Aussie: Nickname for the Australian Dollar, abbreviated AUD.
Appreciation: When a currency strengthens in the Forex market.
Ask: The price at which an asset is offered to traders who wish to buy.
AUD: The abbreviation for the Australian Dollar, also called Aussie by Forex traders.
Base Currency: The first currency quoted in a Forex pair. If the GBP/USD is the pair then USD is the base currency.
Bearish: A bear market is a market that is falling. In the Forex market, if the outlook is bearish for EUR/USD, this means the price of Euro-Dollar is expected to go down.
Bid: The price at which an asset is offered to traders who wish to sell.
BOC: Abbreviation for Canada’s central bank, Bank of Canada.
BOE: Abbreviation for England’s central bank, Bank of England
BOJ: Abbreviation for Japan’s central bank, Bank of Japan
Bond: Debt that is issued for a limited period of time on which interest is paid.
Bullish: A bullish market is the opposite of a bearish market. It means a rising market. In the Forex market, if the outlook is bullish for AUD/USD, it means the price of AUD/USD is expected to go up.
Bundesbank: Central bank of Germany, also nicknamed Bubba.
Buy Limit order: A type of entry order used by traders to buy an asset below the current market price.
Buy Stop order: A type of entry order used by traders to buy an asset above the current market price.
Carry Trade: A trading strategy where a trader buys a currency with a higher interest rate than the secondary currency in order to profit using interest differentials. For example, if a trader buys AUD/JPY when Australia has a higher interest rate than Japan, the trader will benefit from the interest differentials when the trade is rolled over.
Carry Trading: A well-known trading strategy where a trader buys a base currency with a higher interest rate than the currency it’s partnered with. The trader gains interest every time the trade is rolled over to the next day including weekends.
Central Bank: The authoritative bank that manages a country’s currency.
CFD: Contract for Difference (CFD) is a form of contract that allows traders to capitalize over a change in the value of an underlying asset (indices, stocks and commodities) in a leveraged environment.
CHF: Abbreviation for the Swiss Franc.
CTA: Commodity Trading Advisors. CTA’s provide trading advice for traders.
Depreciation: When a currency loses value in the Forex market.
EA: Expert Advisor. The EA is used for automated trading in the MT4 trading platform and as a guide to signal investors on technical events that are happening in the market. It’s based on complex Mathematical formulas. Trading by EA’s is also called Algorithmic trading.
ECB: Abbreviation for Europe’s central bank, the European Central Bank.
Economic Calendar: A calendar listing of the important economic events that are scheduled.
EU: Abbreviation for the European Union. It’s a political union established in 1993 that includes European countries that all operate under one currency, EUR.
Exotic pairs: The same as Liquid FX pairs. These are currencies with minor trading volumes on the global exchange.
Forex: Abbreviation for the Foreign Exchange market in which global currencies are exchanged/traded.
Fundamental analysis: An analysis that is used to forecast prices in the market.
FX Intervention: When a large financial institution, often a central bank, buys or sells a currency in massive quantities to strengthen or devalue the local currency. The Bank of Japan and the Swiss National Bank are famous for FX interventions in the Forex market.
FX majors: The currency pairs most traded in the Forex market.
G7: A group of finance ministers from seven of the world’s strongest countries: United States, Canada, France, Italy, Germany, and Japan.
GBP: Abbreviation for the Great British Pound, also referred to as Sterling.
GDP: Abbreviation for Gross Domestic Product. It indicates the total value of goods and services produced in a given country and is a key indicator in measuring an economy’s strength.
Greenback: Nickname for the US Dollar.
Hedging: When a trader opens both short and long positions on the same trading instrument. Hedging is a trading strategy Forex traders employ to minimize market exposure and/or to maximize returns.
Inflation: The inflation rate measures the price of goods in the market. Central banks monitor the inflation rate to ensure it’s kept between 2.00% – 3.00% and often act to prevent sharp rises in the price of goods.
JPY: Abbreviation for the Japanese yen.
Kiwi: Nickname for the New Zealand Dollar.
Leverage: A borrowed margin provided to a trader to invest in the market. If the leverage is 400:1, it means the trader can trade as much as 400 x the invested capital. Excessive leverage does not result in funds being owed. Please refer to our education center for more details.
LIBOR: Abbreviation for London Inter-Bank Offered Rate. This is used when a bank wants to borrow from another bank.
Liquidity: Liquidity refers to how much an asset can be bought or sold without affecting its price. It also refers to the ability to exchange an asset for currency.
Loonie: Nickname for the Canadian Dollar.
Market exposure: The amount of capital invested in an asset.
MT4: Abbreviation for MetaTrader4, a highly popular trading platform used all over the world.
MXN: Abbreviation for The Mexican Peso.
RBA: Abbreviation for Australia’s central bank, Reserve Bank of Australia
RBNZ: Abbreviation for New Zealand’s central bank, Reserve Bank of New Zealand
Resistance: Refers to a certain price level at which a financial asset is unable to break above, and is often drawn as a straight horizontal line. In such a scenario, traders generally expect the price to fall.
Retail Sales: A report that covers the sales in the retail market which include: food, clothing, cards, beverages etc. Global investors pay close attention to the retail sales. If the report indicates significant growth in the sector it can be positive for the economy , which often leads to a rise in retail stocks, local stock indices, and currency.
Risk Management: Treading techniques used to ensure the invested capital will not be too severely exposed to the market.
Rollover: When a trade goes into the next trading day.
Scalping: A trading strategy in which the trader aims to capitalize using a very small move in the market in a very short period of time. This can last less than 2 minutes.
Secondary currency: The second currency in a Forex pair. In the pair GBP/USD, USD is the secondary currency.
Sell Limit order: An entry order used to sell an asset at a higher price than the current rate.
SNB: Abbreviation for the Swiss National Bank.
Spike: A strong downward or upward movement in the price of a trading instrument that occurs within a short period of time, sometimes less than 10 seconds.
Stock Index: A stock index is a measured value of a group of selected stocks that are analyzed together. Investors use indices to monitor the market in general.
Stop loss order: A feature that allows traders to exit a trade before the official expiry time, generally to minimize market exposure for a trade that is going against the predicted outcome.
Support: The price level at which a financial asset is unable to break below, often shown with a straight horizontal line. In this scenario a trader generally expects the price to rise.
Take profit order: A feature that allows traders to exit a profitable trade before the official time of expiry to ensure that profits are made.
Technical analysis: An analysis used to forecast the price of the market using technical data. This can be done by exploring historical price data, volumes, averages etc.
Thin market conditions: A market with low liquidity.
Trailing Stop: A stop loss order set by the trader that is automatically raised/lowered according to the profit in an open trade.
TRY: Abbreviation for The Turkish Lira.
US Non-Farm Payrolls (NFP): The Non-Farm Payrolls is one of the most followed economic releases in the market. Generally published on the first Friday of each month it can create irregular volatility in multiple instruments. It measures the change in employment numbers for the previous month for people that work outside the farming industry.
ZAR: Abbreviation for The South African Rand.