Online Forex Trading Words | Forex Dictionary | Definition | Forex Alphabet & Terminology

A

2005-10-22T00:14:00.000-07:00

AAII

AAII stands for the American Association of Individual Investors. The AAII is a non-profit organization that provides investment education for the individual investor. Website: aaii.com

ABA

The American Bankers Association.
Related Websites: aba.com

Account Value

The current value of a customers account given the amount of money deposited and changes as a result of profits and losses from existing and closed out positions, credits and debits from daily rollovers, and charges from such things as commissions, transfer fees or bank related fees if applicable.

Accrual

The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitrage) deals , over the period of each deal.

Adjustment

Official action normally by either change in the internal economic policies to correct a payment imbalance or in the official currency rate or. Adjustment - Official action normally by either change in the internal economic policies to correct a payment imbalance or in the official currency rate or.

Aggregate Demand

Total demand for goods and services in the economy. It includes private and public sector demand for goods and services within the country and the demand of consumers and firms in other countries for good and services.

Aggregate risk

Size of exposure of a single customer to a market related movement.

Aggregate Supply

Total supply of goods and services in the economy from domestic sources (including imports) available to meet aggregate demand.

Appreciation

Describes a currency increasing or strengthening in response to a market reaction

Arbitrage

The purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market, in order to take advantage of small price differentials between markets.

Ask (Offer) Price

The price at which the market is prepared to sell a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can buy the base currency. In the quotation, it is shown on the right side of the quotation. For example, in the quote USD/CHF 1.4527/32, the ask price is 1.4532; meaning you can buy one US dollar for 1.4532 Swiss francs.

At best

A specific instruction given to a dealer to buy or sell at the best rate that can be obtained. The term is synonymous with the term "at the market" or is implied by the customer issuing a "market order".

At or Better

An order to deal at a specific rate/price or better.

Available Trading Power

Given a customer's Account Value and existing position, the amount of incremental foreign exchange position, expressed in a specified currency, that the customer could take. Mathematically, the Available Trading Power = (Account Value * Maximum Trading Leverage) - Open Positions Amount.

B

2005-10-21T23:40:00.000-07:00

Back Office

The department in a financial institution that processes and deals and handles delivery, settlement and regulatory procedures.

Balance of Payments

A systematic record of the real economic transactions during a given period for a particular country. Countries are either in a balance of payment excess or balance of payment deficit. Prolonged balance of payment deficits could lead to restrictions in capital transfers, and or decline in currency values.

Balance of Trade or Trade Balance

In general terms, the value of exports less imports for a particular country. A balance of trade deficit is when a country imports more than it exports. A balance of trade surplus is when a country exports more than it imports. If a country is in a prolonged trade deficit condition, the currency versus its trading partners should decline or weaken making the cost of imports more expensive and exports cheaper for the trading partners.

Bank line

Line of credit granted by a bank to a customer, also known as a " line".

Banking day (or Business day)

Any day that commercial banks are open for business in the financial center of the country whose currency a position is taken.

Bar Chart

A type of chart which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line of the right of the bar.

Base Currency

The first currency in a currency pair. In the currency pair EUR/USD, the Base Currency is the EUR. When entering a contract with FXDirectDealer, the base currency remains constant at a contracted lot value amount. For example, if a lot is 100,000, the customer who transacts to buy 1 lot of EUR/USD at a currency rate of .9600 would be contracting to exchange 100,000 EUR for $96,000 USD.

Base Rate

A term used predominantly in the UK for the rate used by banks to calculate the interest rate charged to borrowers. Top quality borrowers will pay a small amount over base rate while lesser quality credits will pay a rate much higher than the base rate.

Basis point

One per cent of one per cent. The difference between 3.75% and 3.76%.

Bear

An investor who believes that price of an investment product is going to fall.

Bear Market

A situation whereby there exists prolonged period of generally falling prices for a particular investment product.

Bear Squeeze

The condition in the market where investors or traders who are short an investment product are forced to cover their position because a rising market condition, has inflicted losses on the account.

Best-Efforts Basis

The execution of an order at the next available price taking into consideration the volume available to buy or sell at that price and the quantity and volume of orders that precede the customers order.

Bid/Ask Spread

The difference between the bid and offer price

Big Figure

Refers normally to the first three digits of an exchange rate that dealers treat as understood in quoting. NOTE: A EUR/USD exchange rate of .9630 implies a "0" as the first figure. So, the price would be 0.9630 with the big figure being 0.96.

Book

In a professional trading environment, a 'book' is the summary of a trader's or desk's total positions.

Break or Break out

Term used to describe a sudden or rapid fall in instruments pricing away from a consolidated range.

Bretton Woods Agreement of 1944

An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.

Broker

An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a 'dealer' commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.

Brokerage

Commission charged by a broker.

Bull

An investor who believes that prices of particular investment products are going to rise.

Bull market

A prolonged period of generally rising prices for a particular investment product.

Business Day

Any day on which commercial banks are open for business other than Saturday or Sunday in the principal financial center of the country in whose currency a position is taken.

Buy Limit

Specifies the highest price at which the purchase of the Base Currency in a Currency Pair can be executed. The limit price in a Buy limit order should be BELOW the current dealing Ask price.

Buy Stop

A Buy Stop is a Stop Order that is placed ABOVE the current dealing Ask price and is not activated until the market Ask price is at or above the Stop Price. The buy stop order, once triggered, becomes a market order to buy at the current market price.

C

2005-10-21T00:23:00.000-07:00

Cable

Trader jargon referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800's.

Candlestick Chart

A technical analysis charting method. The Candlestick Chart is a price chart that displays the high, low, open, and close over a specified period of time. It adds dimension and color to the Bar Chart by depicting the area of the bar between the open and close as a two dimensional real body. This area is shaded white or green for an up time period and black or red for a down time period. Extensions beyond the range of opening and closing prices are shown as lines that reach to the high and low reached within the given time period.

Carry

The interest cost of financing securities or other financial instruments held.

Cash Delivery

Same day settlement.

Cash Market

The market in the actual financial instrument on which a futures or options contract is based.

Cash on Deposit

Cash on Deposit equals the amount of funds deposited in the account, plus or minus the realized closed position P/L and other debits or credits such as rollovers, and commission (if any).

Central Bank

A bank, which is responsible for controlling a country's or region's monetary policy. The Federal Reserve is the central bank for the United States, the European Central Bank is the central bank of Europe, the Bank of England is the central bank of England and the Bank of Japan is the central bank of Japan.

Central Bank Intervention

The act by which a central bank or central banks enter the spot foreign exchange market and attempt to influence unbalanced supply and demand forces through the direct purchase (or sale) of foreign exchange.

CFTC

The Commodity Futures Trading Commission, the US Federal regulatory agency for futures traded on commodity markets, including financial futures.

Chartist

An individual who studies graphs and charts of historical data in an attempt to find trends that will help predict the direction and magnitude of a particular investment product.

Cleared Funds

Funds that are freely available, sent in to settle a trade.

Closed position

A transaction that is opposite in direction and magnitude to an existing position that has the effect of realizing a gain or loss.

Clearing

The process of settling a trade.

CME

Chicago Mercantile Exchange.

Collateral

Something given to secure a loan or as a guarantee of performance.

Commission

The fee that a broker may charge clients for dealing on their behalf.

Confirmation

An electronic or printed notice that describes all the relevant details of a transaction.

Consumer Price Index

Monthly measure of the change in the prices of a defined basket of consumer goods including food, clothing, and transport. Countries vary in their approach to rents and mortgages.

Contagion

The tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high volatility in their domestic currency, the Rupiah. From there, the contagion spread to other Asian emerging currencies, and then to Latin America, and is now referred to as the 'Asian Contagion'.

Contract

The standard unit of trading. The contracted amounts are determined by the foreign exchange rate that the two parties contract to.

Conversion Rate

The rate for a specific currency pair that is used to convert (or sweep) non-US dollar profits/losses into dollars at the end of a trading day.

Correspondent Bank

The foreign banks representative who regularly performs services for a bank which has no branch in the relevant center, e.g. to facilitate the transfer of funds.

Counter Currency

The second listed Currency in a Currency Pair.

Counterparty

The other entity or party with whom the exchange deal is being transacted.

Country risk

The risk attached to a transaction by virtue of its association to a particular country. This involves examination of economic, political and geographical factors of a particular country.

Cover

The act of performing a transaction that closes out a position.

Credit Risk

The risk that a debtor will not repay; more specifically the risk that the counterparty does not have the currency promised to be delivered.

Cross Currency Contract

A spot contract to purchase or sell one foreign currency in exchange for another specific foreign currency. The currencies exchanged are not the US Dollar.

Cross Currency Pairs or Cross Rate

A foreign exchange transaction in which one foreign currency is traded against a second foreign currency. For example; EUR/GBP

Currency symbols AUD - Australian DollarCAD - Canadian DollarEUR - EuroJPY - Japanese YenGBP - British PoundCHF - Swiss Franc

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 in a foreign exchange transaction. The "EUR/USD" is an example of a currency pair.

Currency Risk

The probability of an adverse change in exchange rates.

D

2005-10-20T23:54:00.000-07:00

Daily Cut-off (or Close of Business Day)

The single point in time that signifies the end of that Business Day. The Trade Date of any Contract entered into after the Daily Cut-off shall be considered executed on the next Business Day.

Daily Price Limit

The maximum price advance or decline from the previous day's settlement price permitted during one trading session, as fixed by the rules of an exchange.

Dark Cloud Cover

On a Japanese Candlestick chart, a bearish reversal pattern where a black candlestick follows a long white candlestick. The large black candle casts a dark cloud over the preceding bullish trend. To create this pattern, the following day must open at a new high and must close below the midpoint of the body of the first day.

Day Order

An order that if not executed on the specific day is automatically canceled.

Day trader

Speculators who take positions in investment products, which are then liquidated prior to the close of the same trading day.

Day Trading

trading only intra-day, where all positions closed out before the end of the trading session.

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.

Deal Blotter

A listing of all the deals that were executed over a specified time period, usually the trading day.

Deal date

The date on which a transaction is agreed upon.

Deal Ticket

The primary method of recording the basic information relating to a transaction.

Dealing Desk

Generally speaking, the collection of dealers working for FXDirectDealer that facilitate the pricing and execution of customer orders.

Declining

Describes a security in an downtrent movement with subsequently lower highs and lower lows.

Default

Generally speaking a breach of contract.

Deficit

A negative balance of trade or payments.

Delivery

An FX trade where both sides make and take actual delivery of the currencies traded.

Depreciation

A fall or decline in the value of a currency due to market forces.

Depth of market

A measure of the size of volume available for transaction purposes for a particular currency pair at a specific point in time.

Derivative

A contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.

Details

All the information required to finalize a foreign exchange transaction, i.e. name, rate, and dates.
Devaluation

The deliberate downward adjustment of a currency against its fixed parities or bands, normally initiated by a formal announcement by a country.

Discretionary Income

Net of tax and fixed personal spending commitments.

DM, DMark

Deutsche Mark.

Domestic Rates

The interest rates applicable to deposits in the country of origin.

Done

The term used by FXDirectDealer representative to indicate that a verbal deal has been executed and is now a binding deal.

Down tick

The sale of a security (usually an equity or stock) at a price lower than the previous one.

E

2005-10-20T23:18:00.000-07:00

Ease Off

A minor and/or slow decline in the price of a market.

Easing

A decline in interest rates initiated by the central

Economic Indicator

A government issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.

ECU

European Currency Unit.

Either way market

In the Euro Interbank deposit market where both bid and offer rates for a particular period are the same.

End Of Day Order (EOD)

An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.

Envelope theory

Envelopes refer to moving average bands and channels, which consist of a middle and two outer bands. Envelope theory states that prices are most likely to remain within the boundaries of the envelope. When prices go outside the envelope this can indicate an overbought/oversold situation.

Euro

The currency of the European Monetary Union (EMU). A replacement for the European Currency Unit (ECU).

Euro Rates

The interest rates quoted for Euro-currencies over specific periods.

Eurocurrency

A currency deposited outside its country of origin.

Eurodollars

US dollars deposited in a bank (US or non US) located outside the USA.

European Union

The group formerly known as the European Community.

European Monetary Union (EMU)

The principal goal of the EMU is to establish a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. On Janaury1, 1999 the transitional phase to introduce the Euro began. The Euro now exists as a banking currency and paper financial transactions and foreign exchange are made in Euros. This transition period will last for three years, at which time Euro notes an coins will enter circulation. On July 1,2002, only Euros will be legal tender for EMU participants, the national currencies of the member countries will cease to exist. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.

European Central Bank (ECB)

the Central Bank for the new European Monetary Union.

Event Notifications window

The window of FXDirectDealer that summarizes the transactions that have occurred in a clients account over the course of a business day.

Excess Margin Deposits

Money deposited with FXDirectDealer that is not used for margin against an existing open position.

Exchange

A physical location where instruments are traded and often regulated. Examples: the New York Stock Exchange, the Chicago Board of Trade

Exchange control

A system of controlling inflows and out flows of foreign exchange, devices include licensing multiple currencies, quotas, auctions, limits, levies and surcharges.

Exotic

A less broadly traded currency.

F

2005-10-20T00:41:00.000-07:00

Falling Three Methods Candlestick Pattern

This Japanese Candlestick chart formation shows the market is pausing before continuing a downtrend. In technical parlance this is described as a bearish continuation pattern. A long black body is followed by three small body days, forming a short uptrend, however each is fully contained within the range of the high and low of the first day. This suggests declining confidence on the part of the bulls. On the fifth day, the sellers dominate and the market closes at a new low.

Fast market

The rapid movement of prices or rates in a market caused by disequilibria in supply and demand conditions from buyers and/or sellers. In such circumstances rates or prices may not be readily available to clients until orderly markets resume.

Fed

The United States Federal Reserve Bank.

Fed Funds

Cash balances held by banks with their local Federal Reserve Bank.

Fed Fund Rate

The short term (overnight) rate pegged by the Federal Reserve Bank used to conduct monetary policy and affect changes in the money supply that causes changes in the level of activity in the United States economy.

Federal Deposit Insurance Corporation (FDIC)

The regulatory agency responsible for administering bank depository insurance in the US.

Federal Open Market Committee

Also known as the FOMC. The body of individuals that decide the course of monetary policy that will be conducted in United States. The FOMC is directly responsible for pegging the Federal Funds 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.

Federal Reserve Board

The board of the Federal Reserve System, appointed by the US President for 14 year terms, one of whom is appointed for four years as chairman.

Federal Reserve System

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.

Fibonacci Arcs

Fibonacci Arcs are created on a chart by first drawing a trendline between two extreme points, a trough and opposing peak. Three arcs are generated that are centered on the second extreme point and intersect the trendline at Fibonacci Levels, usually of 38.2%, 50% and 61.8% of the distance between a price maximum and minimum. The interpretation of Fibonacci Arcs involves looking for support and resistance as prices approach the arcs. Fibonacci Arcs and Fibonacci Fan Lines are sometimes used together to anticipate support and resistance at the points where the Fibonacci studies intersect.

Fibonacci Fans

Fibonacci Fan Lines are displayed by first drawing a trendline between two extreme points, a high and low. An invisible vertical line is drawn through the second extreme point. Three lines are then drawn from the first extreme point (the leftmost point) passing through the invisible vertical line with their slopes at the Fibonacci levels, usually 38.2%, 50.0% and 61.8%. These lines indicate areas of support and resistance.

Fibonacci Numbers

A number sequence discovered by a thirteenth century Italian mathematician Leonardo Fibonacci (ca 1170-1250), who introduced Arabic numbers to Europe, in which the sum of any two consecutive numbers equals the next highest number - i.e., following this sequence: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55 and so on. The ratio of any number to its next highest number approaches 0.618 after the first four numbers. Fibonacci numbers are said to be based upon observations of the Great Pyramid of Gizeh in Egypt by Fibonacci. These numbers are used by technical analysts to determine price objectives from percentage retracements.

Fibonacci Retracements

Fibonacci Retracements are displayed by locating two extreme points, a trough and opposing peak. Five lines are drawn: 100% (the high on the chart), the second at 61.8%, the third at 50%, the fourth at 38.2%, and the last one at 0% (the low on the chart). These price levels often correspond to areas of and resistance.

Fibonacci Time Zones

Fibonacci time zones are composed by dividing a chart with vertical lines spaced apart in a ratio adhering to the Fibonacci number sequence (1, 1, 2, 3, 5, 8, 13, etc.). The interpretation of Fibonacci Time Zones involves looking for significant price movement near the vertical lines. Also known as Fibonacci Time Series.

Fictitious Trading

Wash trading, bucketing, cross trading, or other schemes which give the appearance of trading but actually no bona fide, competitive trade has occurred.

Fill or Filled

A deal that has been executed on behalf of a Customer's Account given a Customer's Order. Once filled, an Order cannot be canceled, amended or waived by Customer.

Fill or Kill Order (FOK)

An order that demands immediate execution or cancellation. Typically involving a designation, added to an order, instructing the broker to offer or bid (as the case may be) one time only; if the order is not filled immediately, it is then automatically cancelled.

Firm quotation

A verbal price given in response to a request for a firm rate at which the quoting party is willing to execute a deal for a reasonable amount for spot settlement.

Final Settlement Price

The price at which a cash-settled futures contract is settled at maturity, pursuant to a procedure specified by the exchange.

First In First Out (FIFO)

Open positions are closed according to the FIFO accounting rule. All positions opened within a particular currency pair are liquidated in the order in which they were originally opened.

Fiscal Policy

Use of taxation as a tool in implementing monetary policy.

Fixed dates

The monthly calendar dates similar to the spot. There are two exceptions. For detailed description see value dates.

Fixed exchange rate

Official rate set by monetary authorities. Often the fixed exchange rate permits fluctuation within a band.

Fixed Income Security

A security whose nominal (or current dollar) yield is fixed or determined with certainty at the time of purchase, typically a debt security.

Fixing

A method of determining rates by normally finding a rate that balances buyers to sellers. Such a process occurs either once or twice daily at defined times. Used by some currencies particularly for establishing tourist rates.

Flat/square

Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.

Floating exchange rate

An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a dirty float.

FOMC

Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates etc.

Foreign Exchange

Trading in foreign currency.

Forex

Refers to the OTC market for foreign exchange transactions. Also called the foreign exchange market.

Forward

The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.

Forward Deal

A deal with a value date greater than the spot value date.

Forward Points

The pips added to or subtracted from the current exchange rate to calculate a forward price.

Forward Rate

Forward rates are quoted in terms of forward points, which represents the difference between the forward and spot rates. In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange rate.

The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefore, the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.

Front Office

The activities carried out by the dealer , normal trading activities.

Fundamentals

The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.
Fundamental Analysis

Analysis of economic and political information with the objective of determining future movements in a financial market.

Futures Contract

An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts - ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.

FX

Foreign Exchange

G

2005-10-20T00:21:00.000-07:00

G7

The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy.

G10 - G7

plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.

Going long

The act of buying a currency pair. For example, if a client bought the EUR/USD, he would be "going long" the Euro.

Going short

The act of selling a currency pair. For example, if a client sold the EUR/USD, he would be "going short" the Euro.

Good til canceled (GTC order)

A specific instruction to a broker that unlike normal practice the order does not expire at the end of the trading day, although normally terminates at the end of the trading month.

Gross Domestic Product

Total value of a country's output, income or expenditure produced within the country's physical borders.

Gross National Product

Gross domestic product plus income earned from investment or work abroad.

H

2005-10-19T23:55:00.000-07:00

Hammer

On a Japanese Candlestick chart, the hammer is known as a reversal candlestick. Hammer candlesticks occur when a security moves significantly lower after the open, but rebounds to close well above the intraday low. In a perfect hammer, this tail is twice the length of the body and the candlestick will have no upper shadow or wick. The smaller the body and the longer the tail, the more significant the hammer is as a bullish indicator. Hammers form at trend bottoms. If this candlestick forms during an advance, it is called a Hanging Man.

Hand Held Terminal

A small computer terminal used by floor brokers or floor traders on an exchange to record trade information and transmit that information to the clearing organization.

Hanging Man

On a Japanese Candlestick chart, the Hanging Man candlestick occurs when a security moves significantly lower after the open, but rebounds to close well above the intraday low. The Hammer and Hanging Man are short body candles with little or no upper shadow or wick, and a lower shadow at lease twice the height of the candle body. They are reversal candlesticks: hammers form during a decline at trend bottoms, the bearish Hanging Man forms during an advance.

Harami

On a Japanese Candlestick chart, a two day pattern that has a small body day completely contained within vertical range of the previous larger candle's body. This formation suggest that the previous trend is coming to an end. The smaller the second candlestick, the stronger the reversal signal.

Harami Cross

On a Japanese Candlestick chart, a two day reversal pattern that is the same as the Harami, except that the second day is a Doji.

Hardening

(1) Describes a price which is gradually stabilizing; (2) a term indicating a slowly advancing market.

Head and Shoulders

In technical analysis, a chart formation that resembles a human head and shoulders and is generally considered to be predictive of a price reversal. A head and shoulders top (which is considered predictive of a price decline) consists of a high price, a decline to a support level, a rally to a higher price than the previous high price, a second decline to the support level, and a weaker rally to about the level of the first high price. The reverse (upside-down) formation is called a head and shoulders bottom (which is considered predictive of a price rally).

Head and Shoulders Bottom

bullish reversal pattern marked by three prominent lows with a middle low, the head, that is lower than the other lows, that represent the shoulders. The trendline that connecting the peaks at the top of the pattern is called the neckline. When it is broken, the pattern is complete. An increase in volume from the bottom of the head and continuing through the right shoulder confirms the validity of the formation.

Head and Shoulders Top

A bearish reversal pattern marked by three prominent highs with a middle peak, representing the the head, that is higher than the other peaks, which represent the shoulders. The neckline is drawn under the two price lows that separate the head from the shoulders. When the neckline is penetrated downward the pattern is complete.

Heavy

A market in which prices are demonstrating either an inability to advance or a slight tendency to decline.

Hedge

A position or combination of positions that reduces the risk of your primary position.

Hit the bid

Term used to describe the action of a seller of a currency pair when wanting to sell at the market bid side.

Holder

Buyer of a currency pair.

I

2005-10-19T23:34:00.000-07:00

Indicative quote

A market-maker's price which is not "firm" or "firm quotation".

Indicator

A value that is based on a securities price and/or volume and used to forecast future price movements. Indicators are divided into two groups: trend following/lagging and momentum/leading. Lagging indicators reflect what prices are doing now, or in the recent past, and are useful in a trending market.

Inflation

An economic condition whereby prices for consumer goods rise, eroding purchasing power.

Initial Margin

The initial deposit of collateral required to enter into a position as a guarantee on future performance.

Initial margin requirement

The minimum Margin Balance necessary to establish a NEW Open Position. FXDIRECTDEALER reserves the right to change the Initial Margin requirement at it's sole discretion. The Initial Margin requirement can be expressed as a percentage (i.e., 2% of US dollar position amount) or can be calculated by the Leverage Ratio. For example, a $100,000 position in USD/JPY would require $2,000 of margin given a 2% Margin Requirement. Expressed as a leverage ratio, if 50:1 leverage ratio is used a $100,000 position would require the same Initial Margin ($100,000 / 50 = $2,000).

Interbank currency market

Over 1 trillion dollars is traded daily (and nightly) in the 24 hour world spanning foreign exchange market. The majority of these transactions take place on the interbank currency market rather than on an exchange. The market provides a means for companies to hedge exchange risk against the fluctuations of currency values. However, speculators also participate in this market with a view to profiting from changing exchange rates.

Interbank Market

The interbank market is the over-the-counter market of dealers that make markets in foreign exchange to one another.

Interbank Rates

The Foreign Exchange rates at which large international banks quote other large international banks.

Intervention

Buy or sell action by a central bank in an attempt to affect the value of its currency. Concerted intervention refers to action by a number of central banks to influence the value of exchange rates.

Intra day position

Open positions run by a client of FXDirectDealer within the day. Usually squared by the close.

Introducing Broker

A person or legal entity that introduces customers to FXDirectDealer often in return for compensation in terms of a fee per transaction. Introducing Brokers are prevented from accepting margined funds from their clients.

J

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Japanese Candlesticks

In the 1700s a Japanese man named Homma, a trader in the futures market, developed a method of technical analysis to analyze the price of rice contracts known as candlestick charting. Candlestick charts display the high, low, open, and close for a security each day over a specified period of time, in a format similar to a bar chart, but in a manner that extenuates the relationship between the opening and closing prices. A narrow line (shadow or wick) shows the day's price range. A wider body marks the area between the open and the close, referred to as real body. If the close is above the open, the body is white or green (not filled); if the close is below the open, the body is black or red (filled). Steve Nison is credited with popularizing candlestick charting in the west and is seen as a leading expert on their interpretation.

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Key Reversal Day

A sharp reversal pattern that occurs during a trend. In an uptrend, prices open above the previous day's close, make a new high and then close below the previous day's low. In a downtrend, prices open below the previous day's close, make a new low and then close higher than the previous day's high. The greater the price range and volume on the key reversal day, the more reliable the signal.

Kiwi

Slang for the New Zealand dollar.

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Leading Indicators

The Leading Indicators report is largely a composite of prior indicators such as new orders, jobless claims, money supply, average workweek, building permits, and stock prices. Because the report is highly predictable it is less likely to move the market dramatically.
The Federal Reserve watches leading indicators to aid decision making policy on interest rates.

Left-hand side

Taking the left hand side of a two way quote i.e. selling the quoted currency.

Leverage

The control of a large notional position through the use of a small amount of capital.

LIBOR

The London Interbank Offered Rate. The rate of interest at which banks borrow funds from other banks, in marketable size, in the London interbank market. LIBOR rates are disseminated by the British Bankers Association. Some interest rate futures contracts, including Eurodollar futures, are cash settled based on LIBOR.

Limit (Up or Down)

maximum price advance or decline from the previous day's settlement price permitted during one trading session, as fixed by the rules of an exchange.

Limit Only

The definite price stated by a customer to a broker restricting the execution of an order to buy for not more than, or to sell for not less than, the stated price.

Limit order

A Limit Order is a Customer Order to Buy or Sell a specific amount of a Currency Pair at a specific user defined price. A Limit Order does not guarantee execution; rather it guarantees only that if execution occurs, it will be at the stated Limit Price. Note that sometimes the market briefly touches a limit price, only to immediately retreat back away from the limit price level with very little if any volume traded. Under such circumstances the Limit Order may not have be executed and the limit order will remain in effect, until that time when the order can be executed or until the Customer cancels the order. A Limit Order specifies that execution should be attempted after the market reaches or goes through a set price level - the limit price. Once issued, the limit order will be held pending until the limit price is reached. Once the market hits or goes through the limit price, the order is triggered and the FXDD dealer attempts to execute the order at the Limit Price.

Limit Price

An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 117.00/05, then a limit order to buy USD would be at a price below 102. (ie 116.50).

Line Chart

A price chart depicting a line that connects the closing prices of a market over a specific period of time.

Linear/Arithmetic Scaling

On a linear or arithmetic scale chart, the spacing between each point on the vertical axis is equal. The scale is not averaged out to give more weight to the lower prices as with Logarithmic/Percentage Scaling.

Linear Regression Channel

The Linear Regression Channel is created by drawing parallel lines above and below the Linear Regression line using two standard deviations. The bottom channel line indicates support and the top channel line indicates resistance. Prices extending outside of the channel may suggest a trend reversal.

Linear Regression Trendline

A Linear Regression Trendline is a straight line drawn through a chart of a security's prices using the least squares method, and it is used to forecast future trends.

Liquid

The condition in the market where there is ample amount of volume to buy or sell.

Liquidation

The closing of an existing position through the execution of an offsetting transaction.

Liquidity

Describes the level to which a security can be traded without significantly affecting price. A liquid security can undergo a high volume of trading without a signifcant change in price.

Liquid Market

A market in which selling and buying can be accomplished with minimal effect on price.

Liquidation Level

The account value level that initiates the liquidation of all the client's open position at the best price or exchange rate available at that moment. Liquidation occurs when the Account Value is not sufficient to maintain the current open position(s). A client can prevent liquidation by depositing additional margin into the account, or by closing out existing open position(s).

Liquidation Level Excess/Deficit

Remaining Account Value before automated liquidation is triggered. The level is equal to the Account Value - Liquidation % * Margin. If loss on open position(s) exceeds this amount, FXDirectDealer will automatically liquidate ALL open positions. The level is represented graphically as the top of the "brown" level in the FXDD Margin Monitor.

Long

The term used to describe a client who has opened a new position by buying a currency pair.

Long position

A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.

Loss in Excess of their Margin Deposit

There exists the opportunity for clients to lose more than the margin that they initially pledge to open and maintain a position.

Lot

A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

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Macro Fund

A hedge fund that specializes in strategies designed to profit from expected macroeconomic events.

Maintenance Margin

The minimum margin, which an investor must keep at FXDirectDealer to maintain an open position.

Maintenance Margin Excess/Deficit

Remaining funds against which a customer can maintain/hold a position(s) until a Margin Call is triggered. Maintenance Margin Excess/Deficit = Account Value - Maintenance % * Margin. It is represented graphically as the top of the "red" level in the FXDD Margin Monitor.

Make a market

A dealer is said to "make a market" when a quoted bid and ask price is given to a client. The price represents the firm prices that the dealer is ready to buy or sell.

Margin

The aggregate amount of customer cash pledged against the aggregate Open Position(s). The margin pledged is a function of Maximum Trading Leverage Ratio. The higher the leverage, the lower the pledged Margin. The lower the leverage, the higher the Margin needed to carry the position.
Mathematically, Margin = Open Position Amount / Maximum Trading Leverage Ratio. For example, a USD/CHF 100,000 USD position at Maximum Trading Leverage Ratio 100:1 will require pledged Margin equal to 100,000/100 or $1,000.
Note: To calculate margins for currency pairs, where USD is NOT the Base (First) Currency (e.g. EUR/USD, GBP/USD…) and crosses (EUR/JPY, GBP/JPY…), the Counter Currency amount is first converted into USD using the average exchange rate(s).
Example: Customer buys 1 lot of EUR/USD when the price is 1.30. The average exchange rate is 1.30. Therefore, 100,000 EUR equals 130,000 USD. $130,000 / 100 Leverage Ratio = $1,300

Margin Call

A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the customer.

Mark to Market

Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.

Market maker

A professional securities dealer or person with trading privileges on an exchange who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders. By maintaining an offering price sufficiently higher than their buying price, these firms are compensated for the risk involved in allowing their inventory of securities to act as a buffer against temporary order imbalances.

Market-on-Close

An order to buy or sell at the end of the trading session at a price within the closing range of prices.

Market-on-Opening

An order to buy or sell at the beginning of the trading session at a price within the opening range of prices.

Market order

Market Order is an order to buy or sell a chosen currency pair at the current market price. A Market Order will be executed at the price displayed at the moment user clicks the "Place" button, but only if the currency price remains within a price range (for example, 5 pips) set by the FXDD.

Marubozu Candlestick

On a Japanese Candlestick chart, a candlestick with no shadow or wick extending from the body at either the open, the close or at both. Also known as a shaven or bald candlestick.

Maturity

The date for settlement or expiry of a financial instrument.

Maximum Trading Leverage Ratio

Leverage expressed as a ratio, available to open a new position(s). For example, a leverage ratio of 100:1 allows a client the ability to control a $100,000 lot position with $1,000 of margin ($100,000 / 100 = $1,000).

Maximum Trading Power

Mathematically, the Maximum Trading Power = Account Value * Maximum Trading Leverage Ratio.

Momentum

In technical analysis, the relative change in price over a specific time interval. Often equated with speed or velocity and considered in terms of relative strength.

Money Flow Index(MFI)

The MFI is a volume-weighted momentum indicator that compares positive money flow to negative money flow. When compared with price it can gauge the strength of a trend.

Money Market

The market for short-term debt instruments.

Moving Average

A way of smoothing a set of price/rate data by taking the average price of data range of values.
The moving average is one of the most useful and objective tools available to the technical analyst. Moving averages show the average value of a security's price over a certain number of time periods. The most commonly used moving averages are the 20, 30, 50, 100, and 200 day averages. Moving averages smooth a data series and make it easier to spot trends and smooth out price and volume fluctuations or noise that can confuse interpretation. It moves because for each calculation, the latest x number of time periods' data are used. Using the data from prior time periods, a moving average lags the market. An exponentially smoothed moving average (EMA) gives greater weight to the more recent data, in an attempt to reduce the lag. The shorter the time span, the more sensitive the moving average will be to price changes. The longer the time span, the less sensitive or the more smoothed the moving average will be.

Moving Average Convergence/Divergence(MACD)

A trend following momentum indicator developed by Gerald Appel. MACD shows the relationship between two moving averages of prices and is calculated by subtracting the 26-period exponential moving average of a given security from its 12-period exponential moving average. By comparing moving averages, MACD illustrates trend following characteristics, and by tracking the difference of the moving averages as an oscillator, MACD displays momentum characteristics.
Chart courtesy of Prophet Financial Systems.

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Net Interest Rate Differential

The difference in interest rates from the countries of two different currencies. For example, if the spot next rate for the Euro is 3.25% and the spot/next rate in the US is 1.75%, the interest differential is 1.50% (3.25% - 1.75% = 1.50%).

Net Position

The amount of currency bought or sold which have not yet been offset by opposite transactions.

Netting

The method of settling under which only the differences in the traded currencies are settled at the close.

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OCO Order (One Cancel the Other Order)

A One Cancels the Order is a Stop and Limit orders set simultaneously, whereby once either one is executed, the other is canceled. For example, an OCO may be place to close an existing position either with a Limit (take profit), or with a protective Stop (stop loss).

Offer (ask)

The price at which a dealer is willing to sell. The Offer is also called the Ask or Ask Price.

Offered market

Temporary situation where offers exceed bid.

Offsetting transaction

A trade with which serves to cancel or offset some or all of the market risk of an open position.

Old Lady

Old lady of Threadneedle Street, a term for the Bank of England., the central bank of England

Omnibus Account

An account maintained by one broker with another in which all of the accounts of the former are combined and carried only in its name, rather than designated separately.

Open order

An order that will be executed when a market moves to its designated price. Normally associated with Good 'til Cancelled Orders.

Open position

The difference between assets and liabilities in a particular currency. This may be measured on a per currency basis or the position of all currencies when calculated in base currency.

OTC Margined Foreign Exchange

Over-the-Counter (Off-exchange) Foreign Exchange markets, in which markets participants, such as FXDirectDealer and Customer, enter into privately negotiated Contracts or other transactions directly with each other for which margin is deposited and pledged against outstanding positions.

Overnight

A deal from today until the next business day.

Overnight Position

A trade that remains open until the next business day.

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Paper Profit or Loss

The profit or loss that would be realized if open contracts were liquidated as of a certain time or at a certain price.

Payment for Order Flow

As a way to attract orders from brokers, some exchanges or market-makers will pay your broker's firm for routing your order to them – perhaps a penny or more per share. This is called payment for order flow. Payment for order flow is one of the ways your broker's firm can make money from executing your trade. The firm can also make money by internalizing your order.
Upon opening a new account and on an annual basis, firms must inform their customers in writing whether they receive payment for order flow and, if they do, a detailed description of the type of the payments. Firms must also disclose on trade confirmations whether they receive payment for order flow and that customers investors can make a written request to find out the source and type of the payment as to that particular transaction.

Pending Orders report

The Pending Orders report will show all the pending orders that the client has entered over the user specified dates whether the Pending Order is executed or not. Any Pending Order that is cancelled by the client will still be displayed, giving the client a full audit trail of the orders.

Pips

The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.

Point & Figure Chart

A method of charting that uses prices to form patterns of movement without regard to time. It defines a price trend as a continued movement in one direction until a reversal of a predetermined criterion is met. The chart consists of columns of X's which represent rising prices and O's that reflect falling prices, arranged on a square grid.

Political Risk

Exposure to changes in governmental policy which will have an adverse effect on an investor's position.

Ponzi Scheme

Named after Charles Ponzi, a man with a remarkable criminal career in the early 20th century, the term has been used to describe pyramid arrangements whereby an enterprise makes payments to investors from the proceeds of a later investment rather than from profits of the underlying business venture, as the investors expected, and gives investors the impression that a legitimate profit-making business or investment opportunity exists, where in fact it is a mere fiction.

Position

The netted total commitments in a given currency. A position can be either flat or square (no exposure), long, (more currency bought than sold), or short ( more currency sold than bought).

Position Accountability

A rule adopted by an exchange requiring persons holding a certain number of outstanding contracts to report the nature of the position, trading strategy, and hedging information of the position to the exchange, upon request of the exchange.

Premium

In the currency markets, describes the amount by which the forward or futures price exceed the spot price.

Price Transparency

Describes quotes to which every market participant has equal access.

Principal

A dealer who buys or sells stock for his/her own account.

Profit /Loss or "P/L" or Gain/Loss

The actual "realized" gain or loss resulting fromtrading activities on Closed Positions, plus the theoretical "unrealized" gain or loss on Open Positions that have been Mark-to-Market.

Profit Taking

The unwinding of a position to realize a profit.

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QStick

QStick is a technical indicator developed by Tushar Chande to help identify trends on a Japanese Candlestick chart. It is a moving average of the difference between the opening and closing prices of a security. Chart courtesy of Prophet Financial Systems.

Quotation

The actual price or the bid or ask price on a security at any given time.

Quote

An indicative market price, normally used for information purposes only. Consists of the Bid and Ask for a currency pair.

Quote Panel

The quote panel is the section in the FXDD Window that displays the quotes of major currencies and crosses and allows access to FXDirectDealer charts .

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Rally

A recovery in price after a period of decline.

Random Walk

An economic theory that market price movements move randomly. This assumes an efficient market. The theory also assumes that new information comes to the market randomly. Together, the two assumptions imply that market prices move randomly as new information is incorporated into market prices. The theory implies that the best predictor of future prices is the current price, and that past prices are not a reliable indicator of future prices. If the random walk theory is correct, Technical Analysis cannot work.

Range

The difference between the highest and lowest price of a future recorded during a given trading session.

Range Indicator

The Range Indicator is drawn from the idea that changes in the average day's intraday range (high to low) as compared to the average day's interday range (close to close) will either signal a start of a new trend or the end of an existing trend.

Rate

The price of one currency in terms of another, normally against USD.

Reaction

A downward price movement after a price advance.

Realized P/L

The profit and loss generated from closed positions.

Recovery

An upward price movement after a decline.

Reference Asset

An asset, such as a corporate or sovereign debt instrument, that underlies a credit derivative.

Regulated Market

A market that is regulated usually by a governmental agency that issues a number of guidelines and restrictions designed to protect investors.

Resistance

A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.

Resistance Point or Level

A price recognized by technical analysts as a price which will usually stop a movement of a foreign exchange rate from going higher. If a resistance level is "broken" the technician will conclude that the price movement of the instrument will continue to go higher.

Revaluation

An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.

Right hand side

Corresponds to the Ask or Offer price of a foreign exchange rate. For example, given a price of .9630 - .9635, the right hand side is .9635. The right hand side is the side that a client would buy at.

Risk

Exposure to uncertain change, most often used with a negative connotation of adverse change.

Risk Capital

The amount of money the Customer is willing to put at risk and, which if lost would not, change the Customer's lifestyle or the Customer's family lifestyle.

Risk Management

the employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.

Rollover credit

The credit (in base currency terms) added to a client’s account that is long a higher yielding currency overnight.

Rollover Debit

The debit subtracted from a client's account that is long a lower yielding currency overnight.

Round trip

Buying and selling of a specified amount of currency.

Running a position

The act of keeping open positions in hopes of a speculative gain.

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Same day transaction

A transaction that matures on the day the transaction takes place.

Scale Down (or Up)

To purchase or sell a scale down means to buy or sell at regular price intervals in a declining market. To buy or sell on scale up means to buy or sell at regular price intervals as the market advances.

Scalper

A speculator on or off the trading floor of an exchange who buys and sells rapidly, with small profits or losses, holding his positions for only a short time during a trading session. Typically, a scalper will stand ready to buy at a fraction below the last transaction price and to sell at a fraction above, e.g., to buy at the bid and sell at the offer or ask price, with the intent of capturing the spread between the two, thus creating market liquidity.

Seasonality Claims

Misleading sales pitches that one can earn large profits with little risk based on predictable seasonal changes in supply or demand, published reports or other well-known events.

Seat

An instrument granting trading privileges on an exchange. A seat may also represent an ownership interest in the exchange.

Securities and Exchange Commission (SEC)

The Federal regulatory agency established in 1934 to administer Federal securities laws.

Sell Limit

Specifies the lowest price at which the sale of Base Currency in a Currency Pair can be executed. The limit price in a Sell limit order should be ABOVE the current dealing Bid price.

Sell Stop

A Sell Stop is a Stop Order that is placed BELOW the current dealing Bid price and is not activated until the market Bid price is is at or below the stop price. The sell stop order, once triggered, becomes a market order to sell at the current market price.

Seller's Call

Seller's Call, also referred to as call purchase, is the same as the buyer's call except that the seller has the right to determine the time to fix the price.

Seller's Market

A condition of the market in which there is a scarcity of goods available and hence sellers can obtain better conditions of sale or higher prices.

Settlement date

The date by which an executed order must be settled by the transference of instruments or currencies and funds between buyer and seller.

Settlement Price

The daily price at which the clearing organization clears all trades and settles all accounts between clearing members of each contract month. Settlement prices are used to determine both margin calls and invoice prices for deliveries. The term also refers to a price established by the exchange to even up positions which may not be able to be liquidated in regular trading.

Shooting Star

Shooting Star Japanese Candlestick is a bearish single day pattern that appears during an uptrend. It opens higher, trades still higher, creating a long upper shadow. It then closes near its open, leaving no lower shadow, and a small real body. Looks like the Inverted Hammer but gives a bearish signal.

Short

Having an open position that was created by selling a currency. If you sold the EUR/USD, the client is said to be "Short" the currency pair (sold the base currency). If a client bought the EUR/USD, he would be long the currency pair, but short USD currency. Foreign exchange transactions assume being long one currency and short another.

Short Covering

Buying to unwind a short position of a particular currency pair

Short Position

An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.

Sophisticated Foreign Exchange Investor

Investor possessing sufficient knowledge, experience and/or capitalization to trade in Foreign Exchange market. The investor has to decide for him/herself if Forex is a suitable investment vehicle for his or her purposes.

Sovereign risk

(1) Risk of default on a sovereign loan; (2) Risk of appropriation of assets held in a foreign country.

Speculative

Trading Foreign Exchange is speculative in that there is no guarantee that those who invest in Foreign Exchange will make any money. The conditions also exist that the client can lose his entire deposited margin making trading FX highly speculative. Those who trade foreign exchange should only risk that capital which is considered risk capital, defined as the amount of which if lost would not, change the Customer's lifestyle or the Customer's family's lifestyle.

Speculator

An individual who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements.

Spot

Spot or Spot date refers to the spot transaction value date that is two business days from the deals Trade Date. In instances where there is holiday, weekend or other day when the banks in the countries represented by the currencies in the currency pair are closed, the spot date will be adjusted forward to the next value date where the banks are open. In the case of US Dollar versus the Canadian dollar, the spot date is 1 business day forward from the Trade Date.

Spot price/rate

The price at which a currency pair is currently trading in the spot market.

Spot Settlement Basis

The standardized settlement procedure for foreign exchange transactions that sets the value date 2 business days forward from the Trade Date (see: Spot).

Spread

The difference between the bid and ask price for a foreign currency price.

Square

The condition whereby the client's purchases and sales are in balance and there is no open position.

Squawk Box

A speaker connected to a phone often used in broker trading desks.

Sterling

slang for British Pound.

Stop loss order

A specific order entered by the client to close out a position if the price moves in the opposite direction of the position by a certain amount of pips. In most cases Stop Orders are executed as soon as the market reaches or goes through the Customer set Stop Price level. Once issued, the stop order will be held pending until the stop price is reached. Stop orders may be used to close out a position (Stop Loss), to reverse a position, or open a new position. The most common use is to protect an existing position (by limiting losses or protecting unrealized gains). Once the market hits or goes through the stop price, the order is activated (triggered) and FXDD will execute the order at the next available price. Unlike a Limit Order, a Stop Order does not guarantee execution at the stop price. Market conditions including volatility and lack of volume may cause a Stop order to be executed at a price different than the order.

Stop Price Level

The client entered price that activates a Stop Loss Order.

Support Levels

A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.

Swap

A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

Sweep/Sweeping

When a client of FXDirectDealer has a P/L in another currency other than US dollars, the P/L must be converting at the close of each business day into US dollars, at an exchange rate prevailing at the time (known as the Conversion Rate). This process is called sweeping. Note that until the P/L is swept, the clients Account Value may fluctuate slightly (up or down) as exchange rate for the Profit and Loss currency changes. For example, if the client has a profit in Yen, if the value of the yen rises after the position is closes, but before the profit is swept into dollars, the Account Value will change. The change is only on the profit/loss amount so the effect is minimal.

SWIFT

Society for World-wide Interbank Telecommunications is Belgian based company that provides the global electronic network for settlement of most foreign exchange transactions. The society is also responsible for the standardization of the currency codes used for confirmation and identification purposes (i.e.. USD = US Dollars, EUR = The Euro, JPY = Japanese Yen)

Swissy

Market slang for Swiss Franc.

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TD Moving Average

The TD Moving Average study (named after Tom Denmark) is designed to identify when to exit a trade or where to place stop loss orders.

Technical Analysis

An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.

Technical Correction

An adjustment to price not based on market sentiment but technical factors such as volume and charting.

Ted Spread

The difference between the price of the three-month US Treasury Bill futures contract and the price of the three-month Eurodollar time deposit futures contract with the same expiration month.

Thin market

A market condition in which trading volume and liquidity is low and in which usually bid and ask quotes are wider than normal.

Three Crows

Three Crows Japanese Candlestick formation consists of three relatively long consecutive red candlesticks which close near or below the previous days lows.

Tick

A minimum change in price, up or down.

Time-of-Day Order

This is an order that is to be executed at a given minute in the session.

Time Series Forecast

Also known as the moving linear regression indicator or the regression oscillator, the Time Series Forecast indicator illustrates the statistical trend of a security's price over a given time period. The trend is based on linear regression analysis. The Time Series Forecast plots the last point of multiple linear regression trendlines. The Time Series Forecast does not exhibit as much delay as a Moving Average when adjusting to price changes.

Tomorrow next (Tom next)

Simultaneous buying of a currency for delivery the following day and selling for the spot day or vice versa.

Trader

a professional speculator who trades for his own account and who typically holds exchange trading privileges.

Trade date

The date on which a trade occurs.

Trading Arcade

(1) A facility where locals or associates of a proprietary trading group can gather to trade on an electronic trading facility (especially if the exchange is all-electronic and there is no or ring); (2) a proprietary trading group that administers such a facility.

Trading Facility

A person or group of persons that provides a physical or electronic facility or system in which multiple participants have the ability to execute or trade agreements, contracts, or transactions by accepting bids and offers made by other participants in the facility or system.

Trading Floor

A physical trading facility where traders make bids and offers via open outcry or the specialist system.

Trading margin Excess/Deficit

Remaining funds against which a customer can open a new position(s) or increase the amount of an existing position(s) = Account Value – Margin. It is a function of the position size and the Profit and Loss on the existing position. It is represented graphically as the top of the “yellow” level in the FXDD Margin Monitor.

Trading Platforms

A software application where a client can give an order to execute a transaction on that customers behalf.

Transaction

The buying or selling of foreign exchange amount resulting from the execution of an order.

Transaction date

The date on which a trade occurs.

Treasury Bills (or T-Bills)

Short-term zero coupon US government obligations, generally issued with various maturities of up to one year.

Treasury Bonds (or T-Bonds)

Long-term (more than ten years) obligations of the US government that pay interest semiannually until they mature, at which time the principal and the final interest payment is paid to the investor.

Treasury Notes

Same as Treasury Bonds except that Treasury Notes are medium-term (more than one year but not more than ten years).

Treasury Securities

Treasury securities - including Treasury bills, notes, and bonds - are debt obligations issued by the U.S. Department of the Treasury. Treasury securities are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government. The income from Treasury securities is exempt from state and local taxes, but not from federal taxes.

Trend

The general direction, either upward or downward, in which prices have been moving.

Trendline

In charting, a line drawn across the bottom or top of a price chart indicating the direction or trend of price movement. If up, the trendline is called bullish; if down, it is called bearish.

Triple Top

The Triple Top is a reversal pattern of an uptrend. Similar to the head and shoulders top, the pattern features three prominent peaks, however in the case of the Triple Top all three peaks are at roughly the same price level.

Two-Way Quote

When a dealer quotes a bid and ask price for foreign exchange transactions to a customer.

Two-Way Price

When both a bid and offer rate is quoted for a FX transaction.

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Ultimate Oscillator

Introduced by Larry Williams, the Ultimate Oscillator combines the price action for three different time periods which represent short, intermediate, and long term market cycles, into one number. Typically a 7-day period, a 14-day period, and a 28-day period are used. The oscillator moves between 0 and 100 with 50 as the center line. 70 and 30 represent overbought and oversold levels. Trading signals are also derived from divergence and a breakout in the Oscillator's trend.

Unrealized Gain/Loss

The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains' Losses become Profits/Losses when position is closed.

Up-thrust

Up-thrust describes a price movement that breaks through resistance, but rapidly retraces back below the resistance level, unable to maintain momentum. An Up-thrust is the opposite of a spring.

Uptick

A transaction executed at a price greater than the previous transaction.

Uptick Rule

In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

US Dollar

The legal tender of the United States of America.

US Prime Rate

The interest rate at which US banks will lend to their prime corporate customers.

V

2005-10-16T21:13:00.000-07:00

Value Date

For exchange contracts it is the day on which the two contracting parties exchange the currencies which are being bought or sold. For complete description see the chapter on trading. For a spot transaction it is two business banking days forward in the country of the bank providing quotations which determine the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day. The enquirer is the party who must make sure that his spot day coincides with the one applied by the respondent. The forward months maturity must fall on the corresponding date in the relevant calendar month If the one month date falls on a non-banking day in one of the centers then the operative date would be the next business day that is common. The adjustment of the maturity for a particular month does not effect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day. Also referred to as maturity date.

Variable Price Limit

A price limit schedule, determined by an exchange, that permits variations above or below the normally allowable price movement for any one trading day.

Variation Margin

Funds a broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavorable price movements.

Volatility (Vol)

A statistical measure of a market's price movements over time.

Volatility Trading

Strategies designed to speculate on changes in the volatility of the market rather than the direction of the market.

Volume of Trade

The number of contracts traded during a specified period of time.

W

2005-10-16T21:04:00.000-07:00

Whipsaw

slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Wire Transfer

The transfer of money electronically from one bank to another.

Y

2005-10-16T20:38:00.000-07:00

Yard

Slang for milliard, one thousand million.

Yield Curve

A graphic representation of market yield for a fixed income security plotted against the maturity of the security. The yield curve is positive when long-term rates are higher than short-term rates.

Z

2005-10-15T00:33:00.000-07:00

Zig Zag indicator

The Zig Zag indicator illustrates the most important price reversals by filtering out changes less than a specified amount.

The indicator is created by straight lines being drawn between points on a chart where prices have reversed by at least the amount specified.

Chart courtesy of Prophet Financial Systems

Link Exchange Resources

2005-10-14T22:48:00.000-07:00

Link exchange is important. Many of the top search engines and directories rank web sites according to how many links there are that point to that site. This is called incoming links. Google considers link popularity to be an important factor in their ranking algorithm. Some engines also rank according to how many outgoing links a site has. A site that has many outgoing hyperlinks is considered a hub or authority. These links need to be going to sites in a similar area or field of interest for that site to be considered an authority. Relevance of links is important. It's best if the sites linking to and from you are related in theme to your site. A dog groomer could contact sites of veterinarians to see if they would like to exchange links. Everyone benefits from this type of link exchange.
Sites that are rated as popular give a bigger popularity boost to your site than less popular sites. Look for sites with a lot of traffic and high rankings at the search engines.

If you want your site get listed in here, please contact us : linxchange@gmail.com

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