Forex Glossary Terms

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Forex Glossary Terms

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ACCOUNT STATEMENT REPORT
The FXDD Account Statement Report provides the customer with all debits, credits, trading confirmations and other activity that occurs in the customer’s account over a specified period of time. Forex Glossary Terms

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Forex Glossary Terms

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Forex Demo Accounts

FX Trading with a demo account before trading with a live account is crucial. If a fx broker doesn’t offer demo accounts, run in the other direction. By trading with a demo account you can trade with real conditions but virtual money. FxPremiere only recommends using the fx signals on a demo for learning purposes. Many of FxPremiere Group subscribers do use the fx signals on a live account at their risk fully. Learn How to Trade Forex.

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Reliable Trading Platforms

As seen the best fx broker will offer the best trading platforms.Forex Glossary Terms  A reliable forex platform will offer you quick access to technical and fundamental analysis, an excellent security system, automated trading, visual features like graphs and charts and should always be user friendly. The market standard is the sophisticated MetaTrader 4 or 5 which is also on all FX Brokers FxPremiere Group recommends. Forex Signals Alerts SMS

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FxPremiere The Industry’s Most Important Terms Explained
Forex Signals Glossary .The Industry’s Most Important FX Terms Explained – The forex signal industry is made up of countless definitions and it’s easy to forget a few along the way. But because no forex education can be complete without a glossary of forex signal terms, we’ve compiled one which aims at explaining key definitions in the simplest way possible. This way you can always get to read the definitions. Forex Signals Alerts SMS

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Capital Market Sessions

The Forex Market is not limited to a specific area and thus Fx trading sessions do not have a precise schedule. Open and close times follow each session’s local business hours which are also subject to daylight savings time. Forex Glossary Terms

The Asian Session

SUMMER TIMEWINTER TIME
GMTOpenCloseOpenClose
Tokyo0:006:000:006:00
Shanghai1:307:001:307:00
Singapore1:009:001:009:00
General0:009:000:009:00

The European Session

SUMMER TIMEWINTER TIME
GMTOpenCloseOpenClose
Frankfurt7:0015:308:0016:30
London7:0015:308:3016:30
General7:0015:308:0016:30

The US Session

SUMMER TIMEWINTER TIME
GMTOpenCloseOpenClose
New York13:3020:0014:3021:00
Chicago13:3020:0014:3021:00
General13:3020:0014:3021:00

Pacific Session

SUMMER TIMEWINTER TIME
GMTOpenCloseOpenClose
Sidney0:006:0023:005:00
Wellington22:004:4521:003:45
General22:006:0021:005:0


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ACCOUNT VALUE
The current value of a customer’s account given the amount of money deposited, changes as a result of profits and losses from existing and closed out positions, credits and debits from daily ROLLOVERS, and charges such as commissions, transfer fees or bank related fees if applicable.
AGGREGATE DEMAND
Total demand for goods and services in the economy. It includes private and public sector demand for goods and services within the country and the demand of consumers and firmsin other countries for good and services.
AGGREGATE RISK
Size of exposure of a single customer to a market related movement.
AGGREGATE SUPPLY
Total supply of goods and services in the economy from domestic sources (including imports) available to meet aggregate demand.
AGREEMENT
The FXDD CUSTOMER AGREEMENT (PDF*). All customers must read and sign the FXDD CUSTOMER AGREEMENT (PDF*) before opening an account with FXDD.
APPRECIATION
Describes a currency increasing or strengthening in response to a market reaction
ARBITRAGE
The simultaneous purchase and sale of on different markets, of the same or equivalent financial instruments to profit from price or currency differentials.
ASSET ALLOCATION
Dividing funds among different investment alternatives in order to attempt to achieve diversification or maximum return.
ASK
The price at which the currency or instrument is offered for sale by FXDD.
“AT BEST”
A specific instruction given to a dealer to buy or sell at the best rate that can be obtained.
“AT OR BETTER”
An order to deal at a specific rate/price or better.
AUSTRALIAN DOLLAR (AUD)
The currency abbreviation for the Australian dollar (AUD), the currency for the Commonwealth of Australia. The Australian dollar is made up of 100 cents and is often presented with the symbol $, A$, or AU$. The Australian dollar is also the currency for Pacific Island states of Nauru, Tuvalu and Kiribati.
AUTHORIZED TRADING AGENT
A third party to which Customer grants trading authority or control over a Customer’s Account. FXDD does not, by implication or otherwise, endorse or approve of the operating methods of the Authorized Agent. FXDD shall not be responsible with respect thereto.
B

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BACK OFFICE
The Back Office is the official source of records for customer’s accounts and trading activity. FXDD’s Back Office stores all the information provided in your Account Statement Reports among other day to day activities.
BALANCE OF PAYMENTS
A systematic record of the real economic transactions during a given period for a particular country. Countries are either in a balance of payment excess or balance of payment deficit. Prolonged balance of payment deficits could lead to restrictions in capital transfers, and or decline in currency values.
BALANCE OF TRADE OR TRADE BALANCE
In general terms, the value of exports less imports for a particular country. A balance of trade deficit is when a country imports more than it exports. A balance of trade surplus is when a country exports more than it imports. If a country is in a prolonged trade deficit condition, the currency versus its trading partners should decline or weaken making the cost of imports more expensive and exports cheaper for the trading partners. Forex Glossary Terms
BANK LINE
Line of credit granted by a bank to a customer, also known as a “line”.
BANKING DAY (OR BUSINESS DAY)
Any day that commercial banks are open for business in the financial center of the country whose currency a position is taken.
BANK OF ENGLAND (BOE)
The Bank of England is the central bank for the United Kingdom. It has a wide range of responsibilities, similar to those of most central banks around the world. For example, it acts as the government’s bank and the lender of last resort, it issues currency and, most importantly, it oversees monetary policy.
BANK OF JAPAN OR BOJ
The central bank of Japan.
BASE CURRENCY
The first currency in a currency pair. In the currency pair EUR/USD, the Base Currency is the EUR. When entering a contract with FXDD, the base currency remains constant at a contracted lot value amount. For example, if a lot is 100,000, the customer who transacts to buy 1 lot of EUR/USD at a currency rate of .9600 would be contracting to exchange 100,000 EUR for $96,000 USD.
BASE RATE
A term used predominantly in the UK for the rate used by banks to calculate the interest rate charged to borrowers. Top quality borrowers will pay a small amount over base rate while lesser quality credits will pay a rate much higher than the base rate.
BASIS POINT
One per cent of one per cent. The difference between 3.75% and 3.76%.
BEAR MARKET
A situation whereby there exists a prolonged period of generally falling prices for a particular investment product.
BEAR SQUEEZE
The condition in the market where investors or traders who are short an investment product are forced to cover their position because a rising market condition, has inflicted losses on the account
BEAR
An investor who believes that price of an investment product is going to fall.
BEST-EFFORTS BASIS
The execution of an order at the next available price taking into consideration the volume available to buy or sell at that price and the quantity and volume of orders that precede the customer’s order.
BID
The price at which FXDD offers to buy the currency pair from a customer.
BREAK OR BREAK OUT
Term used to describe a sudden or rapid fall in instruments pricing away from a consolidated range.
BROKER
An agent who executes orders to buy and sell currencies and related instruments either for a commission or on a spread.
BROKERAGE
Commission charged by a broker. Forex Glossary Terms
BULL MARKET
A prolonged period of generally rising prices for a particular investment product.
BULL
An investor who believes that prices of particular investment products are going to rise.
BUNDESBANK
The Central Bank of Germany.
BUSINESS DAY
Any day on which commercial banks are open for business other than Saturday or Sunday in the principal financial center of the country in whose currency a position is taken.
BUY LIMIT
Specifies the highest price at which the purchase of the Base Currency in a Currency Pair can be executed. The limit price in a Buy limit order should be BELOW the current dealing Ask price.
BUY STOP
A Buy Stop is a Stop Order that is placed ABOVE the current dealing Ask price and is not activated until the market Ask price is at or above the Stop Price. The buy stop order, once triggered, becomes a market order to buy at the current market price.
C
CABLE
A term used in the foreign exchange market for the US Dollar/British Pound rate.
CANADIAN DOLLAR (CAD)
The currency abbreviation or currency symbol for the Canadian dollar (CAD). The Canadian dollar is made up of 100 cents and is often presented with the dollar sign as C$ to allow it to be distinguished from other currencies denominated in dollars, such as the U.S. dollar (USD). CAD is considered to be a benchmark currency, meaning that many central banks across the globe keep Canadian dollars as a reserve currency.
CARRY
The interest cost of financing securities or other financial instruments held.
CASH DELIVERY
Same day settlement.
CASH
Normally refers to an exchange transaction contracted for settlement on the day the deal is struck.
CASH ON DEPOSIT
Cash on Deposit equals the amount of funds deposited in the account, plus or minus the realized closed position P/L and other debits or credits such as ROLLOVERS, and commission (if any).
CENTRAL BANK
A bank, which is responsible for controlling a country’s or region’s monetary policy. The Federal Reserve is the central bank for the United States, the European Central Bank is the central bank of Europe, the Bank of England is the central bank of England and the Bank of Japan is the central bank of Japan.
CENTRAL BANK INTERVENTION
The act by which a central bank or central banks enter the spot foreign exchange market and attempt to influence unbalanced supply and demand forces through the direct purchase (or sale) of foreign exchange.
CHARTIST
An individual who studies graphs and charts of historical data in an attempt to find trends that will help predict the direction and magnitude of a particular investment product.
CHINA RETAIL SALES
Released by the government once a month. This economic indicator is potentially market moving and measures the sale of retail goods over a particular time period.
CLIENT OR CUSTOMER
An FXDD account holder. The Customer can be an Individual, Money Manager, corporate entity, trust account, joint account owner, or any legal entity that has an interest in the value of the account.

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CLOSED POSITION
A transaction that is opposite in direction and magnitude to an existing position that has been the effect of realizing a gain or loss.
CME
Chicago Mercantile Exchange
COMMISSION
The fee that a broker may charge clients for dealing on their behalf.
COMMODITY FUTURES TRADING COMMISSION (“CFTC”)
A federal agency which regulates commodity futures and options, foreign exchange and swaps in the United States.
CONFIRMATION
An electronic or printed notice that describes all the relevant details of a transaction.
CONSUMER PRICE INDEX
Monthly measure of the change in the prices of a defined basket of consumer goods including food, clothing, and transport. Countries vary in their approach to rents and mortgages.
CONTRACT
An Over the Counter (OTC) agreement conducted with FXDD to buy or sell a specified amount of a particular currency in return for a specified amount of another currency for settlement on a specified Value Date (normally the Spot Date). The contracted amounts are determined by the foreign exchange rate to which the two parties contract.
CONVERSION RATE
The rate for a specific currency pair that is used to convert (or sweep) non-US dollar profits/losses into dollars at the end of a trading day.
CORRESPONDENT BANK
The foreign banks representative who regularly performs services for a bank which has no branch in the relevant center, e.g. to facilitate the transfer of funds.
COUNTER CURRENCY
The second currency in a currency pair. In the Currency Pair EUR/USD, the Counter Currency is the USD.
COUNTERPARTY
The other entity or party with whom the deal is being transacted.
COUNTRY RISK
The risk attached to a transaction by virtue of its association to a particular country. This involves examination of economic, political and geographical factors of a particular country.
COVER
The act of performing a transaction that closes out a position.
CREDIT RISK
The risk that a debtor will not repay.
CROSS CURRENCY CONTRACT
A spot contract to purchase or sell one foreign currency in exchange for another specific foreign currency. The currencies exchanged are not the US Dollar.
CURRENCY
A Foreign Currency or US Dollar.
CURRENCY PAIR
The two currencies in a foreign exchange transaction. EUR/USD is an example of a currency pair.
CUSTOMER ACCOUNT APPLICATION (PDF*)
The FXDD APPLICATION (PDF*) that all customers must fill out and submit for acceptance by FXDD before a transaction is to take place.
D
DAILY CUT-OFF (OR CLOSE OF BUSINESS DAY)
The single point in time that signifies the end of that Business Day. The Trade Date of any Contract entered into after the Daily Cut-off shall be considered executed on the next Business Day. The Daily Cut-off will occur at a time selected on any Business Day solely by FXDD and may be changed at the discretion of FXDD.
DAY ORDER
An order that if not executed on the specific day is automatically canceled.
DAY TRADER
Speculators who take positions in investment products, which are then liquidated prior to the close of the same trading day.
DEAL BLOTTER
A listing of all the deals that were executed over a specified time period, usually the trading day.
DEAL DATE
The date on which a transaction is agreed upon.
DEAL TICKET
The primary method of recording the basic information relating to a transaction.
DEALER
An individual or firm acting as a principal, rather than as an agent, in the purchase and/or sale of foreign exchange. Dealers trade for their own account and risk.
DEFAULT
Generally speaking a breach of contract.
DEMO TRADING PLATFORM
FXDD offersDEMO TRADING PLATFORMS. The demo trading platforms allow prospective FXDD customers to get used to the trading platform’s features without risking their capital by executing contracted trades. Since the platform does not involve actual deals or contracts, any profit or loss generated by using the platform do not accrue nor are they an obligation of the demo customer. It is strictly for demonstration purposes only.
DEPRECIATION
A fall or decline in the value of a currency due to market forces
DEPTH OF MARKET
A measure of the size of volume available for transaction purposes for a particular currency pair at a specific point in time.
DETAILS
All the information required to finalize a foreign exchange transaction, i.e. name, rate, and dates.
DEVALUATION
The deliberate downward adjustment of a currency against its fixed parities or bands, normally initiated by a formal announcement by a country.
DISCRETIONARY INCOME
Net of tax and fixed personal spending commitments.
DM, DMARK
Deutsche Mark.

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(DOLLAR) MOVING AVERAGE
An indicator frequently used in technical analysis showing the average value of a security’s price over a set period. Moving averages are generally used to measure momentum and define areas of possible support and resistance.
DOMESTIC RATES
The interest rates applicable to deposits in the country of origin.
“DONE”
The term used by FXDD representative to indicate that a verbal deal has been executed and is now a binding deal.
DOWN TICK
The sale of a security (usually an equity or stock) at a price lower than the previous one.
E
EASING
A decline in interest rates initiated by the central bank.
ECONOMIC CALENDAR
A calendar used by Forex traders to track the release, forecast and results of potentially market moving economic indicators.
ECONOMIC RELEASE CALENDAR
A calendar used by traders for the purpose of tracking the occurrence of market-moving events. Investors will research the date and time of a specific event and pay close attention to the announcement because of the high probability that it will affect the direction of the market.
ECU
European Currency Unit.
EITHER WAY MARKET
In the Euro Interbank deposit market where both bid and offer rates for a particular period are the same.
EURO
The exchange currency of the European Union.
EURO RATES
The interest rates quoted for Euro-currencies over specific periods.
EUROCURRENCY
A currency deposited outside its country of origin.
EURODOLLARS
US dollars deposited in a bank (US or non US) located outside the USA.
EUROPEAN CENTRAL BANK (ECB)
The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed in Germany in June 1998 and works with the other national banks of each of the EU members to formulate monetary policy that helps maintain price stability in the European Union.
EUROPEAN UNION
The group formerly known as the European Community.
EXCESS MARGIN DEPOSITS
Money deposited with FXDD that is not used for margin against an existing open position.
EXCHANGE
A physical location where instruments are traded and often regulated. Examples: the New York Stock Exchange, the Chicago Board of Trade.
EXCHANGE CONTROL
A system of controlling inflows and out flows of foreign exchange, devices include licensing multiple currencies, quotas, auctions, limits, levies and surcharges.
EXISTING HOME SALES
An economic indicator of both the number and prices of existing single-family homes, condos and co-op sales over a one-month period. The existing home sales report is released monthly by the U.S. National Association of Realtors. It is a lagging indicator as it tends to react after a change in mortgage rates.
EXOTIC
A less broadly traded currency.
F
FAST MARKET
The rapid movement of prices or rates in a market caused by disequilibria in supply and demand conditions from buyers and/or sellers. In such circumstances rates or prices may not be readily available to customers until orderly markets resume.
FED FUND RATE
The short term (overnight) rate pegged by the Federal Reserve Bank used to conduct monetary policy and money supply in the United States economy.
FED FUNDS
Cash balances held by banks with their local Federal Reserve Bank.
FED
The United States Federal Reserve Bank.
FEDERAL OPEN MARKET COMMITTEE
Also known as the FOMC. The body of individuals that decide the course of monetary policy that will be conducted in United States. The FOMC is directly responsible for pegging the Federal Funds rate and the Discount Rate. Both rates are influential in controlling levels of money supply and economic activity in the United States.
FEDERAL RESERVE BOARD
The board of the Federal Reserve System, appointed by the US President for 14 year terms, one of whom is appointed for four years as chairman.
FEDERAL RESERVE SYSTEM
The central banking system of the US comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board. Membership of the Fed is compulsory for banks chartered by the Comptroller of Currency and optional for state chartered banks.
FILL OR FILLED
A deal that has been executed on behalf of a Customer’s Account given a Customer’s Order. Once filled, an Order cannot be canceled, amended or waived by Customer.
FIRM QUOTATION
A verbal price given in response to a request for a firm rate at which the quoting party is willing to execute a deal for a reasonable amount for spot settlement.
FISCAL POLICY
Use of taxation as a tool in implementing monetary policy.
FIXED DATES
The monthly calendar dates similar to the spot. There are two exceptions. For detailed description see value dates.
FIXED EXCHANGE RATE
Official rate set by monetary authorities. Often the fixed exchange rate permits fluctuation within a band.
FIXING
A method of determining rates by normally finding a rate that balances buyers to sellers. Such a process occurs either once or twice daily at defined times. Used by some currencies particularly for establishing tourist rates.
FLOATING EXCHANGE RATE
An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a dirty float.
FOMC
Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates.
FOREIGN EXCHANGE
The term “Foreign Exchange” generally refers to off exchange trading in foreign currency. It may also refer to currency trading on exchanges such as the IMM at the Chicago Mercantile Exchange. FXDD does not make physical delivery of foreign currency into foreign bank accounts.
FOREX
“Forex” is a popular short name for foreign exchange and generally refers to off exchange trading in foreign currency.
FOREX MARKET HOURS
The hours during which Forex market participants are able to buy, sell, exchange and speculate on currencies. The Forex market is open 24 hours a day, five days a week. International currency markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail Forex brokers and investors around the world. Because this market operates in multiple time zones, it can be accessed at almost any time.
FOREX SIGNAL (SYSTEM)
A set of analyses that a Forex trader uses to determine whether to buy or sell a currency pair at any given time. Forex signal systems could be based on technical analysis charting tools or news-based events. The day trader’s currency trading system is usually made up of a multitude of signals that work together to create a buy or sell decision. Forex trading signals are available for free, for a fee or are developed by the traders themselves.
FOREX TECHNICAL ANALYSIS
Technical Analysis is a system for investors to strategize their trading methods. These analysts examine price data of foreign exchange rates to determine if those prices will continue in the future. Technical analysis involves the use of charts as a tool to identify patterns or trends in a currency market.
FOREX TECHNICAL TRADING
Is the use of charts, indicators, oscillators and other tools to assist in uncovering possible Forex market trends and trading opportunities.
FORWARD DEAL
A deal with a value date greater than the spot value date.
FORWARD FORWARD
A forward / forward deal is one where both legs of the deal have value dates greater than the current spot value date.
FORWARD RATE
Forward rates are quoted in terms of forward points, which represents the difference between the forward and spot rates. In order to obtain the forward rate the forward points are either added or subtracted from the exchange rate.
The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefore, the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.
FRONT OFFICE Forex Glossary Terms
The activities carried out by the dealer, normal trading activities.
FUNDAMENTALS
The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.
FX
“FX” is a popular acronym for Foreign Exchange. Foreign Exchange generally refers to off exchange trading in foreign currency.
FXDD
FXDirectDealer, LLC
FXDD RISK DISCLOSURE DOCUMENT (PDF*)
The FXDD RISK DISCLOSURE outlines the risks associated with opening an account with FXDD. All clients who have a financial interest in FXDD are required to read and sign the document in order to open an account.
G
G7
The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy. Forex Glossary Terms
G10
G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.
GOING LONG
The act of buying a currency pair. For example, if a customer bought the EUR/USD, he would be “going long” the Euro.
GOING SHORT
The act of selling a currency pair. For example, if a customer sold the EUR/USD, he would be “going short” the Euro.
GTC
SEE: Good til canceled.
H
“HIT THE BID”
Term used to describe the action of a seller of a currency pair when wanting to sell at the market bid side.
HOLDER
Buyer of a currency pair.
I
INDICATIVE QUOTE
A market-maker’s price which is not “firm” or “firm quotation.”
INITIAL MARGIN REQUIREMENT
The minimum Margin Balance necessary to establish a NEW Open Position. FXDIRECTDEALER reserves the right to change the Initial Margin requirement at it’s sole discretion. The Initial Margin requirement can be expressed as a percentage (i.e., 2% of US dollar position amount) or can be calculated by the Leverage Ratio. For example, a $100,000 position in USD/JPY would require $2,000 of margin given a 2% Margin Requirement. Expressed as a leverage ratio, if 50:1 leverage ratio is used a $100,000 position would require the same Initial Margin ($100,000 / 50 = $2,000).
INTERBANK MARKET
The interbank market is the over-the-counter market of dealers that make markets in foreign exchange to one another.
INTEREST RATES
In the foreign exchange market, the interest rate differential (IRD) refers to the difference in interest rates between two similar interest-bearing currencies. In the spot foreign exchange market, this pertains to the difference in interest rates in a pair. For example, if the Australian dollar has an interest rate of 4.50% and the Japanese yen has an interest rate of 0.10%, then the interest rate differential between the two is 4.40%. The IRD is one of the most important factors to consider when engaging in trade.
INTERNATIONAL TRADE
International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events.
INTERVENTION
Buy or sell action by a central bank in an attempt to affect the value of its currency. Concerted intervention refers to action by a number of central banks to influence the value of exchange rates.
INTRA DAY POSITION
Open positions run by a customer of FXDD within the day. Usually squared by the close.
INTRODUCING BROKER
A person or legal entity that introduces customers to FXDD often in return for compensation in terms of a fee per transaction. Introducing Brokers are prevented from accepting margined funds from their customers.
J
JOINT ACCOUNT HOLDER
A person who has a co-interest in a FXDD Account. Joint account holders are required to read, fill out and sign account application forms and corresponding customer agreement forms.
K
KIWI
Slang for the New Zealand dollar.
L
LEFT-HAND SIDE
Taking the left hand side of a two way quote i.e. selling the quoted currency.
LEVERAGE
The control of a large notional position through the use of a small amount of capital. Forex Glossary Terms
LIMIT ORDER
A Limit Order is a Customer Order to Buy or Sell a specific amount of a Currency Pair at a specific user defined price. A Limit Order does not guarantee execution; rather it guarantees only that if execution occurs, it will be at the stated Limit Price. Note that sometimes the market briefly touches a limit price, only to immediately retreat back away from the limit price level with very little if any volume traded. Under such circumstances the Limit Order may not be executed and the limit order will remain in effect, until that time when the order can be executed or until the Customer cancels the order. A Limit Order specifies that execution should be attempted after the market reaches or goes through a set price level – the limit price. Once issued, the limit order will be held pending until the limit price is reached. Once the market hits or goes through the limit price, the order is triggered and the FXDD dealer attempts to execute the order at the Limit Price.
LIMIT PRICE
The price that the customer specifies when entering a Limit Order.
LIQUID
The condition in the market where there is ample amount of volume to buy or sell.
LIQUIDATION
Any transaction that offsets or closes out a previously established position.
LIQUIDATION LEVEL
The account value level that initiates the liquidation of all the customer’s open position at the best price or exchange rate available at that moment. Liquidation occurs when the Account Value is not sufficient to maintain the current open position(s). A customer can prevent liquidation by depositing additional margin into the account, or by closing out existing open position(s).
LIQUIDATION LEVEL EXCESS/DEFICIT
Remaining Account Value before automated liquidation is triggered. The level is equal to the Account ValueLiquidation % * Margin. If loss on open position(s) exceeds this amount, FXDD will automatically liquidate ALL open positions. The level is represented graphically as the top of the brown level in the FXDD Margin Monitor.
LIQUIDITY
The term used to describe the amount of volume available to buy or sell at a point in time.
LONG
The term used to describe a customer who has opened a new position by buying a currency pair.
LOSS IN EXCESS OF THEIR MARGIN DEPOSIT
There exists the opportunity for customers to lose more than the margin that they initially pledge to open and maintain a position.
M
MACD
An indicator used in technical analysis that was invented in the 1970s as a means of showing the differences between both the fast and slow EMAs (Exponential Moving Average) of closing prices, although since 1986 the graph has been produced as a histogram. The moving average as expressed by the MACD is essentially the average of a price over a certain set amount of time and the MACD enables easy demonstration of the relationship between two exponential examples of the moving average.
MAINTENANCE MARGIN
The minimum margin, which an investor must keep at FXDD to maintain an open position.
MAINTENANCE MARGIN EXCESS/DEFICIT
Remaining funds against which a customer can maintain/hold a position(s) until a Margin Call is triggered. Maintenance Margin Excess/Deficit = Account ValueMaintenance % * Margin. It is represented graphically as the top of the red level in the FXDD Margin Monitor.
“MAKE A MARKET”
A dealer is said to “make a market”; when the dealer gives a quoted bid and ask price is given to a customer. The price represents the prices that the dealer is ready to buy from or sell to a customer. Forex Glossary Terms
MARGIN CALL
A demand for additional funds to be deposited in a margin account to meet margin requirements because of adverse exchange rate movements.
MARGIN
The aggregate amount of customer cash pledged against the aggregate Open Position(s). The margin pledged is a function of the leverage ratio. The higher the leverage, the lower the pledged Margin. The lower the leverage, the higher the Margin needed to carry the position.
Mathematically, Margin = Open Position Amount / Maximum Trading Leverage Ratio. For example, a USD/CHF 100,000 USD position at Maximum Trading Leverage Ratio 50:1 will require pledged Margin equal to 100,000/50 or $2,000.
Note: To calculate margin for currency pairs, where USD is NOT the Base (First) Currency (e.g. EUR/USD, GBP/USD;) and crosses (EUR/JPY, GBP/JPY;), the Counter Currency amount is first converted into USD using the average exchange rate(s).
Example: Customer buys 1 lot of EUR/USD when the price is .9600 9604. The average exchange rate is .9602. Therefore, 100,000 EUR equals 96,020 USD. $96,020 / 50 Leverage Ratio = $1,920.40. Forex Glossary Terms
MARK TO MARKET
The daily adjustment of an account to reflect unrealized profits and losses.
MARKET MAKER
A market maker is the counterparty in transactions with the customer/customer.
MARKET ORDER
A Market Order is an order to buy or sell a chosen currency pair at the current market price. A Market Order will be executed at the price displayed at the moment user clicks the button, but only if the currency price remains within a price range (for example, 5 pips) set by the FXDD.
MAXIMUM TRADING LEVERAGE RATIO
Leverage expressed as a ratio, available to open a new position(s). For example, a leverage ratio of 50:1 allows a customer the ability to control a $100,000 lot position with $2,000 of margin ($100,000 / 50 = $2,000).
MONEY SUPPLY
The entire quantity of bills, coins, loans, credit and other liquid instruments in a country’s economy. The money supply is important to economists trying to understand how policies will affect interest rates and growth.
MOVING AVERAGE
A way of smoothing a set of price/rate data by taking the average price of data range of values.
N
NET INTEREST RATE DIFFERENTIAL
The difference in interest rates from the countries of two different currencies. For example, if the spot next rate for the Euro is 3.25% and the spot/next rate in the US is 1.75%, the interest differential is 1.50% (3.25% – 1.75% = 1.50%).
NETTING
The method of settling under which only the differences in the traded currencies are settled at the close.
NEW ZEALAND DOLLAR (NZD)
is the currency of New Zealand. It also circulates in the Cook Islands, Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents.It is normally written with the dollar sign $, or NZ$ to distinguish it from other dollar-denominated currencies. ** wikipedia Forex Glossary Terms
NONFARM PAYROLLS
A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number of paid U.S. workers of any business, excluding the following employees:
general government employees
private household employees
employees of nonprofit organizations that provide assistance to individuals. Forex Glossary Terms
farm employees
This monthly report also includes estimates on the average work week and the average weekly earnings of all non-farm employees.
O
OCO ORDER (ONE CANCEL THE OTHER ORDER)
A One Cancels the Order is a Stop and Limit orders set simultaneously, whereby once either one is executed, the other is canceled. For example, an OCO may be place to close an existing position either with a Limit (take profit), or with a protective Stop (stop loss).
OFFER
The price at which a dealer is willing to sell. The Offer is also called the Ask or Ask Price.
Offered market – Temporary situation where offers exceed bid.
OLD LADY
Old lady of Threadneedle Street, a term for the Bank of England, the central bank of England.
OPEN POSITION
The difference between assets and liabilities in a particular currency. This may be measured on a per currency basis or the position of all currencies when calculated in base currency.
ORDER(S)
Customer gives directions either electronically via an online trading platform or verbally to enter into a specific foreign exchange contract with FXDD by buying or selling a specified currency pair now or at a time when the price meets the customers specific requirements.
OTC MARGINED FOREIGN EXCHANGE
Over-the-Counter (Off-exchange) Foreign Exchange markets, in which markets participants, such as FXDD and Customer, enter into privately negotiated Contracts or other transactions directly with each other for which margin is deposited and pledged against outstanding positions.
OVERNIGHT
A deal from today until the next business day.
P
PIP
The smallest measure of movement for a foreign exchange rate.  Forex Glossary Terms
POSITION
The netted total commitments in a given currency. A position can be either flat or square (no exposure), long, (more currency bought than sold), or short ( more currency sold than bought).
PRINCIPAL
A dealer who buys or sells stock for his/her own account.
Q
QUOTE
Consists of the Bid and Ask for a currency pair.Forex Glossary Terms
QUOTE PANEL
The quote panel is the section in the FXDD Window that displays the quotes of major currencies and crosses and allows access to FXDD charts.
R
RANGE
The difference between the highest and lowest price of a future recorded during a given trading session.
RATE
The price of one currency in terms of another, normally against USD.
REALIZED P/L
The profit and loss generated from closed positions.
REGULATED MARKET
A market that is regulated usually by a governmental agency that issues a number of guidelines and restrictions designed to protect investors.
REPORT VIEWER
The FXDD Reports Viewer is where the customer can access various account status reports that show in detail the activity as a customer of FXDD. There are 5 different Reports and the customer can customize any of the reports as to a specific time period. The 5 reports are the Trading History, the Pending Orders History (dependent on the platform), the Account History, the Session History and the Account Statement.
RESISTANCE POINT OR LEVEL
A price recognized by technical analysts as a price which will usually stop a movement of a foreign exchange rate from going higher. If a resistance level is broken; the technician will conclude that the price movement of the instrument will continue to go higher.
RETAIL SALES
An aggregated measure of the sales of retail goods over a stated time period, typically based on a data sampling that is extrapolated to model an entire country. In the U.S., the retail sales report is a monthly economic indicator compiled and released by the Census Bureau and the Department of Commerce. The report covers the previous month, and is released about two weeks after the month-end. Comparisons are made against historical data; year-over-year comparisons are the most-reported metric because they account for the seasonality of consumer-based retail.
RIGHT HAND SIDE
Corresponds to the Ask or Offer price of a foreign exchange rate. For example, given a price of .9630 – .9635, the right hand side is .9635. The right hand side is the side that a customer would buy at.
RISK CAPITAL
The amount of money the Customer is willing to put at risk and, which if lost would not, change the Customer’s lifestyle or the Customer’s family lifestyle.Forex Glossary Terms
ROLLOVER / SWAP
At the end of each business day, FXDD will automatically rollover or swap, all existing open positions into the next spot date. The mechanics in effect involve the simultaneous close of an existing position and the opening of a new spot position. FXDD will debit or credit the customer’s account depending on the interest rate differential between the base currency and the counter currency and the direction of the customer’s position. For example, if the customer is long a currency pair where the overnight rate for the base currency is higher than the counter currency, the customer will earn a small credit for positions held overnight. If the opposite is true, the customer account will be debited for the difference in the interest rate differential. The fundamental reason is if a customer is long a higher yielding currency, he should benefit from being able to invest and earn a higher return overnight than what he has to pay for being short the lower yielding currency. Forex Glossary Terms
ROLLOVER CREDIT
The credit (in base currency terms) added to a customer’s account that is long a higher yielding currency overnight.
ROLLOVER DEBIT
The debit subtracted from a customer’s account that is long a lower yielding currency overnight.
RUNNING A POSITION
The act of keeping open positions in hopes of a speculative gain.
S
SAME DAY TRANSACTION
A transaction that matures on the day the transaction takes place.
SELL LIMIT
Specifies the lowest price at which the sale of Base Currency in a Currency Pair can be executed. The limit price in a Sell limit order should be ABOVE the current market Bid price.
SELL STOP
A Sell Stop is a Stop Order that is placed BELOW the current market Bid price and is not activated until the market Bid price is is at or below the stop price. The sell stop order, once triggered, becomes a market order to sell at the current market price.
SETTLEMENT DATE
The date by which an executed order must be settled by the transference of instruments or currencies and funds between buyer and seller.
SHORT
Having an open position that was created by selling a currency. If you sold the EUR/USD, the customer is said to be short the currency pair (sold the base currency). If a customer bought the EUR/USD, he would be long the currency pair, but short USD currency. Foreign exchange transactions assume being long one currency and short another.
SHORT COVERING
Buying to unwind a short position of a particular currency pair (options terminology).
SOPHISTICATED FOREIGN EXCHANGE INVESTOR
Investor possessing sufficient knowledge, experience and/or capitalization to trade in Foreign Exchange market. The investor has to decide for him/herself if Forex is a suitable investment vehicle for his or her purposes.
SOVEREIGN RISK
(1) Risk of default on a sovereign loan; (2) Risk of appropriation of assets held in a foreign country.
SPECULATIVE
Trading Foreign Exchange is speculative in that there is no guarantee that those who invest in Foreign Exchange will make any money. The conditions also exist that the customer can lose his entire deposited margin making trading FX highly speculative. Those who trade foreign exchange should only risk that capital which is considered risk capital, defined as the amount of which if lost would not, change the Customer’s lifestyle or the Customer’s family’s lifestyle.
SPOT
Spot or Spot date refers to the spot transaction value date that is two business days from the deals Trade Date. In instances where there is holiday, weekend or other day when the banks in the countries represented by the currencies in the currency pair are closed, the spot date will be adjusted forward to the next value date where the banks are open. In the case of US Dollar versus the Canadian dollar, the spot date is 1 business day forward from the Trade Date.
SPOT PRICE/RATE
The price at which a currency pair is currently trading in the spot market.
SPOT SETTLEMENT BASIS
The standardized settlement procedure for foreign exchange transactions that sets the value date 2 business days forward from the Trade Date (see: Spot).
SPREAD
The difference between the bid and ask price for a foreign currency price.
SQUARE
The condition whereby the customer’s purchases and sales are in balance and there is no open position.
SQUAWK BOX
A speaker connected to a phone often used in broker trading desks. Forex Glossary Terms
STERLING
British pound, otherwise known as cable. Forex Glossary Terms
STOP LOSS ORDER
A specific order entered by the customer to close out a position if the price moves a certain number of pips in direction opposite from where the market currently is. In most cases Stop Orders are executed as soon as the market reaches or goes through the Customer set Stop Price level. Once issued, the stop order will be held pending until the stop price is reached. Stop orders may be used to close out a position (Stop Loss), to reverse a position, or open a new position. The most common use is to protect an existing position (by limiting losses or protecting unrealized gains). Once the market hits or goes through the stop price, the order is activated (triggered) and FXDD will execute the order at the next available price. Market conditions including volatility and lack of volume may cause a Stop order to be executed at a price different than the order.
STOP PRICE LEVEL
The customer entered price that activates a Stop Loss Order. Forex Glossary Terms
SWEEP/SWEEPING
When a customer of FXDD has a P/L in another currency other than US dollars, the P/L must be converting at the close of each business day into US dollars, at an exchange rate prevailing at the time (known as the Conversion Rate). This process is called sweeping. Note that until the P/L is swept, the customer’s Account Value may fluctuate slightly (up or down) as exchange rate for the Profit and Loss currency changes. For example, if the customer has a profit in Yen, if the value of the yen rises after the position is closes, but before the profit is swept into dollars, the Account Value will change. The change is only on the profit/loss amount so the effect is minimal.
SWISSY
Market slang for Swiss Franc. Forex Glossary Terms
T
“TAKE THE OFFER”
A verbal market order whereby the customer wants FXDD to pay the Ask or Offer price for a customer desired amount of lots.
TECHNICAL CORRECTION
An adjustment to price not based on market sentiment but technical factors such as volume and charting.
TECHNICAL TRADING CHARTS
Is the use of charts, indicators, oscillators and other tools to assist in uncovering possible Forex market trends and trading opportunities.
THIN MARKET
A market condition in which trading volume and liquidity is low and in which usually bid and ask quotes are wider than normal.
TICK
A minimum change in price, up or down.
TOMORROW NEXT (TOM NEXT)
Simultaneous buying of a currency for delivery the following day and selling for the spot day or vice versa.
TRADE DATE
The date on which a trade occurs. Forex Glossary Terms
TRADING PLATFORMS
A software application where a customer can give a dealer an order to execute a transaction on that customer’s behalf.
TRANSACTION DATE
The date on which a trade occurs.
TRANSACTION
The buying or selling of foreign exchange amount resulting from the execution of an order.
TWO-WAY QUOTE
When a dealer quotes a bid and ask price for foreign exchange transactions to a customer. Forex Glossary Terms
U
UNCOVERED POSITION
Another term for an open position.
UNREALIZED P/L
Unrealized P/L is the real time profit or loss on the current open position(s), given the current exchange rate(s). NOTE: The Unrealized P/L is calculated using the price that the customer would need to deal on to liquidate the position. For example, if the customer were long EUR/USD, the customer would need to sell at the Bid side of the current market. P/L is unrealized until the position is closed out. The P/L will then be added or subtracted from the Cash on Deposit to get the new Cash on Deposit amount.
UP TICK
A transaction executed at a price greater than the previous transaction.
US DOLLAR
The legal tender of the United States of America. Forex Glossary Terms Forex Glossary Terms
V
VALUE DATE
For exchange contracts, it is the day on which the two contracting parties exchange the currencies which are being bought or sold. For a spot transaction it is two business banking days forward in the country of the bank providing quotations which determine the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day. The enquirer is the party who must make sure that his spot day coincides with the one applied by the respondent. The forward months maturity must fall on the corresponding date in the relevant calendar month If the one month date falls on a non-banking day in one of the centers then the operative date would be the next business day that is common. The adjustment of the maturity for a particular month does not effect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day. Also referred to as maturity date.