Forex Glossary

Use our forex glossary to get adjusted to the common words, phrases and terms used by other forex traders.

A downtrend is identified by lower highs and lower lows. The price at which the market is prepared to sell a product. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. For example, a 50 period daily chart SMA is the average closing price of the previous 50 daily closing bars.

Use Forex in a sentence

Definition of forex from the Collins English Dictionary. The hyphen (-) The hyphen joins words or parts of words. Hyphens are used at the ends of lines where a word has been split, to warn the reader that the word continues on the next line. If the word you need to split.

Alles was man braucht ist:. In Deutschland erwacht der Markt gerade erst. Seien Sie von Anfang an dabei und sichern sich ein geregeltes Nebeneinkommen durch Forex. Hier gibt's noch mehr Erklärungen: Probieren geht über studieren! Das gilt auch beim Devisenhandel. Da alle von uns getesteten Demokonten kostenlos sind, sollten Sie sich direkt anmelden und den Währungshandel mit Spielgeld lernen.

Eine bessere Einführung ins Thema gibt es nicht. Zur Auswahl stehen folgende Anbieter:. In the U. It was this break down of the Bretton Woods System that ultimately led to the mostly global acceptance of floating foreign exchange rates in Forex trading as it relates to retail traders like you and I is the speculation on the price of one currency against another. For example, if you think the euro is going to rise against the U. Being a Forex trader offers the most amazing potential lifestyle of any profession in the world.

Confidence — to believe in yourself and your trading strategy, and to have no fear. Discipline — to remain calm and unemotional in a realm of constant temptation the market. Focus — to stay concentrated on your trading plan and to not stray off course. Logic — to look at the market from an objective and straight forward perspective. Patience — to wait for only the highest-probability trading strategies according to your plan. Realism — to not think you are going to get rich quick and understand the reality of the market and trading.

Savvy — to take advantage of your trading edge when it arises and be aware of what is happening in the market at all times. As traders, we can take advantage of the high leverage and volatility of the Forex market by learning and mastering and effective Forex trading strategy, building an effective trading plan around that strategy, and following it with ice-cold discipline.

Money management is key here; leverage is a double-edged sword and can make you a lot of money fast or lose you a lot of money fast. The key to money management in Forex trading is to always know the exact dollar amount you have at risk before entering a trade and be TOTALLY OK with losing that amount of money, because any one trade could be a loser.

More on money management later in the course. Banks — The interbank market allows for both the majority of commercial Forex transactions and large amounts of speculative trading each day. Some large banks will trade billions of dollars, daily. Companies — Companies need to use the foreign exchange market to pay for goods and services from foreign countries and also to sell goods or services in foreign countries. An important part of the daily Forex market activity comes from companies looking to exchange currency in order to transact in other countries.

They can use their substantial foreign exchange reserves to try and stabilize the market. This means, the person or institutions that bought or sold the currency has no plan of actually taking delivery of the currency; instead, the transaction was executed with sole intention of speculating on the price movement of that particular currency.

Retail speculators you and I are small cheese compared to the big hedge funds that control and speculate with billions of dollars of equity each day in the currency markets. Individuals — If you have ever traveled to a different country and exchanged your money into a different currency at the airport or bank, you have already participated in the foreign currency exchange market.

Investors — Investment firms who manage large portfolios for their clients use the Fx market to facilitate transactions in foreign securities. For example, an investment manager controlling an international equity portfolio needs to use the Forex market to purchase and sell several currency pairs in order to pay for foreign securities they want to purchase.

Retail Forex traders — Finally, we come to retail Forex traders you and I. The retail Forex trading industry is growing everyday with the advent of Forex trading platforms and their ease of accessibility on the internet. Retail Forex traders access the market indirectly either through a broker or a bank. There are two main types of retail Forex brokers that provide us with the ability to speculate on the currency market: Brokers work as an agent for the trader by trying to find the best price in the market and executing on behalf of the customer.

For this, they charge a commission on top of the price obtained in the market. Advantages of Trading the Forex Market: This means dense liquidity which makes it easy to get in and out of positions. There is no opening bell in the Forex market. Straight through order execution allows you to trade at the click of a mouse. Also, there is no structural market bias like the long bias of the stock market, so traders have equal opportunity to profit in rising or falling markets.

While the forex market is clearly a great market to trade, I would note to all beginners that trading carries both the potential for reward and risk. Many people come into the markets thinking only about the reward and ignoring the risks involved, this is the fastest way to lose all of your trading account money. Jump To Next Chapter — Part 2: What Is Forex Trading? What is Professional Forex Trading?

What is Fundamental Analysis? What is Price Action Trading Analysis? Introduction to Forex Charting. Common Forex trading mistakes and traps. What is Technical Analysis. How to Make a Forex Trading Plan. The Psychology of Forex Trading. The way you show us these instructions according to me its very interesting, So i need t to start it but i have to learn fast. So I read to try your forex trading article. I am very much interested in trading,especially after going through your notes.

I want to learn more Tony Gauteng, South Africa. But i wanna know how can i do it. I wanna start as soon as possible. Am based in south Africa. I like the fect that you have made it clear that there are risks involved and that one can lose money easily.

Am going to join. HI Nial m thinking this could be my thing if u can help understand better abt Forex I will truly appreciate it. Paneled A very heavy round of selling. Parabolic A market that moves a great distance in a very short period of time, frequently moving in an accelerating fashion that resembles one half of a parabola.

Parabolic moves can be either up or down. Partial fill When only part of an order has been executed. Patient Waiting for certain levels or news events to hit the market before entering a position.

Pips The smallest unit of price for any foreign currency, pips refer to digits added to or subtracted from the fourth decimal place, i. Political risk Exposure to changes in governmental policy which may have an adverse effect on an investor's position. Portfolio A collection of investments owned by an entity. Position The net total holdings of a given product. Premium The amount by which the forward or futures price exceeds the spot price.

Price transparency Describes quotes to which every market participant has equal access. Profit The difference between the cost price and the sale price, when the sale price is higher than the cost price. Pullback The tendency of a trending market to retrace a portion of the gains before continuing in the same direction. Purchasing managers index PMI An economic indicator which indicates the performance of manufacturing companies within a country.

Purchasing managers index services France, Germany, Eurozone, UK Measures the outlook of purchasing managers in the service sector. Such managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries and inventories. Readings above 50 generally indicate expansion, while readings below 50 suggest economic contraction. Put option A product which gives the owner the right, but not the obligation, to sell it at a specified price.

Q Quantitative easing When a central bank injects money into an economy with the aim of stimulating growth. Quarterly CFDs A type of future with expiry dates every three months once per quarter. R Rally A recovery in price after a period of decline. Range When a price is trading between a defined high and low, moving within these two boundaries without breaking out from them.

Rate The price of one currency in terms of another, typically used for dealing purposes. Real money Traders of significant size including pension funds, asset managers, insurance companies, etc. They are viewed as indicators of major long-term market interest, as opposed to shorter-term, intra-day speculators. Resistence level A price that may act as a ceiling.

The opposite of support. Retail investor An individual investor who trades with money from personal wealth, rather than on behalf of an institution.

Retail sales Measures the monthly retail sales of all goods and services sold by retailers based on a sampling of different types and sizes. This data provides a look into consumer spending behavior, which is a key determinant of growth in all major economies.

Revaluation When a pegged currency is allowed to strengthen or rise as a result of official actions; the opposite of a devaluation. Rights issue A form of corporate action where shareholders are given rights to purchase more stock.

Normally issued by companies in an attempt to raise capital. Risk Exposure to uncertain change, most often used with a negative connotation of adverse change. Rollover A rollover is the simultaneous closing of an open position for today's value date and the opening of the same position for the next day's value date at a price reflecting the interest rate differential between the two currencies.

RUT Symbol for Russell index. Sector A group of securities that operate in a similar industry. Sell Taking a short position in expectation that the market is going to go down. Settlement The process by which a trade is entered into the books, recording the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.

X Symbol for the Shanghai A index. Short-covering After a decline, traders who earlier went short begin buying back. Short position An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short. Short squeeze A situation in which traders are heavily positioned on the short side and a market catalyst causes them to cover buy in a hurry, causing a sharp price increase. Shorts Traders who have sold, or shorted, a product, or those who are bearish on the market.

Sidelines, sit on hands Traders staying out of the markets due to directionless, choppy or unclear market conditions are said to be on the sidelines or sitting on their hands. Simple moving average SMA A simple average of a pre-defined number of price bars. For example, a 50 period daily chart SMA is the average closing price of the previous 50 daily closing bars. Any time interval can be applied. Slippage The difference between the price that was requested and the price obtained typically due to changing market conditions.

Slippery A term used when the market feels like it is ready for a quick move in any direction. Sovereign names Refers to central banks active in the spot market. Spot market A market whereby products are traded at their market price for immediate exchange. Spot price The current market price. Settlement of spot transactions usually occurs within two business days. Spot trade The purchase or sale of a product for immediate delivery as opposed to a date in the future.

Spot contracts are typically settled electronically. Spread The difference between the bid and offer prices. Square Purchase and sales are in balance and thus the dealer has no open position. Stock exchange A market on which securities are traded. Stock index The combined price of a group of stocks - expressed against a base number - to allow assessment of how the group of companies is performing relative to the past. Stop entry order This is an order placed to buy above the current price, or to sell below the current price.

These orders are useful if you believe the market is heading in one direction and you have a target entry price. Stop-loss hunting When a market seems to be reaching for a certain level that is believed to be heavy with stops. If stops are triggered, then the price will often jump through the level as a flood of stop-loss orders are triggered. Stop loss order This is an order placed to sell below the current price to close a long position , or to buy above the current price to close a short position.

Stop loss orders are an important risk management tool. By setting stop loss orders against open positions you can limit your potential downside should the market move against you. Remember that stop orders do not guarantee your execution price — a stop order is triggered once the stop level is reached, and will be executed at the next available price. Stop order A stop order is an order to buy or sell once a pre-defined price is reached.

When the price is reached, the stop order becomes a market order and is executed at the best available price. It is important to remember that stop orders can be affected by market gaps and slippage, and will not necessarily be executed at the stop level if the market does not trade at this price.

A stop order will be filled at the next available price once the stop level has been reached. Placing contingent orders may not necessarily limit your losses. Stops building Refers to stop-loss orders building up; the accumulation of stop-loss orders to buy above the market in an upmove, or to sell below the market in a downmove. Strike price The defined price at which the holder of an option can buy or sell the product. Support A price that acts as a floor for past or future price movements.

Support levels A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Suspended trading A temporary halt in the trading of a product. Swap A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate. T Takeover Assuming control of a company by buying its stock.

Technical analysis The process by which charts of past price patterns are studied for clues as to the direction of future price movements. Ten 10 yr US government-issued debt which is repayable in ten years. For example, a US year note. Thin A illiquid, slippery or choppy market environment.

A light-volume market that produces erratic trading conditions. Thirty 30 yr UK government-issued debt which is repayable in 30 years. For example, a UK year gilt. Tick size A minimum change in price, up or down.

Time to maturity The time remaining until a contract expires. Trade balance Measures the difference in value between imported and exported goods and services. Nations with trade surpluses exports greater than imports , such as Japan, tend to see their currencies appreciate, while countries with trade deficits imports greater than exports , such as the US, tend to see their currencies weaken.

Trade size The number of units of product in a contract or lot. Trading halt A postponement to trading that is not a suspension from trading. Trading heavy A market that feels like it wants to move lower, usually associated with an offered market that will not rally despite buying attempts. Trading range The range between the highest and lowest price of a stock usually expressed with reference to a period of time.

Trailing stop A trailing stop allows a trade to continue to gain in value when the market price moves in a favorable direction, but automatically closes the trade if the market price suddenly moves in an unfavorable direction by a specified distance. Transaction cost The cost of buying or selling a financial product. Transaction date The date on which a trade occurs. Trend Price movement that produces a net change in value. An uptrend is identified by higher highs and higher lows.

A downtrend is identified by lower highs and lower lows. Turnover The total money value or volume of all executed transactions in a given time period.

Two-way price When both a bid and offer rate is quoted for a forex transaction. U Ugly Describing unforgiving market conditions that can be violent and quick. This is measured quarter-on-quarter QoQ from the previous year. UK claimant count rate Measures the number of people claiming unemployment benefits. The claimant count figures tend to be lower than the unemployment data since not all of the unemployed are eligible for benefits.

UK HBOS house price index Measures the relative level of UK house prices for an indication of trends in the UK real estate sector and their implication for the overall economic outlook. UK jobless claims change Measures the change in the number of people claiming unemployment benefits over the previous month.

UK manual unit wage loss Measures the change in total labor cost expended in the production of one unit of output. UK producers price index input Measures the rate of inflation experienced by manufacturers when purchasing materials and services. This data is closely scrutinized since it can be a leading indicator of consumer inflation. UK producers price index output Measures the rate of inflation experienced by manufacturers when selling goods and services.

Underlying The actual traded market from where the price of a product is derived. Unemployment rate Measures the total workforce that is unemployed and actively seeking employment, measured as a percentage of the labor force. University of Michigan's consumer sentiment index Polls US households each month. The report is issued in a preliminary version mid-month and a final version at the end of the month.

Consumer sentiment is viewed as a proxy for the strength of consumer spending. Uptick A new price quote at a price higher than the preceding quote. Uptick rule In the US, a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

US prime rate The interest rate at which US banks will lend to their prime corporate customers. US30 A name for the Dow Jones index. V Value date Also known as the maturity date, it is the date on which counterparts to a financial transaction agree to settle their respective obligations, i. For spot currency transactions, the value date is normally two business days forward. Variation margin Funds traders must hold in their accounts to have the required margin necessary to cope with market fluctuations.

VIX or volatility index Shows the market's expectation of day volatility. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge. W Wedge chart pattern Chart formation that shows a narrowing price range over time, where price highs in an ascending wedge decrease incrementally, or in a descending wedge, price declines are incrementally smaller.

Ascending wedges typically conclude with a downside breakout and descending wedges typically terminate with upside breakouts. Whipsaw Slang for a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Wholesale prices Measures the changes in prices paid by retailers for finished goods. Inflationary pressures typically show earlier than the headline retail. Working order Where a limit order has been requested but not yet filled.