Glossary

The account balance reflects the capital on your account excluding the profit/losses from your current open positions.

The equity reflects your balance + your floating profit /loss of your open positions.

A currency is said to ‘appreciate’ when it strengthens in price in response to market demand.

The 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.

The price at which the market is prepared to sell a specific Currency. At this price, the trader can buy the base currency.

An instruction given to a dealer to buy or sell at the best rate that can be obtained.

An order to deal at a specific rate or better.

A type of chart which consists of four significant points: the high and the low prices, the opening and the closing price.

The first currency in a Currency Pair. It shows how much the base currency is worth as measured against the second currency.

A market distinguished by declining prices.

The price at which the market is prepared to buy a specific Currency. At this price, the trader can sell the base currency.

The difference between the bid and offer price.

The first two or three digits of a foreign exchange price or rate.

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

An agreement that established fixed foreign exchange rates for major currencies.

An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

A market distinguished by rising prices.

Germany’s Central Bank.

A chart that indicates the trading range for the day as well as the opening and closing price.

Refers to the simultaneous selling of a currency with a low interest rate, while purchasing currencies with higher interest rates.

The market in the actual financial instrument on which a futures or options contract is based.

A government organisation that manages a country’s monetary policy.

An individual who uses charts and graphs and interprets historical data to find trends and predict future movements.

Funds that are freely available, sent in to settle a trade.

The process of settling a trade.

Exposures in Foreign Currencies that no longer exist.

Something given to secure a loan or as a guarantee of performance.

A transaction fee charged by a broker.

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

The standard unit of trading.

The second listed Currency in a Currency Pair.

One of the participants in a financial transaction.

Risk associated with a cross-border transaction, including but not limited to legal and political conditions.

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

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

The two currencies that make up a foreign exchange rate.

The probability of an adverse change in exchange rates.

AUD – Australian Dollar CAD – Canadian Dollar EUR – Euro JPY – Japanese Yen GBP – British Pound CHF – Swiss Franc

The sum of the balance of trade, net factor income and net transfer payments. The balance of trade is typically the key component.

Speculators who take positions in commodities which are then liquidated prior to the close of the same trading day.

An individual or firm that acts as a principal or counterpart to a transaction.

A negative balance of trade or payments.

An FX trade where both sides make and take actual delivery of the currencies traded.

A fall in the value of a currency due to market forces.

A contract that changes in value in relation to the price movements of a related underlying security.

The deliberate downward adjustment of a currency’s price, normally by official announcement.

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

A government issued statistic that indicates current economic growth and stability.

An order to buy or sell at a specified price. This order remains open until the end of the trading day.

The official currency of the Eurozone, which consists of 19 of the 28 member states of the European Union.

The central bank for the euro and administers monetary policy of the Eurozone.

The principal goal of the EMU is to establish a single European currency called the Euro.

A monthly index produced by the OECD. It measures overall economic health by combining ten leading indicators.

The Central Bank for the United States.

Open positions are closed according to the order in which they were originally opened.

Dealer jargon used to describe a position that has been completely reversed.

The simultaneous buying of one currency and selling of another.

The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date.

The pips added to or subtracted from the current exchange rate to calculate a forward price.

Analysis of economic and political information to determine future movements in a financial market.

An obligation to exchange a good or instrument at a set price on a future date.

The seven leading industrial countries, being US, Germany, Japan, France, UK, Canada, Italy.

The purchase of a stock, commodity, or currency for investment or speculation.

The selling of a currency or instrument not owned by the seller.

A certificate of ownership that gold investors use to purchase and sell the commodity instead of dealing with physical gold.

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

An order to buy or sell at a specified price. This order remains open until filled or cancelled.

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

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

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

Acceptance of purchasing at the offer or selling at the bid.

Measures the total value of output produced by manufacturers, mines and utilities.

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

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

The Foreign Exchange rates at which large international banks quote other large international banks.

Action by a central bank to effect the value of its currency by entering the market.

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

An index that assesses the state of US manufacturing sector. Values over 50 generally indicate expansion.

An index that survey service sector firms for their outlook, representing the other 80% of the U.S. economy.

Measures the mood of businesses that directly service consumers. Readings above 50 generally signal improvements.

Measures the total value of new orders placed with machine tool manufactures.

Slang for the New Zealand dollar.

Statistics that are considered to predict future economic activity.

Also called margin. The ratio of the amount used in a transaction to the required security deposit.

The London Inter-Bank Offered Rate.

An order with restrictions on the maximum price to be paid or the minimum price to be received.

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

The ability of a market to accept large transaction with minimal to no impact on price stability.

A position that appreciates in value if market prices increase.

A unit to measure the amount of the deal.

Measures the total output of the manufacturing aspect of the Industrial Production figures.

The required equity that an investor must deposit to collateralize a position.

A request from a broker for additional funds to guarantee performance on a position.

Process of re-evaluating all open positions with the current market prices.

A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market.

Exposure to changes in market prices.

The date for settlement or expiry of a financial instrument.

The amount of currency bought or sold which have not yet been offset.

The rate at which a dealer is willing to sell a currency.

A trade with which serves to cancel or offset some or all of the market risk of an open position.

Two orders whereby execution of one automatically cancels the other.

An order that will be executed when a market moves to its designated price.

An active trade with corresponding unrealised P&L.

An instruction to execute a trade at a specified rate.

Any transaction that is not conducted over an exchange.

A trade that remains open until the next business day.

Measures an individuals’ total annual gross earnings from wages, business enterprises and various investments.

The smallest unit of price for any foreign currency.

Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.

The netted total holdings of a given currency.

In the currency markets, describes the amount by which the forward or futures price exceed the spot price.

Describes quotes to which every market participant has equal access.

The actual realized gain or loss on Closed Positions, plus theoretical unrealized gain or loss on Open Positions.

Measures an outlook of purchasing managers in the service sector.

An indicative market price, normally used for information purposes only.

A recovery in price after a period of decline.

The difference between the highest and lowest price of a future recorded during a given trading session.

The price of one currency in terms of another, typically used for dealing purposes.

A specific price level at which analysis concludes people will sell.

Measures the monthly retail sales of all goods and services sold by retailers.

An increase in the exchange rate for a currency as a result of central bank intervention.

Exposure to uncertain change, most often used with a negative connotation of adverse change.

The employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.

The interest paid or earned on an open position held past the close of the NY trading.

Buying and selling of a specified amount of currency.

The process by which a trade is entered into the books and records.

An investment position that benefits from a decline in market price.

A simple average of a pre-defined amount of price bars.

A physical market in which foreign currencies and commodities are bought and sold for cash at the current market price.

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

The purchase or sale of a foreign currency or commodity for immediate delivery.

The difference between the bid and offer prices.

Purchase and sales are in balance and thus the dealer has no open position.

Order type whereby an open position is automatically liquidated at a specific price to minimize losses.

A price ceiling and floor at which a given exchange rate will automatically correct itself.

The overnight or rollover interest for having open positions running up to the next trading day.

Market slang for Swiss Franc.

An effort to forecast prices by analyzing market data like historical price trends.

A minimum change in price, up or down.

Simultaneous buying and selling of a currency for delivery the following day.

Measures the difference in value between imported and exported goods and services.

The cost of buying or selling a financial instrument.

The date on which a trade occurs.

The total money value of all executed transactions in a given time period.

When both a bid and offer rate is quoted for a FX transaction.

Measures the total workforce that is unemployed and actively seeking employment.

The theoretical gain or loss on Open Positions valued at current market rates.

A new price quote at a price higher than the preceding quote.

A regulation whereby a security may not be sold short unless the last trade was at a price lower than the current price.

The interest rate at which US banks will lend to their prime corporate customers.

The date on which counterparts to a financial transaction agree to settle their respective obligations.

Funds a broker must request from the client to have the required margin deposited.

Volatility Index showing the market’s expectation of 30-day volatility.

Chart formation that shows a narrowing price range over time.