex is defined as where the exchange rate is equal to 1. For example, if the EURUSD exchange rate is 1, the euro is said to be at parity with the U.S. dollar.|
|Pending Order||A pending order is another name for a limit order.|
It is a pending order until price reaches the pending order order.
Once this happens, the pending order is executed
|Pips||It is the unit of measure in a currency pair which determines the change in value.|
A pip is the fourth decimal in a forex pricing. If for example, the EURUSD moves from 1.1001 to 1.1002, that is a 1 pip move
|Pitchfork||Pitchfork is the same as median line. |
It is a technical analysis tool that is made up of three parallel trend lines to identify support and resistance levels
|PMI||Purchasing Managers Index.|
PMI’s are a leading economic indicator that foretells the business conditions.
|PnL||Short for Profit and Loss.|
|Premium||Premium is when the price of a security is said to be overvalued.|
|PUT||A PUT option is a contract where the option buyer expects the price of the security to fall before maturity.|
|Quote currency||The second currency in a currency pair. This is the quoted value. Example if 1 EURUSD =1.10, that means that the value of 1 euro is equal to $1.10|
|RBA||The Reserve Bank of Australia is the central monetary policy and rate setting institution for Australia.|
|RBNZ||The Reserve Bank of New Zealand is the central monetary policy and rate setting institution for the New Zealand.|
|Realized PnL||Realized PnL is the total profit or loss incurred after the trade is closed.|
|Renko chart||A renko chart is a type of chart that is unique from other chart types. |
Renko charts are not time dependent and use only price as the variable.
Depending on the chart setting, a new renko brick or box is plotted when price moves x ticks or pips as specified in the Renko chart settings.
A reversal Renko appears when price moves two times the x amount in pip or tick value.
|Resistance||In technical analysis, resistance is the area where there are more sellers in the markets.|
Thus, due to the increased supply or selling interest, price hits resistance and fails to rise further.
|Retracement||Retracement is similar to correction. It occurs within a trend and moves in the opposite direction of the trend.|
|Revenue Share||Revenue share is a type of a compensation model where the forex affiliate gets a share of the revenue generated by the forex traders that they refer to a forex broker.|
|Round trip||An open trade when closed equally is considered a round trip.|
|S&P500||An index of top 500 blue chip stocks traded in the United States.|
|Safe Haven||Securities or assets that are known to be more safer.|
They generally have lower returns.
Safe haven assets perform well during risk off conditions. Examples include bonds, the Japanese Yen, Gold and the Swiss franc.
|Scalping||Scalping is a trading strategy where the trader makes use of the intraday volatility to capture small profits.|
|SEC||Securities and Exchange Commission is the regulatory authority that oversees the equity markets in the U.S. and regulates stock exchanges|
|Sell Limit||It is a pending order that is set at a price that is higher than the current market price in anticipation that price will continue to decline|
|Sell Stop||It is a pending order that is set at a price lower than the current market price in expectation that price will continue to decline.|
|Short||Short or short position is when you hold a Sell position or want to hold a sell position.|
|Slippage||The difference between the price that was requested and the actual price at which an order was filled.|
|SMA||Also known as the Simple moving average, the SMA is a type of moving average that gives equal weight-age to all the price points.|
|SNB||Abbreviation for the Swiss National Bank.|
|Spot market||The market at which the goods or the security is exchanged for the prevailing or the current price.|
|Spread||The difference between the Bid and the Ask price of a security.|
|Standard Lot||A standard lot is 100,000 units of a currency pair.|
It is also known as 1 lot.
|STIBOR||Stockholm Inter bank Offered Rate. |
Banks based in Sweden and other Scandinavian countries use the STIBOR as the base rate for lending in SEK.
|Stock exchange||An exchange where stocks are traded.|
|Stop Loss||A stop loss is a price level where your trade will be automatically closed if your trade is in the loss. |
A stop loss is used to protect the trader from taking on further losses.
A stop loss is a pending order
|STP||Straight through processing is a type of a execution used by the forex broker.|
Here, the forex broker does not interfere in the trade execution but simply passes them as STP to their liquidity pool.
|Strike Price||Used in options trading, it is the price at which the option contract can be exercised.|
|Support||In technical analysis, support is the area where there are more buyers in the markets.|
Thus, due to increased demand, price is supported at the level
|Swap||Swap or an overnight swap is the financing fee for an asset or a security.|
In forex, when you hold a position overnight, you will be charged the overnight swap rate.
|Swing trading||Swing trading is a trading strategy where the trader keeps a position open for a few days to a few weeks.|
Swing trading is a medium to long term trading strategy
|Take profit||A take profit is the price where your trade will be automatically closed if it is in profit.|
A take profit level allows you to determine the profits before hand and once executed, your trade is closed automatically.
|Technical Analysis||Technical analysis is the study of past price history to predict future price movements.|
|Tick||The minimum price change in the security.|
|Trend line||A trend line in technical analysis is drawn by connecting the highs or the lows in price.|
It is usually an inclined line and it acts as a dynamic support or a resistance level.
|Unrealized PnL||Unrealized PnL is the total profit or loss incurred on the trade which is currently open.|
|Uptrend||An uptrend is formed when traders are bullish and expect price of the security to rise.|
|USD||The ISO naming convention for the U.S. dollar.|
|Volatility||Volatility is a statistical measure of the dispersion of the returns for the given security in question.|
Volatility is usually measured in standard deviation
|Volume||Volume is the quantity of shares or contracts that have exchanged hands during a trading day. |
It is also known as trading volume.
|WTI||West Texas Instrument is a type of crude oil that is widely used in the United States.|