Glossary
A
ASK
The price at which a trader is willing to buy the trading instrument: share, bond, futures, currency, etc.
B
BALANCE
The ratio between the money available in the account and money engaged for making transactions.
BASE CURRENCY
The first currency in a pair. Quoted currency is bought for base currency. For example, in GBP/USD pair, the GBP is the base currency.
BID
The price at which a trader is willing to sell the trading instrument: share, bond, futures, currency, etc.
BREAKOUT
Crossing by the price of a significant border (level of local maximum / minimum, psychological values, trend line).
BROKER
A company that grants access for individuals or companies to a stock exchange or international bank market. A broker charges a commission, wich usually depends from customer's transaction volume.
C
CFD
A financial instrument allowing to profit off price change of an asset without holding it. Buying CFD, you buy price to an instrument, but not the instrument itself. Basic assets are shares, commodities, futures, indices.
CHART
A graphic representation of a trading instrument price over the past trading period and current price. On Forex usually use a japan candlesticks chart view.
CURRENCY PAIR
A financial instrument in the Forex market. A currency pair consists of the base and counter currency. Main or major currency pairs on Forex: EURUSD, GBPUSD, USDCHF, USDJPY, USDCAD, AUDUSD, NZDUSD.
D
DIVERSIFICATION
Separate of capital between different assets with low risk levels to minimize risks and financial losses.
F
FALSE BREAKOUT
Short-term crossing of a certain conventional border by the price (level of support or resistance, trend line, etc.) with subsequent return and movement in the opposite direction.
FLAT
Little movement of a price value in some period of time. On charts flat looks like horozontal line.
FOREX
FOREX - its acronym from FOReign EXchange market. On this market traders deals trades with various financial instruments, like currencies, stocks, futures, commodities, etc.
FUNDAMENTAL ANALYSIS
A method for forecasting market movement based on analysis of economic data, political events and company reports.
G
GAP
A significant price spread between the closing price of the previous timeframe (time interval) and the open price of the next timeframe. Visually, on the chart, you will see a breach between figures/chart lines. Usually occurs between fridays closing time and mondays opening time of trades.
H
I
INDICATOR
A common name of a mathematical tool in a technical analysis. Indicators are needed to analyze a chart and forecast future price movement.
INFLATION
An economic situation, when prices of goods and services in the country are growing, and purchasing power is falling.
INSTRUMENT
Financial document (stock, futures, option...) which trader can sell or buy to provide receive funds.
INTERVENTION
An impact of a national Central Bank in order to influence the exchange rate of the national currency, i.e. to weaken or strengthen it.
L
LEVERAGE
Relation between borrowed and own funds. It is expressed as 1:10, 1:100. Leverage 1:100 means that in order to carry out a transaction the minimal amount at the account shall be 1% of the operation volume.
LIQUIDITY
Option to easily sell or buy a financial asset at market price. High liquidity means high trade activity and volume.
LOCK
Opposite positions opened at the share dealing account (buy or sell) for a single financial instrument of a certain volume.
LOT
A unit measure of the volume of a financial instrument, standard value of a contract. Standard lot at Forex market is 100,000 units of the base currency.
M
O
ORDER
An order of a trader to buy or sell a financial instrument. They distinguish a market order and a pending order. Market order — buy or sale oprration at a current price. Pending order — buy or sale operation at a price indicated by the trader.
OVERBOUGHT
A market situation in case of overgrowth of the asset price. It is followed by price reduction.
OVERSOLD
A market situation in case of too low fall of the asset price. It is followed by price growth.
P
POINT, PIP
A minimum change in currency rate. For the majority of currency pairs (EURUSD, GBPUSD, USDCHF) one point equals 0.0001, for USDJPY — 0.01.
PULLBACK
Change in price movement direction after its sustained growth or reduction, when market players believe that the reached price is too high or, vice versa, too low.
Q
R
S
STOP LOSS
An instruction to the trading platform to automatically close the position, if the price comes close to a certain level. Stop loss is required to limit capital losses.
STOP OUT
A forced closure of client's positions by the broker, if acceptable level of losses is reached.
SWAP
Difference in credit interest rates for currencies used in trades. Its take place at open positions left for overnight.
T
TAKE PROFIT
An instruction to the trading platform to automatically close the position, if the price comes close to a certain level. Take Profit is required to lock in profits.
TECHNICAL ANALYSIS
Chart analysis method based on price development in the earlier periods. Besides, mathematical analysis methods are used.
TRADE TERMINAL
Software for receiving a flow of currency quotes, carrying out transactions and analysis of charts.
TREND
A steady trend (direction) in price movement. They distinguish an up and down trend — growth and fall of an asset price respectively.
TREND LINE
A straight line in the price chart, it reflects the current market direction — whether the asset price is growing or falling.
V