Forex Dictionary & Glossary

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This is the interest that a trader shows in transacting on a bond. The buyers and sellers of a bond are matched by matching their axes.

The price at which a currency pair or security is offered for sale. The Ask is the quoted price at which an investor or trader can buy a currency pair, or the price at which a dealer will sell a currency pair to a trader. This is also known as the "offer", "ask price", and "ask rate". In a price quote, there are two prices that are listed, and it is the price listed on the right hand side of a price quote that constitutes the Ask. The Ask Price is always higher than the bid price. E.g. in a quote that is listed as 1.2346/1.2349, 1.2349 is the Ask Price.

An item having commercial or exchange value. The commercial value of a resource is not fixed, but changes from time to time as a result of several factors influencing the supply and demand of the resource. It is this change in the perceived value of the resource that confers on it economic and commercial importance. Financial markets provide a standardized template on which assets can be exchanged for a value bestowed on it by the concurrence of traders and the intermediaries (brokers) in such transactions.

This is the colloquial name for the Australian Dollar in the financial markets.

At Best
An order by a trader or broker to fill a trade using the best prices possible in the shortest time possible. An ‘at best’ order is invariably an instant order that will be filled at market price, and may be subject to slippage.

At Limit
An order by a trader to a broker to fill a long trade at a price that is below the current market price, or to fill a short trade at a price that is above market price. The expectation is that prices will move against the trader’s expectation for the asset before turning in the direction of the trader’s expectation, and so an ‘at limit’ order reduces the level of draw down the account would have experienced if the order is filled at market price. An ‘at limit’ order is a pending order.

The aggressor is usually the party that initiates the deal in a transaction. In the financial markets, the aggressors are usually the ones responsible for order flows in a particular direction. This role is taken on by the institutional investors in the Forex market, and that is why in times of increased volatility (especially during news trades), it is not unusual to see large spikes following the release of a news item. In this instance, the institutional investors aggressive push prices by their large demand and hope to gain on this price change by offloading the positions on the non-aggressive section of the market.

Prices of securities always form peaks and troughs in the market. The peaks are the areas where prices are highest, and troughs are the areas where prices are lowest. The amplitude measures the distance between the midpoint of the highest point of the price (peak) and the midpoint of the lowest price point (trough). A bullish retracement is signified by a positive amplitude, and a bearish retracement is signified by a negative amplitude.

Profiting from differences in the price of a single asset (such as a currency pair) that is traded on more than one market. For arbitrage opportunities to exist, the currency pair must be traded simultaneously on two different markets, and at different prices. One very common form of arbitrage is hedging, which is a practice of buying a security on one market (e.g. the spot Forex market) and selling the options on that currency pair in another market (e.g. currency options market). Arbitrage is also used in sports, in trading exchange traded funds and also in trading credit default swaps.

Absolute Breadth Index (ABI)
The absolute breadth index is a momentum indicator discovered by Norman Fosback. It is an indicator that measures market activity by taking into consideration issues that affect price advances and price declines, and the value of the ABI is actually the absolute difference between these two sets of issues. ABI is therefore calculated as follows: ABI = advancing issues – declining issues For graphical representation, a 10week moving average is derived by dividing the ABI by the total number of values traded. Values of >40% are adjudged to be bullish while values less than 15% are adjudged to be bearish.

Absolute Rate
Absolute rate is a combination of a percentage of an interest rate swap that is fixed, as well as the percentage that is flexible or floating. Interest rate swaps are used by companies to hedge against sudden and undesirable fluctuations in interest rates. So if the swap deal is given at a premium of 5% and a flexible rate of 2% from a flexible rate such as LIBOR or EURIBOR is added to the mix, this gives an absolute rate of 7%.

Absolute Return Index
Absolute return index is an index that measures the absolute return of a market of hedge funds versus the returns of individual hedge funds. An absolute return index is a stock market index. In essence, the absolute return index is used as a tracker for the performance of hedge funds over a period of time. In order to qualify to be listed, hedge funds must meet certain criteria. Once listed, all hedge funds are weighed equally, and are tracked regardless of past performance records. At the end of the year, the index’s performance is compared with that of the individual hedge fund, and that way, investors can know which hedge funds outperformed the market and use that as a guide to know where to put their money.

Accumulation Area
The accumulation area is the range of prices within which a trader purchases or ‘accumulates’ a stock. The area of accumulation is usually determined by looking at the volume within an area where price of the asset seems not to be able to go below. By looking at the on-balance volumes at particular areas where price seems to have hit a support level, traders can use the information derived from these accumulation areas as signals to purchase a stock.

Accumulative Swing Index (ASI)
The ASI is a technical indicator that is used to measure the long-term trend of a security or asset in the market. A positive ASI is an indication of a market that will be higher in the long term, and a negative ASI indicates that the security’s value will fall in the long-term. This calculation is done using the high, low, open and close prices over time. The ASI’s results are enhanced when combined with other technical indicators that can detect breakout movements.

Active Management
This is the use of a manual or human resource to manage an account or a trading portfolio as opposed to the use of passive systems of account management such as indexing. Indexing involves adjusting the components of an investment portfolio to match the performance of an index. By employing the human element where research, creative reasoning and analysis as well as judgement is tied to experience, it is thought that this approach can produce better returns than indexed portfolios.

Adaptive Price Zone (APZ)
This is a technical indicator that is used to detect points of market reversal, especially in a choppy range-bound market situation. Introduced by Lee Leibfarth in 2006, the APZ indicator appears as a set of bands which are non-symmetrical. These bands are based on double-smoothed exponential moving averages and are short term in nature. The distance between the bands are a function of the price swings, with wider bands indicating greater volatility and narrower bands indicating lesser volatility. The APZ indicator has a statistical average and price extremes produce an attempt by the band to correct the imbalance, thus producing the trading opportunity that this indicator shows.

ADF (Andorran Franc)
The Andorran Franc was the national currency of the territory of Andorra before the introduction of the Euro in 1999. Prior to 1999, Andorra never printed any bank notes nor minted any coins, so Andorra has never had any independent currency. Andorra used the currencies of France and Spain as legal tender, being located in a range of mountains between both countries. Therefore the Andorran Franc is in reality, the French Franc which was the currency of France.

Adjustable Peg
An adjustable peg is a type of fixed exchange rate policy adopted by certain countries where the national government pegs the rate of its currency to that of another major currency such as the US Dollar. Under this arrangement, the peg can be adjusted within a narrow range of movement. It is important to note that adjustability of the peg does not mean that the currency is floating. China’s Yuan (RNB) is the most famous example. Others haven been the Argentinian Peso (under Pres. Carlos Menem’s regime, and to some extent, the Singaporean Dollar).

Advance-Decline Index
This is a tool of technical analysis that measures the difference between the total number of securities that have gained in value and those that have depreciated in value. This index is used as an indication of the strength of market movements. If there are more stocks gaining that losing value in the market at a time that the market has started to advance, this shows that the advance is likely to continue for some time and is not a transient event. Conversely, if there are more securities losing value at a time that the market is down, this is a sign of bearishness in the market.

Advance-Decline Line (AD)
The A/D Line is an indicator used in technical analysis. It is a tool used mostly in the stock markets to measure the number of assets that rise or fall during a market advance or decline respectively. The movement of the share price of a single large and well capitalized company can affect the index as a whole. The A/D line is therefore used to know if the movement of a majority of smaller stocks in that index was responsible for the market movement, or if the market movement was caused essentially by the performance of one or two large company stocks. If there is disproportion between the market and the stock prices of smaller companies listed in that market, the A/D line will show it as a trading opportunity. The trade opportunity would be that the gap would correct, and so this information can be exploited by speculators in the market.

AED (United Arab Emirates Dirham)
The legal tender/currency of the United Arab Emirates is the Dirham, which is subdivided into 100 fils. The Dirham was introduced in 1973 to replace the Bahrain Dinar and the Qatar and Dubai Riyal, (used in all emirates in the UAE except Abu Dhabi where the Bahraini Dinar was used). Presently, the range of notes for the Dirham is from 5 AED to 1000 AED. The Dirham is issued by the Central Bank of the United Arab Emirates.

AFA (Afghanistan Afghani)
The AFA is the ISO 4217 code for the original Afghani, which was the currency of Afghanistan from 1925 to 2003. It was issued by the Da Afghanistan Bank (Afghanistan’s central bank) and was available via a dual exchange rate mechanism (fixed by the Central bank and floating at the Saraye Shahzada money exchanges). Subdivided into 100 Pul, it was eventually replaced in 2003 by the new Afghani (ISO 4217 Code AFN) due to the years of uncontrolled and unregulated printing of the currency by entities other than the Da Afghanistan Bank during the wartime years and under the Taliban administration. The new Afghani is now a fully floated currency.

Affirmative Obligation
An affirmative obligation is a rule imposed by the management of a stock exchange mandating market specialists and market maker brokers to take positions in certain assets when there is not enough demand for those assets, so as to close a liquidity gap. The affirmative obligation will also include presenting two-sided quotes to traders on such positions, and reporting any such executed trades to the relevant authorities within a specified time. This is also called positive obligation. It is this obligation that is responsible for the after-hours trade activities on the markets.

Aggregate Risk
This is a measure of an investor’s total market exposure to spot and futures market contracts. Such investors would include banks, major corporations, hedge funds and other financial institutions. The definition for the Forex market is the exposure of a trading entity to fluctuations in the exchange rates of two currencies. Aggregate risk is a key indicator that a trading entity must employ in order to gauge the maximum allowable exposure to a a trade before engaging in that trade. Once this has been derived, limits on the position can be set. Larger corporations such as the ‘too big to fail’ banks have larger aggregate risk limits than smaller firms with lower credit ratings.

ALL (Albanian Lek)
The Albanian Lek is the currency/legal tender of Albania. 1 Albanian Lek is made up of 100 qindarka. Introduced for the first time in 1926, there have been four series of the ALL introduced in its history. Known locally as the Leke, the latest series of the ALL were introduced in 1997 with denominations ranging from 100 Leke to 5000 Leke. The 100 Leke is no longer used as legal tender and the qindarka subdivisions are no longer issued.

American Stock Exchange (AMEX)
American Stock Exchange was a stock exchange located in New York that first started in the early 19th century to trade at least 100 stocks of companies in the construction and railroad business. With the discovery of oil and the emergence of other industries that produced equipment used in the American civil war, more companies became listed on this exchange and this metamorphosed into AMEX. AMEX was later acquired by NYSE Euronext in 2008 to become the NYSE AMEX Equities Exchange. It is the 3rd largest stock exchange in the US by trade volume. Small-cap stocks and ETFs are the securities mostly traded on AMEX.

Andrew's Pitchfork
The Andrew’s Pitchfork is a trend channel indicator developed by Alan Andrews for use in trading the financial markets. The indicator is made up of three lines: a median line which is key to the use of this indicator, as well as two parallel lines located on each side of the median line. These parallel lines are at the same distance from the median line on each side. The outer trend lines mark areas of support and resistance, while the median line is used to get the diagonal orientation of the indicator, thereby showing the strength of the trend. A steeply sloped Pitchfork shows a strong trend. Range traders can therefore trade within the trend lines. A break of the lower trend line while the pitchfork is pointing diagonally upwards is a bearish reversal while a break of the upper trend line while the pitchfork is pointing diagonally downwards is a bullish reversal.

ANG (Netherlands Antilles Guilder)
The Guilder was originally the currency used by the Netherlands and all its territories prior to 1999 when the Euro was adopted by the Netherlands. In Curacao and St Maarten, 2 of the 5 island territories that constituted the Netherlands Antilles islands prior to the dissolution of that union in 2010, the Guilder is used as the ANG or Netherlands Antilles Guilder. The ANG will be replaced by the Carribean Guilder sometime in 2013. The Guilder has been in use in the Netherlands Antilles since the 18th century. The link to the traditional Dutch Guilder was broken by the German occupation of the Netherlands during the Second World War, and the ANG became pegged to the US Dollar in 1940. The dissolution of the Netherlands Antilles Union in 2010, with the emergence of the constituent islands now forming independent countries means that 2012 is the last year that this currency will be used as legal tender.

Annual Equivalent Rate
This is an interest rate that is paid based on calculations of principal + interest for every fresh interest rate payment. Annual equivalent rate is therefore calculated based on the new compounded figure derived from the sum of the original principal and any interest that has been paid on that principal. This allows the amount to be compounded several times.

Anti-Martingale System
The anti-Martingale system is a system of Forex trading where the trader halves the size of his position after a losing trade, and doubles his position after a string of winning trades. This is in contrast to the Martingale strategy where the trader doubles his size after a losing trade in an attempt to recover capital in one fell swoop. The anti-Martingale strategy is assumed to be less risky because it only builds on periods of trading success and not during periods of loss when the trader is less emotionally prepared to assume more risk.

AON (Angolan Novo Kwanza)
The Novo Kwanza is the second in the series of Kwanza notes issued by the Angolan Central Bank. The Kwanza is the currency and legal tender of Angola. Four Kwanza series of notes have been issued and used in Angola since 1977. The Novo Kwanza was issued for the first time in 1990 to replace the First Kwanza and was used until 1995. The ownership of the Kwanza was placed under restrictions, as Angolans could only replace the 5% of the First Kwanza for the new Kwanza, and the remaining 95% for government owned traded instruments. This Kwanza existed only in the form of bank notes because the currency was so devalued that it made no sense to mint coins. The currency note range of the Novo Kwanza was from 50 to 5,000 Novo Kwanza.

The increase in the value of an asset. Appreciation of an asset usually occurs when there is positive market news or trader optimism. In the Forex market, a currency will experience an appreciation or rise in value when there is increased demand for that currency for the use of international transactions, or whenever there is an increase in the interest rate (which means traders holding that currency can get an increased rate of return on investments with that asset in the Forex market), or when there is an increase in the demand for goods and services from that country as a result of increase in the income of the citizens in that country.

Arms Index (TRIN)
The Arms Index is named after its inventor, Richard Arms. It is used to measure the relation in volumes of advancing securities and the volume in declining securities. Volumes a integral part in the analysis of possible future price movements of a security. The normal situation would be increased volume in advancing securities, showing that the advance is as a result of more demand. Where the security is rising and the volume is not, this creates a negative divergence and vice verse. The TRIN will therefore indicate areas where these divergences occur, which trader can then use as divergence trading signals.

Aroon Indicator
Developed by Tushar Chande, the Aroon Indicator is basically a trend indicator, helping traders determine existing trend in the market. The Aroon indicator is made up of two lines (Aroon Up and Aroon Down), each made up of 25 standard periods. The maximum range of values for the Aroon Indicator is from 0 to 100. A cross of the Aroon lines at values closer to 100 indicates that the market is overbought and that a bearish reversal is likely. A downtrend is seen when the Aroon Down is >70. A cross of the Aroon lines at values closer to 0 indicates oversold conditions and a market ripe for bullishness. An uptrend is seen when the Aroon Up is >70. When the Aroon lines run parallel to each other, it shows a market in consolidation.

Aroon Oscillator
Unlike the Aroon indicator, the Aroon oscillator is a momentum indicator. Also developed by Tushar Chande, the Aroon oscillator is used to signal uptrends, downtrends and market reversals. When the Aroon oscillator is above 0, it is an indication that the market is in an uptrend. When the Aroon oscillator is below 0, it is an indication that the market is in a downtrend. The strength of the trend is determined by how far away the Aroon oscillator is from the zero line.

ARS (Argentinian Peso)
The Argentinian Peso is the legal tender of the country of Argentina. Its ISO 4217 Code is the ARS. One Argentine Peso is made up of 100 centavos. The Peso has been in use in Argentina since the 19th century. It has gone by several names, still qualified as Pesos from that time until the present day. It has however undergone several name changes and re-denominations to derive the present Peso, which is known as the Peso convertible. The Peso convertible has been in use since 1992, and since January 2002, has been allowed to float in the currency exchange market following the Argentine financial crisis of 2001. The value of the ARS in international transactions is commonly expressed against the US dollar.

This term is used in reference to order placement, indicating that the broker should fill the trader’s order at the trader’s ordered price, or at a price that will be cheaper for the trader in terms of spread costs. Usually pending orders are used for such requests by traders to brokers.

Attribution Analysis
This is a tool used to evaluate the performance of fund managers. It seeks to determine if superior stock selection or superior timing is the determinant factor of the performance of a fund manager that outperforms an index.

AUD (Australian Dollar)
This is the legal tender of Australia. The Australian Dollar is classified as a commodity currency, as its price is correlated to the price of gold. The Australian Dollar was used as a currency of choice for the carry trade because Australia had the highest interest rate out of the 7 major global currencies, peaking at 8.25% just before the global financial crisis of 2008. It is subdivided into 100 cents.

Australian Bureau of Statistics (ABS)
This is the agency in Australia that is saddled with the responsibility of maintaining and managing the country’s statistical data. It was formed in 1905, and its functions include census of population and housing, undertaking surveys to determine the level of expenditure on research and development in Australia since 1978 and conducting several household and business surveys. Some of these household/business surveys include GDP, CPI, consumption and investment and incomes.

Authorized Forex Dealer
This is an entity that has been registered and licensed by the appropriate regulatory authority to conduct the business of selling assets to traders and buying assets from traders as a broker/market maker.

Automated Forex Trading
This refers to the practice of using software (indicators and expert advisors) to generate signals and execute trades automatically in the Forex market without human intervention. Another way of carrying out automated Forex trading is by signing up to auto-trading services and signing up to a trade strategy, which is now replicated on the trading account automatically in an attempt to reproduce the results of the successful strategy developer.

Automatic Execution
A method of executing trades without manual input or without the help of a broker’s dealing desk. In the old days, order placement was done using telephone calls put to the broker to get their dealing desk to execute the trade, meaning that a human element was involved in the trade. The provision of online trading platforms now enables traders to get their orders executed with a click of the mouse button, providing automatic execution of their orders.

Autoregression is a statistical model which believes that past values are predictive of current and future values, and thus seeks to use trends, moving averages and other previous statistical data of an asset to attempt to predict future price of that asset. Autoregression is a system of analysis which tries to predict the current behavior of an asset by looking at the past behaviors/values of that asset. There are several autoregressive models used in the market.

Average Daily Trading Volume (ADTV)
Average amount of an individual security that is traded within a time frame of one day. It is calculated by dividing the number of shares traded in a time frame by the number of days that stock has been traded. Many analysts use 30 days as a benchmark. So if a stock has 6,000,000 shares traded in 30 days, the ADTV is 6,000,000 / 30 = 200,000.

Average Directional Movement Index (ADX)
This is an indicator developed by Welles Wilder in 1978 to measure the strength of a trend in an asset based on a series of prices. It is a momentum indicator in Forex, It combines a positive strength indicator (+D1) and a negative strength indicator (-D1), and the results are smoothed out by an exponential moving average. It is a lagging indicator and is graded from 0 to 100, with crosses of +D1 and –D1 close above 50 indicating that the trend has a strong momentum.

Avgerage Execution Speed
Average speed is calculated on actual data of all trades execution time on particular type of account and is updated on weekly basis. It does not include the internet connection latency from client terminal to our trading server, which can vary depending on trader's internet connection quality and speed.

AWG (Aruban Florin)
This the currency of the former Dutch territory of Aruba. It is subdivided into 100 cents, and is the successor of the Netherlands Antillean Guilder, being used for the first time in 1986. The Aruban Florin is pegged to the US Dollar at the rate of 1.78 Florins to US$1. The currency is issued by the Central Bank of Aruba.

A bar is used on a financial chart to represent the time frame in which transactions and prices of the asset being traded are recorded. If an hourly time chart is being used, one bar shows price data and trading activity for one hour.

The price at which a dealer is prepared to purchase a currency from an investor or trader, or the price at which an investor or trader can sell a currency pair to a dealer. This is also known as the "bid price" and "bid rate". In a price quote, there are two prices that are listed, and it is the price listed on the left hand side of a price quote that constitutes the Bid. The Bid Price is always lower than the ask price. E.g. in a quote that is listed as 1.2346/1.2349, 1.2346 is the Bid Price.

An opening of a long and a closure of a short positions. Traders generally buy when there is the expectation that the price of the asset or that the exchange rate of the currency pair will increase. A Buy order in Forex is an instant market order to purchase the asset at the market (current) price.

A market participant counting on the market price decrease; a market operator, a trader or an investor who speculates on the fall in value of an asset. The bears will therefore sell an asset based on their sentiment of market expectations. When there are more bears in the market place than there are buyers (bulls), then the market price of the asset will depreciate.

A market participant counting on an increase in the value of the market in general or an asset specifically. A bull is also a market operator, a trader or an investor who speculates for a rise in prices of tradable instruments. The bulls will therefore buy an asset based on their sentiment or on their market expectations. When there are more bulls in the market place than there are sellers (bears), then the market price of the asset will appreciate.

An agent, who executes orders to buy and sell currencies and related instruments either for a commission or on a spread. Brokers are agents working on commission and not principals or agents acting on their own account. In the foreign exchange market brokers tend to act as intermediaries between banks bringing buyers and sellers together for a commission paid by the initiator or by both parties. There are four or five major global brokers operating through subsidiaries affiliates and partners in many countries.

The financial result of all completed transactions of a trading account. In the Forex market, there is an unused balance and the used balance (which is the margin put up as the trader’s equity in the leveraged trade). The true balance of the trading account can only be known when all unrealized profits or losses, as well as the initial margin (used balance) are included into the unused balance after all positions have been closed.

Box Size
This is the minimum change that must occur in the price of an asset for the next mark to be added to a point. Unlike a bar chart which plots price changes at specific time intervals, point charting only adds a new mark after the asset price has moved by a specified amount known as the box size.

A breakout is a situation when the momentum of the price action is so strong that it moves beyond key levels of support (downside breakout) and resistance (upside breakout). Breakouts usually occur as a result of high impact news releases or some other factors that cause traders in the market to generally place orders in one direction.

Bank Rate
The rate at which a central bank is prepared to lend money to its domestic banking system. It is also known as the discount rate, or interest rate on the economic news calendar. Central banks function as a lender of last resort. Commercial banks invest funds deposited with them by customers either in the form of loans given out to individuals and businesses, or in other investment vehicles, but are required to keep reserve funds to handle settlement of transactions. Occasionally, commercial banks may run out of such reserve funds. They can therefore obtain stop-gap loans from the central bank, repayable at a certain interest rate. This is what is known as the bank rate.

This is a decline in the price of an asset which is both sharp and rapid in nature. Such steep declines are usually as a result of a systemic negative impact on the markets.

Buy Break
An order to buy an asset once a confirmation of a break of a strong resistance is obtained. Usually if an asset price closes the candle above the resistance point, a break is achieved and the trader can then use the buy break order to trade this situation.

Buy Minus
An order to buy a security at a price that must not be higher than the security's last price if the last price was a down-tick or a zero-minus tick, or must not be higher than the difference between the last price and its change If the previous trade was an uptick or a zero-plus tick.

Back Office
The office location, or department, where the processing of financial transactions takes place. Usually when a trade has been performed by a trader, that order must be processed and executed, and a record of that trade and its outcome kept for settlement purposes. When the trade is over, the amount won or lost in the trade is credited or debited from the trader’s account respectively. For cases of rollover, the swap is either added to or deducted from the trader’s account depending on what currency in the pair the trader is holding. When traders request for withdrawals, these are processed accordingly. All these functions are performed by departments that constitute the broker’s back office. So the back office is basically any department within a broker’s organization that handles record-keeping, processing, clearing and settlement of all transactions from the broker’s clients.

Barra Risk Factor Analysis
This is a statistical model developed by Barra Inc to measure the risk inherent in a security relative to the market risk. Debt ratings, earnings growth, share turnover, are some of the metrics measured by this model, and the results now compared with risks inherent in the sector where the company operates in, risks inherent in the company itself and risks associated with multi-sectorial exposure. A Value at Risk (VaR) number is assigned to the company undergoing risk assessment using the Barra Risk Factor Analysis, and this number is graded from a percentile rank of 0 to 100 with numbers approaching 100 being associated with greater risk/volatility.

Base Currency
In terms of foreign exchange trading, currencies are quoted in pairs. This is because you cannot trade one currency on its own. A currency is always traded in exchange for another. The first currency in the pair is the base currency. The base currency is the currency against which exchange rates are generally quoted in a currency pair. In expressing the exchange rate, the rate is quoted as the value of the other currency in relation to 1 unit of the basic currency. For instance, when a quote of EUR/USD is said to be 1.3109, it means that 1.3109 US Dollars can be used to purchase 1 unit of the base currency. Examples: USD/JPY, the US Dollar is the base currency; EUR/USD, the EURO is the base currency.

Base Interest Rate (Benchmark Interest Rate)
A minimal interest rate set and published by commercial banks for accumulating interest on different credit types.

Basis Point
A basis point is one-hundredth of a percentage point, or 1/100 (0.01%). This term has its origins in the practice of trading the ‘basis’, or the percentage difference between spreads. It is commonly used in describing the rate of change of interest rates. So if a central bank increases interest rate from 4.5% to 5%, this is an increase in 0.5% or 50 basis points.

BBD (Barbados Dollar)
This is the currency of Barbados, and has been in use since 1935. It is subdivided into 100 cents, and replaced the previous bank notes and coins (dollars and pounds sterling) which had been issued by several colonial banks such as the Royal Bank of Canada and Barclay's Bank.

BDT (Bangladesh Taka)
This is the legal tender of Bangladesh, and the Taka is subdivided into 100 poisha. The Taka is issued and produced by the Bangladesh Bank ( the central bank of Bangladesh) with the exception of the 1 and 2 Taka notes which are produced by the Ministry of Finance. The Taka became the currency of Bangladesh in 1972. Several issues of the Taka have been produced, with the 10 Taka note now being issued as a polymer note.

Bear Market
An extended period of general price decline in an individual security, an asset, or a market. A bear market is also defined as a loss of more than 20% of the value of an asset or a market over a 2-month period. A bear market can be a sign of systemic collapse of the financial system, as occurred after the collapse of Lehman Brothers and the subsequent global financial crisis. A bear market is usually triggered by fear, panic or prolonged and extreme investor pessimism.

Bear Position
A bear position is a trading position which is based on the expectation that the prices of an asset will fall by at least 20%. The bear position is executed by borrowing an asset from dealer, selling the asset at a price, and buying back the asset to return to the dealer (on maturity of the trade) at a cheaper, bargain price, thus profiting from the price difference.

Bearish Abandoned Baby
This is a bearish reversal pattern which is formed by a long bullish candle, followed by a Doji which has gapped upwards, and then a bearish candle which has gapped downwards from the Doji. It is a bearish reversal candlestick pattern with strong reliability.

Bearish Belt Hold
This is a candlestick pattern of low reliability which forms in an uptrend. The pattern is made up of a bearish or black candlestick occurs with an opening price (that becomes the high for the day) being higher than the close of the previous day. This bearish candle has a short lower shadow and no upper shadow.

Beginning Market Value (BMV)
The valuation at which an asset is expected to exchange for at the beginning of each period. It assumes that the beginning market value at the start of every period is equal to the ending market value of the previous period, based on an agreement between market participants on what the value of the asset should be, and given that the market remains efficient.

Bell Curve
Also known as a Gaussian distribution curve, is a graph whose line forms the shape of a bell. The characteristic shape is formed when key points of the graph are plotted, which shows that the normal distribution in a market will show fewer market participants at both extremes of performance, and more concentration towards the centre.

Berlin Stock Exchange (BER)
This is a stock exchange founded in 1685 and located in Berlin, Germany. The main offering of the Berlin Stock Exchange is foreign stocks, and up until recently, this stock exchange catered solely to retail investors.

BGN (Bulgarian Lev)
The Bulgarian Lev is the currency of Bulgaria. It has undergone four issues, with the first issue being released in 1881 at a par value with the French Franc. It is subdivided into 100 stotinka and is issued by the Bulgarian National Bank (BNB).

BHD (Bahraini Dinar)
The Dinar is the currency of Bahrain and is subdivided into 100 fils. It was first introduced in 1965 to replace the Gulf Rupee at an exchange value of one-tenth the value of the Rupee.The exchange rate of the Dinar is fixed to the US Dollar and a special foreign currency reserve asset valuation system known as the IMF Special Drawing Rights (SDR).

BIF (Burundi Franc)
The Burundi Franc is the currency of the country of Burundi and is subdivided into 100 centimes. The Burundi Franc replaced the Rwanda and Burundi Franc as the official currency of the country in 1964. The Burundi Franc is unique as the centimes has never been issued as a coin, with the 1 BIF note being issued as a coin.

Big Figure
The first two or three digits of a foreign exchange price or rate. Examples: USD/JPY rate of 108.05/10 the big figure is 108. EUR/USD price of .8325/28 the big figure is .83

Big Mac PPP
This is a method of quoting the exchange rate of two countries by comparing the price of a Big Mac (McDonald’s flagship hamburger) in one country with the price of the Big Mac in another country. It is published by the Economist as an informal way of measuring the Purchasing Power Parity (PPP) between two currencies. It was introduced in 1986 by Pam Woodall.

Blue Collar Trader
A trader who trades assets as a second stream of income and not as the primary means of making a living. Such traders are less experienced than professional traders, trade lower volumes and take lesser risks than the professional traders.

BMD (Bermudian Dollar)
The Bermuda Dollar is the currency of the island country of Bermuda and is subdivided into 100 cents. The Bermuda Dollar was introduced in 1970 and initially maintained a peg with the British Pound, but this peg was abandoned in 1972 as a retaliatory move by the Bermuda government after the UK excluded Bermuda from its sterling area privileges. The Bermuda Dollar is currently pegged to the US Dollar at parity and this has been in existence since 1972.

BND (Brunei Dollar)
The Brunei Dollar or Ringgit Brunei is the official currency of the sultanate of Brunei and is subdivided into 100 sen (cents in English). The currency is issued by the Monetary Authority of Singapore and is maintained at exchange rate parity with the Singaporean Dollar. It was first introduced in 1967 and since then six issues of the currency have been issued.

BOB (Bolivian Boliviano)
This is the currency of Bolivia and is subdivided into 100 cents (centavos). Since 1864, two Boliviano issues have been used in Bolivia. The coins and notes are issued by the Banco Central de Bolivia. Rampant inflation caused the old Boliviano to be redenominated at a rate of 1,000,000 Old Boliviano to 1 new Boliviano in 1987.

Box-Top Order
A market order that is executed at the best possible market price. If all the units of asset that the trader wants to purchase cannot be filled at that price, the trader uses a limit order to acquire the assets still at a best possible price.

Bracketed Buy Order
This is a buy order that also incorporates a limit order placed above the entry price and a stop order placed below the entry price. The essence of this order is for the trade to either lock in profits by triggering the limit order when the price rises above entry, or to control losses by triggering the stop order if the price goes below entry price.

Bracketed Sell Order
This is a sell order that also incorporates a limit order placed below the entry price and a stop order placed above the entry price. The essence of this order is for the trade to either lock in profits by triggering the limit order when the price falls below entry, or to control losses by triggering the stop order if the price goes above entry price.

Breakaway Gap
This is a gap between the closing price in one candle and the opening price in the next candle, usually as a result of an increase in trade volume. Breakaway gaps can occur upwards or downwards.

Breakout Trader
A breakout trader is one who uses a system of pending orders to trade price breakouts in the market. The breakout trader’s strategy is based on a system where pending orders are used above a resistance (Buy Stop) and below a support (Sell Stop) in order to trigger the trade automatically if prices advance beyond the key levels.

Bretton Woods
The town of Bretton-Woods is located in the state of New Hampshire in the United States. It is the site of the United Nations Monetary and Financial Conference, which in 1944 led to the establishment of the post-World War 2 foreign exchange and global economic system that remained intact until the early 1970s. The conference resulted in the formation of the IMF and the International Bank of Reconstruction and Development (World Bank). The system fixed major global currencies to the US Dollar in a fixed exchange rate system with 1% fluctuations, and fixed the price of US Dollar to gold at the rate of $35 an ounce.

Bretton Woods Agreement
The treaty signed by the first members of the UN in 1944 during the United Nations Monetary and Financial Conference in Bretton-Woods, New Hampshire in USA, which set fixed exchange rates for major currencies of the world, and gave central banks the right to intervene in foreign exchange markets to ensure that the fixed exchange rate of the global currencies to the US Dollar, and he US Dollar to the price of gold at the level of 35 USD per ounce was maintained. The agreement was in force until 1971 when it was unilaterally abandoned by the US government under President Richard Nixon.

BRL (Brazilian Real)
This is the official currency of Brazil and is subdivided into 100 centavos.The modern version of this currency was first issued in 1994, with the second issue being released in 1998 and still in use. It was introduced with a fixed exchange peg to the US Dollar at the rate of parity. The currency is issued by the central bank of Brazil, and consists of a 10 real polymer bank note. The new currency notes released in 2010 were specially created to help visually-impaired users identify the notes with less problems.

BSD (Bahamian Dollar)
This is the official currency of the Bahamas and is subdivided into 100 cents. The currency is issued by the Central Bank of The Bahamas and maintains a fixed exchange rate at parity with the US Dollar. The Bahamian Dollar replaced the Pound in 1966 as the official country, marking the country’s transition from colonial rule to self-determination.

BTN (Bhutanese Ngultrum)
This is the official currency of Bhutan, and it is subdivided into 100 chhertum. The currency is issued by the Royal Monetary Authority of Bhutan and came into existence in 1974 to replace the Indian Rupee at exchange rate parity.

Budget Deficit
A situation where the expenditures by the government on its capital and recurrent programs exceed the revenues the government earns for that budgetary year. In order to cover up for the budget deficits, governments usually resort to borrowing from financial institutions like the World Bank, International Monetary Fund (IMF) or African Development Bank (and similar organizations all over the world), or they resort to borrowing in the form of issuing government bonds to investors.

Bull Market
A market which is on a consistent upward trend. A bull market is created by increased market optimism and buoyed investor confidence, which leads to widespread buying far above any selling. The widespread buying produces increased demand for the asset, leading to further appreciation.

Bullish Abandoned Baby
This is a bullish reversal candlestick pattern with high reliability, formed by a long bearish candlestick, followed by a Doji which has gapped downward, and then a long bullish candlestick that has gapped upwards from the Doji.

Bullish Belt Hold
This is a candlestick pattern of low reliability which forms in a downtrend. The pattern is made up of a bullish candlestick which occurs with an opening price (that becomes the low for the day) being lower than the close of the previous day. This bullish candle has a short upper shadow and no lower shadow.

The Deutsch Bundesbank is German for German Federal Bank is the Central Bank of Germany. Established in 1957 as the Central Bank of the Old West Germany, the Bundesbank replaced the Bank Deutsche Lander and eventually became the central bank of the unified Germany in 1990. The Bundesbank was the largest and most powerful of the central banks in Europe based on the size and strength of the German economy and its currency, the Deutschmark. The Bundesbank was responsible for control of inflation and monetary policy in Germany, as well as issuing the bank notes (Deutschmark) and coins (Pfennig). The bank also functions as the banker of the German republic. However, the Bundesbank is NOT a lender of last resort, unlike other banks in its category such as the Federal Reserve and Bank of England. It is currently part of the European System of Central Banks (ESCB).

Buy A Bounce
This is a range trading technique where the trader enters a long position on the currency pair when it reaches a support, formed by the lower end of the price range.

Buy Limit Order
An order to execute a transaction at a specified price (the limit) or lower. A Buy Limit order is a pending order used by the trader when he expects the price of the asset or currency pair to increase in value after prices have fallen from their present position. On the MetaTrader4 platform, the Buy Limit is purely a pending order, but on other platforms, the Buy Limit has a variety known as Entry Limit Buy.

Buy on Margin
The process of buying a currency pair where a client pays cash for part of the overall value of the position. The word margin refers to the portion the investor puts up rather than the portion that is borrowed. The financial markets require heavy capital involvement. For this reason, they are heavily leveraged, which means that a trader is not expected to bring all the capital required for a trade. Rather he can borrow the capital for the trade from the broker, who will now require the trader to put up a portion of his account balance as collateral for the trade. This practice is known as buying on margin.

Buy Stops Above
A ‘buy stop above’ is a pending order that is used in trading an upside breakout. When prices of the asset are advancing and the momentum of the advance is very strong as to close above a resistance level, a breakout occurs. In order to benefit maximally from such an upside breakout without missing the entry, a buy stop is placed above the resistance so that the upside breakout can trigger a trade entry and the trade position can follow the price movement to its logical conclusion.

Buy Weakness
A trading strategy in which a trader takes profits by closing a short position or buying into a long position, at a time when the price of the asset being traded is dropping but may reverse and move against the trader.

BWP (Botswana Pula)
This is the official currency of Botswana and is subdivided into 100 thebe. The currency is issued by the Bank of Botswana and maintains a fixed exchange rate at parity with the South African Rand. The Botswana Pula came into existence in 1976 and three series of the currency have been issued since then.

BZD (Belize Dollar)
This is the official currency of the country of Belize and is subdivided into 100 cents. The currency is issued by the Central Bank of Belize and maintains a fixed exchange rate with the US Dollar at a ratio of 2:1. The Bahamian Dollar jettisoned its peg with the Pound in 1978 in favour of the US Dollar peg.

The British pound/US Dollar exchange rate GBP/USD. The name ‘cable’ was derived from the transatlantic cable that ran from the US to Europe in the 19th century, and this was the only means of transmitting information between both continents, including the exchange rate information. Since this was the method of creating a synchrony between the exchange rates in both the US and London markets, this pair is still colloquially known as the cable.

Cent Lot
A cent lot is equivalent to 1/1000 micro lots, where the value of one tick movement of price is equivalent to 1 cent.

A person who attempts to predict prices by analyzing past price movements as recorded on a chart. Using chart information is one of the methods of technical analysis. Information that can be derived from the charts include candlestick patterns, chart patterns, and information from technical indicators. Chart information derived from the worm of chartists is the bedrock of technical analysis.

Money issued by a government. Currency has evolved over centuries from grains to other times that were considered stores of value, to gold and silver, and then graduated to the use of minted coins and paper money. It is a form of money used as a unit of exchange within a country. Money is known as currency because once the issuing agency (the central bank) has decided on the amount of money that is in circulation at any given time, the existing amount of money in a system flows from one person to another based on the exchange of goods or services for it, and this is likened to a river current that flows from one point to the other.

A situation where price crosses a key threshold such as a resistance level or a support level. The resistance and support levels are said to be crossover thresholds because they indicate points at which the price of the asset will continue to rise or continue to fall.

CAD (Canadian Dollar)
The Canadian Dollar is the official currency of Canada, and it is listed as one of the major currencies in the Forex market. It is closely correlated to the price of oil, and it is issued by the Bank of Canada. It is subdivided into 100 cents.

Cancel Former Order (CFO)
This is an instruction from a trader to a broker to cancel an order that was made previously but which has not been filled. This is usually done if a trader changes his mind about a transaction, especially if it concerns the outlook on the same security.

Candlestick Chart
A chart that displays the daily trading price range (open, high, low and close). A form of Japanese charting that has become popular in the West. A narrow line (shadow) shows the day's price range. A wider body marks the area between the open and the close. If the close is above the open, the body is white (not filled); if the close is below the open, the body is black (filled).

Carry Grid
A trading strategy in which the trader attempts to profits from a basket of carry trade positions, placing long positions on currencies with the higher- yielding interest rate while simultaneously selling those with lower-yielding interest rates.

Cash Delivery
This is a settlement of a futures trade that is made with the cash value of the asset and not by delivery of the physical asset itself. Most online trades done on the options and futures market are settled with cash deliveries.

Central Bank
A bank, administered by a national government, which regulates the behavior of financial institutions within its borders and carries out monetary policy. A central bank is responsible for issuing a nation’s currency, controlling its supply and in some cases, acting as a lender of last resort to provide emergency financing to the nation’s banking system.

Centralized Market
A centralized exchange where all orders in the market are routed to, with no other competing exchanges receiving any orders/quotes. As such, all price quotes obtained from that exchange are the same that are given to all participants in that market.

CFD (Contract For Differences)
This is an agreement between a buyer and a seller to exchange the difference between the initial value of an asset at the time of the agreement and the final value of an asset at the end of the trade maturity, without actual ownership of the asset and settlement of the cash value of the asset (and not physical delivery), in which both parties must put up some margin for the trade.

Chart Formation
A chart formation is a series of patterns that are formed by peculiar arrangement of candlesticks and these can be used as determinants of future price action of an asset.

CHF (Swiss Franc)
This is the currency of Switzerland and Lechtenstein. It is issued by the Swiss National Bank and it is subdivided into 100 centimes. It is listed as one of the major currencies in the Forex market, and currently has a minimum peg set by the Swiss government against the Euro.

Closing a Position
The process of selling or buying a foreign exchange position resulting in the liquidation (squaring up) of the position. A position can be liquidated manually by the trader using the appropriate button on the Forex platform, or can be liquidated automatically by setting a profit target, using a trailing stop or using an expert advisor. In all cases, the instruction is sent to the broker to close the position, which broker does by looking for a trader willing to be a counterparty to the transaction by acquiring the trade position at that price or by the market maker acquiring the position from the trader as a counterparty.

Closing Market Rate
The rate at which a position can be closed based on the market price at end of the day. Another way to describe the closing market rate is the market price of a currency pair when the market closes at the end of the trading day, or the most updated valuation of an asset at the time the market closes for the day.

Broker’s bonus for facilitating transactions. A commission is different from the spread, which is usually the difference between the price that a broker is ready to pay for an asset and the price that the broker is ready to buy back the asset from a trader. A commission is a fee charged for enabling a transaction to occur. In the Forex market, commissions are only charged in an ECN environment to cover the cost of maintaining the FIX protocol on which the electronic communication network works.

These are trad-able financial instruments whose contracts are based on materials of value that are either extracted from the ground (hard commodities such as gold, natural gas, oil), or are based on agricultural products (corn, coffee, cocoa, wheat).

Commodity Block Currency
This is a currency of a country whose economy is directly affected and correlated with the price movements of a single economy. This usually occurs in countries whose main export earner comes from a single commodity, or which depends on imports of a single commodity for its economical well-being. An example is Canada, whose oil sands give it the second largest oil reserves after Saudi Arabia.

Commodity Channel Index (CCI)
This is a technical indicator that was invented by David Lambert as an oscillator to detect periods at which prices may undergo reversal. It does this by identifying overbought and oversold conditions in the market. It can also show periods of price divergence in the market, and can also be used as a coincident indicator to show the start of an uptrend (CCI close to +100) or a downtrend (CCI close to -100).

Commodity Pairs
Commodity pairs refers to the pairing of currencies that are correlated with the prices of certain commodities. The currencies correlated with commodities are Australian Dollar ( gold), Canadian Dollar (oil), US Dollar (oil), Japanese Yen (oil). The commodity pairs are therefore the USDCAD, CADJPY, AUDJPY and AUDUSD.

Commodity Selection Index (CSI)
Developed by Willes Wilder, the CSI is a momentum indicator that aids the trader to select assets that can be traded on the short term. It works by assigning a value number to a commodity so that an asset with a high CSI value indicates that the asset has high volatility which can be exploited by short term traders to enter and exit positions on the asset fairly quickly.

Commodity-Product Spread
A spread which involves related commodities which are different. It can also be defined as the difference in price between the crude form of a commodity and its refined form. An example of a commodity-product spread is the crack spread, which is the spread between the price of crude oil and its refined derivatives e.g. heating oil. Traders can profit from this spread by taking a position on the crude product and then a contrarily position on the refined product.

Common Gap
Common gaps simply refer to a gap or space on the charts between the closing price of one candle and the opening price of the next candle. The word ‘common’ is given to them because they occur all the time in the market and their occurrence is not rare.

Conditional Order
An order which may be submitted or cancelled only if specific criteria are met. The criteria or conditions for such an order will be defined by the trader or investor, and are used so that it is only when the conditions for the market are favorable for making money or preserving capital for the trader, that they will be executed or cancelled.

Confirmation On A Chart
This is a term in technical analysis used to describe a situation where a trading signal for an asset is confirmed either by technical indicators that show a setup favoring the trade on the time frame charts, or the appearance of candlesticks/chart patterns that concur with the trading signal.

A period in the markets when there is excessive demand of exit orders that outstrips the corresponding orders required to buy off these positions. This leads to price tightening or ‘congestion’ on the charts.

This refers to a period of time in the market when prices are restricted to a tight trading range. Consolidation occurs when the majority of traders sit on the sidelines, leading to very low trading volumes.

Constant Currencies
A calculation of international transactions that is designed to eliminate exchange rate fluctuations. It is mostly used by companies that do a lot of international business.

Consumer Price Index (CPI)
The CPI is calculated once a month, and is used to measure the change of prices of goods and services that are purchased by domestic households. It can also be described as an index that measures the rate of change of goods and services as purchased by a consumer. One of the most important inflation indicators in a nation, and is one of the pieces of data used by the central bank to determine interest rates.

Continuation Pattern
A continuation pattern is a period of consolidation after a strong trend, and which is usually a sign that the previous trend will continue once the period of consolidation is over. Examples of continuation patterns are triangles, flags and pennants.

Continuous Net Settlement (CNS)
This is an automated clearing and settlement system that uses a clearing house unit in a brokerage firm to settle all financial transactions that have occurred between traders. The in-house handling of clearing and settlement of orders makes for a more efficient and continuous system of ensuring that those who have bought assets have their assets delivered and those who have sold assets get their money, thus eliminating the need for taking settlement of orders outside the brokerage which could lead to settlement delays.

Contrarian means taking a position, a standpoint or bias that is against the general sentiment in the financial markets or for an asset. Traders like who bet against the housing market in 2005/2006 were contrarian traders, betting against the market sentiment at the time about the continued surge in prices of real estate.

Convertible Currency
A currency that can be bought or sold very readily on the foreign exchange market (i.e. internationally) without any government restrictions.

Convertible Hedge
This is an arbitrage strategy that involves holding a short position on a company’s common stock while maintaining a long position on the convertible bond instrument of that company. This is a hedging strategy that ensures that the trader makes money on the asset whether the price goes up or down.

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. In the US this often occurs domestically due to inter state banking restrictions. A correspondent bank is usually a large financial institution that sets up special accounts called correspondent accounts, in order to receive money from and make payments on behalf of smaller financial institutions.

A participant in a financial transaction. A counterparty is a market participant that takes the opposing side of a transaction to that of a trader in the market. In the Forex market, market makers usually function as a counterparty in a Forex transaction.

Countertrend Trading
Also known as retracement trading, this is the practice of trading against the trend. The strategy is to go long on an upward retracement from a downtrend, and to go short on a downward retracement on an uptrend. Countertrend trading is also known as contrarian trading, and is of a short-term nature becuase the retracement that is traded on a countertrend trade does not last long.

Covered Interest Rate Parity
This is a situation where the forward and spot rates of the currencies of two countries are at par with the interest rates of the two countries. This is used to determine what a foreign investment should yield in terms of the domestic currency.

Cross Currency
A currency which can be freely exchanged with another currency without having to be first exchanged with the US Dollar.

Cross Rate
Currency exchange rate quotes which do not involve the US Dollar. In other words, the cross rate is the exchange rate between two cross currencies. Another definition has it as the quoted exchange rate of two currencies in a country in which neither currency is the official currency.

Cross Rates
Two currency exchange rate set in relations of each of them towards the third currency. For instance, for EUR/CHF pair, EUR/USD and USD/ CHF quotes are used. The concept of using cross rates to trade Forex arose because some Forex platforms do not offer certain currency pairs. In order to benefit from a gain in the exchange rate of one currency over another in any currency pair not listed in a Forex platform, a trader may decide to employ the concept of currency crosses to facilitate these trades. So using our example of the EUR/CHF, assuming that the trader does not have this pair listed on his platform and he believes the Euro would gain against the Swiss Franc, he can go long on the EUR/USD and go short on the USD/CHF, with the corresponding USD short position in the first trade and the long position on the second trade neutralizing themselves.

Currency Arbitrage
This is a Forex strategy in which a trader can take advantage of the difference in exchange rates of a currency pair across several markets by taking a long position on a currency in one market and instantly going short on that currency in another market. The opportunity for such trades are very brief and transient, so they require specialised software which can execute the trades in record speeds before the differential closes up in such a liquid market as the Forex market.

Currency Basket
A selection of foreign currencies, which is used as a guiding line by regulative institutions when shaping a national currency rate against other currencies. In other words, a currency basket is a collection of foreign currencies which are weighted according to their relative importance to that country’s trade, and then used as a benchmark in setting an exchange rate for a local currency. In other words, if three currencies A, B and C are used as the composite currencies in a basket, and the imports and exports of a currency are made up of 40% from currency B, and 30% from currency A and C, the constitution of the currency basket would be made up of 40% weight from B, and 30% weight each from A and C.

Currency Intervention
Central bank intervention in the operations on the currency market in order to raise or lower the exchange rate of the national currency by selling/ buying foreign currency. A reduced rate of the national currency can be achieved through the purchase of foreign currency; increased rate is achieved through foreign currency sales. Some countries have an export oriented economy and export sales are hurt if there is undue strengthening of the local currency. An example of an export oriented economy is Japan, and we have seen the Bank of Japan intervene in the markets twice in the last three years. The last BoJ intervention saw the bank using more than 600 billion Japanese Yen to buy foreign currencies. A currency intervention can also be achieved by setting maximum or minimum exchange rate pegs. An example of this was seen on September 6, 2011 when the Swiss National Bank (SNB) set the minimum exchange rate peg between the Euro and the Swiss Franc to 1.2000, and pledged to defend the peg by selling ‘unlimited amounts’ of the local currency in order to drop its value. This was done to protect the export oriented Swis economy that was being hurt by a stronger Swiss Franc.

Currency Pair
A conversion operation object based on the change of one currency rate against another. The example of the currency pair is USD/JPY. Currency pairings are done because it is the rate of exchange of one currency to another currency that is measured in the Forex market. A currency cannot be traded against itself, and that is why currencies are paired so that they reflect the rate of exchange of one currency against another. In a currency pair, the first listed currency is the base currency while the currency listed on the right is known as the counter currency.

Currency Risk
The risk that shifts in foreign exchange rates may undermine the dollar or any other foreign currency value of overseas investments. In other words, this is the business risk that can lead to an increase in cost of goods of services borne by individuals or corporations with cross-border interests as a result of increase in the exchange rate of the local currency against a foreign currency. If for instance a company A wants to buy goods in US dollars from a US company on Friday and a few hours to the transaction, the value of the local currency decreases so that it now takes more if it to buy the agreed sum of US dollars that the company would have paid for the goods, this situation constitutes a currency risk.

The ability of a security to withstand demand for it without significant price changes. In the Forex market, depth is seen in highly liquid securities, making it possible for the spreads to be low and fairly constant.

A company or individual, playing in the market at their own expense and on their behalf, that is, investing their own money, selling/buying a currency or other assets on their own. In the Forex market, the dealers are also known as market makers. Many brokers in the Forex market are dealers/market makers, taking buy and sell positions from the liquidity providers in order to ramp up liquidity and then offering these positions at set prices to retail traders. Dealers typically operate a dealing desk and do not provide an ECN environment for their clients. Dealers serve to close the liquidity gap in the Forex market when there are many smaller players who can only afford a few hundreds to thousands in the Forex market.

The national currency in a number of countries: the United States, Canada, Australia, New Zealand etc. One US Dollar = 100 cents. The name originated from the word "Thaler" which was the name for a black metal coin in Europe. The US Dollar is also used in countries like Zimbabwe that operate a dual legal tender system where goods and services are priced and can be paid for in the local currency as well as the US dollar.

Day Order
A buy or sell order that will expire automatically at the end of the trading day on which it is entered. On some Forex trading platforms, the day order is also known as a Good for Day (GFD) order. A trader uses a day order when he wants a particular trade he is interested in taking to be executed within the same trading day if the conditions set for the execution of that trade are met. In setting a day order, the trader does not expect the trade order to be viable after that trading day, and so instead of having to manually close the order himself, he can use a day order to get that trade automatically cancelled once the day is over.

Day Trade
A trade opened and closed on the same trading day. A day trade may be done in a matter of minutes (e.g. following a news trade spike), or can be done within a matter of hours. Trades opened and closed in a matter of minutes are also referred to as scalps. Since a day trade is usually done within the same trading day, it would require that the price of the currency pair changes appreciably, and the trade volumes used in executing such trades would be higher than would ordinarily be expected for traders who open trades for the long haul, in order to benefit maximally from these movements. Day trades typical feature movements of between 10 pips to 100 pips.

Deal Slip
A document that contains all the essential details of each trade that a trader has made on a given day. It includes the details about the broker, the counterparty to the trade, transaction date and time. The data are usually serially numbered and it is from the deal slip that data of each and every trade is transferred to the deal blotter, which now carries the information about all the trades for the day in one place.

This is a period marked by sustained fall in prices for a trading asset or for a market. In a downtrend, each successive peak and trough that depict the price movement of the asset is lower than the previous one, and a downtrend occurs when the market for that asset is dominated by sellers.

Daily Cut-Off
This is the time that is used by brokers to mark the end of one trading day and the beginning of another trading day. It is usually used in the Forex market purely for administrative purposes and for rollover calculation since Forex is technically speaking, a 24 hour market. The daily cut off time is 2100hrs GMT (Daylight Savings Time On) or 2200hrs GMT (Daylight Savings Time Off).

Daily Trading Limit
This is the maximum price movement on an asset or security in a positive or negative direction. Some stock exchanges have daily trading limits imposed by the regulatory authorities in order to control the level of volatility which can sometimes get out of control if there is a major systemic shock that impacts the markets.

Dark Cloud Cover
This is a double-candlestick bearish pattern where the first candle is a bullish candlestick, followed by a bearish candlestick whose high is higher than that of the first candlestick, and which closes below the midpoint of the body of the first candlestick. This candlestick pattern shows that sellers immediately came into the market to shut down the activity of the buyers. It is a highly reliable pattern.

Day Trader
A trader who buys and sells on the basis of small short-term price movements. Typically, the Forex market is a highly volatile market and this allows the currency pairs to experience reasonable price movements within the same trading day. These periods of price volatility allows traders to open and close trades within a few minutes or hours of each other, and traders who conduct this kind of trading activity are known as day traders. Day traders are also found in the stock markets, but on a much lesser scale.

Day Trading
Refers to a style or type of trading where trade positions are opened and closed during the same day. Day trading requires that the trader analyze the market using short term charts (e.g. the 1 minute, 5 minute, 15 minute and 1 hour charts), identify currency pairs that have the potential for moving between 10 and 100 pips, and then executing the trade using this pip range as the target and stop prices. A popular day trading technique is trading the price spike that follows high market impact news releases, in which the trader aims to capture market movement resulting from the price spike following the news release.

Dead Cat Bounce
This is a period of transient upside recovery after a period of a sustained downtrend, followed by a continuation of the downtrend. The dead cat bounce is completed when the resumption of the downtrend makes new lows. The dead cat bounce is more of a profit-taking recovery and not a full entry of buyers into the market, hence the short-lived nature of the bounce.

Deal Blotter
This is a detailed, documented record of all the transactions that a trader has performed on a given trading day. The deal blotter provides information about the open and closed positions for the day as well as the profits and losses for the day. It contains the information for all trades made on that day.

Dealing Desk
This is the department in a market maker brokerage firm that is responsible for the execution of trade orders in the Forex market. Dealing desks act as intermediaries between the trader and the liquidity providers, matching buyers with sellers and fulfilling sell orders with buy orders. Dealing desks can also be found in banks and finance houses.

Death Cross
The death cross is a technical pattern in which a short term moving average (such as the 50-day moving average) breaks below the support hitherto formed by the long term moving average (e.g. 200-day moving average), signifying a change in trend to a downtrend. The long term moving average now serves as a resistance.

A fall in the value of a currency due to market forces. This is not the same as devaluation, which is deliberate move by a central bank to lower the value of the local currency. Depreciation occurs strictly by a lower demand and larger supply of a currency. Depreciation can be caused by inflation, increased in money supply or if a country is under economic sanctions, preventing them from being able to import goods or sell their products.

Depth of Market
This is a measure of the size and number of the open positions on the buy and sell side for an asset at various prices. This information is a measure of market liquidity and is also the basis of the data shown in the order book, accessible to traders using Level II trading platforms. Another definition describes depth of market as the number of units of the asset that can be purchased without significantly affecting the price of the asset. In other words, a very large order has to be made before the price of the asset shifts significantly.

Deutsche Akzien Index (DAX 100)
Major German stock index. It is a blue cheap index that tracks the performance of the 30 top German companies, using pricing obtained from the Xetra electronic pricing system. This is why it is sometimes known as the Xetra DAX. The DAX’s base date is set to January 1987, and since then the movement of the index has been set to be measured once every second.

The depreciation of the national currency, or in other words, the rate decline in relation to foreign currencies and gold. For example, in Britain in September 1992 raising interest rates in the situation of stagnation in the economy were the reason for the devaluation of the pound. On September 16 the pound lost 2.7% against the Mark and by the evening was traded in New York at 2.703.

Direct Quotation
Quoting in fixed units of foreign currency against variable amounts of the domestic currency. In other words, the quote is done by stating the price of the local currency against the foreign currency. For instance, if using a direct quotation system based in the Us for the British Pound, a direct quote would be US$1 = GBP 0.6273, even though in the conventional price quoting system, the GBP is the base currency in a GBP/USD pair.

Direct Quote
This is a quote that expresses the exchange rate in terms of how much of the domestic currency or the currency under reference can purchase one unit of another currency. So instead of the conventional quote for Euro vs US Dollar being expressed in terms of the base currency (EURUSD = 0.9860), the direct quote is expressed in terms of the counter currency to the base currency.

Directed Order
This is a trade order from a client to a broker with specific instruction to route the order to a particular exchange. This order is used when the trader wants to buy a stock from a particular exchange, or if for the purpose of faster reaction to the news, the trader decides to execute the order from a server located closer to the exchange serving the news.

Directional Trading
This is a trading strategy in which the trader opens a position which is dedicated either to the upside (long) or to the downside (short). Directional traders usually form a bias for an asset at the beginning of the trading period and only trade in the direction of that asset for the time period in view.

Dirty Float
A dirty float is a currency exchange regime setup by a government in which the national currency is allowed to float, but where the central bank can intervene at any point to send the currency in the opposite direction whenever the current direction is perceived to be injurious to the economy of that country. Another name for dirty float is a ‘managed float’.

Discretionary Account
An account in which the customer permits a trading institution to act on the customer's behalf in buying and selling currency pairs. The institution has discretion as to the choice of currency pairs, prices, and timing-subject to any limitations specified in the agreement.

Disparity Index
This is a technical analytical indicator that expresses the difference between the most recent closing price of an asset and its current price, and expresses the value obtained as a percentage. The disparity index is used to measure momentum of the price of the asset, and detect points at which price corrections may occur, with a positive value indicating a ‘buy’ point and a negative value indicating a ‘sell’ point.

A situation where the price of the asset and the technical indicators are moving in opposite directions. It is also a situation where two indicators are moving in opposite directions. The principle behind the use of divergence in trading is that eventually, the price of the asset will correct in the direction of the indicator, giving the trader an indication of where to trade when the divergence appears.

The acquisition of a wide range of securities in order to reduce risks: the drop of rate of certain securities is covered by the growth of price of others. The history of the Kimberly Clark company is one of successful diversification. The company worked in a pulp and paper industry sector. At one point, company managers realized that it became difficult for the company to develop in this sector on the world scale. The major incentive was to find a new market, a new industry, and a new strategy. And Kimberly Clark developed Procter & Gamble company in the sector of paper consumer goods. They began to produce "Haggies" diapers, cosmetics and by now they have successfully realized their goal.

Double Exponential Moving Average (DEMA)
This is a trend indicator developed by Patrick Mulloy that is used as a substitute to other moving average indicators because it is more sensitive and responds more quickly.

Dow Jones Averages (DJA)
The average indicator of transportation, utilities and industrial companies’ shares. It was created by Charles Dow, the founder of the Dow Jones& Company. It is calculated as the average of quotes of the day at the exchange closing time. The Dow Jones is a measure of the performance of the 30 most capitalized firms trading in the New York Stock Exchange. As an index, it is used as an indicator of stock market activity in the US and to measure the temperature of investors with regards to their sentiments regarding the performance of the US economy.

Down Volume
A stock volume where there are more bearish than bullish trade volumes, causing the price of the asset to close the day lower than it opened. A down volume is therefore a situation where bearish price movements are caused by low buying volumes and larger selling volumes.

Downside Tasuki Gap
This is a bearish continuation candlestick pattern which is used to signal the continuation of a per-existing downtrend. It is a triple candlestick pattern in which the first two are bearish candlesticks with a gap between them, followed by a third candlestick whose open is at the upper half of the second candlestick and whose body partially closes the gap between the Day 1 and Day 2 candles.

The national currency of EU countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Slovenia, the Netherlands, Portugal and Spain. It was first introduced on January 1st 1999, and effectively replaced the old national currencies of these countries in 2002. It also replaced the ECU in 1998 in a parity exchange regime. The Euro is one of the most actively traded currencies in the Forex market, and its pairing with the US Dollar is the most actively traded in the market.

The balance of funds on the trade account. It is calculated using the following formula: balance + floating profit – floating loss.In other words, the equity in an account is calculated by adding the unused balance in the account to the difference between any floating profits made and floating losses in active trades.

The Process of completing an order or deal.

EA (Expert Advisor)
An expert advisor or Forex robot is a software whose algorithm is based on a trading strategy, and which is programmed to open and close trades in the market automatically based on the trading strategy it has been programmed to work on.

ECN Broker
An ECN broker is a broker that provides straight through processing for pricing and order executions to its clients without the intervention of a dealing desk. ECN brokers obtain pricing straight from the liquidity providers and offer the pricing to traders without interference or mark-up. ECN brokers therefore offer the most transparent pricing model in the market.

Economic Exposure
The risk that a company’’s finances is exposed to as a result of fluctuations in interest rates and exchange rates, especially when a component of the company’s operations has to deal with foreign exchange transactions or cross-border transactions. Usually, such a company that has economic exposure is one that has to regularly exchange the local currency for a foreign one, or borrow money from external financing institutions. In each case, there is a risk of economic exposure because of the floating nature of interest rates and exchange rates, so the entity stands to lose money by simple exchanges of money if the local currency weakens against the foreign one.

European Currency Unit (ECU)
A currency unit that has been in use by European Monetary System from 1979 till 1998. The ECU was the precursor of the Euro. The ECU was actually a basket of currencies from the European Union member states, and was replaced by the Euro at a value equivalent to parity. The constituent currencies in the basket were the Belgian Franc, Deutschmark, Danish Krone, Greek Drachma, Irish Pound, Spanish Peso, French Franc, British Pound, Portuguese Escudo, Dutch Guilder, Italian Lira and Luxembourgian Franc.

European Monetary System (EMS)
EU countries relation in currency sphere, which has a goal to provide a stable national currencies rates ratio. Another goal is the facilitation of stabilization of foreign economic relations in general.

Executing Broker
This is the broker that is responsible for the assessment of validity of a trader’s order and the final processing and execution of that order. Sometimes trades have to be routed through major brokerages in order to get matching orders that will fulfill execution for clients. At this stage, the trades must be vetted to ensure compliance with the rules before matching counter-orders are used to provide execution.

Exhaustion Gap
This is the difference in price between the close of a candlestick and the open of another candlestick, where the open of the second candlestick gaps downwards after prices have been rising for some time. An exhaustion gap usually results from buyers’ fatigue and a drop off in the volume of demand for the asset, leading to a sharp retreat of prices that manifests as a gap following the weekend.

Exotic Currency
An exotic currency is one that is thinly traded and as such, has little liquidity and very wide spreads. Examples are the Swedish Krona (SEK), Norwegian Krone (NOK), Turkish Lira. On the forex platforms, the pairings of these currencies usually have very wide spreads. E.g. the EURSEK has spreads of up to 50 pips on some platforms. As a consequence, they also have wide intraday ranges. Examples of exotic currency pairings include EURSEK, EURNOK, USDZAR etc.

The process of completing a customer's order to buy or sell a currency pair. In an ECN environment, the trader’s fill is usually at the price that he has ordered at from a liquidity provider. In a dealing desk environment, the trader’s fill may not necessarily be at the price at which he ordered, especially in a situation of market volatility.

The Flat is a term that has three meanings. In Forex, it indicates a state of being neither in a long position or short position, or in other words, describing a trading book with no market exposure. It can also mean a bond that has no interest accruing to it, or a state where the price is neither rising nor falling (flat market).

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. The FOMC handles the monetary policy function of the Fed and is made up of the Governor, the Chairmen of the 12 Reserve banks and the seven members of the Board of Governors. Only 5 of the 12 Reserve Bank Presidents have voting rights when deciding on issues like setting the interest rates in the US.

A fakeout is a situation where a trader takes a position in the market on the basis of analysis done with technical indicators, but the outcome of the trade is different because the asset so analyzed takes a different course from the technical analysis done on it. Fakeouts occur commonly when a trader uses a single indicator for conducting technical analysis.

A transaction that settles at a future date. It is described as a non-standard transaction between a buyer and seller to settle a financial transaction at a future date, at a price that is agreed on at the present time. Forward contracts are especially used in the physical commodities markets to guarantee a price for commodities exchanged as a way of hedging against risks to both parties. For the commodity owner (seller), a forward contract helps to hedge against fall in prices as a result of a glut in the market, and for a commodity buyer, a forward contract helps to hedge against rise in price as a result of famine, war or other situations that will produce a shortfall in supply.

Fast market
Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported. It is also possible for slippages to occur in such markets as it is difficult to effectively find buyers and sellers at key stop and limit levels due to prices moving too rapidly.

Federal Deposit Insurance Corporation (FDIC)
The regulatory agency responsible for administering bank depository insurance in the United States. The job of the FDIC is to provide insurance for customers’ deposits in commercial banks so that in the event of liquidation or bankruptcy of an affected bank, customers’ deposits will be safe. This function is carried out along with the central banks or any such agencies that are classified as lenders of last resort.

Federal Reserve System (FED)
Also known as the Federal Reserve, the Fed is an independent financial institution, which serves as the US central bank. It was founded on December 23, 1913. The Fed structure is made up of a Governor with a Board of Governors (Fed Reserve Board), 12 Federal Reserve Banks and a Federal Open Market Committee (FOMC) which handles the monetary policy function. In addition to monetary policy, the Fed controls money supply in the US and functions as a lender of last resort to the US banking system.

Fill Price
The price at which a buy or sell order was executed. A fill price may not necessarily be the trader’s order price, and where the fill price differs from the order price so that the trader incurs more spread cost, this is known as slippage. In an ECN environment, the trader’s order prices are equivalent to the fill prices.

Financial Risk
The risk that a firm will be unable to meet its financial obligations. This has many applications in business. Financial risk can describe a situation where a company is unable to pay dividends to shareholders as a result of debt or inadequate cash flow. It can also mean a situation where a bond issuer defaults on its bond obligations, or the inability of an illiquid Forex broker to settle withdrawal claims of its clients.

Five Digit Pricing
A system where currency pairs are priced with 5 decimal places instead of the conventional four. E.g. quote for EURUSD with five digit pricing would be expressed as 1.31092. This is a more exact pricing model for the forex market and is commonly used by ECN brokers.

Fixed Spread
This is a situation where the difference between the bid and ask prices is always the same, irrespective of market demand or volatility. Fixed spreads are a feature of dealing desk trading in the forex market.

Floating Profit and Loss
Unrecorded gains/losses on the open positions of a certain tool at current rates values. Another name for floating profit or loss is unrealized profit or loss. When a position is open, whatever profit or loss is shown on the active trade is known as the floating profit or loss. In so far as the positions are open, whatever profit or loss shown on the platform represents the floating profit/loss.

Foreign Exchange
The purchase or sale of a currency against sale or purchase of another. This is also used to describe the market in which currencies re bought and sold against each other with the aim of profiting from the change in the exchange rates between one currency and another. In everyday street parlance, it's used to connote foreign currency.

Foreign Exchange Risk
The risk that the exchange rate on a foreign currency will move against the position held by an investor such that the value of the investment is reduced. It can also be used to describe a situation which arises when a change in exchange rates causes an entity to incur more cost on a transaction.

Forex Broker (Brokerage Firms)
The brokerage firm, such as Forex4you, provides the link in the seller-customer chain. It is the ‘sauce’ which holds together a ‘hamburger’ if you like. A broker takes an order from a customer and gives it to a salesperson. A broker is always between those two people, like a sauce. Because of brokers, buyers and sellers need never meet face-to-face. In simple words, brokers are mediators or agents. Their job is not just to meet seller and buyer but to take care of all the documents and the time and space limitations of a deal. Usually brokerage firms receive a fee for their services. This usually consists of their own exchange rate that they provide to their customers, which can be higher or lower than the wholesale rate at which they are able to get in the market.

Forward Points
The number of basis points that are added to or subtracted from the spot rate to calculate the forward rates for a forward foreign exchange transaction. In other words, this is the spot rate difference between the spot price and the forward price for a currency transaction. These points are based on the differential between the interest rates of the two currency pairs. For example, if the 3-year forward rate of the GBP/USD is 1.6109 and the spot price of the GBP/USD is 1.5950, the forward points is 1.6109 – 1.5950 which is 0.0059 or 59 basis points.

Forward Rates or Forward Price
The net price resulting from calculating the forward points and subtracting them from the existing spot rate. This is the rate at which a currency can be purchased or sold for delivery in the future. When a buyer and seller enter into a forward contract, they agree on a price that will be paid in future on delivery of the product/asset. The price at which both parties agree to conduct the settlement, even though decided at a present time for a future date, is called a forward price.

Four Digit Pricing
A system of setting prices of currency pairs with 4 decimal places. E.g. quote for EURUSD with four digit pricing would be expressed as 1.3109. This pricing system is mostly used by market makers.

A price range where quotes haven’t occurred. A gap usually occurs as a result of after-hours trading, which pushes the price of an asset to some distance away from the original market close, thereby creating an area where no price quotes occur. Gaps occur when there is plenty of volatility, and when some market moving news such as an earnings report has been released to the market after trading hours.

Good Till Cancelled Order (GTC)
A buy or sell order which remains open until it is filled or cancelled. A good till cancelled order is used by a trader when he/she feels that the conditions under which the asset is trading is one where an order which is filled will bring favorable returns for the trader, irrespective of how long it takes.

Gross domestic product (GDP)
The combined value of all finished goods and services produced in a country by its residents as well as non-residents. The GDP per capita is an internationally recognized tool of measuring the living standards of its inhabitants.

Gross National Product (GNP)
The combined value of all goods and services produced by the factors of production provided by the residents of a country inside or outside of it during a period of 1 year. GNP emphasizes production based on ownership, and does not include any money made by non-residents of a country throughout the duration of their stay in that country. The GNP is another indicator used in measuring the living standards of inhabitants of a country, since the definition also includes the income earned by the citizens and residents of that country.

A transaction that reduces the risk on an existing investment position. A hedge is a transaction which is used to cover for any losses that may be incurred on another investment. An example of a hedge is using a Short option on the currency futures market to cover for a long position on the spot Forex market. The way the hedge is constructed is such that if the investment that is being hedged is successful, the losses from the hedging position will be far less than the profits from the hedged trade, and if the hedged trade ends in a loss, the hedge trade’s profits will outstrip the losses from the hedged trade.

An insurance operation against adverse market changes through a counter-purchases or sales of assets. This is the active use of an opposing position in another market to cover for any losses that may be incurred from an investment in a certain market.

Hard Currency
A currency that is used and has wide acceptance internationally as a result of the stability of the country of its origin and the respect and standing that the country has in matters of international trade. As a result, these currencies are widely traded because of the global demand and this translates into great liquidity for that currency. An example is the US Dollar which is used for settlement of most international transactions. The value of hard currencies does not experience wild swings in fluctuation.

Hard Money
This has several meanings. It is sometimes used to refer to hard currency, and may also be used to describe a monetary program of repetitive government funding such as payment of subsidies. Hard money is also used to describe a material that has a universal store of value that can be used to back up a nation’s currency, e.g. gold.

Hedged Margin
A hedged margin means holding an equal volume of trade on the buy and sell side of an active position simultaneously. This means that if a trader holds 0.5 lots on a long order on EURUSD and also holds 0.5 lots on a short order on EURUSD, the net gain/loss is neutralized until the trader closes one of the positions. This works well as a hedging strategy on well funded accounts. It is used when the trader is suddenly unsure of the outcome of a trade and has no time to utilize a proper hedge on another market.

High-Frequency Trading (HFT)
This is the practice of executing orders using computerized algorithms, either by executing large orders by splitting them up and executing them piecemeal at various times, or by executing smaller trade orders whenever a profitable opportunity presents itself in the market. High Frequency trading is also called algorithmic trading.

HKD (Hong Kong Dollars)
The HKD is the official currency of the Chinese territory of Hong Kong. It is subdivided into 100 cents, and is currently the 8th most traded currency in the world. Despite being handed over to China in 1997 by the UK, the territory of Hong still maintains sovereignty over issuance of the Hong Kong Dollar, which is issued by the government and three banks under supervision from the Hong Kong Monetary Authority (the Central Bank of Hong Kong).

HNL (Honduran Lempira)
This is the official currency of Honduras. It is named after a ruler of the indigenous people of Honduras of the 16th century, and is subdivided into 100 centavos. The Lempira replaced the Peso at an exchange rate of parity in 1931, and since 1950, it has been issued by the central bank of Honduras. It is widely interchanged with the US Dollar, especially in the Bay Islands area.

HTG (Haitian Gourde)
This is the official currency of Haiti and is subdivided into 100 centimes. It replaced the Livre in 1813 as the official currency. In 1979, the Bank of the Republic of Haiti took over the duties of issuing the currency from the erstwhile National Bank of Haiti. The 1 gourde and 5 gourde component of the currency are issued as coins along with the 50 centimes coin.

HUF (Hungarian Forint)
This is the currency of Hungary, and is subdivided into 100 fillers. The Forint became fully convertible in 2001 following years of post-communism adjustment to a free market economy. The name of the currency came from the origins of the first coins used as currency in Hungary, which came from the city of Florence in Italy. The HUF is one of the exotic currencies traded on forex trading platforms. The Forint as we know it today was introduced in 1946 at the end of World War 2.

IDR (Indonesian Rupiah)
The Indonesian Rupiah is the official currency of Indonesia and it is subdivided into 100 sen. It is issued by the Bank of Indonesia and it became recognized as an international currency in 1950.

ILS (Israeli New Sheqel)
The ILS is the currency of Israel, and it is subdivided into 100 agorots. The New Sheqel is the re-denominated version of the old Sheqel, introduced in 1986 to replace the Old Shekel at a rate of 1,000 old sheqels to one new sheqel. The New Sheqel is not produced in Israel: the coins are produced in South Korea and the notes in Switzerland on behalf of the Bank of Israel, which is the issuing agency for the currency in Israel. The currency became fully convertible in 2008.

In And Out
This is the trading style of choice for scalpers, where the trader opens and closes a position very quickly. This style of trading is used to ensure that a few pips are captured each time without the trader being subjected to adverse market conditions.

Inconvertible Currency
Also known as non-convertible currency or blocked currency, this is a currency that cannot be freely exchanged in the foreign exchange market, or can only be exchanged with certain restrictions imposed by the national government. They can only be traded in the black market or parallel foreign exchange market.

Indicative Quote
This is a currency quote that is given to traders by market makers for a currency pair, but without a guarantee for any trade on that currency pair to be fulfilled at that quote by the dealer. Such quotes are therefore used by traders purely as an indication of what the currency pair may be traded at.

Indirect Quote
This is a system of currency price quotation where the quote is expressed in terms of how many units of a foreign currency will be used to purchase a unit of the local currency. In other words, the indirect quote will depend on the country is used as the reference point. If the trader is in Canada and wants to express the USD/CAD currency quote in an indirect manner, that quote will be expressed as units of USD required to buy 1 CAD e.g. 1.0078 USD = 1 CAD

Initial Margin
The deposit a customer needs to make before being allocated a trading limit. It can also be described as the initial capital that a broker mandates a trader to have in his account to be used as collateral for every leveraged trade opened in the market. The requirements for initial margin differ from broker to broker and from country to country. In the US, FINRA requires traders to have an initial margin of 25% of the amount obtained from the broker as a leverage for the trade.

Initial Margin Requirement
The minimum portion of a new security purchase that an investor must pay for in cash. It is also the percentage of the amount to be invested in a trade that the trader must provide in his account as collateral.

INR (Indian Rupee)
This is the official currency of India, and is theoretically subdivided into 100 paise (theoretically as the coins below 50 paise have been withdrawn from circulation). The Reserve Bank of India controls the issuance of the currency. The first ‘rupee’ was used in the 15th century, but the modern rupee came into existence in 1847 as the move towards independence prompted a shift from other colonial currencies to a national currency. The Indian Rupee is also used as legal tender in Bhutan.

Inside Market
An inside market is a market that features trading with a higher bid and lower ask pricing than is available to retail (individual) investors. It is usually carried out between dealers and institutional investors. Pricing in an inside market is therefore lower for institutional investors and this is as a result of the large volumes of orders that they place. Even in everyday life of buying and selling of goods, people who buy in bulk get cheaper pricing per unit.

Instant Execution
The provision of quotes to the trade system without a request. An instant execution is an instruction to the broker to fill a client’s order at market price. It is used when the trader wants to get into a position immediately so as to profit from that position.

Interbank Market
This is a financial market that features strictly bank to bank trading of currencies, money market and other financial instruments. In other words, this is the banks’ market. No other class of investor can trade here. An example of an interbank market is the interbank currency auction where central banks sell foreign exchange to commercial banks, who now provide same for customers who need them.

Interbank Rate
This is a rate in which banks within a jurisdiction charge one another for short term loans provided or the charge that banks within a jurisdiction are prepared to pay for borrowed short term loans. In other words, interbank rates can be divided into interbank offered rates (the first definition) or interbank bid rates (the second definition). An example of interbank offered rates is the London Interbank Offered Rate (LIBOR).

Also known as Electronic Data Interchange (EDI), this is a system of transfer of information from one computer to another electronically. Communication of business and financial transactions between parties to a trade (e.g. from dealer to trader and back to dealer is done through directly between computers, databases and back-end systems.

Interest Rate Carry
The income or cost associated with keeping a foreign exchange position overnight. This is derived when the currency pairs in the position have different interest rates for the same period of time. The interest rate carry is the basis of the carry trade, where traders look for currency pairs that feature a high interest rate yielding currency and another with a lower interest rate.

Interest Rate Differential (IRD)
This is the differential that measures the gap between interest rates of two comparable assets that yield interest. For instance, two investments that yield interest are bonds and fixed deposit accounts, so the IRD will measure the gap of these two instruments since they are comparable assets that yield interest.

Interest Rate Parity
This is a theory that explains the interrelationship between forex forward rates and spot rates resulting from the interest rate differential in two countries. In other words, the interest rate parity states that the difference in interest rates of two countries is determined by difference between the exchange rates and the rates of the two currencies in the spot forex market.

IQD (Iraqi Dinar)
This is the official currency of Iraq, subdivided into 1000 fils. The currency is issued by the Central Bank of Iraq. The Iraqi Dinar replaced the rupee as the currency of Iraq in 1932 at a rate of 11 rupees to 1 dinar. US sanctions after the First Gulf War caused the government to start issuing new notes that were of inferior quality, which were used in the country apart from the Kurdish area that still used the old notes (Swiss Dinar). It was only after the overthrow of Saddam Hussein that the new government created a new dinar that was used uniformly all over the country.

IRR (Iranian Rial)
This is the official currency of Iran, and is expressed as a sub unit of the old Iranian currency unit, the Toman used as currency until 1932. The Rial is issued by the Central Bank of the Islamic Republic of Iran. Till date, prices of goods and services are expressed in Rials and Tomans. Due to economic sanctions imposed on the country as a result of its nuclear enrichment program, the Rial has suffered a devaluation of more than 75%, making it the world’s least valued currency.

Island Reversal
This is a chart pattern where the price of an asset gaps either to the upside or downside, and following an upside gap, the price of the asset gaps down to the previous values or following a downside gap, the price of the asset gaps upwards to the previous values. The island reversal can form the basis of a gap trading strategy.

The word ‘jobber’ is used in several ways in the financial market. It is used colloquially to describe a market maker broker on the London Stock Exchange. It can also be used to describe an investor who purchases and sells a stock very quickly, or who opens and closes positions very quickly without holding any overnight positions. A jobber can also be described as an intermediary between a buyer and a broker, making a commission from the sales of financial instruments such as stocks.

JMD (Jamaican Dollar)
This is the official currency of Jamaica, and is subdivided into 100 cents. It has been issued since 1969 and the issuing agency controlling the supply of the currency is the Bank of Jamaica. It replaced the old Jamaican pound as a move to nationalize the currency following the tradition of other countries that form the British West Indies. The Jamaican dollar was used in the Cayman Islands until 1972.

Exchange transactions unit. A lot is the measure of the trade volume or trade amount invested in a Forex trade, and is equivalent to 100, 000 units of the base currency in a Forex transaction. A Standard lot can be subdivided into mini-lots (one-thousandth of a lot or 1/1000 lots) and micro-lots (one-millionth of a lot or 1/1,000,000 lots).

This is a trade position which the trader assumes in order to profit from advancing prices in the market or an asset. For instance, if the trader expects the price of the EURUSD to rise from 1.2903 to 1.2980 and he wants to enter a trade to profit from the expected advance in prices for the EURUSD, trade order to use is a long order.

A loss is a situation where the price of a currency pair moves against the direction of the trader’s position such that when the trade is closed, the trader ends up with less account equity than when he started the trade. For instance, if a trader goes long on the EURUSD at 1.2908 and sets a profit target of 1.2958 and stop loss of 1.2868, and the currency retreats to hit the stop loss at 1.2868, then the trader has experienced a loss on the trade.

Ratio between the amount of money on the account (deposit) and offered funds. Trades in the Forex market are performed in the range of tens of thousands (mini-lot accounts) or hundreds of thousands (standard lot accounts). Many traders cannot afford these amounts, so brokers offer to match the trader’s funds with a corresponding ratio of trading capital so that the trader can meet the obligation for the trade. These borrowed funds provided by the broker is what is called leverage. The amount of leverage used depends on the ratio of the trader’s funds to the broker’s funds. For instance, the leverage minimum in the US is 1:50, meaning that for every $1,000 the broker can match the trader’s funds with $50,000.

Refers to the relationship between transaction size and price movements. For example, a market is "liquid" if large transactions can occur with only minimal price changes. The Forex market is described as being very liquid because transactions that are carried out in this market are in the region of hundreds of thousands to millions and billions of dollars. Where traders can only afford hundreds to thousands of dollars, market makers step in to acquire positions from the liquidity providers so as to bridge the liquidity gap, and these positions are resold to such traders in smaller chunks.

Low Price
The minimal price of a certain security for a certain period of time. This is the lowest price that a currency pair has attained within a specific time frame on the charts. The low price can be defined in terms of a single candlestick, the candlestick low (which represents the trade period for the time chart) or for a period of time displayed on the charts (the swing low).

Leading Indicators
Statistics that are considered to predict future economic activity. A leading indicator can be described as a measurable factor that points to a change of market trend or direction before the market starts to respond in that direction. There are leading indicators used in technical analysis, and leading indicators (such as money supply, building permits) that are used for fundamental analysis.

LIBOR (London Interbank Offered Rate)
Average weighted interest rate on interbank loans provided by banks, that participate in the London interbank market and offer funds in different currencies for different time periods (from 1 day to 1 year). LIBOR is widely used globally as a short term interest rate benchmark, since the London market is where most of the world’s major borrowers go to source for financing. The British Banking Association (BBA) is responsible for setting LIBOR by averaging short term deposit rates among the most credit worthy global banks. The BBA has been putting rates on record since 1985.

Limit and Stop Levels
These are the price levels at which a trader has set a take profit target and stop loss for his forex trades respectively. Some trading platforms require the trader to set the profit and stop loss targets using a Limit and Stop order, and the price levels that are chosen for these targets are known as limit and stop levels.

Limit Order
An order to execute a transaction at a specified price (the limit) or better. A limit order to buy would be at the limit or lower, and a limit order to sell would be at the limit or higher. This order type is used when the trader expects the market to retreat before advancing (for Buy Limit) or to advance before retreating (for Sell Limit). Another way of using the limit order in an open trade is to set a profit target so that once the trade reaches the Limit target, the trade is automatically closed in profit.

Limit-On-Close Order
This is an order to buy or sell a specific amount of a currency pair at the close price only if that price is at or below a set price (for buy orders) or at or above a set price (for sell orders). This order places a maximum on entry prices for sell orders and a minimum on entry price for buy orders, and assumes that the closing price is better than a limit price. For instance, if a trader wants to sell 1 Standard Lot of the EURUSD using an LOC order, the trade will be executed at the closing price of the candlestick on the chart or at a price higher than that closing price if the candle is a bear candle. Similarly, if a trader wants to buy 1 Standard Lot of the EURUSD using an LOC order, the trade will be executed at the closing price of the candlestick on the chart or at a price lower than that closing price if the candle is a bullish candle.

Limit-On-Open Order
This is an order to buy or sell a specified amount of a currency pair at the open of the market only if the asset is trading at the limit price or better at that time. If this condition is not met, the second part of the order is to cancel the order execution automatically.

Liquid Market
This is a market in which there is a large number of buyers and sellers, such that trade volumes are high and it is not difficult to get matching order quotes filled because there is always a ready buyer or seller to match any order type. Orders in a liquid market are fulfilled instantly because there are always buyers to buy sell orders and sellers to match buy orders.

The closing of an existing position through the execution of an offsetting transaction. For a long order, a position can be liquidated when the broker gets a seller to acquire the position. For a short order, a position is liquidated when the broker gets a buyer to acquire the position.

Liquidation Level
This is the specified value of a trader’s account below which all open positions are automatically closed in order to preserve the broker’s funds used as leverage. The provision of leverage to a trader is a risk that the broker assumes, so a specified liquidation level is fixed and agreed to by the trader (expressed as a percentage of the trader’s account equity) so that the for automatic liquidation of positions to prevent default of return of the broker’s funds.

Liquidation Margin
This is the total value of all equity positions in a margin trading account. This is the equivalent to what the trader would retain in his account (long positions) or what he would owe the dealer (short positions) if the positions are closed or liquidated.

Lock In Profits
This is a system of using a trailing stop order (i.e. a stop loss set to a few pips below {for long orders} or above {for short orders} for an active forex trade with unrealized profits such that the trailing stop follows the market price by the set number of pips if the trade moves in the trader’s favor, and locks the profit by staying stationary when the trade moves against the trader.

Locked Market
This is a market in which the bid price is the same as the ask price, producing a zero spread situation.

Locked Positions
Buy and sell positions on the same asset with the same trading volume. Locking of positions is an emergency hedging action taken to prevent further increase of a floating loss in a trade that has moved adversely to a trader’s position. If a trade in one direction is going bad ans there is a likelihood it may continue for some time, the trader may decide to place another trade in the opposite direction to curtail further losses and buy time to evaluate the positions.

Long Position
Open position to buy an asset, with the expectation of profiting from advancing prices. In Forex, a long position involves buying the base currency and simultaneously selling equivalent units of a counter currency.

Long-Short Equity
This is a strategy employed by hedge fund managers where long positions are assumed on certain assets and short positions assumed on other assets. There are hedge funds that use only long orders and there are those with only short orders. Hedge funds that use Long/Short Equity can for instance, go long on crude oil and go short at the same time on assets that have an inverse relationship with crude such as the US Dollar.

Long-Term Growth (LTG)
This is a relative investment concept that states that an asset will experience an appreciation in value over a long period of time, irrespective of when the market move towards that growth occurs immediately or later on in the investment lifespan of that asset. The LTG concept is used in the stock market, and can also be used in the forex market as a part of a carry trade strategy to identify carry trade high-yielding currencies that can give the trader investment profit from long positions for many months or up to a year.

Losing The Points
This is a situation where the trader buys an asset at a certain price and has to sell that asset for a lesser price in future. In the forex markets, it can also mean a situation where the trader buys a currency pair in the futures market at a lower price than it sells for in the spot forex market. This is used as a capital preservation strategy where the trade expectation of the trader has changed, and he is looking to conserve capital that would otherwise be lost in the trade.

Low Volume Pullback
This is a situation where prices pull back from their highs in an uptrend, with a volume that is significantly lower than average. This occurs as a result of nervous buyers taking profits. For instance, there will be traders who do not want to hold long positions for some time because they are unsure of whether the asset can sustain the uptrend, and these traders will be seen selling at some key points to take whatever profits that they can out of the market. The consequent reduction in volume leads to a drop off in the price advance for the asset.

The guarantee, which is required by the dealer from the trader, to maintain an open locked position or locked position that the client intends to open. Each tool, asset or market has its own margin requirements. The margin is the collateral on a leveraged trade.

An organized system of goods and assets trade. Price, supply and demand are the basic mechanisms of market. The market sets trade rules which are to be followed. The essence of a market is to provide a standardized system of exchange of goods and services for money, so that buyers get fair value of goods/services for their money and sellers get a fair value of exchange for their products.

The date on which payment of a financial obligation is due. It is also used to describe the date that a trade in the options market expires.

The tendency of a currency pair to continue movement in a single direction. The term ‘momentum’ can also be described as the strength displayed by a currency that enables it to move in a particular direction. Some indicators of technical analysis are classified as ‘Momentum’ indicators because they are used to gauge the strength of a trend in a currency pair, and so can detect when a rising trend is about to end (overbought) or when a falling trend has started to waver (oversold).

Margin Account
An account that allows leverage buying on credit and borrowing on currencies already in the account. Buying on credit and borrowing are subject to standards established by the firm carrying the account. Interest is charged on any borrowed funds and only for the period of time that the loan is outstanding. Margin accounts were created to allow traders to trade larger positions and get the opportunity to make more money than they could otherwise have made, and also benefits brokers providing such funds by allowing them to make more money from the increased spreads and commissions the larger trades bring in.

Margin Call
A call for additional funds in a margin account either because the value of equity in the account has fallen below a required minimum (also termed a maintenance call) or because additional currencies have been purchased (or sold short). Usually, a trader is required to have an initial margin as collateral for a leveraged trade. When the trade incurs a floating loss, this is deducted from the trader’s margin and not from the leveraged funds. When the loss is about to wipe out the trader’s equity, the broker will issue a margin call, asking the trader to add more funds or risk the trade being closed out automatically to preserve the leveraged funds.

Margin Call Level
This is the price level that an asset will get to before the broker issues an instruction to the trader to add more funds to his account or risk closure of all open positions. Before signing up for a leveraged trading account such as is obtainable in the forex market, the trader has to agree that a particular price level will be used in the calculation of when a position is closed to protect the broker’s equity in a bad trade. This is the margin call level.

Margin trading
Trading securities with the use of money borrowed from the broker (leverage). In margin trading, the trader is required to come up with a smaller portion of the investment amount to act as collateral for the trade. For instance, having a deposit of 100$ and 1:3 leverage allows a client to make deals with the total price of 400$. Margin trading was created to enable traders to have more money to be able to handle larger positions in the market. Margin trading can deliver profits to the trader beyond what his investment amount would have delivered if the trade goes well, but it can also cause the trader to sustain magnified losses if the trade goes bad.

Mark to Market
The theoretical value of an open position at the current market price. Marking an instrument to market means updating the value of a security to reflect its present market value instead of its book value. This concept can also be applied to mutual fund investment when a mutual fund’s net asset value is updated to the most recent market value. Marking-to-market is done to ensure that the margin requirements for a trade are kept up to date and that the trader’s equity has not dropped below the required margin levels.

Market Close
This refers to the time of day that a market closes. In the 24 hour-a-day foreign exchange market, there is no official market close. 5:00 PM EST is often referred to and understood as the market close because value dates for spot transactions change to the next new value date at that time. In other markets such as the stock markets or commodity markets, there are specific times at which official business transactions come to an end and this is the market close in these markets.

Market Depth
This is the size of an order that is required to move the markets by a certain degree, or to change the price of an asset by a certain degree. An increased market depth means that there is a lot of liquidity in the market, while reduced market depth means that assets are illiquid. A market with increased market depth makes it easier to get pricing with lower spreads and more instant order fulfillment.

Market Maker
A person or firm that provides liquidity by making two-sided prices (bids and offers) in the market. In Forex, transactions require large volumes to avoid large swings in prices, and this requires traders to trade with volumes of at least several hundreds of thousands of dollars to millions of dollars. Due to the fact that many traders cannot afford these sums, market makers step in to buy off assets and hold both buy and sell positions on the assets, which are then offered in smaller chunks to retail traders to buy in tens of thousands of dollars per transaction.

Market Order
An order made by client for an immediate purchase or sale of a security at the price of the market. This can also be described as an order/instruction by the trader to the broker to fill an order immediately at the present price of that asset in the market.

Market Price
This is the price that currently exists for an asset in the market. For instance, if the price of a currency pair is quoted at 1.2890/1.2893 in real time, then the that is the market price of the asset.

Market Rate
The current quote of a currency pair. This is the rate at which a currency can be used to exchange for another currency in real time, and is the rate at which a trader who uses a market order for the security will be filled at.

Maximum Lot
This is the maximum allowable trade size/volume that a trader can use for a forex trade on his broker’s forex trading platform.

Minimum Lot
This is the minimum allowable trade size/volume that a trader can use for a forex trade on his broker’s forex trading platform. Some brokers allow a minimum lot of 0.1 lots while some others allow 0.001 lots (1 micro-lot).

Minimum Step
This is the minimum degree of change in the trade volume of an asset that a trader can purchase. For instance, a Standard Lot account with a minimum lot size of 1 lot and a minimum step of 0.1 lots allows the trader to purchase 1.1, 1.2, 1.3, 1.4 lots of the asset, all with an increment or decrement of 0.1 lots (which is the minimum step).

Monetary Base
This is the liquid money that circulates within the economy and the banking system of a nation, and consists of all notes and coins in circulation among the citizens of a country as well as cash held in the vaults of commercial banks and the reserves of those commercial banks held in the central bank.

An after-market, wholly electronic index specialized on shares of leading technology companies. Created as a successor to the Over-the-Counter (OTC) market in 1971, the NASDAQ index is plotted as the average weighted shares market price. Trading in NASDAQ securities is done electronically using online trading exchanges, which is different from the way the NYSE securities are traded (auctioning on the trading floor). It is traded as a stock index asset. Despite being known for its technology stocks, other sectors such as pharmaceuticals are also listed on the NASDAQ index.

Necessary Margin
The guarantee (in monetary expression), which is required by the dealer to maintain an open position. In leveraged markets, the trader is required to maintain a margin in order to sustain trades that are open against losses. It is the necessary margin that a broker looks at before issuing a margin call and closing positions as a result. If the trader has enough of the necessary margin in his account to maintain a position, a margin call will not be issued and active positions would not be closed.

New York Stock Exchange (NYSE)
One of the major US stock exchanges. At NYSE the Dow Jones index as well as NYSE Composite index are defined. It was founded in May 1792. The NYSE is the oldest securities exchange, and is the largest in the world by market capitalization. It is currently operated by NYSE Euronext, and the market operates by an open floor auction system where traders (acting as buyers and sellers on behalf of their clients) gather round a floor specialist/auctioneer, and try to outbid each other for an asset. The highest bidder buys the asset, while the sale goes to the bidder with the lower bid.

Nikkei 225 (Nikkey Stock Average)
The major index of the Japanese stock exchange. It is calculated as the average shares rate of 225 major companies, quoted on the Tokyo stock exchange. The Nikkei 225 is regarded as the Japanese equivalent of the Dow Jones in America, and its movement correlates with that of the Dow due to the fact that the US is the number one consumer of the goods produced by Japan’s export oriented economy. The Nikkei 225 is traded as a stock index asset, and is a major indicator of the performance of Japan’s economy. It was founded in 1950.

No Dealing Desk
The process of delivering prices from the liquidity providers to traders without a department in the broker’s office acting as trade or pricing intermediary. ECN brokers operate a ‘no dealing desk’ environment.

Non-client Order
An order on an exchange that is made by a participant firm or on behalf of a partner, officer, director, or employee of the participant firm. (a participant firm is a firm that is entitled to trade on the exchange, and is also known as a member firm). While these orders are allowed, priority must be given to client orders for the same securities. In some instances, an exchange or company may make a security available for sale only through member firms. An example was the 2008 sale of a stake of the National Salt Company of Nigeria (NASCON), where a portion of the company was sold by the controlling investor to the public through 22 member firms of the Nigerian Stock Exchange.

Non-trading Operation
The following types of operations performed on a trading account constitute non-trading operations: deposit, withdrawal, repayment and extension of credit. These are all transactions that are performed on a Forex trading account by a trader aside from trading.

A client’s order to buy or sell a certain amount at a given rate. There are several types of orders, and these can all be compressed into two main order types: market orders and pending orders. Market Buy and Market Sell are the instant (market) orders, while Order Cancels the Other (OCO), Buy Stop, Sell Stop, Buy Limit, Sell Limit, Entry Limit/Stop, Good till Day (GTD) and Good Till Cancelled (GTC) are all pending order types.

A technical analytical term which describes a situation where the value of a currency pair has dropped so low that the price of that asset is expected to undergo a market correction upwards. If traders perceive an asset as oversold, sellers will thin out and buyers will come in, sending the price of the asset upwards.

An open position which is transferred to the next day. Sometimes positions are left overnight in an attempt to earn money from the interest rate differential on a long position on the higher-yielding currency. Swing traders and position traders who leave positions open for days and weeks at a time, leave positions overnight by virtue of their trading styles. Intraday traders do not leave positions open overnight.

OCO (One Cancels the Other Order)
A combination of two orders in which the execution of either one automatically cancels the other. An OCO order is used in several ways. It can be used in straddle trades on news items when the trader is unsure of market direction after the news is released. In this case, the trader places two orders to catch the price on either side of the pre-release market price. When one of the orders is activated, the other is immediately cancelled. It is also used to set a limit price to capture profits and a stop price to cut losses. When one target is reached, the other is cancelled and the trade closed.

Open Market
The term ‘open market’ is used to describe a market which is open to all participants and where traders can participate in buying and selling of securities without restrictions. This also refers to a deregulated market. Prior to 1997, the Forex market was not an open market, but after deregulation of the market that year, individual traders were allowed to come into the market place, making the Forex market an open market.

Open Order
Buy or sell order that remains in force until executed or cancelled by the customer. This also refers to a good-till-cancelled order.

Open Position
Any position (long or short) that is subject to market fluctuations and has not been closed out by a corresponding opposite transaction. On Forex platforms, there is a tab that displays all open positions. This information is important especially if the trader has several of such positions open, so that they can all be tracked, and the trader can also use the information to check his market exposure to avoid excessive risk.

Order Confirmation
Written acknowledgment of a trade, listing important details such as the date, the size of the transaction, the price, the commission, and the amount of money involved. Whenever a trade is executed, the broker is required to either display on the platform or to send a written confirmation to the trader, details about the trade order and execution details such as price at which the order was filled, the time, transaction ID, date, etc. The trader can use this for his records and also monitor any discrepancies in order fulfillment's.

Overnight Position
Trader's long or short position in a currency that extends beyond the trading day. Overnight positions are held commonly by swing traders and position traders, who take their analysis information from long term charts and use it to take trades that take many days or weeks to fully play out.

This is the practice of opening too many positions at the same time, or opening positions too soon after a succession of trade losses. Overtrading stretches the capacity of an account to maintaining adequate margin and that is why a single trade in an overtraded account can lead to a margin call.

The smallest increment of change in a foreign currency price, either up or down. A pip is known as percentage interest point, and is equivalent to 0.0001 or ten-thousandths of a unit number of 1. For the Yen crosses, a pip is equivalent to 0.01.

The word ‘point’ can be used in different ways in the financial markets. It could be used to mean the minimal price change in an asset or currency pair. E.g. initial price of the security was 1.3550 and it has dropped to 1.3545. It means that there was a 5-point rate change. A point can also be used to refer to ‘basis point’, which is one-hundredth of a percentage point or 1/10000. It is a term popularly used to describe the changes in the interest rate in one year for a currency. Point can also be used to refer to percentage point, which is the arithmetical difference between two percentages.

The price at which the underlying currency can be bought or sold. Usually, pricing can be provided by market makers to the trader (indirectly), or from the liquidity providers (banks) directly in a non-dealing desk environment. Pricing of currencies can be either driven by market demand, or by government intervention.

Customer’s revenue from a completed transaction. In terms of profit, the trader can consider his revenue from the trade, or revenue over a time period from a succession of trades. For a single trade, a profit is made when the price of the asset moves in the direction of expectation of the trader’s position. So for a long trade, the trader makes a profit when the price of the asset moves higher, and for a short trade, when the price of the asset is lower. When profitability is viewed over a time period, then the trader has to make more from his winning trades than he has lost from his losing trades for the time period in view for a profit to have been made.

Pending Order
A client’s order to open a position when a price reaches a certain level. A trader may decide to use a pending order if the current market prices are deemed unfavorable for profiting from, but are expected to get to price levels where the odds of profitability are improved. Pending orders are also used when the trader expects prices to retrace to cheaper levels before resuming the previous trend, or when the trader is waiting for confirmation of a break of a key level before entering in the direction of breakout.

Price Transparency
The ability of all market participants to "see" or deal at the same price. Price transparency enables all market participants to have access to all information regarding the price as a security or a currency pair. The basis of price transparency is access to the ‘order book’, which enables traders to see all prices provided by liquidity providers, as well as who is buying what, at what price and the volume of their trade. This enables traders to find out where the price of the asset is likely to head towards as a result of the demand pull of the order flows. The extent of price transparency will depend on the exchange on which the asset is traded, as well as the degree of price quotation (Level I or II, with Level II providing more transparency than Level I quoting).

Principal Value
The original amount invested by the client in a market. For instance, if a trader invests $500 in the Forex market, the principal value of the Forex trade is $500.

A security price considered while buying and selling. It is expressed in Ask and Bid prices, and the quoted prices are always that of the counter currency (quote currency) to one unit of the base currency. A price quote is made up of the highest price that the trader is willing to pay for the asset as well as the lowest price that the dealer is willing to accept for the asset. A typical quote for the EURUSD is 1.2940/1.2943, where the first price is the Bid price and the second price is the Ask price. Both prices indicate how much of the counter currency (USD in this case) is used to buy 1 unit of the base currency (EUR in this case).

Providing a client with quotes in order to complete a transaction. It also means the process of providing the highest price that a trader is willing to pay for an asset and the lowest price that the dealer is willing to accept for the same asset. The process of quoting will depend on whether the trader receives the pricing from a dealing desk or whether the pricing is received directly from the liquidity providers in an STP environment.

Quote Currency
The second currency in a currency pair, for which a client is able to sell/buy a base currency. For instance, in the currency pair USD/JPY, Japanese yen is the quote currency. The quote currency is also called the counter currency, and gets its name because the exchange rate is usually stated as the price of the quote currency against one unit of the base currency. So in a rate quote that states that the USDJPY is 79.34, the figure ’79.34’ simply means that 79.34 Yen will be used to buy 1 US Dollar.

Quote’s Feed
Quotations on each security entering the system. It is more aptly defined as a high speed stream of data that transmits information about pricing in real time and without delays. The quotation level of the broker’s platform (Level I, II or III) will determine how fast the data stream gets to the end user.

The price of one currency expressed in the unit price of another country’s currency. Usually, the rate is expressed as the price of a counter currency (the 2nd currency in a currency pair) as against one unit of the base currency (the currency on the left of a currency pair). So when we express the rate of EURUSD as 1.2940, we are saying that the rate at which a trader will sell one Euro for the USD is at 1.2940 US Dollars.

The difference between the maximum and minimum prices of a certain time period. The range is the distance between the highs made by the price of an asset and the lows made by the same asset within the same time frame. The range can then be used to make certain trading decisions such as where to apply profit targets and where to apply stops. The range can also tell a trader how much movement a currency pair has in any given time period. Identifying the range is also the basis of trading by range traders, who typically buy at the price lows and exit at the price highs, then sell at price highs and exit at price lows.

This is a phenomenon that occurs when prices have moved between the time that they are displayed and the time the trader clicks on the order execution button on his platform. The trade is not executed; rather the trader is asked to either accept the new price for his order to be executed, or the order execution is cancelled if no action is taken in a matter of seconds.

Price level at which technical analysts note persistent selling of a currency. A resistance is not really a fixed price but a zone or region in which buyers are reluctant to get into the market, causing prices to stall at that region. Two things can then happen. Sellers can enter the market and drive prices downward, or buyers and sellers can have a tug-of-war and cause prices to hover around that region for sometime. If prices find it difficult to break above that region after testing that price area repeatedly, that area is referred to as a resistance.

Revaluation can be used in a number of ways. In Forex, it is specifically used to mean a structured increase in the value of a currency of a nation relative to other currencies. It is usually as a result of deliberate government policy rather than appreciation due to market forces. One example of currency revaluation was what the Chinese government did to the Yuan by moving it from being a dollar-pegged currency to being pegged against a basket of currencies.

Risk Management
The employment of financial analysis and use of trading techniques to reduce and/or control exposure to financial risk. Risk management can also be defined as the process of identifying the risk to an investment, and the steps that can be taken to mitigate them. In the Forex market, this would include methods of identifying how risk a trade is, what impact a loss on that trade would mean for the trader’s account, and if possible whether to take the trade in the risk circumstances identified or not. For instance, if a trader wants to trade the Non-farm Payrolls Report, risk management for the trade would include identifying how much he is willing to win or lose in the trade, how many pips would achieve his win target, how many pips he is prepared to lose in order to set a stop loss that would terminate the trade at some point, and if the news numbers would favor the trade or not. If the risk of loss is great and the trader feels that a loss would do a lot of damage to his account, a mitigation would be to avoid the trade totally and trade less risky news with a higher chance of success.

The process of extending the settlement value date on an open position forward to the next valid value date. In Forex, a rollover can either attract an interest rate charge on the trader’s account, or pay the trader an interest rate charge, depending on the interest rate differential of the two currencies in the currency pair being traded, that has been rolled over to the next trading day.

The payment for transferring an open position overnight. May be both positive and negative. The night from Wednesday to Thursday triples the payment. The swap payment is based on the interest rate differential between the two currencies in a currency pair on which the trade position is rolled over to the next trading day. The swap is positive if the trader has a long position on the currency with the higher interest rate, and negative when the trader is short on the higher yielding currency (or long on the lower yielding currency).

The point difference between the bid and ask price. The difference between the bid and ask price is the broker’s commission in a forex trade. Market prices are quoted with two prices: the bid on the left and the ask on the right. If the EURUSD is quoted as 1.2980/2983, then the spread is the difference between these two prices (measured in pips), and this is 3 pips. The lot size of the trade will determine the financial value of the spread of a currency. Spreads are lower in liquid currency pairs (such as EURUSD) and much higher in illiquid pairs such as EURNOK.

A scalper is a trader who trades the forex market by opening and exiting from positions within a few minutes of each other.

Scale In
This is the practice of gradually taking positions in a currency pair over time. The essence is to buy into the asset in small increments as the price of the asset gradually falls, so that the entry price is gradually lower and this serves to reduce the average cost of acquiring the asset. This is a risky strategy as there is no guarantee that prices will start advancing after the fall. For instance, if a trader buys the EURUSD at 1.3490 but the price continues to fall and the trader is sure that the EURUSD will pick up again, he can decide to reduce the overall cost of the trade to his account by buying at strategic points lower down so that if the price eventually gets to his price profit target, he will make more pips from the scaled in trades and this will cover up for the trade entries made at higher price.

This is the trade practice of opening and closing positions manually within a few minutes of each other in order to capture small market moves and gradually build these up over time to produce increased profits. Scalpers use larger position sizes in order to make more money from the smaller pip targets.

It's the experience of not getting filled at (or even very close to…) your expected price when you place a market order or stop loss. This can happen because either: market price is simply moving too fast, the market is not liquid or you're talking to an unmotivated broker. Slippage typically occurs in a very volatile market (such as when there is a systemic effect that causes the entire market, asset or currency to fall, creating a situation where there are no traders to purchase the position at a stop loss. Sometimes, it occurs because brokers fill the large trade orders of institutional traders first, and by the time they move to the smaller retail orders, the large demand on the asset created by the institutional orders has driven prices too far.

Another term for the British currency, "The Pound" or GBP.

Scale Out
This is the practice of gradually exiting positions in the market at gradually increased prices (for long orders) or gradually reducing prices (for short orders). This is used as a means of reducing the risk in the market to the trader by locking in profits as the trade progresses. For instance, if a trader sells the EURUSD at 1.3490 but the price continues to rise and the trader is sure that the EURUSD will drop, he can decide to reduce the overall cost of the trade to his account by selling at strategic points at higher prices so that if the asset reverses and eventually gets to his price profit target, he will make more pips from the scaled in trades and this will cover up for the trade entries made at lower prices.

Spot Next
The process of moving the spot settlement value date on an open position forward to the next valid value date. This process will affect the profit or loss on the overnight position. The forward points reflect the difference in interest rates between the currencies being rolled over. It can also be described as the purchase of a currency pair for delivery on the day following the delivery date. So a trader who buys Euros on a Tuesday, will have a spot next delivery of Friday, which is one day later than Thursday which conforms to the T + 2 days delivery for spot Forex transactions.

Stop Loss
A client’s order to close an open position if the trade has moved against the trader’s position up to a certain price level. It is used to minimize losses. On some trading platforms, this is set on one side of the OCO order, while on some other platforms a stop order is set on an active trade or a stop price is entered during the order process (MT4).

Scale Order
This is an order placed for a currency pair in the forex market in which the trader specifies that small quantities of the asset are bought or sold at gradually reduced or increased prices respectively, in order to reduce the average entry price of the asset.

Sell Limit Order
An order to execute a transaction only at a specified price (the limit) or higher. The sell limit order is used when the trader has a bearish expectation for the asset, but expects the asset to rise higher up to the nearest resistance point before resuming the downward move. A sell limit is a pending order, and using a sell limit ensures that traders benefit from an asset which still has some upward momentum which is not expected to last long.

Selling Short
A situation where an asset has been sold with the intent of buying back the position at a lower price to make a profit. Another name for this is short selling. Selling short works by borrowing the asset from the dealer and selling this asset at a higher price, then waiting for the price of the asset to drop after which the trader buys it back at a lower price, returns the asset to the dealer and profits from the price difference.

The word ‘settlement’ can be used in several ways in the financial markets. It can be used to refer to actual delivery of currencies or other assets on the maturity date of a trade, based on the contract entered into at the time the trade was made.

Short Hedge
This is a loss-protection/hedging strategy where the trader uses a short on a futures or options contract in order to offset any losses incurred from a bearish movement of a commodity, stock or currency asset that the trader owns. So if a trader owns a stock and the stock price diminishes, he can use a short sale of the options contract on that asset in such a way that exercising the option will pay him more money than he would have lost on the stock trade.

Short Interest
The total volume of an asset that investors/traders have short-sold, and which have not been repurchases to close the short position. This is usually a measure of the degree of pessimism among investors for an asset, or a measure of the bearish sentiment that investors have towards an asset.

Short Position
The situation when a currency sale has occurred and has to be covered with the respective buy. A short position is assumed by the trader on an asset when there is an expectation that prices will fall, and in the Forex market, this is executed by selling the base currency and simultaneously buying the counter currency, and then re-exchanging the currencies by buying the base currency at a lower price with the counter currency which now has a higher value.

Short Squeeze
The pressure on short sellers to cover their positions as a result of sharp price increases. A better definition of a short squeeze is a situation where there is a sudden sharp demand for a security and a lack of supply, which causes a demand-induced sharp spike in the price of the security. The commonest situation that produces this effect is when short sellers are forced to exit their positions due to the price of the stock moving adversely against their short positions. Usually this happens as a result of stop losses being taken out and short sellers being forced to buy back the assets they sold short to return to the dealer. This puts more buying pressure on the asset and forces the price of the asset sharply upwards. This sharp spike in prices is a temporary effect.

Spot Market
Market where people buy and sell actual financial instruments (currencies) for two-day delivery. The spot market is characterized by very short settlement times. The stock market and currencies market are spot markets. They are the opposite of futures markets in terms of settlement dates.

Spot Price
The current market price of a currency that normally settles in 2 business days (1 day for USD/CAD). Usually, the price at which the trade was closed is the spot price and this is the price at which the asset is settled in a time frame of T + 2 days, including the day of the ‘T’, the transaction.

Stop Loss Order
Order to buy or sell when a given price is reached or passed to liquidate part or all of an existing position in a trade that has moved against the trader’s position. This occurs by the dealer or broker scouting for another trader who has placed an entry order at that price to buy off the position (ECN environment) or by the market maker buying the position off the trader.

Stop Order
An order to buy or to sell a currency when the currency's price reaches or passes a specified level. A stop order is used in two ways. On some Forex trading platforms, the stop order is used to set the stop loss on an active trade. Another way that the stop order is used is to take advantage of price breakouts. By setting a stop order beyond a key level (above the resistance for long trades and below the support for short trades), the trader can take advantage of a break of these key levels when if he is not sitting in front of his computer.

Stop Out Level
This is the price level at which the broker will automatically close all the trader’s positions as a result of the level of equity in the account dropping to critically low levels. If the margin level is lower than the stop out level, then the stop out will be executed at market price.

Stop-Limit Order
This is a stop order that indicates a price limit for the asset so that the limit so reached now becomes a limit order and not a market order.

Support Level
A price at which a currency or the currency market will receive considerable buying pressure. This is a price zone where prices of an asset find it hard to drop below. A true support is formed when prices bounce of a particular price level repeatedly, failing to break it each time. The more the number of bounces, the stronger the support level. This occurs because sellers leave the arena and buyers start to come in, causing the price to keep stalling at that level.

SWIFT (Society for Worldwide Interbank Financial Telecommunications)
A computer network which is used to send instruction and payment statements. This system assigns special and unique codes to each bank conducting international money transfers. A typical SWIFT code will consist of some letters from the name of the financial institution, the country that the bank is located in, and a control code unique to each bank.

A minimal change of security price. A tick may represent a movement of one pip on a four-digit pricing broker.

A currency pair or a contract for difference financial instrument that can be traded by being bought or short sold.

A direction of the market movement. If the asset/market is rising in price, the trend is up. If the market or asset is dropping in price, the trend is down. If the price of the asset is hedged in a tight range of prices for a considerable length of time, the trend is sideways/range-bound and the asset is said to be in consolidation.

A number, assigned to an opening position or to a pending order. It can also be used to mean an electronic device, monitor or computer used on a trading platform or on the floor of an exchange to send out financial information about a security or asset. The precursor of the modern day electronic tickers was the ticker tape, which was printed out from stock tickers, which made a ticking noise that gave the object its name.

A market participant, who makes deals in order to gain profit. The trader is one party to a trade, the other (counterparty) being the market maker (in a dealing desk environment) or another trader (ECN environment).

The total volume of all executed transactions in a given time period. It can also be defined as the aggregated cost of all trading deals within a specific time frame. The average daily turnover in the Forex market is about $4trillion.

Take Profit Order
A customer's instructions to buy or sell a currency pair which, when executed, will result in the reduction in the size of the existing position and show a profit on said position. This order is used by the trader to automatically close the trade when the position has moved in the trader’s favor up to a certain level. This order is executed by filling a suitable price in the ‘Take Profit’ tab during order execution (MT4), or by using the Limit Order tab or using the other end of an OCO order.

Technical Analysis
An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc as well as chart information and technical indicators.

Tomorrow Next
The process of moving the settlement value date on an open position forward from one business day after the trade date (tomorrow), to the next valid value date (next), the spot value date. Also abbreviated as Tom/Next. Since many traders in the Forex market are speculators who will not take actual delivery of the currency, they use a Tom/Next transaction by closing a position in one trading day, then re-entering the position on the next trading day to avoid having to take delivery of the currency.

An operation of buying or selling a security in the Forex market.

Transaction Date
The calendar date on which a trade occurs.

Two-Way Price
A quote in the foreign exchange market that indicates a bid and an offer. A two-way pricing system in the Forex market indicates that the price at which a dealer is prepared to buy an asset off a trader and the price at which the dealer is prepared to sell an asset to a trader are different. A two-way pricing system provides a system of compensation for the broker with the difference in the two prices.

Up Volume
This is the volume of an asset that has ended the day higher than it opened. So if an asset’s closing price is higher than its opening price for a trading day, all the trade volume on that asset is considered to be up volume.

U.S. Treasury
The United States Department of the Treasury is the government department responsible for issuing all Treasury bonds, notes, and bills. Unlike the custom in most nations, it is the US Treasury (and not the central bank) that prints and issues all US Dollar notes and coins through its US Mint and Bureau of Engraving and Printing units. Through the IRS, the US Treasury also collects taxes, and manages the US debt instruments known as the Treasuries.

Unrealized (Floating) Profit-Loss
An unrealized profit or loss is a situation where an active position in the market has moved into profit or loss territory, but the trade has not been closed so as to apply the profit or loss to the account equity.

Upside and Downside Ratio
This is the ratio of the volume of assets that ended he day higher to those that ended the day lower. The upside/downside ratio is commonly used in the New York Stock Exchange as an indicator of trends, with a higher ratio indicative of an uptrend.

Used Margin
This is the portion of the trader’s account equity that has been committed to a trade/trades in the forex market. Anytime the trader opens a position in the forex market, some money is taken from his account equity to act as collateral for the equity that is supplied by the broker for leveraging the trade. This is the used equity.

Value Date
The maturity date of the currency for settlement, usually two business days (one day for Canada) after the trade has occurred in the spot Forex market. In the futures market, the value date can be set to a maximum of 3 months.

Variable Spread
Variable spreads are a feature of trading in an ECN environment and describe a situation where the difference between the bid and ask prices of a currency pair change according to the demand on the currency pair and the volatility.

Variation Margin
Funds, which are required to bring the equity in an account back up to the initial margin level, calculated on a day-to-day basis. When the trader’s initial margin required to keep a trade open falls below the maintenance margin, the broker will require the trader to fund the account back above the maintenance margin so that the trade stays open. This is what the variation margin is all about.

An indicator which characterizes the tendency of a market price change. Expressed in absolute values 5$ ± 5$ or in relative of the initial price 5$ ± 5%. Volatility is a measure of price variations in an asset over a period of time. An asset that experiences wide price variations in a short length of time is said to be volatile. Volatility can also be measured and traded as an asset. A popular volatility-based index is the Volatility Index (VIX).

Volatility Ratio
This is a technical indicator that uses a true price range to determine the true range in which an asset is trading, and can therefore be used as an indicator of when the market is range-bound or when a breakout has occurred.

This is a short term movement of a currency pair which moves against the general trend of the market. This movement is expressed as a wave against the trend. This is usually produced by retracements which are areas where those who had entered the trend early enough have started taking profits.

Weak Currency
A currency that fluctuates in value very often, usually to the downside. It can also be used to describe a currency that trades at a low level against other currencies or a currency which requires large amounts of it to be exchanged for lower amounts of a foreign currency.

Weak Dollar
A state where a certain amount of US dollars can be exchanged with progressively lesser amounts of foreign currency, thus reducing the amounts of other currencies that can be purchased with a certain amount of US dollars. A weak dollar is important to the financial markets because it caused a corresponding rise in the price of certain assets such as crude oil, with various economic implications.

Weak Shorts
Weak shorts are a group of traders who go short on an asset, but usually exit positions quickly on the first signs of strengthening of that asset. Weak shorts have a bearish sentiment on assets but are unwilling to take too much risk by staying for the long haul, so the moment they have made some pips from a short position on the asset, they exit the trade.

Win-Loss Ratio
This is the ratio of the number of winning trades versus the number of losing trades. The win/loss ratio does not take into account the amount that was won or lost on each trade, but only the total number of trades on both sides of the equation.

Withholding Tax
Income tax withheld from employees' wages, or from payments from an investment or a contract, and paid directly to the government by the employer. It is also called retention tax. Withholding tax is deducted ‘from source’ because the government requires the payer of the income to remove it at that level before the payment of the income earned is released to the payee. Withholding tax is not restricted to wages, but also covers income earned from interest, dividends, royalties, rent, etc. It is used as a weapon against tax evasion.

World Trade Organization (WTO)
International government organization (with over 120 members) designed to shape an international trade system; it was created in 1995 as the GATT successor. WTO headquaters is in Geneva. The WTO was formed in 1995 by the Marrakech Agreement, and its main funtcion is to liberalize global trade and make global markets more accessible to member countries. The WTO also provides a framework for trade between member countries and provides a forum for resolution of trade disputes.

X Stock Symbol
A NASDAQ stock symbol specifying that the asset is a mutual fund. The basis of using unique stock symbols for assets traded on the NASDAQ is because there are several kinds of assets listed on NASDAQ as opposed to the other US markets where only stocks are listed. This system of assigning specific stock symbols for assets of a particular class on the NASDAQ is the reason why mutual funds were assigned the X symbol.

The national currency of Japan. It was introduced in 1872 and remains one of the major reserve currencies in the world. The Yen is always listed as a counter currency, and Yen crosses (currencies featuring the Japanese Yen apart from the US Dollar) are always quoted to 2 decimal places (for 4-digit pricing brokers) and 3 decimal places (for 5 digit pricing brokers), as opposed to 4 and 5 digits for other currency pairs in the Forex market.

A slang word used in the currency industry meaning "billion". The term is taken from the word ‘milliard’, and is equivalent to 10 raised to the integer of 9, which is the number 1 with nine zeros following, or 1,000,000,000 (which is 1 billion in American English).

Also known as the Altman Z score, this is a statistical measure that quantifies the distance (measured in standard deviations) a data point is from the mean of a data set. In a more financial sense, Z-score is the output from a credit-strength test that gauges the likelihood of bankruptcy. The Z-score is a statistical formula designed by Professor Edward Altman to calculate the potential of a company going bankrupt in a 2 year period.

Zero Minus Tick
This is a transaction in which an asset is traded at the same price at which the previous trade was made, and which was in turn traded at a price that was lower than the trade before it. Therefore if an asset has traded at $5 now, and traded at $5 five minutes before and $4.95 ten minutes before that, the asset has traded on a zero minus tick.

Zero Plus Tick
This is a transaction in which an asset is traded at the same price at which the previous trade was made, and which was in turn traded at a price that was higher than the trade before it. Therefore if an asset has traded at $5 now, and traded at $5 five minutes before and $5.10 ten minutes before that, the asset has traded on a zero plus tick.

Zone Of Resistance
This is an area on the price charts where the advancing price action of the currency pair fails to climb higher, or the area where price advance of the asset is halted as a result of drop in buying demand and sellers coming into the market. With a resistance zone, there is no specific resistance price, but rather a tight range of prices where this phenomenon occurs.

Zone Of Support
This is an area on the price charts where retreating prices of an asset fail to drop below, or where the downside move of a currency pair is halted as a result of sellers exiting their positions and buyers coming in. This occurs within a tight range of prices as opposed to a specific price level.
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