Trading Glossary

GLOSSARY

 

Accrual

The allocation of bonuses and bonuses on forward foreign exchange transactions directly related to deposit swap orders, during the session of each transaction.

Adjustment

This is an authorized activity generally justified by an alteration of the internal economic procedure to repair a payment imbalance or forex sanctioned rate.

Aggressive

Investors and / or prices behave with conviction.

Analyst

A financial expert experienced in the valuation of investments that defines the purchases, sales, clotures and provides advice to customers.

Appreciation

A financial instrument is expected to appreciate when its price increases in line with prevailing market demand.

Arbitration

The simultaneous purchase or sale of a financial asset in order to take advantage of the marginal price differences between the two.

Asian central banks

These are apex banks in Asia or monetary organizations in the region. They continued to improve their activities in the main currencies and, as such, contributed to their rapid control of the forex reserves that emanate from the trade excesses.

Asian session

23:00 - 08:00 (Tokyo).

Purchase price

The charge at which an asset will be sold on the market and can be quoted in two parts, namely: Bid (Price for Sale) / Ask (price at purchase). The offer can also be used instead of the purchase price.

AUS 200

The AUS 200 is what investors call the index of the top 200 companies by cap market on the Australian stock market.

At best

This is the order placed to a dealer to buy or sell at the most appropriate rate that can be obtained.

Aussie

A term used to describe the AUD / USD pair, it may also be called "Oz" or "Ozzie".

Trade balance

The trade balance is the difference, in terms of dollar value, between exports and imports of goods or goods and services of a country

Bar graph

This is a type of chart composed of four important points: the high and low prices, which constitute the vertical bar, the opening and closing price, which form a small horizontal line on the left and a small horizontal line to the right of the bar respectively.

Reference currency

The base currency is the first currency in a currency pair. It depicts how much the base currency is relative to the second currency in the pair. For example, the EUR / USD rate is 1.3066, which suggests that one euro equals 1.3066 USD.

Basic rate

The lending rate of a given country as prescribed by its apex bank.

Basing

A procedure used in technical analysis, which is to display a graphical trend that shows a period when the demand and supply of a product are almost identical. This model is characterized by a narrow commercial range and the fusion of support and resistance levels.

Base point

Unit of measure used to define the minimum change in the price of an asset.

Bear market

This indicates a negative price action. For example, if we choose a decline on the EUR / USD pair, this is a bet on the weakness of the euro against the US dollar.

Bears

Bears are investors who anticipate lower prices and can also take sales orders in the market.

Offer price (Bid price)

The price that the market considers appropriate when buying a product.

Bid / ask spread

The difference between the price of the offer and the price of the request.

Big figure (Gos figure)

These are the first three digits of a forex quote, such as 1.30 in the EUR / USD. If we say that the price has gone up by 1.2 big numbers, it means the price has moved 120 pips.

BIS

It is an acronym for Bank for International Settlement located in Basel, Switzerland, and is the apex bank for apex banks. The Bank for International Settlement generally acts as an intermediary in the market, linking the apex banks and the market. BIS gained more market share as apex banks increased their reserve money management.

Black box

These are words used to define systemic traders, based on models or techniques.

BOC

An acronym for the Bank of Canada, apex bank in Canada.

BOE

The apex bank of the United Kingdom, namely the Bank of England.

BOJ

Bank of Japan, the Japanese apex bank.

Jump

This is what traders call debt that is issued over a specified period.

Book

In the financial world, a "book" is a complete overview of the entire positions of an investor or an office.

British Retail Consortium (BRC) shop price index

A fundamental tool that measures the UK inflation rate based on different retailers surveyed. The index selects price changes in the number of goods purchased from retail outlets.

Broker

A person or company playing the middleman, with the sole responsibility of bringing buyers and sellers together for commission. In comparison, a dealer invests in cash and takes a position, hoping to reduce his liquidation by leaving the subsequent trade position with another organization.

Buck

Slang on the market that defines a million units of US dollars.

Bull market

This is a rising market that is characterized by rising prices. For example, a rising EUR / USD means one euro strengthening against the US dollar.

Bundesbank

The German apex bank.

Buy

Hold a long position on an asset.

Buy dips

It is at this point that an operator holds a buying position of 20 to 30 pip pullbacks in the direction of an intraday trend.

Cable

It's a slang that is used to describe the GBP / USD. The term dates back to the mid-1800s when rates were transmitted via transatlantic cable.

Candlestick chart

A pictorial representation that represents the ranges of trades at different times, as well as opening and closing prices. If the closing price is lower than the opening price, the rectangle is filled. If, on the other hand, the closing price is higher than the opening price, the rectangle is not filled.

Capital markets

A market dedicated to medium- and long-term investments, such as Eurobonds and government bonds from the United States.

Bank Central

It is a government or body that controls a regional monetary policy. For example, in the United States, we have the Federal Reserve, the euro zone has the ECB, the United Kingdom has the BOE.

Chartist

It is a person who can interpret the value of historical data to determine trends, forecast prices for future actions, and use them in technical analysis.

Clearing

A way to set a trade.

Commission

A commission on a transaction, which is billed by the broker.

Confirmation

A document that participants exchange during a transaction confirming the terms of the declared transaction.

Contagion

The possibility that an economic crisis can spread on the markets. For example, Asia experienced contagion in 1997 when the Thai currency's high volatility spread to the region and other emerging currencies in East Asia were affected. This has even reached Latin America.

Contract (unit or lot)

This is the base unit used in trade on defined trades.

Convertible currency

A currency with the potential for free exchange among other currencies at the rates offered by the market, or gold.

Cost of Carry

It is simply the expense of obtaining funds to manage a position. It depends on the interest parity, which defines the futures price.

Against-part

The counterpart in a given transaction is the opposing party. For example, the buyer is a counterpart to the seller or vis-à-vis.

Country Risk

Excluding the intervention of the country's apex bank, this is the risk that a foreign exchange operator incurs for possible government intervention in the market. This can be the result of war or civil unrest.

Credit Verification

This is a routine validation performed to check if both parties have the credit to cover the trade they wish to initiate.

Cross rate

The forex rate between two currencies. We refer to this as non-standard in the region or country where the currency pair is quoted.

Motto

This is the legal currency unit of a country that is issued by the apex bank or the government, its value being the basis of the trade.

Currency risk

The risk of loss due to the large variation in exchange rates.

Day trader

It is a speculator who initiates positions in the products / currencies and who exits these positions just before the end of the day of this trade.

Day trading

Involves initiation and exit of trades in a single day.

Deal

A deal defines the trades made at the most recent market price. It is a direct tradeen on the market against an order.

Dealer

A person or company that faces an advance or consideration for a transaction. Usually, prospects take a side of a position, hoping to make a profit by leaving the position of a trade that follows with another party.

Dealing spread

It defines the difference between the buying and selling price

Defend a level

Action taken by an investor, or a group of investors, to prevent an asset from trading at a certain price or price range, normally because of the special interest they hold, as seen in the table below. barrier option.

Deficit

This is a negative trade balance.

Delisting

Delete the quotation of an action during an exchange.

Delivery

This is the actual delivery of assets exchanged by both parties.

Delta

The ration between changing the price of a product and changing the price of its underlying market.

Depreciation

An asset decreases in value over a period.

Derivative

A financial contract whose value depends on the underlying value of the asset. Some of the most popular underlying assets for derivative contracts include currencies, commodities, stocks and indices.

Devaluation

When a fixed currency is made to weaken or depreciate according to official acts: the direct opposite of the revaluation.

Discount rate

It is an interest rate that a qualified depository agency is responsible for obtaining short-term funds directly from the Federal Reserve Bank.

Divergence

This is a term of technical analysis that describes a situation in which price and momentum are in opposite directions. Traders consider the divergence as positive (bullish) or negative (bearish), both types alerting large movements in the price movement. We experience a bullish or positive divergence when the price of a security offers a low value while the momentum indicator indicates a push up. The bearish / negative divergence occurs when the price of a security offers a new height, while the momentum indicator indicates a push down.

Divergence of MAs

A technical review that depicts moving averages of different moments moving away from each other, which essentially predicts the price trend.

Dividend

The benefits of a company shared by its shareholders.

DJIA or Dow

An acronym for Dow Jones Industrial Average or US30.

Dove

This term is used to describe the monetary policy that facilitates the decline of interest rates. This is the direct opposite of hawkish.

Downward trend

It is the price movement that consists of low-low as well as low-high.

DXY

An acronym for the US dollar index.

ECB

Acronym representing the European Central Bank, apex bank for countries using the euro currency.

Economic indicator

A statistic published by the government that describes the most recent economic stability and growth. Some indicators are employment rates, retail sales figures, inflation figures, gross domestic product (GDP), and so on.

End of Day Order (EOD)

An order to buy or sell at a set price that remains open until the end of the trading day, which is at 17:00 New York.

EST / EDT

This is an acronym for Eastern Standard Time Eastern Time, which is the time zone of New York City.

ESTX50

An acronym for Index Euronext 50.

EURO

The currency of the euro zone.

Economic and Monetary Union (EMU)

This is a name encompassing a league of policies focused on the organization of economic and fiscal policies in the EU Member States.

European Session

07:00 - 16:00 (London).

Euro area labor cost index

This measures the annualized inflation rate in compensation and the benefits paid to secular workers and is considered a driver of overall inflation.

Expiration date / price

This is the exact date and time of expiration of an option. There are two hours of expiry of very important options, which are at 10:00 am ET (also known as 10:00 NY time) and 3:00 pm Tokyo time (also known as 15:00 Tokyo time). The market is experiencing an increase in activity during these periods.

Exporters

Companies that sell goods internationally, turning them into currency sellers and buyers of national currency. Companies like Sony, Samsung and Toyota fall into this category.

Expanded

The situation in which one believes that the market has exceeded too much, too fast.

Federal Deposit Insurance Corporation (FDIC)

The regulatory body that has the right to administer bank deposit insurance in the United States.

Federal Reserve (Fed)

The apex bank in the United States.

Fixed exchange rate

An exchange rate approved by the financial authorities for one or more currencies.

Fixed interest

An interest rate unchanged during the term of the transaction, with respect to bonds or fixed rate mortgages.

Flat (or Square)

A condition where one is neither short nor long. 

Variable rate interest

An interest rate that changes based on market or benchmark rates, as seen in standard mortgages.

International Currency Market

The simultaneous purchase of one currency and the sale of another in the currency market.

Forex

This usually means the Foreign Exchange, where 'FOR' stands for Foreign and 'EX' stands for Exchange.

Forex trader

An individual or company that deals with the purchase and sale of foreign currency, in order to make gains.

Forward

A deal that will start at a harmonized date in the future. The futures trade is quite flexible and can be adapted to the requirements of both parties. Of course, there is no centralized exchange.

Forward Points

This is the number of pips subtracted or added to the most recent forex rate to calculate a futures price.

Front Office

Sales and corporate finance staff in a financial institution.

Futures

A trading style designed for financial instruments, forex or commodities for a specified price on a specified date in the future. Futures can be used to speculate and protect against a future price of the underlying assets.

G7

This is the group of seven nations, made up of the United States, Japan, Germany, France, Canada, the United Kingdom and Italy.

G8

This is the group of eight nations. They include the G7 plus Russia.

Gap / Gapping

A fast market action in which prices cross a certain number of levels without transactions occurring. Gaps are observed in the market after large economic or new information.

GER30

This is an index of 30 leading companies (in line with their market capitalization) as indicated on the German stock market.

Given

This represents the selling interest.

GMT

Greenwich Mean Time - This is the most known time zone in the currency market.

Going long

A market term that involves the purchase of foreign currency, stocks or commodities for investment or speculative purposes - with expectations of price spikes.

Going shorts

A market term that involves the sale of foreign currency, stocks or commodities for investment or speculation - with the expectation of lower prices.

Gold

Gold is a common commercial product and it is widely accepted that its price moves in the opposite direction of US dollar prices.

Good for day

This is an order that will expire at the end of the day if it is not completed

Good 'til canceled order (GTC)

An instruction to buy or sell at a set price that remains open until entry or until the customer deletes it.

Good 'til date

A type of order that was billed to expire on a chosen date, in case it did not enter previously.

Greenback

Another name for the United States dollar.

Gross Domestic Product (GDP)

It is the total value of a country's production, income and expenditure created within its actual physical limits.

Gross national product

It is GDP added to income from investment or work abroad.

Guarantee order

This is a type of order that protects the investor from the market gap. This is a stop-loss order that promises to leave your position at the level you decide, in case the market is at or beyond.

Handle

Every 100 pips on the currency market starts with 000.

Hawk - hawkish

A monetary policy is considered hawkish when it favors higher interest rates, with the aim of managing inflation or slowing rapid economic growth.

Hedge

It is a position or set of positions that minimizes the danger of your main position.

Hit the bid

The process of selling to the current market supply.

HK40 / HKHI

This is a symbol used to describe the Hong Kong Hang Seng Index.

Illiquid

A condition on the market that is represented by low volume or lack of liquidity, often creating fluctuations.

IMM

An acronym for the international money market: Part of the Chicago Mercantile Exchange.

UNDUE

INDU is a short form for the Dow Jones Industrial Average.

Industrial production

It is an economic indicator that measures the total value of production produced by mines, manufacturers and utilities. These data have the ability to act quickly on the extensions and contractions of the business cycle and can be a leading indicator of individual income and employment data.

Inflation

It is an economic syndrome that is characterized by rising prices of consumer goods, while reducing purchasing power.

Initial margin requirement

The incessant filing guarantees necessary to launch an order.

IPO

This is short for the initial public offering - the initial offers of a private company to the public.

Interbank rates

These are big forex rates that are sided between major international banks.

Interest

This is a cash adjustment to show the effect of deducting or obtaining the notional amount of fairness of a CFD item.

Intervention

The action of the apex bank to affect the value of the currency when it enters the market.

INX

A symbol representing the S & P 500 index.

ISM manufacturing index

An economic indicator that measures the state of the US manufacturing sector by analyzing frames on forecasts for future production, inventories, employment, new orders and deliveries. The ISM figures above 50 represent an expansion, while the numbers below 50 show a contraction.

ISM non-manufacturing

An economic indicator that measures the services sector for their prospects, defining the remaining 80% of the US economy not detailed by the ISM manufacturing report. In general, figures greater than 50 represent an expansion, while those smaller than 50 show contraction.

Survey of observers on the Japanese economy

An economic indicator that measures the mood of business that directly serves consumers and includes waiters, drivers and beauticians. Results greater than 50 show an improvement in feeling.

Japanese machine tool orders

An economic indicator that measures the full value of new orders placed with machine tool manufacturers. It is a measure of demand for companies that manufacture machinery, a leading indicator of industrial production in the future. Good data indicates that there is improvement in the manufacturing sector and also economic expansion.

JPN225

A short form for the NIKKEI index.

Keep the powder dry

Limit your trades due to inclement trades conditions on the market. It is appropriate to stay on the side until conditions are favorable, when the market is agitated or in an extremely narrow phase.

Kiwi

Another name for the NZD / USD.

Knock-ins

An option strategy that requires the underlying asset to trade at a particular price before the previously acquired option becomes active. Knock-ins are used to minimize the premium cost of the underlying option and may trigger hedging activities by activating an option.

Knockouts

Options cancel an option that has already been purchased if the underlying product trades at a particular level. The underlying option ceases to exist when trading a knock-out level and any hedging vent may be unwound.

LIBOR

This is a short form for the London Interbank Offer Rate, which represents the interest rate that the largest international banks lend to each other.

LIFFE

This is a short form for the London International Financial Futures Exchange, which includes three of the UK's largest futures markets.

Limited order

It is an order placed to buy below or at a fixed price, or to sell above or at a specified price.

Liquid markets

A market is said to be liquid if the gap between the price of supply and the price of demand is low. Another measure of liquidity is the volume of buyers and sellers, and more traders create tighter spreads.

Liquid Assets

These are assets that can be turned into cash. For example: bank deposits, US Treasury bills, etc.

Liquidation

Closing of an open position by initiating a clearing transaction.

Long

A market position characterized by the purchase of a growing value of an asset than that sold in anticipation of price increases.

Macro

It is the longer term investor who depends on his trade on the fundamentals. A "macro" trade can have a shelf life of about 6 months to a few years.

Manufacturing production

An economic indicator that measures the total output of the manufacturing component of industrial production figures. The data has the capacity to measure about 13 sub-sectors directly related to manufacturing - accounting for about 80% of all industrial production.

Margin

The necessary funds that an investor must deposit to enable him to maintain a position.

Margin call

A call from a broker or dealer asking for more funds or other guarantees that will allow a position to stay afloat while it has been against the customer.

Market capitalization

It's the complete value of a listed company.

Market maker

It is a broker that continually climbs two ways (supply and demand) and is willing to make a two-sided deal on any financial item.

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