Forex Dictionary

Ask/Offer Price: In the Forex Market the ask/offer price is the price where the market is willing to sell a specific currency pair.
An example: in the quote EUR/USD 1.3222/25, the ask price is 1.3225. This means you can buy one euro for 1.3222 U.S. dollars. The ask price can also be referred to as the offer price.
Aussie: a Forex term for the Australian Dollar.
Bank Rate: the percentage rate where a central bank will lend money to the commercial banks of a country.
Broker: middleman body between large commercial institutions and retail traders.
Bid Price: The bid price is the price where the market is willing to buy a currency pair.
Base Currency: is the first currency in any currency pair.
Cable: a Forex term for the GBP/USD currency pair.
Cross Currency: A cross currency is any currency pair with neither currency being the U.S. dollar.
Commission: broker fees for handling.
CPI: consumer price index, it is the measure of inflation influenced by changes of prices of particular sets of goods.
EA (Expert Adviser): an automated system which many use to manage positions and orders automatically.
ECB (European Central Bank): Financial system of the European Union’s regulatory body.
Elliott Waves: a certain set of principles for chart analysis determined by 5-wave and 3-wave patterns.
Fed (Federal Reserve): United States of America financial system’s regulatory body.
Fibonacci: levels likely of trend break or bounce, calculated as the 23.6%, 32.8%, 50% and 61.8% of the trend range.
Flat: when all your positions are closed in account.
Floating Profit/Loss: a profit/loss for your open positions.
Fundamental Analysis: analysis based on news, economic indicators, and global happenings.
Gap: a space between one period’s close price and the next period’s open price.
GDP (Gross Domestic Product): measures the national income and output of the economy.
Hedging: holding a market position which secures the open positions in the opposite direction. Being long and short at the same time.
Kiwi: a Forex term for the New Zealand dollar.
Leverage: Leverage is the ratio of the amount of used capital in a transaction to the security deposit (margin). It lets you control large amounts of money with a relatively small account size. Leverage varies drastically with different brokers, it ranges from 2:1 to 500:1 and even larger.
Liquidity: the measure of markets describing the relationship between price change and the trading volume.
Long: position in a buy direction. The base currency when bought is long the other currency is short.
Loss: a loss from closing a position with negative profit.
Major and Minor Currencies: The eight most traded currencies in the Forex Market which are:USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD.
Margin: the money the investor has to keep in the account to keep execution of trades possible. It is needed because of possible losses that could occur.
Margin Call: When an investor runs out of free margin they will have a margin call. Depending on which broker, all open trades may close at the margin call.
Market Price: a price at which a currency pair is being traded for in the market.
Momentum: the measure of the specific currency’s power to move in any direction.
Moving Average: A fundamental technical indicator showing the average rate determined by calculations with a series of time periods.
Open Position: current market position buying or selling on a specific currency pair.
Order: trade for a broker to execute buying or selling the currency at a specific price.
Percentage Allocation Management Module (PAMM): a system which allows traders to manage investors funds that they choose to invest in the PAMM account.
Pivot Point: primary support or resistance area determined on the prior trend’s Close, Low, and High prices.
Pip (Point): the final digit in the rate; for example: EUR/USD 1 point = 0.0001.
An exception to the rule are pairs that include the Japanese Yen (JPY) where a pip is 0.01 instead of being 0.0001.
Pipette: As BabyPips calls it, one-tenth of a pip. An example: if AUD/USD moved from 1.00898 to 1.00899, it moved 1 pipette.
Profit (Gain): positive equity gained by closing profitable open positions.
Principal Value: is the initial amount of money invested.
Quote Currency: The quote currency is the second noted currency in a currency pair.
Resistance: is a technical term referring to lines on a chart that cap a rise in the current currency price.
RSI (Relative Strength Index): indicator measuring the power of direction price movement by comparing bullish and bearish parts of trends.
Scalping: recognized by numerous positions taken for short-term profit.
Slippage: refers to the execution of the order for a price unequal to that which was expected. Low liquidity can cause this.
Spread: is the currency pair’s difference between the ask and bid prices.
Standard Lot: 100,000 units of the base currency of the stated pair.
Stop-Limit Order: an order set to sell or buy for a certain price or under.
Stop-Loss: a point set by investor at which the current open position will close if it reaches. This avoids extra losses if the market is moving in the opposite direction of your trade.
Support: is a technical term referring to lines on a chart that hold a bearish movement in the current currency price.
Swap: is payment for holding your position.
Take-Profit: a point at which your trade will close when the market reaches a certain price. It is used to keep you from losing gains.
Technical Analysis: The analysis of the market via charts using indicators and other tools to examine chart data.
Trend: The established movement of the market in a certain direction.
Useable Margin: available amount of money in an account able to be used for trading.
Used Margin: money amount in the account already used to holding open trades.
Volatility: measure of the number of price fluctuations for a given currency pair over a certain period of time.
VPS (Virtual Private Server):A VPS is a divided portion of a server with allocated memory, CPU, and disk space. In other terms, it is a computer on it’s own.

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