Forex Dictionary


FOREX DICTIONARY BY FOREX TRADER PH

A

Ask Price - the price where the trader is willing to buy the currency pair.

B

Buy Order - a type of market order where a buy order is immediately executed. 

Broker - A firm that offers a variety of trading platform that allows a retailer to buy and sell a product or currency. 

Base Currency - the first currency in a currency pair. 

Bear Market (Bearish Market) - is a market trend where the price of the product is continuously decreasing. 

Bull Market (Bullish Market) - is a market trend where the price of the product is continuously increasing. 

Bank - a financial institution that is authorized to offer financial services such as loans, deposits, exchange currencies etc. 

Bid Price - the price where the trader is willing to sell the currency pair. 

Buy Limit Order - a price that is set to trigger a buy order when the current price is lower or equal to the price set. 

Buy Stop Order - a price that is set to trigger a buy order when the current price is higher or equal to the price set.

Balance - the actual cash amount in your trading account. 

C

Candlestick - is a visual representation of price movement. It shows the opening, closing, lowest and highest prices in different time frames.  

Currency Pair - two currency in which the value of each is relative to the other. 

Cross Currency Pair - a pair of currency that does not include the US Dollar. 

D

Demo Account - a type of account offered by a broker where a trader uses virtual money to explore their different platforms. 

Dealing Desk - a type of broker that re quotes the quoted price offered in the interbank and offers the re quotes to the retailer. 

Day Trading - a type of trading strategy where a position either buys or sells is closed within the day. 

E

Equity - is the real time amount of your account balance after you open a position.

European Central Bank - the central bank of the European Union countries which adopted the Euro currency. 

Expert Advisor - a program of automated trading that mimics the algorithm of a real trader. 

End of Day Order - a type of market order which will be canceled at the end of the day 

Electronic Communication Network - a network that allows a trader to access currency exchange with interbank prices. 

Exotic Currency Pair - a pair of currency for which the other pair is a less volatile currency. 

Exchange Rate - the relative value of the base currency to the quote currency. 

F

Free Margin - a part of the equity that is not linked to any position opened by the trader. 

Fundamental Analysis - a kind of trading strategy that utilizes the economic news of a country as an indicator to increase the accuracy of market prediction. 

Federal Reserve System - the central bank of the US. 

G

Good Till Cancel Order - a type of market order that will stay as pending order until the trader canceled it. 

H

Hedging - Buying and selling at the same time is called hedging. 

I

Indicator - a wide range of trading tools that can be used to improve market analysis. 

Inflation - a rate at which a good and services in an economy increase over time. 

Interest - a charge from borrowing money at a particular rate. 

Interbank - a global network where banks and financial institutions trade currencies. 

J

K

L

Lot - the amount of product we trade in units. 100,000 units is equivalent to 1 Standard Lot. 10,000 units for 1 Mini Lot and 1,000 units of currency equivalent to 1 Micro Lot. 

Liquidity - a process of buying and selling a currency pair without causing a significant effect on the exchange rate. 

Leverage - an act of borrowing money to increase the buying power in trading. 

Long Position - buying a currency pair. 

M

Market Sentiment - pertains to the position of the majority of traders either in a long or short position. 

Margin - a cash amount act as collateral when you open a position in Forex. 

Margin Level - known as the ration of equity and the used margin of an open position. 

Margin Call - a margin threshold for which a trader will not be allowed to open a new position. 

Market Maker - a type of broker that re quotes a price quoted in the interbank and offered to traders. (w/ Dealing Desk) 

Market Trend - the current direction of the market. Either bullish or bearish. 

N

No Deposit Bonus - a credit balance offered for free by a broker. You can use it to trade and withdraw profit based on the broker's terms. 

Non Dealing Desk - a type of broker that offers the quoted price from the interbank directly to retailers.

News - an economic indicator that guides the traders in market analysis. 

O

Over The Counter - a type of transaction that is made directly by two parties. 

P

Pip - also known as the point in percentage or the lowest amount of change in the value of a currency exchange rate. 

Q

Quote Currency - is the second currency listed in a currency pair. 

R

Regulatory Bodies - firms that provide rules and regulation to the Forex Industry. 

Range Market - a market trend in sideways. It cannot be distinguished if the market will go up or down. 

Real Account - an account associated with real money.

Rollover - the interest paid for holding a position overnight. 

Risk Capital - the amount of money you invest that you can afford to lose.

Resistance Level - a price range where a large number of sellers is expected to push the price downward. 

S

Scalping - a trading strategy that uses a small time frame such as 30mins, 15mins, 5mins, and 1 min. 

Support Level - a price range where a large number of buyers are expected to push the price upward. 

Sell Order - a type of market order where a sell order is immediately executed. 

Short Position - a sell order in trading. 

Swap - an interest earned or paid by holding a position overnight. 

Straight Through Processing - a type of broker that provides direct access to traders in the prices quoted in the interbank. (No Dealing Desk) 

Stop Loss - a trigger price to close a trade to avoid further loss in equity. 

Spread - the difference in bid and ask price. 

Sell Limit Order - a price that is set to trigger a sell order when the current price is higher or equal to the price set.

Sell Stop Order - a price that is set to trigger a sell order when the current price is lower or equal to the price set. 

T

Trading Platform - a software that allows a trader to access the market. 

Transaction Cost - the cost associated when opening a position. It can be in the form of spread or commission. 

Transaction Date - the date where the transaction was executed. 

Technical Analysis - a type of trading strategy that utilized past prices or historical charts to improve prediction on future trades. 

Trader - an institution or individual that buy or sell currencies. 

Trading - an act of buying or selling a product 

Take Profit - a trigger price that closes a trade when the current price is equal to the price set. 

U

Used Margin - the amount deposited for the current open position.

V

Volatility - it is the rate of fluctuation in a currency pair exchange rate over time. 

W

Welcome Bonus - Bonus offered by a broker for which you can withdraw the profit you gained based on the broker's terms. 

X

Y

Z