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FX Glossary

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ASK

The price at which you can buy the base currency.

Asset

The underlying instrument essential for determining a contract

Bar Charts

The top of the vertical line indicates the highest price a security traded at during the trading period and the bottom represents the lowest price. The closing is displayed on the right side of the bar, and the opening price is shown on the left side of the bar.

Bear

A trader who predicts that the price of an asset will fall.

BID

Bid is the price at which you can sell the base currency.

Bull

A trader who predicts that the price of an asset will rise.

Candlestick Charts

A candlestick chart is a combination of a line-chart and a bar chart. It records four prices: open, close, high and low.

Channels

There are three types of channels in Forex charting: ascending channel, descending channel, and horizontal channel.

CFD

Cocoa Frosted Doughnuts - Oh no wait, that’s our mid-morning snack. Actually, a CFD is a contract for difference. That’s a contract between you, the trader or investor, and an investment bank or FX company. At the end of the contract, the two parties exchange the difference between the opening and closing prices of a financial instrument. CFDs allow traders to speculate on the rising or falling prices of fast-moving financial markets or instruments like shares, indices, commodities, currencies and treasuries. They can do this while eating cocoa frosted doughnuts.

Commodities

Physical items that are grown or mined, i.e: Precious metals or oil.

Contract size

The contract size is the trading amount or quantity for exchanging currencies.

Crosses

Currency pairs that are not associated with the U.S. dollar are referred to as minor currencies or crosses. These pairs have slightly wider spreads and are not as liquid as the majors

Currency

A financial assets traded in pairs

Day trading

The opening and closing of positions in the market before the end of the trading session

Exotic

Exotic currency pairs include currencies of emerging markets. These pairs are not as liquid, and the spreads are much wider.

Fibonacci

Technical analysts tool used to identify potential support and resistance levels based on key numbers.

Forex (Fx)

The FX market is the largest and most dynamic market in the world. The foreign exchange market (forex, FX, or currency market) is a global decentralised market for the trading of currencies. Forex is an “over-the-counter” (OTC) market supported by forex dealers serving as market makers.

Fundamental Analysis

Fundamental Analysis concentrates on the financial drivers of the economy. It attempts to identify intrinsic value by examining related economic, financial and other factors related to the markets.

Good For the Day

A GFD order stays active in the market until the end of the trading day.

GTC

Good till cancelled

Hedging

Techniques of reducing or avoiding extensive losses

Index

A group of stocks such as Nasdaq, S&P 500.

Leverage

Leverage allows traders to trade on a large investment size, without having to put up the full amount. Leverage makes a trader with a small investment size have the same potential as a trader with a much bigger investment size.

Limit Entry Order

This is an order placed to buy below the market or sell above the market at a certain price.

Line Charts

Line charts help illustrate supply and demand by mapping time on the X-axis and price on the Y-axis. The most simple of all charts is the line chart which connects a timescale’s closing prices without giving us any information about the trading range during the selected time interval.

Lots

A lot is a standardised quantity of the instrument you are trading.

Majors

The currencies that trade the most volume against the U.S. dollar are referred to as the major currencies. All of the major currency pairs have very liquid markets that trade 24 hours a day, every business day, and they each have very narrow spreads.

Market Order

A market order is an order to buy or sell at the best available price.

Moving Averages

The method of smoothing out data on price charts so that trends are easier to spot

Nasdaq

The Nasdaq Stock Market, also known as Nasdaq or NASDAQ, is an American stock exchange headquartered in New York City. Nasdaq refers to the Nasdaq Composite, an index of more than 3,300 stocks listed on the Nasdaq exchange. Some of the world’s foremost technology giants listed on the exchange include Apple, Google, Microsoft, Oracle, Amazon, and Intel. Most are technology and internet-related, but there are also financial, consumer, and industrial companies. It is ranked second on the list of stock exchanges by market capitalisation of shares traded. Its trading technology is used by 70 exchanges in 50 countries, listed on the Nasdaq under the symbol NDAQ.

Once Cancels the Other

An OCO order is a mixture of two entry and or stop loss orders.

Once Triggers the Other

An OTO is the opposite of an OCO as it only puts an order when the parent order is triggered. Also known as a conditional order.

Pips

Pip is an acronym for "percentage in point". A pip is the smallest price move that an exchange rate can make based on market convention. Most currency pairs are priced to four decimal places and the smallest change is the last (fourth) decimal point. The fifth decimal is a fraction of a pip. JPY pairs are a notable exception, with the second decimal being a pip.

Precious metals

A metal considered to have a high value such as Gold or Silver.

Reversal Patterns

Reversal patterns indicate that a reversal in trend is taking place.

Slippage

Slippage is a normal market condition that occurs at times of limited liquidity or at times of particularly high-market volatility, for instance when any important economic data is about to be released or at the market closing and/or opening times.

Spread

The spread is the number of pips between the bid and the offer

Stop Entry Order

This is placed to buy above the market or sell below the market at a certain price to enter into a new position

Stop Loss Order

This is linked to a trade to prevent additional losses. The stop-loss order stays in effect until the position is closed or until the order is cancelled.

Support & Resistance

The troughs, or reaction lows, are called support. Support is a level or area on the chart where buying interest is sufficiently strong to overcome selling pressure. Decline is halted and prices turn back up again. Resistance is the opposite of support and represents when selling pressure overcomes buying pressure and a price advance is turned back.

Techincal Analysis

Technical analysis focuses on past price behaviours. It involves the study of charts to identify patterns and trends.

Ticks

One tick is the minimum number of pips that a currency pair moves

Trailing Stop

This is a type of stop-loss order attached to a trade that moves as the price fluctuates. Your position will be closed when a market order to close your position at the best available price is sent.

Trendlines

The straight line connecting successively higher lows during an uptrend or successively lower highs during a downtrend

Trends

A trend is a tendency for prices to move in a particular direction over a period of time