Forex Glossary

Most of the expressions you should know when trading forex are listed below in alphabetical order

A – B – C – D – F – H – K – L – M – O – P – Q – R – S – T

A

Ask
The ask price (the right side of a quote) is the price at which traders can buy the base currency.

Aussie
FX trader name for the AUD/USD currency pair.

B

Base Currency

The base currency is the first currency (on the left) in any currency pair. Its value is determined against the counter currency’s value. For instance, if the EUR/USD price is 1.3407, it means that the EUR is the base currency and it is worth 1.3407 USD.

Bear

A Bear or someone who’s bearish is someone thinking the market will go down.
A Bear market is a pessimistic, declining market.

Bid

The bid price (left quote display) is the price at which traders can sell the base currency. It’s alway lower than the ask (or offer) price. (see below)

Bull

A Bull or someone who’s ullish is someone thinking the market will go up.
A Bull market is an optimistic, rising market.

Buy Price

Synonyme for ask (or offer) price. It’s the price at which counterparties are willing to sell you the base currency.

C

Cable

FX dealer name forGPB/USD.

CHF

ISO code for the Swiss franc, Switzerland’s currency (Tag: CHF)

Counter Currency

The counter currency is the second currency in a currency pair. For example, in the following currency pair EUR/USD, the counter currency is USD.

Cross Rate

A cross is the price quote of any currency quoted against another currency but the USD. It is made up of the exchange rates of the two involved currencies against the USD.

Currency Pair

A Currency Pair is the combination of two currencies, it’s the price of one against the second one in the pair.

D

Day Trading

Opening and closing positions in the same trading day, so that at the end of the day a trader has no more open positions.

F

Fed

The Fed is short for Federal Reserve, the United States’ Central Bank. Fed issues reports on U.S. monetary policy, with significant implications for the Forex market

Forex

Forex, or FX, stands for Foreign Exchange. Forex is the simultaneous buying of one currency and selling of another. There are always two sides to any forex transactions (buying and selling) taking place at the same time as bying a currency means selling the counter currency of the selected pair.

Fundamental Analysis

The fundamental analysis is focusing on the macroeconomic factors that may influence a country’s currency.

H

Hedging

Minimizing the risk by taking simultaneous opposite positions. Hedging reduces the risk but also the profit potential.

K

Kiwi

FX dealer name for NZD/USD.

L

Leverage

Leverage is a kind of loan from your broker enabling you to trade bigger positions with a small amount of capital. It can increase your potential profit, but it can also increase your risk.

Long Position

Going long means opening a position by buying a currency hopping that this currency’s value will increase. It’s the opposit of going short (selling).

Loonie

FX dealer name for USD/CAD.

Lot

A preset unit of trading. One standard lot equals 100,000 units of the base currency, a mini lot equals 10,000 units, and a micro lot equals 1,000 units. Lots’ sizes may vary between brokers.

M

Margin

The minimal cash deposit needed to trade. Trading forex on margin increases your buying power, but it can also increase the risk.

O

Offer Price

another name for Ask Price

P

Pip

Pip stands for “percentage in points” is the smallest price increment in the last digit in the rate – usually the fourth digit after the decimal point (apart from the USD/JPY).

Point

See Pip above

Price Trend

A consistent tendency of currency prices to move in a certain direction. Indentifying trends is a major focuse when analysing charts. then just follow it and make profits!

Q

Quote Currency

Same as Counter Currency

R

Rate

Rate (or quote), is the price of one currency against another.

Risk Capital

The amount of money that a trader can afford to risk, the potential loss of which would not affect their lifestyle. Always trade with money you don’t need!

S

Sell Price

Other name of Bid Price

Short Position

Going short is the opposint of going long. It means opening a position by selling a currency hopping that this currency’s value will decrease (sell high, buy low).

Spread

The spread is the difference between the bid and the ask price.

Stop Loss

A stop loss is an order which automatically closes an open position at a determined price in order to prevent losses if the market moves against you.

Swissy

FX dealer name for USD/CHF.

T

Take Profit

An order which automatically closes an open position at a specific price ending up in making a profit. Also known as a limit order.
Learn more about take Profit orders.

Technical Analysis

This type of analysis uses chart patterns to predict currency movements. It assumes that all relevant information are included within the prices and thus visualized in the charts.
Learn more about technical analysis.

Featured News

Forex Market News
FxPro Daily Forex Brief | The euro bails out

Markets approach the end of what has been a pretty difficult week. The single currency has made news lows for the year (vs. the USD) and markets have no more faith in the ability of eurozone leaders to quell speculation around a Greek exit as anti-bailout parties retain their lead in the Greek election opinion polls. We’ve also seen the capitulation of the single currency, something which we talked about earlier this month, where the euro has been the weakest [...]
Read more →
Forex Market News
FxPro Daily Forex Brief | Europe’s impossible dream

Probably not by accident, yesterday’s Brussels dinner party of EU leaders ended too late for the European press to pass judgement. There was a weight of expectations, which was largely misplaced given this was an informal meeting to pave the way for the main summit of leaders at the end of next month. The same differences remain on common bonds and the financial transaction tax (UK opposing) and more subtle differences on the growth agenda. Of course, everyone would like [...]
Read more →
Forex Market News
EU Summit fails to tackle euro bonds and Greece by trading point

The informal Summit of European Leaders that took place in Brussels late on Wednesday concluded with little progress on agreeing concrete measures to tackle the euro zone debt crisis. EU leaders did not reach an agreement on a clear path forward for Greece, nor on shoring up euro zone banks despite growing fears of contagion to the periphery countries. Spain’s banking sector is already under alot of stress. No progress was made on euro zone bonds. All this reflects deep [...]
Read more →
Forex Market News
Fitch Fires Another Round by ACM-Swissquote

Fitch downgraded Japan by two notches yesterday afternoon from AA to A+ with outlook negative. The agency justified the credit rating cuts by saying that the Japanese government isn’t reactive enough in tackling its “high and rising public debt ratios”. The move came in a few hours after the OECD urged Japan to prioritize the implementation of a fiscal consolidation plan, as debt-to-GDP ratio exceeds 200 percent, and budget deficits are forecast at 10 percent of GDP for the current [...]
Read more →
Forex Market News
FxPro Daily Forex Brief | Dollar dominance returns

The dollar index made a new high for the year yesterday, 3.8% higher than the level seen at the start of the month. This follows on from two sessions of downward pressure on the dollar, which was more down to the extent of short positioning on some of currencies under pressure for most of the month. As we start the European session, EUR/USD itself is not that far off the lows for the year at 1.2624 as EU leaders meet [...]
Read more →
Forex Market News
FxPro Daily Forex Brief | Here we go again

It’s Monday and the shifting sands of the European mindset are moving (not for the first time) towards the issuance of common bonds as a means of overcoming the sovereign crisis. This is one of the changes in momentum that has emerged from the weekend’s meeting of G8 leaders, together with giving the EFSF the ability to re-capitalise banks. It’s a sign that there is stronger desire to see an alternative to the hard-line German stance of austerity, with few [...]
Read more →
Forex Market News
Can the Facebook IPO Revive Equities and Torpedo the US Dollar? (dailyfx)

Whether you’re a user or not, you no doubt know of Facebook. The social networking service is visited by an estimated 900 million active users per month and is a cultural phenomenon. Can we expect another, more unusual miracle from the tech giant? Can the company’s IPO help lift the general sentiment and the broader equities market? We will discuss how this event could potentially alter the course of market itself and how – through risk trend connections – it [...]
Read more →
Forex Market News
FxPro Daily Forex Brief | Clueless in Brussels

Yet another day where the bears were in charge, despite the fact that some European markets were shuttered for Ascension Day. European equities continued to slide, with losses generally ranging from 1% to 2%. Russia fared worse than most, falling by more than 4%. In the forex world, the dollar was again in the ascendancy; the euro fell under 1.27, cable dropped to near 1.58, and the Aussie traded through 0.99. Commodities were also under pressure, with Brent under USD [...]
Read more →
Forex Market News
FxPro Daily Forex Brief | Europe must decide urgently

Nearly five years into the global credit crunch, you get a feeling for when something has reached the point of no return, when no amount of reassurance, promises or policies will fight the tide of markets. This is not to define markets as pure ‘speculators’, rather rational individuals and entities that are removing deposits from Greek banks, reducing their exposures to all types of market risk and doing their best not to be crushed by a moving train that is [...]
Read more →
Forex Market News
FxPro Daily Forex Brief | Dollar soars after Greek talks fail

News that ongoing talks amongst politicians in Greece have failed to come up with a coalition government and that new elections will need to be called, has triggered renewed fears that a Greek exit from the eurozone might not be too far away. In response, risk assets are again on the defensive with both traders and investors seeking sanctuary in the US dollar. Overnight, the dollar index stopped just short of its highest level for the year, reaching 81.45. The [...]
Read more →