Record of all transactions

Account Balance

Amount of money in an account

Algorithmic Trading

A trading system that utilizes very advanced algorithms for making transaction decisions in the financial markets. The use of algorithmic trading or “algo trading” for short, is most commonly used by large institutional investors due to the large amount of shares they purchase everyday.

API – Application Programming Interface

In the context of forex trading, an API refers to the interface or platform that enables your platform to connect with the market.


A currency is said to appreciate when price rises in response to market demand; an increase in the value of an asset.


Taking advantage of countervailing prices in different markets by the purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market to profit from small price differentials.

Ask, Offer

The price, or rate, that a willing seller is prepared to sell at.


The Australian Dollar

Back Office

The departments and processes related to the settlement of financial transactions (i.e. written confirmation and settlement of trades, record keeping)

Balance of Payments

A record of transactions with the rest of the world over a particular time period. These include merchandise, services and capital flows.

Balance of Trade

The value of a country’s exports minus its imports

Bar Chart

A type of chart which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line of the right of the bar.

Base Currency

The currency in which an investor or issuer maintains its book of accounts; the currency that other currencies are quoted against. In the forex market, the US Dollar is normally considered the ‘base’ currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair.

Basis Point

One hundredth of a percent.


An investor who believes that prices/the market will decline.

Bear Market

A market distinguished by a prolonged period of declining prices accompanied with widespread pessimism.


The bid is the price that a buyer is prepared to purchase at; the price offered for a currency.

Binary Trading

Binary trading is based on a simple ‘yes’ or ‘no’. Will an underlying asset be above a certain price at a certain time? Traders, when binary trading, place trades based on whether they believe the answer is yes or no.


Bonds are tradable instruments (debt securities) which are issued by a borrower to raise capital. They pay either fixed or floating interest, known as the coupon. As interest rates fall, bond prices rise and vice versa.


An individual, or firm, that acts as an intermediary, putting together buyers and sellers usually for a fee or commission. In contrast, a ‘dealer’ commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.


Bundesbank, Central Bank of Germany.


An investor who believes that prices/the market will rise.

Bull Market

A market distinguished by a prolonged period of rising prices (opposite of bear market).

Candlestick Chart

A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.

Central Bank

A government or quasi-governmental organization that manages a country’s monetary policy and prints a nation’s currency. For example, the US central bank is the Federal Reserve, others include the ECB, BOE, BOJ.

CFD Trading

CFD in cfd trading means Contracts for Difference (CFDs) and it is a method to trade on the price movements of products such as shares, indices, commodities, currencies and treasuries.


An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.


The process of settling a trade.

Closed Position

Exposures in Foreign Currencies that no longer exist. The process to close a position is to sell or buy a certain amount of currency to offset an equal amount of the open position. This will ‘square’ the position.


A transaction fee charged by a broker.


A document exchanged by counterparts to a transaction that confirms the terms of the said transaction.


The standard unit of trading.

Counter Party

The participant, either a bank or customer, with whom the financial transaction is made.

Cross Rate

An exchange rate between two currencies. The cross rate is said to be non-standard in the country where the currency pair is quoted. For example, in the US, a GBP/CHF quote would be considered a cross rate, whereas in the UK or Switzerland, it would be one of the primary currency pairs traded.


Any form of money issued by a government or central bank and used as legal tender and a basis for trade.

Currency Exchange

Currency or money exchange is the business that allows customers to exchange one currency for another currency at specific currency rates.

Currency Pair

The two currencies that make up a foreign exchange rate. For example, EUR/USD.

Currency Risk

The risk of incurring losses resulting from an adverse change in currency exchange rates.

Day Trading

Opening and closing the same position or positions within the same trading session.


A trading software platform that has charting tools, forex indicators and forex news to help you analyze markets and trade foreign currency.


An individual or firm that acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.


A negative balance of trade or payments


An actual delivery where both sides transfer possession of the currencies traded.


The borrowing and lending of cash. The rate that money is borrowed/lent at, is known as the deposit rate (or depo rate). Certificates of Deposit (CD’S) are also tradable instruments.


A decline in the value of a currency due to market forces.


A contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.


The deliberate downward adjustment of a currency’s price, normally by official announcement.

ECB – European Central Bank

The Central Bank for the European Monetary Union.

End Of Day (Mark-to-Market)

Traders account for their positions in two ways: accrual or mark-to-market. An accrual system accounts only for cash flows when they occur, hence, it only shows a profit or loss when realized. The mark-to-market method values the trader’s book at the end of each working day, using the closing market’s rates or revaluation rates. Any profit or loss is booked and the trader will start the next day with a net position.


The currency of the European Monetary Union (EMU) which replaced the European Currency Unit (ECU).

Exchange Rate

Exchange rate / foreign exchange rate (forex rates), is the price of a country’s currency in terms of another currency. An exchange rate has a base currency and a counter currency. Most exchange rates use the US dollar as the base currency and other currencies as the counter currency.

Execution Date

The date on which a trade occurs.

Fed – Federal Reserve

The Central Bank for the United States

Fixed Exchange Rate (Representative Rate)

An official exchange rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates fluctuate between definite upper and lower bands, leading to intervention.

Flat (Square, Balanced)

To be neither long or short is the same as to be flat or square. One would have a flat book if he has no positions or if all the positions cancel each other out.

FOMC – Federal Open Market Committee

The Federal Reserve monetary committee.

Forex – Foreign Exchange

The simultaneous buying of one currency and selling of another in an over-the-counter market. Most major FX is quoted against the US Dollar. Sometimes mistakenly called forex exchange.

Forex Signal

A forex signal is a suggestion for executing a trade on a currency pair, at a specific price and time. The forex signals are generated either by an expert analyst or an automated forex robot programmed by the forex signal service.


The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.

Forwards Points

The pips added to or subtracted from the current exchange rate to calculate a forward price.

FRA – Forward Rate Agreements

FRA’s are transactions that allow one to borrow/lend at a stated interest rate over a specific time period in the future.

Front and Back Office

The front office usually comprises of the trading room and other main business activities.

Fundamental Analysis

Analysis of economic and political information with the objective of determining future movements in a financial market.

Futures Contract

An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that futures are typically traded over an exchange (Exchange-Traded Contracts – ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.


The five leading industrial countries, being US, Germany, Japan, France and UK.


The seven leading industrial countries, being US, Germany, Japan, France, UK, Canada and Italy.

GDP – Gross Domestic Product

Total value of a country’s output, income or expenditure produced within the country’s physical borders.

GNP – Gross National Product

GNP equals to Gross Domestic Product plus income earned from investment or work abroad.

GTC – Good-Till-Cancelled

An order left with a dealer to buy or sell at a fixed price. The GTC will remain in place until executed or cancelled.


A position or combination of positions that reduces the risk of your primary position.


Usually, the highest traded price and the lowest traded price for the underlying instrument for the current trading day.


An economic condition where there is an increase in the price of consumer goods, thereby eroding purchasing power.

Initial Margin

The initial deposit of collateral required to enter into a position as a guarantee on future performance.

Interbank Rates

The Foreign Exchange rates at which large international banks quote other large international banks


Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.

IRS – Interest Rate Swaps

An exchange of two debt obligations that have different payment streams. The transaction usually exchanges two parallel loans; one fixed, the other floating.


The New Zealand Dollar

Leading Indicators

Economic variables that are considered to predict future economic activity (i.e. Unemployment, Consumer Price Index, Producer Price Index, Retail Sales, Personal Income, Prime Rate, Discount Rate, and Federal Funds Rate).


Also called, margin. The ratio of the amount used in a transaction to the required security deposit.

Libor – London InterBank Offered Rate

The London Inter-Bank offered rate. Large international banks use LIBOR when borrowing from another bank.


The closing of an existing position through the execution of an offsetting transaction.


The ability of a market to accept large transactions with minimal to no impact on price stability.

Managed Forex Accounts

A managed forex account is an account where a money manager trades the account on behalf of the client, for a fee. Some managed forex accounts use the broker’s own automated trading systems. Having forex managed accounts, is like hiring an investment advisor / professional to manage an investment account..


The required equity that an investor must deposit to collateralize a position.

Market Maker

A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.

Market Order

An order to buy/sell at the best price available when the order reaches the market.

MetaTrader 5

The MetaTrader 5 (MT5) is a platform for trading forex, analyzing financial markets and using Expert Advisors. Mobile trading, Trading Signals and the Market are the integral parts of MetaTrader 5 that enhance your Forex trading experience.

OCO – One Cancels the Other

A contingent order where the execution of one part of the order automatically cancels the other part.

Open Order

An order that will be executed when a market moves to its designated price. Normally associated with Good ‘til Cancelled Orders.

Open Position

An active trade with corresponding urealized P & L (Profit & Loss), which has not been offset by an equal and opposite deal.


An agreement that allows the holder to have the option to buy/sell a specific security at a certain price within a certain time. Two types of options are: call and put. A call is the right to buy while a put is the right to sell. One can write or buy call and put options.


An order is an instruction, from a client to a broker, to trade. An order can be placed at a specific price or at the market price. Also, it can be good until filled or until close of business.

Overnight position

A trade that remains open until the next business day.

Points, Pips

The term used in currency market to represent the smallest incremental move an exchange rate can make. Depending on context, normally one basis point (0.0001 in the case of EUR/USD, GBP/USD, USD/CHF and .01 in the case of USD/JPY).


A position is a trading view expressed by buying or selling. It can refer to the amount of a currency either owned or owed by an investor.


In the currency markets, it is the amount of points added to the spot price to determine a forward or futures price.

Profit/Loss (P&L)

The actual “realized” gain or loss resulting from trading activities on closed positions, plus the theoretical “unrealized” gain or loss on open positions that have been Mark-to-Market.


An indicative market price; shows the highest bid and/or lowest ask price available on a security at any given time.


A recovery in price after a period of decline.


The difference between the highest and lowest price of a future recorded during a given trading session.


The price of one currency in terms of another.

Repo – Re-purchase

This type of trade involves the sale and later re-purchase of an instrument, at a specific time and date. Occurs in the short-term money market.


A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above. Recurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line.

Risk Management

To hedge one’s risk they will employ financial analysis and trading techniques.


Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies.


Scalping (forex scalping) is the strategy where traders try to earn the spread, meaning to buy at the Bid price and sell at the Ask price, in order to gain the bid/ask difference.


The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.


To go ‘short’ is to have sold an instrument without actually owning it, and to hold a short position with expectations that the price will decline so it can be bought back in the future at a profit.

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.


A transaction that occurs immediately, but the funds will usually change hands within two days after the deal is struck.

Spot Price

The current market price. Settlement of spot transactions usually occurs within two business days.

Swing Trading

A style of trading that attempts to capture gains in a stock within a short time frame, therefore, swing trading is mainly used by at-home and day traders. Swing traders use technical analysis to look for stocks with short-term price momentum. These traders are only interested in the stock price trends and patterns.

Trading Simulator

A trading simulator is a virtual software that attempts to reproduce certain features of the live market on a computer so that a player may practice trading stocks without financial risk.