Forex Terms

A Forex Glossary

Here are the most common and used terms in the Forex market.

Ask

A term which refers to the price demanded by the application.

Back office

The department and procedures for use in the registration and establishment of financial transactions of the trading day.

Base currency

Basis currency, the first of the two currencies in a currency cross.

ECB (European Central Bank)

Bank based in Frankfurt.

Bid

Word which means asking price offer.

Bidirectionality

Opportunity to take a position on the market when it is ascending or descending.

BOE (Bank Of England)

Bank of England.

BOJ (Bank of Japan)

Bank of Japan.

Book

Set of pending orders waiting execution.

Broker

Credit institutions or entities authorized to trade between various counterparties.

Cable

Name change of the British Pound / US Dollar. Originally comes from the fact that the prices GBP / USD were transmitted, since the mid-1800s, the U.S. and Europe through the wiring that crossed the Atlantic Ocean.

Japanese candle

Method of graphic representation of the price value that indicates the opening, closing, high and low for a certain period of time.

Capital gain

Realized gain on investments.

Cross rate

Exchange rate.

Dollar

Reference currency of the United States of America.

Euro

Reference currency of the European Union.

FED (Federal Reserve)

The institute, which combines the 12 banks in U.S. financial departments.

Figure

The sum of 100 minimum on each cross currency movements.

Example: in the Euro / dollar figure is comparable to 1 cent.

Flat

No open positions.

Forex (Foreign Exchange Market)

Market trade in foreign currency.

Franco

Reference currency of Switzerland.

Gap

Missing distance between the closing price and opening a new market. The price jumps certain values on your scale of reference. In the Forex this is an event that happens rarely and only on Sunday night.

Managers

People who work on the market as personal insights.

Hedging

Engage in investment activities in order to cover the losses of another. The aim is to reduce volatility.

ISM Index

U.S. macroeconomic index, which reports the national trend of manufacturing industry.

PMI
U.S. macroeconomic index, which reports the performance of manufacturing industry.

Mediation

Activities aimed at improving the operating conditions in the market to get the most out of a negotiation.

Leverage

Multiplier on investment that can only invest a margin of security, as compared to the total amount invested.

Liquidity

Available in an easy way to find a counterparty to conclude a negotiation.

Long

Purchase in the open position, with bullish perspective.

Obligation

Title securities in which one party agrees to lend money to another prior to maturity interest.

Zero Coupon Bonds

Bonds in which interest is paid in full at maturity, purchase a discounted price of present interest.

Overnight operations

Positions that remain open during the night and need to rollover activities: immediate closure and reopening.

Commercial operations or intraday

Operations that are closed within the day.

OTC (Over The Counter) or Interbank

Due to the fact that transactions are conducted between two parties or via phone or electronic network..

PIP (Performance Index Paper)
The smallest increase possible for an exchange rate.

Example: In the Euro / Dollar is equal to one ten-thousandth (0.0001).

Location

The thought of a operator expressed by an operation carried out on the market.

Open position

Market transaction in progress.

Basic position

Market transaction in progress with long-term perspective.

Rating

Technical opinion expressed on the solvency of a financial product. Drawn up in 3 alpha characters followed by AAA.

Resistance

Price threshold where sellers are reverse a rising market.

Currency risk

Risk of suffering losses in the event of a change in the exchange rate.

Rollover

Regulation of an open transaction during the night. This leads to another date adjustment according to the differential between the discount rate differential of the two currencies of the cross.

Scalping

Faster operations and repeated several times during the day.

Uncorrelated

No link between the development of two different markets.

Short

Open positions in sales, with bearish perspective.

Spread

Price difference between supply and demand.

Pound

Reference currency in Britain.

Stop loss

Executed order to reduce the loss of the wrong operation on the market.

Stop profit

Executed order to cash gain profitable market operation.

Support

Price threshold where buyers are reversing a drop in the market.

Target profit

Price threshold where a manager believes he has to close a transaction.

Tick

Minimum movement of the quoted instrument price.

Trading

Trading activity.

Trend

Trend, direction, development, evolution.

Volatility

A statistical measure of price movements in a market with respect to time.

Volume

The amount of total trade on a given listed instrument.

Warrants

Warrants a financial instrument are defined and listed on the stock market, consisting of a forward contract that entitles to subscribe for the purchase (such Call Warrants) or sale (such Warrants) of some underlying financial asset (underlying) to a price (called strike price or exercise price) and a set deadline. The purchase price of the warrant is called a premium.

Depending on the underlying asset, there are two types of warrants:

* Warrants (in the strict sense) that have as underlying shares only.

* Covered warrants can have the underlying stocks, bonds, stocks or bonds, indices or baskets of securities, currencies or interest rates.

The theoretical value of a warrant is given by the number of shares to the base value of each share less the exercise price.

Yen

Reference currency of Japan.

Yuan

Currency of the People’s Republic of China.