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| Account Statement |
A statement providing the balance as well as the full record of all
transactions that lead to the current balance. |
| Ask/offer price |
The price at which a currency pair or security is offered for
sale; the quoted price at which an investor can buy a currency pair. This
is also known as the 'offer', 'ask price', and 'ask rate'. |
| Balance |
The amount of money in an account in terms of the basic currency. |
| Base currency |
In terms of foreign exchange trading, currencies are quoted in terms
of a currency pair. The first currency in the pair is the base currency. The
base currency is the currency against which exchange rates are generally quoted
in a given country. Examples: USD/JPY, the US Dollar is the base currency;
EUR/USD, the EURO is the base currency. |
| Bid price |
The price at which an investor can place an order to buy a currency pair;
the quoted price where an investor can sell a currency pair. This is also known
as the 'bid price' and 'bid rate'. |
| Chart |
A type of information graphic that allows to analyze price changes at the
market and are used for graphical analysis, building of various indicators and
line studies. Charts are a very valuable instrument for analyzing
of financial markets. |
| Close price |
The rate at which a position can be closed based on the market price at end
of the day. |
| Closing a position |
The process of selling or buying a foreign exchange position resulting
in the liquidation (squaring up) of the position. |
| Currency pair |
The two currencies in a foreign exchange transaction. The «EUR/USD»
is an example of a currency pair. The first currency in the pair is the base
currency. The second currency in the pair is labeled quote currency
or counter currency. |
| Cross-rate |
The exchange rate between 2 currencies where neither of the currencies are
USD. The rate at which two currencies exchange based on exchange rates using
a third currency. |
| Day Trading |
Refers to a style or type of trading where trade positions are opened and
closed during the same day. |
| Deposit |
Reflects funds deposited to the trading account for a particular purpose
of investment (the buying and selling of securities or commodities for the
purpose of gaining profit). |
| Derivative |
A financial instrument whose characteristics and value depend upon the
characteristics and value of an underlier, such as a commodity, bond, equity
or currency. Futures and options are prominent
examples of derivatives. |
| Hedging |
A type of protective investment designed to offset adverse price movements
in a given asset. Typically, a hedge is an offsetting position taken
in a related security or entering positions to reduce risk
in another investment. |
| High price |
The greatest price that a security or currency hit during a specific period
of time. Most charting packages will usually list an open, high, low, close.
If a security or currency closes at the high of the day, it is usually perceived
very positive or bullish. |
| Last price |
The price of the last transaction for a given currency pair at the end
of a given trading session. Also known as closing price or close. |
| Leverage |
The amount, expressed as a multiple, by which the notional amount traded
exceeds the margin required to trade (the ratio between the borrowed and owned
funds for trading). For example, if the notional amount traded (also referred
to as «lot size» or «contract value») is $100,000 dollars and the required
margin is $2,000, the trader can trade with 50 times
leverage ($100,000/$2,000). |
| Long position |
In foreign exchange, when a currency pair is bought, it is understood that
the primary currency in the pair is 'long', and the secondary
currency is 'short'. |
| Lot |
The standard unit size of a transaction. Typically, one standard lot
is equal to 100,000 units of the base currency, 10,000 units if it’s a mini,
or 1,000 units if it’s a micro. |
| Low price |
The lowest price that a security or currency pair has reached during
a certain period of time (usually, during a day). |
| Margin |
The amount of money required to open or maintain a position. For example, 1%
margin means that $1,000 of funds on deposit are required for a $100,000
position. Margin can be either «free» or «used». Used margin is that amount
which is being used to maintain or open a position, whereas free margin is the
amount available to open new positions. If a traders account falls below the
minimum amount required to maintain an open position, he will receive a «margin
call» requiring him to either add more money into his or her account or to close
the opened position. |
| Margin account |
A type of account in which the brokerage lends the client cash with which
to purchase securities. In contrast to a cash account, a margin account allows
an investor to buy securities not in the hands of the client. |
| Margin level |
Proportion of Equity and Margin (equity/margin), which defines safety factor
on trading account. |
| Open position |
Any position (long or short) that is subject to market fluctuations and has
not been closed out by a corresponding opposite transaction.
Open — Opening
of a position, or entering the market, is the first buying or selling
of a certain amount of the security traded. Position can be opened either
by execution of a market order or by automatic triggering
of a pending order. |
| Order |
A customer’s instructions to buy or sell currencies. |
| Pip (percentage in points) |
The smallest increment of change in a foreign currency price, either
up or down. For most currencies, denotes the fourth decimal place in the
exchange rate (0.0001). For such currencies as the Japanese yen, a basis point
is the second decimal place (0.01). |
| Position |
A position is a trading view expressed for buying or selling. It refers
to the amount of a currency either owned or owed by a trader. |
| Profit |
The positive gain resulting from an investment or business operation after
subtracting for all expenses. Opposite of loss |
| Range |
Range refers to the area between high and low prices a currency pair tends
to trade between during a given period of time. |
| Rate |
Price at which a currency can be purchased or sold against
another currency. |
| Risk |
The risk that the exchange rate on a foreign currency will move against the
position held by an investor such that the value of the
investment is reduced. |
| Short position |
In foreign exchange, when a currency pair is sold, the position is said
to be short. It is understood that the primary currency in the pair is 'short',
and the secondary currency is 'long'. |
| Spot |
In the FX market transactions in the spot market are actually settled two
days later, but are delivered right away. In the speculative spot FX markets,
unlike the spot commodity markets no good actually change hands. Transactions
are simply settled as computer entries between the tow parties in the trade.
In other words the sale of 100 million Euro for dollars does not obligate the
seller to actually deliver the hard currency to the buyer, but simply requires
him to settles out the difference if any between the entry price and the current
market price. |
| Spread |
The difference between the sell quote and the buy quote or the bid and offer
price. For example, if EUR/USD quotes read 1.3200/03, the spread is the
difference between 1.3200 and 1.3203, or 3 pips. In order to break even
on a trade, a position must move in the direction of the trade by an amount
equal to the spread. |
| Stop-limit order |
An order to buy or sell a certain quantity of a certain security
at a specified price or better, but only after a specified price has been
reached. A stop-limit order is essentially a combination of a stop
order and a limit order. |
| Stop-loss order |
An order to restrict losses at a pre-specified price level.
Order to buy or sell when a given price is reached or passed to liquidate part
or all of an existing position. The purpose of setting up a stop loss order
is to put a «safety net» on transactions. Without a stop, a trader could
potentially lose all his funds if the trade went against them. A stop position
reflects a trader’s «pain point," where the market has turned so far against him
that he needs to exit his position. As a result, stop orders are useful for
money management in controlling losses, helping to ensure a trader
is controlling their risk exposure. |
| Stop-out |
If at any point of time the Equity (current balance including open
positions) is equal or less than 20% of the margin occupied by open positions,
a dealer has the right to close one or all open positions at his discretion
to meet margin requirements. |
| Support |
A price level in which a currency pair has difficulty falling below.
At support, price action tends to stall before breaking below, or reverse in the
opposite direction. Support level, is the bottom of a stock’s current trading
range, or the point at which the price is low enough to stimulate demand among
investors. Strong buying at the support level moves the stock’s price up from
its low. |
| Tick |
The smallest possible change in a price, either up or down. A tick may also
be called a minimum fluctuation. |
| Trading session |
The period in which trading activities occurs, spanning from the time the
market opens until the closing of the market. |
| Trend |
The general pattern of movement for prices or rates. The relatively constant
movement of a variable throughout a period of time. The period may
be short-term or long-term, depending upon whether the
trend itself is short-term or long-term. |
| Quote |
A simultaneous bid and offer in a currency pair. The highest bid or lowest
ask price available on a currency at any given time. |
