Forex Terms
A
| Ask Price | Selling price of the provider/ Buying price of a client. The price a buyer is willing to pay for a product. |
| Asian Session | 07:00 – 16:00 HKT |
| Arbitrage | Buy and sell a financial product at the same time in different markets in order to take small advantage of price differentials betweens markets. |
B
| Bid Price | Buying price of the provider/ Selling price of a client. The price a seller is willing to accept for a product. |
| Bull Market | A upward price trend or ‘uptrend’ over time. |
| Bear Market | A downward price trend or ‘downtrend’ over time. |
| Base Currency | The 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. |
C
| Central Bank | A 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 Currencies | Currencies from countries where mainly rely on exporting natural resources for income, often specifically referring to Canada, New Zealand, Australia and Russia. |
| Cross Currency Pair | A pair of currencies that does not include the U.S. dollar. |
| Crown Currencies | Refers to Loonie (Canadian Dollar), Aussie (Australian Dollar), Sterling (British Pound) and Kiwi (New Zealand Dollar) – countries of the Commonwealth. |
| Currency | Any form of money issued by a government or central bank and used as legal tender and a medium of exchange. |
| Currency Pair | It is a price quote of the exchange rate of two different currencies for trading in the market. |
| CPI | Acronym for Consumer Price Index, a measure of inflation. |
| Carry Trade | A 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. |
D
| Double Bottom | Chart pattern that occurs when the underlying investment moves in a similar pattern to the letter “W”. |
| Double Top | Chart pattern that occurs when the underlying investment moves in a similar pattern to the letter “M”. |
E
| Exchange | A centralized market like the New York Stock Exchange. |
| EET | Eastern European Time. |
| EST/EDT | The time zone of New York City, which stands for United States Eastern Standard Time/Eastern Daylight time. |
| European Session | 15:00 – 00:00 HKT |
F
| Fiat Currency | Government issued money which is not backed by commodities such as gold or silver. |
| Fundamentals | The study of basic underlying economic factors which apply to the state of business. |
| Foreign Exchange/FOREX/FX | The transaction of changing one currency into another currency. For example, buying of one currency and selling of another at the same time. |
| FOMC | Federal Open Market Committee, the policy-making committee of the US Federal Reserve. |
G
| Gap/Gapping | The 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. |
| GDP | The 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. |
H
| Hedge | An offsetting transaction designed to protect from or minimize the impact of unfavorable movements in the assets’ value. |
I
| Inflation | The decrease of purchasing power of a given currency over time. |
L
| Liquidity | How easy it is to sell or buy a specific product. |
| Limit order | A limit order is an order to buy or sell a product at a specific price better than the market price. |
| Leverage | Traders can trade notional values far higher than the funds available within a specified multiplier. |
M
| Margin | Margin is the amount of money that a trader needs to put forward in order to open a trade. |
| Margin Call | The amount of money that a trader put is not enough to maintain open positions, trader is required to deposit funds. |
| Moving Average | A calculation that takes the arithmetic mean of a given set of prices over the specific number of days in the past. |
| Market Value | The price at which a product is traded. |
N
| New York Session | 21:00 – 06:00 (Next day) HKT |
O
| OTC | Over-The-Counter. A decentralized market which traded via a broker-dealer network. |
P
| Pips | Abbreviation 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. |
Q
| Quote | An indicative market price, for information purposes only in normal situation. |
| Quote Currency | The second currency in a currency pair. |
R
| Resistance | The upper level which prevent the price from rising further. |
| Rollover | Rollover 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. |
| Rate | The price of one currency expressed in another, usaully used for dealing purposes. |
S
| Spot price | The market price of a product is determined by the latest trades on over-the-counter market. |
| Spread | The difference between the buy price and the sell price of a product. |
| Support | The lower level which prevent the price from declining further. |
| Settlement Date | The 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 order | A stop order is an order to buy or sell a product at a specific price worse than the market price. |
| Server time | Time zone which the server is using. |
| Slippage | The difference between order price and executied price, typically becaused of changing market conditions. |
| Swap | A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate. |
T
| Trailing stop | A 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 analysis | The process by which charts of past price patterns are studied for clues as to the direction of future price movements. |
U
| US Dollar Index | The 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). |
Y
| Yield | A measure of the annual return on an investment expressed as a percentage. |
