Forex Glossary


The major difference between the calculation methods is the weight attached to the most recent prices. Overbought/Oversold levels are not easily spotted on the Momentum Oscillator since it is unbounded. Hence, visual inspection is used instead, to identify extreme readings above and below the 100-line. Divergence between the oscillator and price gives early signals of a reversal. It measures the speed of price changes rather price itself. A Japanese candlestick of a long body with very small (or non-existent) upper and lower shadows.

forex brokers

The law of supply and demand shows how the relation betweeen price, supply and demand works. As the price of an asset goes up, supply increases and demand drops. As the price of an asset goes down, supply lowers and demand rises. The rollover fee indicates the amount a trader will pay or receive for holding a position overnight. Return on Investment is a metric of performance for investments.

Such a process occurs either once or twice daily at defined times. Used by some currencies particularly for establishing tourist rates. Often, the fixed exchange rate permits fluctuation within a band. The central banking system of the US, comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board. Membership of the Fed is compulsory for banks chartered by the Comptroller of Currency and optional for state-chartered banks.

A currency peg is a governmental policy of fixing the exchange rate of its currency to that of another currency, or occasionally to the gold price. It can sometimes also be referred to as a fixed exchange rate, or pegging. A covered call is when a trader sells call options in an asset that they currently have a long position on. An asset’s closing price is the last level at which it was traded on any given day.

They can do this across a number of different asset classes, including stocks, forex, real estate and insurance. A broker will normally charge a commission for the order to be executed. Brent crude – also referred to as Brent blend – is one of three major oil benchmarks used by those trading oil contracts, futures and derivatives.

Traders use this tool to determine potential retracement – temporary dips – within a trend. Confirmation is used by traders who perform technical analysis, and it refers to using an additional indicator or indicators to support a trend suggested by one indicator. The Commitment of Traders report is a weekly report released by the Commodity Futures Trading Commission . The report shows how futures traders are positioned in the market and traders can use the COT report to help determine whether they should take short or long positions.

Trading floor definition

The bands comprise an upper and a lower band, plotted above and below a simple moving average. BOE – The central bank of the United Kingdom, established on 27 July 1694 and governed by Mark Carney. Economic theory underlying monetary policy suggests that controlling the growth of the amount of money in the economy is the key to controlling prices and therefore inflation. However, central banks’ monetary capability is severely limited by global money movements.

The identification and acceptance or offsetting of the threatening the profitability or existence of an organisation. With respect to foreign exchange involves among others consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk. The relationship between the risk and return on an investment.

Forex Today: EUR/USD Breaks $1.09 –

Forex Today: EUR/USD Breaks $1.09.

Posted: Mon, 23 Jan 2023 08:00:00 GMT [source]

75% of retail client accounts lose money when trading CFDs, with this investment provider. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. On-balance volume is a form of technical analysis which enables traders to make predictions about future price movements based on the asset’s previous trading volume. OBV is mostly used in shares trading, because the volume has an especially large influence on the way share prices move.

Trend Line

These patterns could be indications as to which direction the market may move in next. Swing Trade – A short term trading strategy usually lasting from a couple of days to a week. Stock Index – The stock index is an average value of diverse stock prices listed and traded on the stock markets. It is considered as one of the main indicators to gauge the performance of the overall stock market of an economy. For instance, the S&P 500 is a stock index that represents the performance of the NYSE .

moving average convergence

The effect on foreign trade payments of an anticipated move in the exchange rate, normally a devaluation. Then payment of imports is faster and export receipts are slowed down. One currency is in interest parity with another when the difference in the interest rates is equalised by the forward exchange margins.

Amortisation definition

Support and resistance are two levels on a price chart within which the price of an asset moves. The support level is the price point at which the price falls to and bounces back while the resistance level is the price point at which the price stops increasing and drops back down. Social trading is a kind of trading that allows investors to copy the trades of other – possibly more successful and experienced – traders.

united kingdom

The FOMC is directly responsible for pegging the Federal rate and the Discount Rate. Both rates are influential in controlling the levels of money-supply growth and the levels of economic activity in the United States. The rapid movement of prices or rates in a market caused by disequilibrium in supply and demand conditions from buyers and/or sellers.

Closing Price

For example, if an opening trading price in the morning is much lower than the previous day’s closing price, the difference is called the gap. A long black candle forms in the direction of the downtrend. The next candle is a hammer that opened higher and tested lower prices levels but eventually rejected as shown by the long lower shadow. The third candle is a small white body formed below the hammer’s body showing signals that the market is not willing to move lower. As the market continues to trade in the direction of the established uptrend, registering higher highs the next session is bearish, pushing prices lower.

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 or negative ; both kinds of divergence signal major shifts in price direction. Positive/bullish divergence occurs when the price of a security makes a new low while the momentum indicator starts to climb upward.

Exotic Currency

There is plenty to learn, but below is a quick look at some of the most common terms used by traders. Yield is the income earned from an investment, most often in the form of interest or dividend payments. Yield is one of the ways in which investments can earn a trader money, with the other being the eventual closing of a position for profit.

  • Fill is the term used to refer to the satisfying of an order to trade a financial asset.
  • FOMC – FOMC is an abbreviation of Federal Open Market Committee.
  • A sell signal occurs during an uptrend and a “reversal bulge” in place.
  • Support and resistance are two levels on a price chart within which the price of an asset moves.
  • A position is the expression of a market commitment, or exposure, held by a trader.

An active market which can absorb large sale or purchases of currency without major moves. A speaker connected to a phone often used in broker trading desks. Legal doctrine which means that the state cannot be sued or have its assets seized. More potential sellers than buyers, which creates an environment where rapid price falls are likely.

Terms & Expressions of Forex Trading – the Language of Success

Each day’s volume is assigned a plus or a minus sign, depending on whether the current day’s closing price is higher or lower than the previous day’s closing price. A reading above 100 implies extreme overbought conditions whereas a reading below -100 signals extreme oversold conditions. A buy signal is triggered when the oscillator falls in the area between -70 and -100 and then turns up.

Trading Account – Your capital available for use in trades on the online trading platform. Support Level – The bottom barrier of a trend (Sellers’ floor). It is the level at which a current downtrend is expected to stop as the price finds “support”. Resistance Level – The upper barrier of a trend (Buyers’ ceiling).


A currency pair involving the US Dollar where the US dollar is not the first currency quoted. For example, the euro is the base currency when paired with the US dollar. For example, in the case of USDEUR, EUR is the quote currency and USD is the base currency. In the case of USDEUR, USD is the base currency and EUR is the quote currency.

Think ensures high levels of client satisfaction with high client retention and conversion rates. From beginners to experts, all traders need to know a wide range of technical terms. Trade up today – join thousands of traders who choose a mobile-first broker.

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