Forex Glossary: Key Trading Definitions
Welcome to our comprehensive Forex Trading glossary.
A comprehensive guide designed to illuminate the path for traders at every level of expertise. This glossary serves not only as a repository of key forex terms and definitions but also as a dynamic educational tool.
It aims to unriddle complex or basic forex terminology or concepts, clarify ongoing market trends, and empower you with the knowledge needed to articulate and analyze strategies confidently.
Glossary Dictionary
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A currency exchange rate system that is fixed but allows for readjustment.
The total exposure a trader has to various sources of risk in their portfolio.
The difference in value between currencies, or between the nominal and actual values of a currency.
A category of investments sharing common traits, market behaviors>market behaviors, and regulatory frameworks.
A directive to a broker to execute a trade at the most favorable current market price.
The currency pair that represents the exchange rate of the Australian Dollar to the U.S. Dollar.
Slang for the AUD/USD currency pair.
A bank or financial entity officially permitted to conduct foreign exchange transactions.
A system that provides the ability to execute trades via automated, pre-set trading instructions.
The administrative and support segment of a firm handling trade settlement, confirmation, and financial record maintenance.
The comprehensive tally of a country's international transactions with the world within a specific timeframe.
A type of chart representing the price range of a security during a given period with vertical bars.
The range in which a currency is allowed to fluctuate.
Paper currency issued by the central bank or treasury of a country.
The interest rate at which a nation's central bank lends money to domestic banks.
A business day when bank branches are operational and offer a full range of services to the public.
Charts that represent the opening, high, low, and closing (OHLC) prices of a security for a specific period in the form of vertical bars.
One hundredth of a percentage point (0.01%).
A portfolio of currencies being traded against the US Dollar, where the USD is being sold.
Expectation that a currency's value will decline.
The maximum price a buyer offers to pay for a currency.
The gap between what buyers are willing to pay and sellers are asking for in currency trading.
The main body of a price quote, excluding the decimal points and the last two digits.
A charting technique that uses three lines to indicate volatility: a moving average flanked by two bands at standard deviations.
A record of all the positions that a trader is holding.
A market movement characterized by a significant price jump, indicating the start of a new trend following a key pattern completion.
Forex trades with settlement dates that are not standard time frames (e.g., one month).
A person or organization that charges a commission or other fee to facilitate transactions between buyers and sellers.
The company or service that provides access and trading services to the forex market for traders.
Expectation that a currency's value will increase.
A market condition where prices are trending upward or expected to increase.
An order to purchase a currency pair at a specified price or lower.
Purchase on Margin involves utilizing funds borrowed from a broker to acquire currency, with the investment itself serving as security for the transaction.
The rate at which the market or a broker will purchase a specific currency.
The action of purchasing one currency while simultaneously selling another.
Slang for the GBP/USD currency pair.
The official exchange rate published by financial institutions or currency exchange services.
The interest cost or gain associated with holding a currency position overnight.
Currencies from countries with high interest rates, often involved in carry trades.
The Carry Grid strategy is a method in foreign exchange trading aimed at capitalizing on the variance in interest rates between two currencies.
A trade where the financing cost is less than the interest earned on the purchased currency.
A Carry Trade is a strategy that entails borrowing at a lower interest rate and allocating funds to an asset offering a higher rate of return.
Funds deposited in a financial institution that are available for trading.
The principal monetary authority of a nation, responsible for its currency, money supply, and interest rates.
An individual who uses charts and graphs of historical data to predict future market movements.
A transaction that results in a neutral net commitment to the market regarding a specific currency.
The process of selling or buying a currency to offset an existing position and close the trade.
The final rate at which a currency is traded on a given day.
Funds that are fully transferable and available for immediate use in trading.
A service charge assessed by a broker or agent for facilitating transactions.
A document exchanged between parties involved in a transaction, outlining the terms of the agreement.
A measure that evaluates the weighted average of prices across a selection of consumer goods and services, including items such as transportation, food, and medical care.
The agreed exchange rate for forward or futures contracts.
Slang for the Danish currency, the krone.
A statistical measure of how two securities move in relation to each other.
The other organization or party with whom the exchange deal is being conducted.
The party on the other side of a financial transaction.
To "cover" is to repurchase, as a closing move, an asset that was originally sold.
The rate of exchange between two currencies that are not the official currency of the nation that the rate is stated in.
The medium of exchange in any form actively used or circulating, particularly referring to circulating banknotes and coins.
A Currency Pair refers to a duo of currencies engaged in a foreign exchange transaction.
The potential risk of loss from fluctuating foreign exchange rates.
An order to buy or sell that is automatically canceled if not executed on the day it is placed.
The practice of buying and selling within the same trading day, before the markets close.
An investor who purchases and sells financial instruments within the span of a single trading day.
A record of all trades in chronological order.
The date on which a trade is agreed upon.
A written or electronic record of the details of a transaction.
An individual or entity that operates as a principal, rather than an agent, in the buying and/or selling of securities.
The act of buying and selling financial instruments.
Electronic systems used to facilitate trading in financial markets.
The date on which both parties agree to exchange the currencies being traded.
A decrease in the value of a currency concerning its purchasing power, in terms of how much it can buy of foreign goods (opposite of appreciation).
A deliberate downward adjustment to a currency's value, typically by official announcement.
Selling at a price below the nominal or par value.
The official currency of several countries, including the United States, Australia, Canada, and others.
The peak-to-trough decline during a specific record period of an investment, fund, or commodity.
A term indicating that a currency is weakening or that interest rates are decreasing.
A monetary policy used by central banks to increase the money supply by lowering interest rates.
A monetary policy used by central banks to increase the money supply by lowering interest rates.
A system that facilitates trading of financial products outside traditional exchanges.
Statistics about economic activities that allow analysis of economic performance and predictions of future performance.
An index describing the strength of a currency relative to a basket of other currencies.
A technique within technical analysis employed by investors to predict market trends by recognizing extremes in investor psychology, price highs and lows, and other collective factors.
An Exchange Rate represents the worth of one currency concerning its conversion into another currency.
The specific date when a derivative contract concludes and the final settlement must occur.
The amount of money that one may risk losing in an investment.
Less traded currencies that are not major global currencies, often from developing countries.
A legal tender established by government regulation that is not supported by a physical commodity.
Describes a market that is strengthening or a currency that is appreciating.
A global decentralized market for the trading of currencies.
A non-standardized contract between two parties to buy or to sell an asset at a specified future time at a price agreed upon today.
The agreed upon exchange rate for a currency to be exchanged on a specified future date under a contract.
The difference in interest rates between two currencies, represented as points in the exchange rate calculation.
The future date on which the foreign exchange is expected to be delivered and received.
Economic factors that are used to determine the value of a currency, including inflation, interest rates, and GDP growth.
Contracts that reserve parties to buy or sell a precise asset at a predetermined price at a specified time in the future.
A financial term describing a method of increasing exposure to an asset by using borrowed funds.
The Group of Seven, an organization of the world's seven largest advanced economies.
A technical analysis term indicating a bullish signal where a shorter-term moving average crosses above a longer-term moving average.
A technical analysis term indicating a bullish signal where a shorter-term moving average crosses above a longer-term moving average.
An economic state characterized by moderate growth and low inflation, enabling stable, market-friendly monetary policies.
A standing order to buy or sell a security at a specified price, remaining active until executed or canceled by the investor.
A trading strategy that places buy and sell orders at predefined intervals around a set price point to capture profits from market volatility.
A trading strategy that places buy and sell orders at predefined intervals around a set price point to capture profits from market volatility.
The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.
A currency that is trusted and widely accepted around the world due to the stability and reliability of the country's economy.
A pattern on a chart which is a predictor of a market reversal, featuring three peaks, the outer two at a similar height and the middle is highest.
The practice of making a trade or opening a position to reduce the risk of adverse price movements in an asset.
The buyer or the entity holding a financial instrument.
The International Foreign Exchange Master Agreement, setting standardized terms for FX transactions.
A currency that cannot be exchanged for another because of foreign exchange regulations.
A non-binding quote in the forex market, showing a rate without offering commitment
A measure of how much the broad level of prices for goods and services is ascending, leading to a decrease in purchasing power.
The initial deposit required to open a position in forex trading.
The minimum amount that must be available in an account to initiate a trade.
A directive to buy or sell a currency or financial instrument.
The FX rates that large international banks quote to one another.
A specialized broker that acts as an intermediary between major dealers to facilitate interbank trades.
The difference in interest rates between two different currencies in a pair.
The action by a central bank to influence the value of its currency by entering the forex market.
A person or entity that introduces clients to a broker in return for compensation.
The official currency of Japan, one of the major currencies traded on the forex market.
A market participant who trades financial instruments, targeting quick profits from short-term price fluctuations.
A currency that is considered important globally, either because of the country's economic stability or the volume of its trade.
Statistical data that predict future economic activity.
States to the bid price in a forex quote, representing the price at which the market is willing to buy a currency pair.
Utilizing borrowed capital to amplify potential returns on an investment.
A financial obligation, debt, or amount owed.
The buying of a currency pair with the expectation that its value will increase.
Slang for the Canadian Dollar.
The standardized number of units of a currency contract used in forex trading.
The necessary actions to maintain a position, like adjusting margins.
The minimum amount of equity that must be kept in a margin account.
A demand by a broker that a trader deposits additional money or securities to cover possible losses.
A dealer's commitment to accept buy or sell orders at quoted prices.
The daily adjustment of an account to reflect accrued profits and losses.
A firm that maintains a ready stock of specific securities to ensure liquidity and facilitate trading by buying and selling from its own inventory.
A direction to buy or sell a security immediately at the best available current price.
The minimum amount of equity required from an investor to secure a trading position.
The current market price for trading a currency pair.
Electronic systems that match buy and sell orders for securities in the financial markets.
The date on which a financial instrument's contract is set to end.
The price halfway between the two prices of a bid and ask spread.
Slang for a million units of a currency in the forex market.
A policy by central banks to increase the money supply by lowering interest rates.
The strategies employed by a central bank or regulatory authority to control the money supply and influence economic growth.
A sector of the financial market that trades in highly liquid instruments with short-term maturities.
A technical indicator that averages the price of a security over a chosen time period to smooth out price variability and highlight trends.
Currency pairs that cost you interest when you hold them overnight.
The difference between total open long (buy) and open short (sell) positions in a given asset held by an individual.
A trader who bases their trading decisions on news announcements.
A number of shares less than the standard trading unit.
The demand price at which a seller is willing to sell. Also known as the ask price.
A trading instruction consisting of two linked orders where the implementation of one automatically cancels the other.
A trade that has been initiated but not yet offset or closed with a corresponding trade.
A flexibility in settlement date chosen by the trader in a forex transaction.
A direct transaction involving the forward buying or selling of a currency, set for settlement on a specified future date.
Technical analysis indicators that vary over time within a band.
A trading method where transactions occur directly between two parties without the mediation of an exchange.
An equal value; in forex, it refers to a situation where two currencies are of equal value.
A situation where a country's currency exchange rate is fixed to that of another country.
The minimal price increment a currency pair can make in the forex market, often representing the smallest change in exchange rate.
The smallest possible price change in financial markets, equivalent to a pip in forex trading under certain conditions.
The total net holdings of a currency pair.
The difference in forex trading where the forward or futures price of a currency is higher than its spot price.
The actual gain or loss resulting from trading activities on closed positions, including the increase or decrease in the value of open positions.
The current market price; the bid (buy) and the ask (sell) prices.
The second listed currency in a forex pair, which indicates the amount needed of this currency to purchase one unit of the first currency.
A period in which price moves sharply upwards.
The extent between the highest and lowest prices traded during a specified period.
The price of one currency in terms of another.
The price of one currency in terms of another.
Profit or loss that is generated from completed trades.
A currency pair involving the USD, where the USD is not the first currency quoted.
The price level at which an asset meets sufficient selling interest that it temporarily cannot surpass.
Refers to the ask price in a forex quote, representing the price at which the market is willing to sell a currency pair.
The act of postponing the settlement date of an open trading position to the next trading day.
The process of both buying and selling, or selling and buying, the same amount of a currency pair.
The selling of a currency pair, anticipating a decrease in value of the base currency against the quote currency.
The present price at which a currency can be bought or sold, with settlement typically occurring within two business days.
The distinction between the buying price (bid) and selling price (ask) of a currency pair.
An order to sell a security when it attains a certain price, aimed at limiting potential losses.
Slang for the Swiss Franc.
An order placed to automatically close out a position at a predetermined profit target.
The action of closing a position to realize profits.
A reversal in price direction following a recent trend, typically triggered by profit-taking.
The smallest possible change in price, up or down.
A system for showing real-time changes in stock prices and market indexes
The end date of a contract or financial instrument.
A market characterized by a low number of transactions or participants, which can lead to significant price swings.
A forex transaction where a position is closed out and re-entered for the next trading day.
The date on which a trade occurs.
The costs associated with buying or selling a currency or financial instrument.
The window of time between the decision to trade and the execution of the trade.
The costs associated with buying or selling a currency or financial instrument.
The general direction in which a market or asset's price is moving.
A quote in the forex market that indicates both the buy and sell prices.
A currency that cannot be exchanged for another because of foreign exchange regulations.
The standard quantity of a transaction.
A transaction performed at a higher price than the previous trade.
The agreed-upon date for the exchange of funds in a financial transaction.
A transaction that occurs with immediate settlement, typically within two business days.
A trade that is settled one business day after the trade date.
The hypothetical balance in a trading account, reflecting all executed transactions, but not necessarily cash settled.
The degree of variation in the price movements of a security or market index over time, commonly used to assess the risk involved in an investment.
The number of shares or contracts traded in a security or market during a given period.
A day when the banks in a currency's primary financial market are open for business.
Slang in forex trading for a billion units.