Forex Terminologies


Inflation – The rate of increase in the price of goods and services in a national/state economy. Inflation rates can affect Forex pairs and other traded assets by either lowering or heightening their value. Ask – The price at which the market maker/broker is willing to sell the currency pair. A brokerage connects clients to financial markets, the custodian of brokerage accounts, and the go-between between buyers and sellers, receiving a fee per transaction. A traditional brokerage, also known as a brick-and-mortar or full-service brokerage, formed the backbone of the financial system. Self-managed portfolios rose in popularity, but trading costs at a full-service brokerage were high, discouraging active trading and favoring low-frequency buy-and-hold portfolios.

moving average

  • Settlement of spot transactions usually occurs within two business days.
  • The USD/JPY pair edges higher following the previous day’s two-way price swings and trades with a mild positive bias through the early European session.
  • The opposite of a bear market, this term describes when the price of an asset, currency, or security is rising.

An incorrect punctuation placement, an extra number, or an omitted digit might result in hundreds of dollars in financial damages. For example, in the Thai language, it is preferable to use transliteration with explanation and apply the exact technical English terms in translation. Let’s look at how to deal with the Thai translation of some specialized Forex terms. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority.

Crystallisation definition

GDP – The total sum of the economic activity of a country and is reflective of the overall health of its economy. If you want to remain up-to-date on must-know Forex terminology that will help you with your trading, continue reading.

What Is SMC (Smart Money Concepts) Forex Strategy? – EarnForex News

What Is SMC (Smart Money Concepts) Forex Strategy?.

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The moving average convergence/divergence is a technical analysis indicator that aims to identify changes in a share price’s momentum. The MACD collects data from different moving averages to help traders identify possible opportunities around support and resistance levels. It encompasses a range of information such as price, bid/ask quotes and market volume.

The opposite of a bear market, this term describes when the price of an asset, currency, or security is rising. Much like the term “bear market”, “bull market” is also often shortened, so you can expect to hear the terms “bull” and “bullish” used regularly. Traders remember those levels and place their sell orders around them, as they believe that those levels will again provide selling pressure and move the price down. Since fresh memory is more important than old memory, recent support and resistance levels usually have a higher importance than old support and resistance levels. In the end, buyers buy at the ask price, and sellers sell at the bid price. Given its nature, the bid price is always lower than the ask price.

Bear Market

It is used to assess the impact that a rise or fall in interest rates can have on a bond’s price – which highlights a bond holder’s exposure to risk. Buying a financial instrument means taking ownership of it from someone else, whether it is a commodity, stock or another asset. A base rate is the interest rate that a central bank – such as the Bank of England or Federal Reserve – will charge commercial banks for loans. The base rate is also known as the bank rate or the base interest rate. When a trader purchases an asset, the asset’s price drops, and if the trader purchases more, it is referred to as averaging down. Chart patterns are one of the most effective trading tools for a trader.


Find the approximate amount of currency units to buy or sell so you can control your maximum risk per position. Finally, exotic pairs include exotic currencies which are not in the Top 10 of the most traded currencies, such as the Mexican peso, Turkish lira or Czech koruna. Since those currencies can be extremely volatile, they should be left to be traded by the pros. Those are basic terms of the Forex market that all traders need to know. Plus500SG Pte Ltd holds a capital markets services license from the Monetary Authority of Singapore for dealing in capital markets products (License No. CMS100648).

The literal meaning of EBITDA is ‘earnings before interest, taxes, depreciation and amortisation’. A dividend is the portion of profit that a company chooses to return to its shareholders, usually expressed as a percentage. Automated trading – also known as algorithmic trading – is the use of algorithms for making trade orders. An annual general meeting is a yearly gathering between the shareholders of a company and its board of directors. Generally, this is the only time that the directors and shareholders will meet throughout the year, so it is a chance for the directors to present the company’s annual report.

Floating exchange rate definition

The accuracy of the reports has fluctuated over , but the market still pays attention to them in the short-run. MARKET MAKER – A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial product. LONG POSITION – A position that appreciates in value if market price increases. When the base currency in the pair is bought, the position is said to be long. This position is taken with the expectation that the market will rise. IMMA – International Monetary Market, the Chicago-based currency futures market, that is part of the Chicago Mercantile Exchange.

If you’re new to forex, you can begin exploring the markets by trading on our demo account, risk-free. One critical feature of the forex market is that there is no central marketplace or exchange in a central location, as all trading is done electronically via computer networks. As you have read, there are several basic forex terminologies and acronyms to familiarize yourself with while trading Forex. Trading Forex can be an intricate beast to tame but with the right gears and knowledge, we can continue to develop as traders.

VARIATION – Funds traders must hold in their accounts to have the required margin necessary to cope with market fluctuations. Also known as the maturity date, it is the date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. TWO-WAY PRICE – When both a bid and offer rate is quoted for a forex transaction. TRANSACTION COST – The cost of buying or selling a financial product.

current market

They are pure price-action, and form on the basis of underlying buying and… An account leverage ratio is used to determine how much margin will be required. UNDERLYING – The actual traded market from where the price of a product is derived. This index is the longest monthly data series of any UK housing index, published by the largest UK mortgage lender (Halifax Building Society/Bank of Scotland).

Leveraged products definition

The amount, expressed as a multiple, by which the notional amount traded exceeds the margin required to trade. Futures contracts traded on an exchange, most typically the Chicago Mercantile Exchange (“CME”). Always quoted in terms of the currency value with respect to the US Dollar. Parameters of the futures contract are standardized by the exchange.

For example, if someone is in EURUSD, then he or she will hold the position as per the relative increase and decrease in the price of quote currency which is . What forex scalping tends to represent is the “little and often” approach when it comes to forex trading. A candlestick chart forms the backbone of technical analysis and remains a cornerstone of many analysts. It includes crucial price action data and displays it in easy-to-read candlesticks.

Basic Terminologies in Forex Trading – ForexLive

Basic Terminologies in Forex Trading.

Posted: Wed, 12 Oct 2022 07:00:00 GMT [source]

It is used to analyse a company’s financial performance and profit potential where the company is undergoing a restructure or if its rent expenses are higher than average. A commodity is a basic physical asset, often used as a raw material in the production of goods or services. Cash flow is the amount of money coming into and going out of a company’s accounts, as reported in earnings announcements. Bond trading is one way of making profit from fluctuations in the value of corporate or government bonds.

Currency – monetary units of payment inclusive of coins and paper that a government issues and circulates as the generally accepted medium for goods and services. All these platforms can be used to open, close and manage trades from the device of your choice. This means they often come with wider spreads, meaning they’re more expensive than crosses or majors. For instance, when two signals indicate that you should make a trade, it can be described as confluence.

  • CFD traders do not own or have any rights to the underlying assets.
  • Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open.
  • Typically, a rally will occur after a period in which prices have been flat, trading in a narrow band, or experiencing a decline.

BROKER – An individual or firm that acts as an intermediary, bringing buyers and sellers together for a fee or commission. In contrast, a dealer commits capital and takes one side of a position, hoping to earn a spread by closing out the position in a subsequent trade with another party. Our trading platform provides excellent forex trading instruction. A pip is the smallest price increment tabulated by currency markets to establish the price of a currency pair. The foreign exchange, or Forex, is a decentralized marketplace for the trading of the world’s currencies. Unlike a forward, the terms of a futures contract are non-negotiable.