Forex Terms

Ask PriceSelling price of the provider/ Buying price of a client. The price a buyer is willing to pay for a product.
Asian Session07:00 – 16:00 HKT
ArbitrageBuy and sell a financial product at the same time in different markets in order to take small advantage of price differentials betweens markets.

Bid PriceBuying price of the provider/ Selling price of a client. The price a seller is willing to accept for a product.
Bull MarketA upward price trend or ‘uptrend’ over time.
Bear MarketA downward price trend or ‘downtrend’ over time.
Base CurrencyThe first currency in a currency pair. It shows how much the base currency is worth as measured against the second currency, also known as quote currency. For example, USD/JPY’s base currency is USD.

Central BankA government bank that is responsible for the establishment and maintenance of the nation’s fiscal and monetary policy, as well as for controlling interest rates and money supply.
Commodity CurrenciesCurrencies from countries where mainly rely on exporting natural resources for income, often specifically referring to Canada, New Zealand, Australia and Russia.
Cross Currency PairA pair of currencies that does not include the U.S. dollar.
Crown CurrenciesRefers to Loonie (Canadian Dollar), Aussie (Australian Dollar), Sterling (British Pound) and Kiwi (New Zealand Dollar) – countries of the Commonwealth.
CurrencyAny form of money issued by a government or central bank and used as legal tender and a medium of exchange.
Currency PairIt is a price quote of the exchange rate of two different currencies for trading in the market.
CPIAcronym for Consumer Price Index, a measure of inflation.
Carry TradeA trading strategy that captures the difference in the interest rates earned from buying a currency that pays a relatively high interest rate and selling another currency that pays a lower interest rate.

Double BottomChart pattern that occurs when the underlying investment moves in a similar pattern to the letter “W”.
Double TopChart pattern that occurs when the underlying investment moves in a similar pattern to the letter “M”.

ExchangeA centralized market like the New York Stock Exchange.
EETEastern European Time.
EST/EDTThe time zone of New York City, which stands for United States Eastern Standard Time/Eastern Daylight time.
European Session15:00 – 00:00 HKT

Fiat CurrencyGovernment issued money which is not backed by commodities such as gold or silver.
FundamentalsThe study of basic underlying economic factors which apply to the state of business.
Foreign Exchange/FOREX/FXThe transaction of changing one currency into another currency. For example, buying of one currency and selling of another at the same time.
FOMCFederal Open Market Committee, the policy-making committee of the US Federal Reserve.

Gap/GappingThe market moves so fast that the opening prices skip several levels from previous closing price with no trades being made. This situation often follows economic data or news announcements.
GDPThe total value of all finished goods and service, that are bought by final user, produced within a country during a specific period and it can be calculated by using expenditures, production or incomes.

HedgeAn offsetting transaction designed to protect from or minimize the impact of unfavorable movements in the assets’ value.

InflationThe decrease of purchasing power of a given currency over time.

LiquidityHow easy it is to sell or buy a specific product.
Limit orderA limit order is an order to buy or sell a product at a specific price better than the market price.
LeverageTraders can trade notional values far higher than the funds available within a specified multiplier.

MarginMargin is the amount of money that a trader needs to put forward in order to open a trade.
Margin CallThe amount of money that a trader put is not enough to maintain open positions, trader is required to deposit funds.
Moving AverageA calculation that takes the arithmetic mean of a given set of prices over the specific number of days in the past.
Market ValueThe price at which a product is traded.

New York Session21:00 – 06:00 (Next day) HKT

OTCOver-The-Counter. A decentralized market which traded via a broker-dealer network.

PipsAbbreviation for percentage in point, the smallest unit of price range traded in the traditional interbank market. The amount of one pip varies by currency pair, for example, one pip is 0.01 yen for USD/JPY and 0.0001 euro for EUR/USD.

QuoteAn indicative market price, for information purposes only in normal situation.
Quote CurrencyThe second currency in a currency pair.

ResistanceThe upper level which prevent the price from rising further.
RolloverRollover is the interest paid or earned for holding an open position overnight. It is calculated based on the interest rate differential between the two currencies.
RateThe price of one currency expressed in another, usaully used for dealing purposes.

Spot priceThe market price of a product is determined by the latest trades on over-the-counter market.
SpreadThe difference between the buy price and the sell price of a product.
SupportThe lower level which prevent the price from declining further.
Settlement DateThe date on which a contract is scheduled for delivery and payment. Spot settlement in the bullion market is two days after the transaction is struck.
Stop orderA stop order is an order to buy or sell a product at a specific price worse than the market price.
Server timeTime zone which the server is using.
SlippageThe difference between order price and executied price, typically becaused of changing market conditions.
SwapA currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

Trailing stopA trailing stop is created by setting up a stop order that ‘trails’ your position by a specific number of points. This is useful for ensuring that you lock in profits if the market moves in your favour.
Technical analysisThe process by which charts of past price patterns are studied for clues as to the direction of future price movements.

US Dollar IndexThe value of the US dollar relative to a basket of world currencies, which include the Euro (EUR), Japanese yen (JPY), Canadian dollar (CAD), British pound (GBP), Swedish krona (SEK), and Swiss franc (CHF).

YieldA measure of the annual return on an investment expressed as a percentage.