FinixMarkets
Trader`s Glossary
Learn Forex from A to Z. Expand your trading vocabulary and get to see what the most common terms and phrases used by traders mean.
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#, A
ASK/Ask Price
Also known as Buy price, it is the amount when entering an uptrend position ( ↑ ), i.e. it is the amount a seller is willing to take for the asset/security in question.
Asset
Resources being exchanged on the market, the value of which may change. Fondex, for instance, offers 7 asset classes : FX pairs, Indices, Stocks, Metals, Energies, Crypto and ETF'S
Averaging Down
The practice of buying shares in a company at a price lower than the price one paid in the past for the same share – decreasing the average entry price of held shares.
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B
Balance
Amount of funds in an account.
Base Currency
Every currency pair has a base currency and a quote (counter) currency. The base currency is the one you see first in a currency pair. For example, in the case of EUR/USD, EUR = BASE & USD = QUOTE
Bear Market
A bear market is known as when the market experiences a prolonged price fall as a result of negative investor sentiment.
Bearish
Both, investor behaviour and a market, may be described as bearish when asset values begin to fall.
BID/Bid Price
Also known as Sell price, it is the amount when entering a downtrend position ( ↓ ), i.e. it is the amount a buyer is willing to pay for the asset/security in question.
Bid/Ask Spread
The difference between the Bid and Ask prices.
Bitcoin
Bitcoin is a type of cryptocurrency. A virtual or digital currency, exchanged on a Peer-to-Peer network with no central bank or single administration control.
Break-Even Point
The point at which an asset's market price reaches its original cost.
Bull Market
A bull market is known as when the market experiences a prolonged price increase as a result of positive investor sentiment.
Bullish
Both, investor behaviour and a market, may be described as bullish when asset values begin to rise.
Buy Signal
A buy signal indicates that an asset's price will increase in the future, hence signalling investors that it's time to buy the asset in question.
Buy Limit Order
In the case of a Buy Limit order, If the Ask price reaches the specified level, a long position is opened.
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C
Cable
A popular nickname for the GBP/USD currency pair, dating all the way back to the 19th century.
Candlestick Chart
Candlestick Charts, also known as Japanese Candlesticks, help traders determine future price movements, based on past patterns (i.e. Hammer, Head and Shoulders etc.). Each candlestick displays the high, low, open, and closing prices of a security for the period in question. Each candlestick normally represents one day.
CFD
A CFD, also known as a Contract for Difference, is a derivative contract that allows a trader to speculate on possible rises and falls of an asset, without actually owning the asset or having any rights or obligations with regard to it.
Chart
Visual representation of data that usually provides qualitative and quantitative information. In financial trading, the most frequently used charts are Bar Charts, Candlestick Charts (OHLC Charts), and Renko Charts.
Closed Position
Also referred to as 'closing' a position. An opposing transaction to an existing position with the intention of closing the initial position.
Closing Price
The price at which a security closes at the end of a trading session, remaining at that level until the next trading session.
Commodity
A basic good, usually used as an input in the manufacturing process of products, or in the provision of services. The most common traded commodities are gold, silver, natural gas and oil.
Currency Pair
All currencies are traded in pairs. When you buy or sell one currency, you automatically sell or buy another. In every currency pair, there is a base currency and a quote currency – the base currency appears first, and the quote currency - second. Please see "Base Currency" for more information.
CySEC
CySEC, also known as the Cyprus Securities & Exchange Commission (est. 2001) is the financial regulatory authority of Cyprus. CySEC is responsible for regulating, monitoring and supervising the Cyprus Stock Exchange, as well as all licensed financial companies and brokerages, operating therein.
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D
Day Trading
Buying or selling financial assets within a one-day time period, so that all positions opened during an exchange's session are closed within the same session.
Deposit
Funds placed into an account as savings, or as the principal on an investment to accrue interest or profit.
Depreciation
The decrease in value of an asset.
Downtrend
A downtrend shows decreasing values over time.
Dow Jones
The Dow Jones Industrial Average is a stock market index, tracking 30 major US-based public companies. It is one of the most commonly-followed US indices.
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E
Economic Calendar
An economic calendar covers economic data releases and events that may affect the market in chronological order.
ECN
Also known as an Electronic Communications Network, ECN is a computer system that automatically matches buy and sell orders in the market, facilitating trading outside brick-and-mortar stock exchanges.
Equity
While your balance reflects the amount of money in your trading account, minus your profit/loss from closed positions, equity reflects total money in your trading account plus/minus profit/loss from your closed AND open positions.
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F
Foreign Exchange (Forex/FX)
An exchange for currencies belonging to different states. The foreign exchange market is global, decentralized and not bound by time constraints.
Fundamental Analysis
Fundamental analysis is a method of market analysis, based on geopolitical events and news, as well as economic, fiscal and monetary announcements and releases.
Futures
A futures contract is a standardized legal agreement to buy or sell a financial instrument at a predetermined price, at a specified time in the future.
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G
GDP
Also known as Gross Domestic Product, GDP is the total fiscal value of all goods and services produced in a country over a defined period of time. Calculated monthly, quarterly or annually, depending on the country in question. Changes in GDP are typically measured quarterly or annually, but occasionally also monthly.
GNP
Also known as Gross National Product, GNP is the total fiscal value of all goods and services produced by a country's own residents over a defined period of time. Unlike the GDP, GNP also includes foreign production.
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H
Hedge
Hedging means investing in order to offset potential loss that results from another investment. It can be undertaken through a variety of instruments, including commodities, currencies and securities.
Holder
The owner of a financial instrument.
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I
Inflation
Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
Instant Execution
Instant execution means that once an order with a specified volume is placed, a transaction is executed immediately, based on the asset value currently quoted in the platform.
Instrument
An instrument is any tradable asset - currency, commodity, security, derivative.
Interest rates
An interest rate is how much interest is paid by borrowers for the money that they borrow. Interest rates in a country are usually guided by a base rate set by its central bank.
Investment Amount
The amount of money one invests in a transaction.
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J
JPN 225
A popular nickname for the NIKKEI index.
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K
Kiwi
A popular nickname for the NZD/USD currency pair.
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L
Leverage
Leverage allows one to trade higher volumes, without putting up the full amount of collateral required. In other words, it permits one to make larger trades by "borrowing" balance from the broker.
Limit Order
A limit order is a type of order that instructs your broker to buy or sell an asset at a specified price or better. In the case of a buy limit order, the price is placed below the present market price. In the case of a sell limit order, the price is placed above the present market price. Once the price in question is reached and the order is triggered - a position is opened.
Line Chart
A line chart reflects an asset's historical price action over a selected time period in line format.
Liquidity
Liquidity refers to the extent to which the asset in question can be sold quickly on the market, without a major discount. A liquid market, in turn, is a market with many buyers and sellers, coupled with low volatility and spreads. As an example, the USD is the most liquid currency, and the Forex market is the most liquid market of all.
Long Position
Opening a long position (going long) implies that you expect the asset in question to increase in value.
Lot Size
A lot can come in a variety of sizes. The quantity of an instrument denoted by a lot varies by asset class. Simply put, it is the size of the contract of the CFD in question.
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M
Margin
Simply put, a margin is a good faith deposit/collateral used to open and maintain a position. It is not a fee or a transaction cost, but rather an amount your broker sets aside in order to keep your trade open and make sure that you are capable of covering potential losses from your trade.
Margin Call
A margin call is a warning issued to a trader, alerting them that their available equity has fallen below the level necessary to maintain their positions. This means positions are in danger of automatic close.
Market Execution
A type of transaction execution, by means of which an order is filled at the best available market price. If not available, the order is executed at the closest available price.
Market Quote
The current asking price of a securities contract.
Momentum
The rate at which an asset's price changes.
Monetary Policy
Monetary policy consists of decisions made by a country's central bank.
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N
NYSE
The New York Stock Exchange is the world's largest stock exchange, located at 11 Wall Street in New York City. The NYSE currently lists 2,400+ companies.
NYSE AMEX
American Stock Exchange. It was acquired by NYSE Euronext in 2008, and currently operates under the NYSE structure. It is best known for listing small- and micro-cap companies.
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O
Open Order
An open order is an order that has not yet been filled. It remains an open order to buy or sell the asset in question until it expires, gets cancelled by the trader or becomes an open position.
Open P&L
The sum of a trader's profits and losses on open positions, should all trades be closed.
Open Position
An open position is an active trade, able to generate profit and loss.
Over the Counter
A transaction done directly between two parties, not through a centralized exchange.
Owner
One who enjoys the benefit of possessing an asset.
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P
Payout
The return on an investment over a defined time period. Payout can be expressed in both currency and percentage terms.
Pending Order
A pending order is an order that is not to be executed until the market price reaches a certain level. The 4 types of pending orders include buy limit, sell limit, buy stop and sell stop.
Pip
A pip is a point in percentage - the unit by which a currency pair can change. For the majority of currencies - a pip is the fourth digit after the decimal point. In the exceptional case of JPY, however, it is the third digit after the decimal point.
Point
The first digit before the decimal point.
Position
An open trade or transaction. A position can be long or short.
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Q
Quote
Every currency pair has a base currency and a quote (counter) currency. The base currency is the one you see first in a currency pair. For example, in the case of EUR/USD, EUR = BASE & USD = QUOTE.
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R
Range
The difference between the highest and lowest values of an asset in a given time period.
Rate
The price of one currency relative to another.
Realized Gains & Losses
Profits or losses incurred as the result of a transaction.
Resistance
In technical analysis, resistance lines on a price chart indicate that the asset in question is overbought.
Risk Management
Risk management is a collection of practices used to identify, evaluate and prioritize risks in order to minimize losses.
ROI (Return on Investment)
ROI is a ratio between net profit and cost of investment. ROI is used to evaluate the efficiency of an investment, or to compare the efficiencies of several different investments.
RSI
Also known as Relative Strength Index. A technical indicator that measures the strength of an asset's price movement by measuring its velocity and magnitude.
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S
Shares (stocks)
Shares are single units of ownership in a company, financial asset or fund, distributed by the company itself.
Short
A position that becomes profitable if the market price of an asset falls.
Slippage
Slippage is the difference between a trade's expected price and the price at which it is actually executed. Slippage often occurs as a result of unexpected news, or during generally volatile market periods.
Spot Price
Market price.
Spread
The difference between the bid and ask price.
Stock Index
The stock index, also known as the stock market index, is a measure of a stock market or its subset that helps investors compare current prices with historical ones, in order to estimate market performance.
Stop-Loss
A stop-loss order can be defined as an order to sell an asset when it reaches a particular price. A stop-loss is used to minimize losses in the case that an asset's value goes opposite of the desired direction.
Stock Exchange
A location that facilitates the purchase and sale of securities issues by companies. The exchange is usually divided into a primary market and a secondary market.
Support
In technical analysis, support lines on a price chart indicate the level at which the asset in question has been oversold.
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T
Take-Profit
A risk management tool used to secure a profit once the value of the asset in question reaches the desired profit price. Once the asset reaches the desired price, the position is closed.
Technical Analysis
Technical analysis is a method of market analysis that uses a variety of tools to predict or define the future, current and past movements of the asset in question with the use of graphs, mathematical formulas, indicators and oscillators.
Tick
An asset's smallest possible unit of measurement and price movement.
Trader
A trader is an individual who executes orders in the financial market.
Turnover
The total volume of transactions executed during a certain time period.
Trend
The directional movement in an asset's value over time.
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U
Used Margin
Funds from one's equity devoted to maintaining open positions.
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V
Volatility
Volatility is the radical change in the price movement of the asset in question. The higher the volatility, the riskier the security.
V-Shaped Recovery
A V-shaped recovery is an economic cycle of recession and recovery. The chart shape shows a sharp decline, followed by a sharp rise, resembling the letter V.
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W
W-Shaped Recovery
A W-shaped recovery is an economic cycle of recession and recovery. The chart shape shows a sharp decline, rise, decline and another sharp rise, resembling the letter W.
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X
XAU
The symbol for gold.
XAG
The symbol for silver.
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Y
Yield
Profit of an investment, typically expressed as a %
YOY
Abbreviation for Year Over Year.
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Z
Zero-coupon bond
A bond with no periodic coupon payments. In the case of a zero-coupon bond, both the principal and interest are paid at maturity.