A
Appreciation growth, a currency is
said to 'appreciate' when it
strengthens in price in response to
market demand.
Arbitrage a purchase or sale of an
instrument and simultaneous taking
of an equal and opposite position in
a related market, in order to take
advantage of small price
differentials between markets.
Ask price the rate at which a
client carries out a trading
operation of buying. It is shown on
the right side of the quotation.
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B
Balance the amount in the traders
account after the last complete
transaction.
Bar chart a type of chart which
consists of four significant points:
the maximum and minimum prices which
form the vertical bar, the opening
price, which is marked with a little
horizontal line to the left of the
bar, and the closing price, which is
marked with a little horizontal line
to the right of the bar.
Base currency the first currency
in a currency pair.
Bear a market participant, who
thinks that prices will go down.
Bear market a market distinguished
by declining prices.
Bid price the rate at which a
client carries out a trading
operation of sale. It is shown on
the left side of the quotation.
Big figure A change in the
financial instrument price by the
base value of 100 points (jargon).
Bookmakers working time the time
during which the Bookmaker accepts
bets, opens and closes positions.
Breakout the prices crossing of
support or resistance levels.
Broker an individual or firm that
acts as an intermediary, putting
together buyers and sellers for a
fee or commission.
Bull a market participant, who
thinks that prices will go up.
Bull market a market distinguished
by rising prices.
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C
Clearing the process of settling a
trade.
Close position to sell or buy a
certain amount of currency to offset
an equal amount of the open
position. This will 'square' the
position.
Commission a fee the broker
charges for a transaction.
Confirmation is seen when one or
more indicators confirm the data of
another one.
Consolidation the same as deadlock
field. Consolidation, however,
assumes continuation of the
preceding tendency.
Contract the standard unit of
trading on certain exchanges.
Contract for difference, CFD is
over-the-counter market trading
instrument that allows to trade on
the stock without a real asset
delivery.
Counter currency the second
currency in a currency pair.
Cross currency pairs, Cross rate a
rate between two foreign currencies
with the exception of USD. For
example: EUR/GBP.
Currency any official form of
money.
Currency pair the two currencies
that make up a foreign exchange
rate. For example, EUR/USD is a
currency pair.
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D
Day trading opening and closing
the same position or positions
within the same trading session.
Deficit a negative trading or
payment balance.
Deposit the money placed at a
trading account available for
further operations.
Derivative 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.
Divergence a discrepancy, when two
or more index charts show
discrepancy with the price chart.
Double Bottom a figure of
technical analysis of the market
situation: the rate lowers to a
certain level twice and then
increases again.
Double Top a figure of technical
market situation when the rate
increases to a certain level twice
and then lowers again.
Downtrend a declining trend,
accompanied by diminishing maximums
and/or minimums.
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E
Elliott Wave theory a method of
technical analysis and price
forecasting based on R. N. Elliotts
theory. The main point of it is that
price movement has 5 waves in one
trend direction followed by 3
correction waves.
Equity - value that reflects the
Clients current account status
taking into consideration the
operations carried out at the given
moment.
Euro European Union currency.
European Central Bank, ECB the
Central Bank for the new European
Monetary Union.
European Monetary Union EMU the
principal goal of the EMU is to
establish and maintain a single
European currency called the Euro.
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F
False breakout short term price
movement (financial asset rate)
through a certain hypothetical
boundary (previous top or bottom,
consolidation level) and then return
to the initial level and price
movement in the opposite direction.
Fed, FRS, Federal reserve system
the central bank of the USA.
Forecast attempt to predict a
future tendency via examination and
analysis of the available data.
Forex, Foreign Exchange Market the
international exchange market, the
market for conversion exchange
operations of specified amounts of
one countrys currency into the
currency of another country
according to an agreed rate for a
given date.
Fundamental analysis analysis of
economic and political information
with the objective of forecasting
future financial market movements.
Futures a way of trading financial
instruments, currencies or
commodities for a specific price on
a specific date in the future.
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G
Gap a situation when the price of
an instrument at opening of the
trading session varies form the
price at closure of the preceding
one with formation of an unfilled
price range.
Going long buying shares,
commodity or currency for investment
or speculation purposes.
Going short sale of shares,
commodity or currency in
anticipation of its price reduction
and being able to buy it back in the
future.
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H
Hedging a policy of risk
neutralization by means of opening a
position in the opposite direction
for the same financial asset type
and with the same lot amount to the
given one.
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I
Indicator, custom/technical
indicator mathematical conversion
of the price and/or financial
instrument amount for prediction of
future price changes. On the basis
of technical indicator signals,
decisions when and how to open
positions are made.
Inflation economic condition where
there is an increase in the price of
consumer goods, thereby eroding
purchasing power.
Interbank rates the Foreign
Exchange rates which large
international banks quote for other
large international banks.
Intervention action by a central
bank to effect the value of a
particular currency by entering the
market.
Intra-day any period of time
shorter than a single day.
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L
Leverage ratio of the transaction
to the required security deposit.
Long position a position to
purchase more of an instrument than
is sold, hence, an appreciation in
value if market prices increase.
Lot a unit to measure the amount
of the deal. The value of the deal
always corresponds to a decimal
fraction of the lot.
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M
Margin the required equity that an
investor must deposit to
collateralize a position.
Margin call the state of a trading
account when the Client loses an
opportunity to manage it. ln case of
a margin call all the positions
would be closed by the Bookmaker on
any immediate quotation. Margin call
comes, when a Margin level reaches
30% and lower.
Margin trade operations of
buying/selling securities or
currencies carried out by a client
by means of a special margin account
opened at a brokers. The principle
of Margin trade is that the client
pays only a part of the transaction,
the rest of the amount is provided
by the broker as credit.
Market maker a dealer who supplies
prices and is prepared to buy or
sell at those stated bid and ask
prices. A market maker runs a
trading book.
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O
Open position to open a
deal/transaction, i.e. to buy or
sell a currency.
Order 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.
Oscillator a curve of temp, which
fluctuates around the zero line (or
between 0 and 100%), a technical
indicator that shows the overbought
or oversold market state.
Overbought a market condition
after an abrupt price rise. In this
situation a corrective recession is
possible.
Oversold a market condition after
an abrupt recession. In this
situation a corrective price rise is
possible.
Over the counter market OTC used
to describe any transaction that is
not conducted over an exchange.
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P
Pip, point, tick the term used in
currency market to represent the
smallest incremental move an
exchange rate can make. Usually it
is the second or fourth decimal
point, 0,01 or 0,0001 respectively.
Position the netted total holdings
of a given currency.
Profit gains exceeding over
losses.
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Q
Quote, Quotation an indicative
market price; shows the highest bid
and/or lowest ask price available on
a security at any given time.
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R
Rally recovery of the rates after
a fall.
Range the difference between the
highest and lowest price of a future
recorded during a given trading
session.
Rate the price of one currency
expressed in units of another
currency.
Reaction movement of the prices
against the prevailing trend.
Rebound a change of direction of
market price movements after a
long-term tendency of their growth
or reduction led to the situation
that the market participants
consider the given levels too high
or too low.
Resistance 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.
Resistance level 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.
Retracement, Correction a reverse
movement of the price or its
rollback from the previous maximum
or minimum expressed in percentages,
the most popular are 38%, 50% and
62% retracements.
Risk exposure to uncertain change,
the likelihood of significantly
less-than-expected returns.
Roll-over process whereby the
settlement of a deal is rolled
forward to another value date. The
cost of this process is based on the
interest rate differential of the
two currencies.
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S
Short position 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.
Spot a transaction that occurs
immediately, but the funds will
usually change hands within two days
after the transaction took place.
Spot price the current market
price. Settlement of spot
transactions usually occurs within
two business days.
Spread the difference between the
bid and ask prices.
Square purchase and sales are in
balance and thus the dealer has no
open position.
Stop Out condition when the Client
is no longer able to manage their
account and one or several of its
open positions are compulsorily
closed at any nearest available
price for preserving a positive
account balance. Stop Out takes
place when the account balance
percentage indicator (Margin Level)
drops to 20% of the initial deposit
or lower.
Support level a term used in
technical analysis indicating a
specific price level at which a
currency will have the inability to
cross below. Recurring failure for
the price to move below that point
produces a pattern that can usually
be shaped by a straight line.
Swap the simultaneous sale and
purchase of the same amount of a
given currency at a forward exchange
rate. It usually takes place during
transmission of the position to the
following day.
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T
Technical analysis an effort to
forecast prices by analyzing market
data, i.e. historical price trends
and averages, volumes, open
interest, etc.
Trader natural or legal person who
sells and buys securities or
currencies in the market.
Trading buying and selling
securities, goods or currencies on a
short-term basis for obtaining
profit.
Trading dollar a unit of trading
operations by which the profit or
loss is calculated.
Trading range a situation when the
prices balance between horizontal
support and resistance levels.
Trading session a continuous
period of time during which trading
operations are run.
Trend a prevailing price movement
direction. Ascending tops and
bottoms form an uptrend, descending
a downtrend.
Trendline a line on the price
chart connecting a number of
descending and ascending maximums.
For building up a trendline at least
two points are necessary.
Turnover the volume traded, or
level of trading, over a specified
period, usually daily or yearly.
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U
Uptrend prices increase
accompanied by a number of ascending
maximums and minimums.
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V
Value date the date on which
counterparts to a financial
transaction agree to settle their
respective obligations, i.e.,
exchanging payments. For spot
currency transactions, the value
date is normally two business days
forward.
Volatility a statistical measure
of a market or a securitys price
movements over time and is
calculated by using standard
deviation. Associated with high
volatility is a high degree of risk.
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W
Weighted moving average a sliding
average, during calculation of which
every price value is given a certain
weight. Usually the last indicator
is allocated the bigger weight. |