Balanced FX Signals

BALANCE OF TRADE

The value of a country’s exports minus its imports.

BAR CHART

A type of chart which consists of four significant points: the high and the low prices, which form the vertical bar; the opening price, which is marked with a horizontal line to the left of the bar; and the closing price, which is marked with a horizontal line to the right of the bar.

BARRIER LEVEL

A certain price of great importance included in the structure of a Barrier Option. If a Barrier Level price is reached, the terms of a specific Barrier Option call for a series of events to occur. Forex Glossary

BASE RATE

The lending rate of the central bank of a given country. Forex Glossary

BASIS POINT

A unit of measurement used to describe the minimum change in the price of a product.

BEARS

Traders who expect prices to decline and may be holding short positions.

BID/ASK SPREAD

The difference between the bid and the ask (offer) price.

BID PRICE

The price at which the market is prepared to buy a product. Prices are quoted two-way as Bid/Ask. In FX trading, the Bid represents the price at which a trader can sell the base currency, shown to the left in a currency pair.

BLACK BOX

The term used for systematic, model-based or technical traders.

BLOW OFF

The upside equivalent of capitulation.

BOC

Bank of Canada, the central bank of Canada.

BOE

Bank of England, the central bank of the UK.

BOJ

Bank of Japan, the central bank of Japan.

BOLLINGER BANDS

A tool used by technical analysts. A band plotted two standard deviations on either side of a simple moving average, which often indicates support and resistance levels.

BOND

A name for debt which is issued for a specified period of time.

BOOK

In a professional trading environment, a book is the summary of a trader’s or desk’s total positions.

BULLS

Traders who expect prices to rise and who may be holding long positions.

BUNDESBANK

Germany’s central bank.

BUY

Taking a long position on a product.

BUY DIPS

Looking to buy 20-30-pip/point pullbacks in the course of an intra-day trend.

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CONFIRMATION

A document exchanged by counterparts to a transaction that states the terms of said transaction.

CONSOLIDATION

A period of range-bound activity after an extended price move.

CONTRACT

The standard unit of forex trading.

CONTRACT NOTE

A confirmation sent that outlines the exact details of the trade.

CONTRACT SIZE

The notional number of shares one CFD represents.

COUNTER CURRENCY

The second listed currency in a currency pair.

COUNTERPARTY

One of the participants in a financial transaction.

CROSS

A pair of currencies that does not include the U.S. dollar.

CROWN CURRENCIES

Refers to CAD (Canadian Dollar), Aussie (Australian Dollar), Sterling (British Pound) and Kiwi (New Zealand Dollar) – countries off the Commonwealth.

CTAS

Refers to commodity trading advisors, speculative traders whose activity can resemble that of short-term hedge funds; frequently refers to the Chicago-based or futures-oriented traders.

CURRENCY

Any form of money issued by a government or central bank and used as legal tender and a basis for trade.

DEFICIT

A negative balance of trade or payments.

DELTA

The ratio between the change in price of a product and the change in price of its underlying market.

DEPRECIATION

The decrease in value of an asset over time.

DERIVATIVE

A financial contract whose value is based on the value of an underlying asset. Some of the most common underlying assets for derivative contracts are indices, equities, commodities and currencies.

DISCOUNT RATE

Interest rate that an eligible depository institution is charged to borrow short-term funds directly from the Federal Reserve Bank. Forex Glossary

DIVIDEND

The amount of a company’s earning distributed to its shareholders – usually described as a value per share.

DOWNTREND

Price action consisting of lower lows and lower highs.

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ECB

European Central Bank, the central bank for the countries using the euro.

ECONOMIC INDICATOR

A government-issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.

EST/EDT

The time zone of New York City, which stands for United States Eastern Standard Time/Eastern Daylight time.

ESTX50

A name for the Euronext 50 index.

EURO

The currency of the Eurozone.

EUROPEAN MONETARY UNION (EMU)

An umbrella name for the group of policies that aims to coordinate economic and fiscal policies across EU Member States.

EUROPEAN SESSION

07:00 – 16:00 (London).

5:00am – Frankfurt

6:00am – London

10:00am – WMHCO (World Market House Company)

11:00am – WMHCO (World Market House Company) – more important

8:20am – IMM

8:15am – ECB

FTSE 100

The name of the UK 100 index. Forex Glossary

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G7

Group of 7 Nations – United States, Japan, Germany, United Kingdom, France, Italy and Canada.

G8

Group of 8 – G7 nations plus Russia.

GMT (GREENWICH MEAN TIME)

Greenwich Mean Time – The most commonly referred time zone in the forex market.

GOING SHORT

The selling of a currency or product not owned by the seller – with the expectation of the price decreasing.

GOLD CONTRACT

The standard unit of trading gold is one contract which is equal to 10 troy ounces.

GOOD FOR DAY

An order that will expire at the end of the day if it is not filled.

GOOD ‘TIL DATE

An order type that will expire on the date you choose, should it not be filled beforehand.

GREENBACK

Nickname for the US dollar.

GROSS DOMESTIC PRODUCT (GDP)

Total value of a country’s output, income or expenditure produced within its physical borders.

GROSS NATIONAL PRODUCT

Gross domestic product plus income earned from investment or work abroad.

HEDGE

A position or combination of positions that reduces the risk of your primary position.

HIT THE BID

To sell at the current market bid.

HK50/HKHI

Names for the Hong Kong Hang Seng index.

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ILLIQUID

Little volume being traded in the market; a lack of liquidity often creates choppy market conditions.

ILLIQUID

Little volume being traded in the market; a lack of liquidity often creates choppy market conditions.

INFLATION

An economic condition whereby prices for consumer goods rise, eroding purchasing power.

INITIAL MARGIN REQUIREMENT

The initial deposit of collateral required to enter into a position.

INTERBANK RATES

The foreign exchange rates which large international banks quote to each other.

INTRODUCING BROKER

A person or corporate entity which introduces accounts to a broker in return for a fee.

LEVERAGED NAMES

Short-term traders, referring largely to the hedge fund community.

LIABILITY

Potential loss, debt or financial obligation.

LIBOR

The London Inter-Bank Offered Rate. Banks use LIBOR as a base rate for international lending.

LIQUID MARKET

A market which has sufficient numbers of buyers and sellers for the price to move in a smooth manner.

LIQUIDATION

The closing of an existing position through the execution of an offsetting transaction.

LONDON SESSION

08:00 – 17:00 (London).

LONGS

Traders who have bought a product.

LOONIE

Nickname for the Canadian dollar or the USD/CAD (U.S. Dollar/Canadian Dollar) currency pair.

LOT

A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

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MACRO

The longest-term trader who bases their trade decisions on fundamental analysis.

MARGIN CALL

A request from a broker or dealer for additional funds or other collateral on a position that has moved against the customer.

MARKET ORDER

An order to buy or sell at the current price.

MEDLEY REPORT

Refers to Medley Global Advisors, a market consultancy that maintains close contacts with central bank and government officials around the world. Their reports can frequently move the currency market as they purport to have inside information from policy makers.

MOMENTUM PLAYERS

Traders who align themselves with an intra-day trend that attempts to grab 50-100 pips.

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NAS100

An abbreviation for the NASDAQ 100 index.

NET POSITION

The amount of currency bought or sold which has not yet been offset by opposite transactions.

NEW YORK SESSION

8:00am – 5:00pm (New York time).

NO TOUCH

An option that pays a fixed amount to the holder if the market never touches the predetermined Barrier Level.

OPEN POSITION

An active trade with corresponding unrealized P&L, which has not been offset by an equal and opposite deal.

ORDER

An instruction to execute a trade.

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PAID

Refers to the offer side of the market dealing.

PAIR

The forex quoting convention of matching one currency against the other.

PORTFOLIO

A collection of investments owned by an entity.

POSITION

The net total holdings of a given product.

PREMIUM

The amount by which the forward or futures price exceeds the spot price.

PRICE TRANSPARENCY

Describes quotes to which every market participant has equal access.

RBA

Reserve Bank of Australia, the central bank of Australia.

RBNZ

Reserve Bank of New Zealand, the central bank of New Zealand.

RESISTENCE LEVEL

A price that may act as a ceiling. The opposite of support.

SPOT MARKET

A market whereby products are traded at their market price for immediate exchange. Foreign Exchange Forex FX

SPOT PRICE

The current market price. Settlement of spot transactions usually occurs within two business days.

STERLING

A nickname for the British pound or the GBP/USD (Great British Pound/U.S. Dollar) currency pair.

STOP ENTRY ORDER

This is an order placed to buy above the current price, or to sell below the current price. These orders are useful if you believe the market is heading in one direction and you have a target entry price.

STRIKE PRICE

The defined price at which the holder of an option can buy or sell the product.

SUPPORT

A price that acts as a floor for past or future price movements.

SUPPORT LEVELS

A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.

SWAP

A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

SWISSIE

The nickname for the Swiss franc or the USD/CHF (U.S. Dollar/Swiss Franc) currency pair.

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TAKE PROFIT

See definition of Limit Order.

TAKEOVER

Assuming control of a company by buying its stock.

TECHNICAL ANALYSIS

The process by which charts of past price patterns are studied for clues as to the direction of future price movements.

TRADE SIZE

The number of units of product in a contract or lot.

TRADING BID

A pair is acting strong and/or moving higher; bids keep entering the market and pushing prices up.

TRANSACTION COST

The cost of buying or selling a financial product. Introducing Broker

TRANSACTION DATE

The date on which a trade occurs.

TREND

Price movement that produces a net change in value. An uptrend is identified by higher highs and higher lows. A downtrend is identified by lower highs and lower lows. What are commodities?

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UK AVERAGE EARNINGS INCLUDING BONUS/EXCLUDING BONUS

Measures the average wage including/excluding bonuses paid to employees. This is measured quarter-on-quarter (QoQ) from the previous year. What are indices?

UK JOBLESS CLAIMS CHANGE

Measures the change in the number of people claiming unemployment benefits over the previous month.

UK MANUAL UNIT WAGE LOSS

Measures the change in total labor cost expended in the production of one unit of output. Forex Glossary

UK OIL*

A name for Brent Crude Oil.

VOLATILITY

Referring to active markets that often present trade opportunities.

Learning Forex: Foreign exchange market

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XAG/USD

Symbol for Silver Index.

XAU/USD

Symbol for Gold Index. Basics First: An Introduction to Forex Signals

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YUAN

The yuan is the base unit of currency in China. The renminbi is the name of the currency in China, where the Yuan is the base unit

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