Normally issued by companies in an attempt to raise capital. Closing The process of stopping closing a live trade by executing a trade that is the exact opposite of the open trade. During , Iran changed international agreements with some countries from oil-barter to foreign exchange. This creates an incentive for the option seller to drive prices through the strike level and creates an incentive for the option buyer to defend the strike level. We look at how you can predict a currency movement by studying the stock market. This happened despite the strong focus of the crisis in the US. A number of the foreign exchange brokers operate from the UK under Financial Services Authority regulations where foreign exchange trading using margin is part of the wider over-the-counter derivatives trading industry that includes contracts for difference and financial spread betting.
Forex trading is also referred to as the 'Fx market', 'Currency market', 'Foreign exchange currency market' or 'Foreign currency market', and it is the largest and most liquid market in the world with an average daily turnover of $ trillion.
Controlled risk A position which has a limited risk because of a Guaranteed Stop. Corporate action An event that changes the equity structure and usually share price of a stock.
For example, acquisitions, dividends, mergers, splits and spinoffs are all corporate actions. Corporates Refers to corporations in the market for hedging or financial management purposes. Corporates are not always as price sensitive as speculative funds and their interest can be very long term in nature, making corporate interest less valuable to short-term trading. Counter currency The second listed currency in a currency pair. Counterparty One of the participants in a financial transaction.
Country risk Risk associated with a cross-border transaction, including but not limited to legal and political conditions. Crater The market is ready to sell-off hard. Cross A pair of currencies that does not include the U. CTAs Refers to commodity trading advisors, speculative traders whose activity can resemble that of short-term hedge funds; frequently refers to the Chicago-based or futures-oriented traders. Currency Any form of money issued by a government or central bank and used as legal tender and a basis for trade.
Currency pair The two currencies that make up a foreign exchange rate. Currency risk The probability of an adverse change in exchange rates. Currency symbols A three-letter symbol that represents a specific currency. For example, USD U. Current account The sum of the balance of trade exports minus imports of goods and services , net factor income such as interest and dividends and net transfer payments such as foreign aid.
The balance of trade is typically the key component to the current account. D Day trader Speculators who take positions in commodities and then liquidate those positions prior to the close of the same trading day.
Day trading Making an open and close trade in the same product in one day. Deal A term that denotes a trade done at the current market price. It is a live trade as opposed to an order. Dealer 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. Dealing spread The difference between the buying and selling price of a contract. Defend a level Action taken by a trader, or group of traders, to prevent a product from trading at a certain price or price zone, usually because they hold a vested interest in doing so, such as a barrier option.
Deficit A negative balance of trade or payments. Delivery A trade where both sides make and take actual delivery of the product traded. Delta The ratio between the change in price of a product and the change in price of its underlying market. Depreciation The decrease in value of an asset over time.
Derivative A financial contract whose value is based on the value of an underlying asset. Some of the most common underlying assets for derivative contracts are indices, equities, commodities and currencies. Devaluation When a pegged currency is allowed to weaken or depreciate based on official actions; the opposite of a revaluation.
Discount rate Interest rate that an eligible depository institution is charged to borrow short-term funds directly from the Federal Reserve Bank. Divergence In technical analysis, a situation where price and momentum move in opposite directions, such as prices rising while momentum is falling. Divergence is considered either positive bullish or negative bearish ; both kinds of divergence signal major shifts in price direction.
Divergences frequently occur in extended price moves and frequently resolve with the price reversing direction to follow the momentum indicator.
Divergence of MAs A technical observation that describes moving averages of different periods moving away from each other, which generally forecasts a price trend. Dove Dovish refers to data or a policy view that suggests easier monetary policy or lower interest rates. The opposite of hawkish. Downtrend Price action consisting of lower lows and lower highs. Economic indicator A government-issued statistic that indicates current economic growth and stability.
Euro The currency of the Eurozone. Eurozone labor cost index Measures the annualized rate of inflation in the compensation and benefits paid to civilian workers and is seen as a primary driver of overall inflation. It measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices and interest rate spreads. EX-dividend A share bought in which the buyer forgoes the right to receive the next dividend and instead it is given to the seller.
The two most common option expiries are These time periods frequently see an increase in activity as option hedges unwind in the spot market. Exporters Corporations who sell goods internationally, which in turn makes them sellers of foreign currency and buyers of their domestic currency.
Extended A market that is thought to have traveled too far, too fast. F Factory orders The dollar level of new orders for both durable and nondurable goods.
This report is more in depth than the durable goods report which is released earlier in the month. Fill When an order has been fully executed. Fill or kill An order that, if it cannot be filled in its entirety, will be cancelled. First in first out FIFO All positions opened within a particular currency pair are liquidated in the order in which they were originally opened.
Follow-through Fresh buying or selling interest after a directional break of a particular price level. The lack of follow-through usually indicates a directional move will not be sustained and may reverse. The minutes provide more insight into the FOMC's deliberations and can generate significant market reactions. The global market for such transactions is referred to as the forex or FX market. Forward The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based on the interest rate differential between the two currencies involved.
Forward points The pips added to or subtracted from the current exchange rate in order to calculate a forward price. FRA40 A name for the index of the top 40 companies by market capitalization listed on the French stock exchange. Fundamental analysis The assessment of all information available on a tradable product to determine its future outlook and therefore predict where the price is heading.
Often non-measurable and subjective assessments, as well as quantifiable measurements, are made in fundamental analysis. Funds Refers to hedge fund types active in the market. Future An agreement between two parties to execute a transaction at a specified time in the future when the price is agreed in the present.
Futures contract An obligation to exchange a good or instrument at a set price and specified quantity grade at a future date. G8 Group of 8 - G7 nations plus Russia. Gaps usually follow economic data or news announcements. Gearing also known as leverage Gearing refers to trading a notional value that is greater than the amount of capital a trader is required to hold in his or her trading account. It is expressed as a percentage or a fraction. Given Refers to a bid being hit or selling interest.
Giving it up A technical level succumbs to a hard-fought battle. Going long The purchase of a stock, commodity or currency for investment or speculation — with the expectation of the price increasing. Going short The selling of a currency or product not owned by the seller — with the expectation of the price decreasing. Gold gold's relationship It is commonly accepted that gold moves in the opposite direction of the US dollar.
The long-term correlation coefficient is largely negative, but shorter-term correlations are less reliable. Gold certificate A certificate of ownership that gold investors use to purchase and sell the commodity instead of dealing with transfer and storage of the physical gold itself. Gold contract The standard unit of trading gold is one contract which is equal to 10 troy ounces.
Good for day An order that will expire at the end of the day if it is not filled. Good 'til cancelled order GTC An order to buy or sell at a specified price that remains open until filled or until the client cancels. Good 'til date An order type that will expire on the date you choose, should it not be filled beforehand.
Greenback Nickname for the US dollar. Gross domestic product GDP Total value of a country's output, income or expenditure produced within its physical borders.
Gross national product Gross domestic product plus income earned from investment or work abroad. Guaranteed order An order type that protects a trader against the market gapping. It guarantees to fill your order at the price asked. Guaranteed stop A stop-loss order guaranteed to close your position at a level you dictate, should the market move to or beyond that point.
H Handle Every pips in the FX market starting with Hedge A position or combination of positions that reduces the risk of your primary position. Hit the bid To sell at the current market bid. I Illiquid Little volume being traded in the market; a lack of liquidity often creates choppy market conditions. Industrial production Measures the total value of output produced by manufacturers, mines and utilities.
This data tends to react quickly to the expansions and contractions of the business cycle and can act as a leading indicator of employment and personal income data. Inflation An economic condition whereby prices for consumer goods rise, eroding purchasing power. Initial margin requirement The initial deposit of collateral required to enter into a position. Interbank rates The foreign exchange rates which large international banks quote to each other. Interest Adjustments in cash to reflect the effect of owing or receiving the notional amount of equity of a CFD position.
Intervention Action by a central bank to affect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.
Introducing broker A person or corporate entity which introduces accounts to a broker in return for a fee. Short for initial public offering. ISM manufacturing index An index that assesses the state of the US manufacturing sector by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.
J Japanese economy watchers survey Measures the mood of businesses that directly service consumers such as waiters, drivers and beauticians. Readings above 50 generally signal improvements in sentiment.
Japanese machine tool orders Measures the total value of new orders placed with machine tool manufacturers. Machine tool orders are a measure of the demand for companies that make machines, a leading indicator of future industrial production. Strong data generally signals that manufacturing is improving and that the economy is in an expansion phase.
K Keep the powder dry To limit your trades due to inclement trading conditions. In either choppy or extremely narrow markets, it may be better to stay on the sidelines until a clear opportunity arises. Knock-ins Option strategy that requires the underlying product to trade at a certain price before a previously bought option becomes active. Knock-ins are used to reduce premium costs of the underlying option and can trigger hedging activities once an option is activated.
Knock-outs Option that nullifies a previously bought option if the underlying product trades a certain level. When a knock-out level is traded, the underlying option ceases to exist and any hedging may have to be unwound. L Last dealing day The last day you may trade a particular product.
Last dealing time The last time you may trade a particular product. Leading indicators Statistics that are considered to predict future economic activity. Leverage Also known as margin, this is the percentage or fractional increase you can trade from the amount of capital you have available. It allows traders to trade notional values far higher than the capital they have.
For example, leverage of Liability Potential loss, debt or financial obligation. A limit order sets restrictions on the maximum price to be paid or the minimum price to be received. Liquid market A market which has sufficient numbers of buyers and sellers for the price to move in a smooth manner.
Liquidation The closing of an existing position through the execution of an offsetting transaction. 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. Longs Traders who have bought a product. Lot A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots. M Macro The longest-term trader who bases their trade decisions on fundamental analysis. Manufacturing production Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only measures the 13 sub-sectors that relate directly to manufacturing.
Margin call A request from a broker or dealer for additional funds or other collateral on a position that has moved against the customer. 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.
Market order An order to buy or sell at the current price. Market-to-market Process of re-evaluating all open positions in light of current market prices. These new values then determine margin requirements.
Maturity The date of settlement or expiry of a financial product. Medley report Refers to Medley Global Advisors, a market consultancy that maintains close contacts with central bank and government officials around the world.
Their reports can frequently move the currency market as they purport to have inside information from policy makers. The accuracy of the reports has fluctuated over time, but the market still pays attention to them in the short-run. Models Synonymous with black box.
Systems that automatically buy and sell based on technical analysis or other quantitative algorithms. MoM Abbreviation for month-over-month, which is the change in a data series relative to the prior month's level.
Momentum A series of technical studies e. Momentum players Traders who align themselves with an intra-day trend that attempts to grab pips. Net position The amount of currency bought or sold which has not yet been offset by opposite transactions. New York session 8: No touch An option that pays a fixed amount to the holder if the market never touches the predetermined Barrier Level. The Offer price is also known as the Ask.
The Ask represents the price at which a trader can buy the base currency, which is shown to the right in a currency pair. Offsetting transaction A trade that cancels or offsets some or all of the market risk of an open position.
On top Attempting to sell at the current market order price. One cancels the other order OCO A designation for two orders whereby if one part of the two orders is executed, then the other is automatically cancelled. One touch An option that pays a fixed amount to the holder if the market touches the predetermined Barrier Level. Open order An order that will be executed when a market moves to its designated price.
Normally associated with good 'til cancelled orders. Option A derivative which gives the right, but not the obligation, to buy or sell a product at a specific price before a specified date. Order An instruction to execute a trade. Order book A system used to show market depth of traders willing to buy and sell at prices beyond the best available.
Over the counter OTC Used to describe any transaction that is not conducted via an exchange. Overnight position A trade that remains open until the next business day. P Paid Refers to the offer side of the market dealing. Pair The forex quoting convention of matching one currency against the other.
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. There is no centralized market for forex transactions, which are executed over the counter and around the clock. The forex market is unique for several reasons, mainly because of its size. Trading volume is generally very large. The market is open 24 hours a day, five days a week across major financial centers across the globe.
This means that you can buy or sell currencies at any time during the day. The foreign exchange market isn't exactly a one-stop shop. There are a whole variety of different avenues that an investor can go through in order to execute forex trades. You can go through different dealers or through different financial centers, which use a host of electronic networks. From a historic standpoint, foreign exchange was once a concept for governments, large companies and hedge funds.
But in today's world, trading currencies is as easy as a click of a mouse — accessibility is not an issue, which means anyone can do it. In fact, many investment firms offer the chance for individuals to open accounts and to trade currencies however and whenever they choose.
But there's no physical exchange of money from one party to another. That's what happens at a foreign exchange kiosk — think of a tourist visiting Times Square in New York City from Japan. He may be converting his physical yen to actual U. But in the world of electronic markets, traders are usually taking a position in a specific currency, with the hope that there will be some upward movement and strength in the currency they're buying or weakness if they're selling so they can make a profit.
A spot deal is for immediate delivery, which is defined as two business days for most currency pairs. The major exception is the purchase or sale of U. Canadian dollars, which is settled in one business day. The business day calculation excludes Saturdays, Sundays and legal holidays in either currency of the traded pair.
During the Christmas and Easter season, some spot trades can take as long as six days to settle. Funds are exchanged on the settlement date , not the transaction date. The euro is the most actively traded counter currency , followed by the Japanese yen, British pound and Swiss franc.
Market moves are driven by a combination of speculation , especially in the short term ; economic strength and growth; and interest rate differentials. Any forex transaction that settles for a date later than spot is considered a "forward. The amount of the adjustment is called "forward points. They are not a forecast of how the spot market will trade at a date in the future.
Forex trading is a popular type of investing because it provides investors with the ability to make quick profits due to small changes in one country's currency. Due to the time differences around the world, forex trading takes place continuously because as one market closes another one opens. What is 'Forex - FX' Forex (FX) is the market in which currencies are traded. The forex market is the largest, most liquid market in the world, with average traded values that can be trillions of dollars per day. It includes all of the currencies in the world. The forex trading in the spot market always has been the largest market because it is the "underlying" real asset that the forwards and futures markets are based on.
Learn forex trading with hdmobilsikis.ga's learning center. We offer video tutorials, webinars and online trading courses. You can't understand pips until you understand Forex trading. "Forex" is shorthand for the foreign exchange market. Currencies must be exchanged to facilitate international trade and business, and this is the place where it happens. Forex is attractive to investors either speculating (trading for profit) or hedging against other investments for the following reasons: The market is the world’s largest and most liquid Trading takes place 24 hours a day, five days a week.
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