FOREX GLOSSARY
Forex glossary, A to Z
Every trading term you’ll meet — explained in plain language. Hundreds of terms, grouped alphabetically.
BROWSE
Find a term.
S
€STRThe ECB-published benchmark for overnight euro borrowing costs, replacing EONIA.
SECUS government agency that regulates securities markets.
SectorA group of securities from companies in a similar industry.
SellTaking a short position because the market is expected to fall.
SettlementRecording a trade in the books, which may or may not involve exchanging currencies.
Short positionA position that profits from falling prices, created by selling the base currency.
Short squeezeCrowded short positions forced to buy back, sharply pushing prices higher.
Short-coveringTraders who sold short buy back their positions after a decline.
ShortsTraders who have sold a product or who are bearish on it.
SidelinesStaying out of the market during directionless or unclear conditions.
Simple moving average (SMA)The average of a set number of recent price periods.
SlippageThe gap between the requested price and the price actually obtained.
SlipperyA market that appears ready for a quick move in either direction.
SNBSwiss National Bank, the central bank of Switzerland.
SOFRThe overnight interest rate used for US dollar loans and derivatives.
SONIAThe overnight sterling rate banks pay to borrow from each other, replacing LIBOR.
Spot marketA market where products trade at current prices for immediate exchange.
Spot priceThe current market price, usually settling within two business days.
Spot tradeBuying or selling for immediate delivery rather than at a future date.
SpreadThe difference between the bid and offer prices.
SPX500A name for the S&P 500 index.
SquarePurchases and sales are balanced, so no open position remains.
SterlingNickname for the British pound or the GBP/USD pair.
Stock exchangeA marketplace where securities are bought and sold.
Stock indexThe combined price of a group of stocks, tracking market performance.
Stop entry orderAn order to buy above or sell below the current price to enter on a breakout.
Stop orderAn order that becomes a market order once a set price is reached.
Stop-loss huntingPushing prices toward levels where many stop orders cluster.
Stop-loss orderAn order that closes a position at a set level to limit losses.
Strike priceThe fixed price at which an option holder can buy or sell the underlying.
SupportA price level that acts as a floor, slowing or reversing declines.
Suspended tradingA temporary halt in trading a product.
SwapSimultaneously selling and buying the same amount of a currency at a forward rate; also the overnight financing charge.
SwissieNickname for the Swiss franc or the USD/CHF pair.
A
AccrualSpreading premiums and discounts on forward deals over the life of related interest-arbitrage swap deals.
AdjustmentOfficial action, usually a policy or currency-rate change, that corrects a payment imbalance.
AggressiveDescribes traders or price action moving with strong conviction.
AnalystFinance professional who evaluates investments and issues buy, sell or hold recommendations to clients.
AppreciationA product's price rising in strength because of market demand.
ArbitrageSimultaneously buying and selling a product across markets to profit from small price differences.
Asian central banksMonetary authorities in Asia whose large reserve holdings can sway major currencies short-term.
Asian sessionTrading hours from 23:00 to 08:00 GMT.
Ask (offer) priceThe price at which the market sells; in FX, what you pay to buy the base currency.
At bestOrder to buy or sell at the best rate available at a given time.
At or betterOrder to buy or sell at a specified price or a more favourable one.
AUS 200Index of the top 200 companies by market capitalisation on the Australian Securities Exchange.
AussieNickname for the AUD/USD pair, also called "Oz" or "Ozzie".
B
Balance of tradeA country's export value minus its import value.
Bar chartChart showing each period's high, low, open and close using a vertical bar with side ticks.
Barrier levelA key price that, when reached, triggers defined events in a barrier option.
Barrier optionOption whose payout depends on whether price reaches a set barrier, such as knock-in or no-touch types.
Base currencyFirst currency in a pair, showing how much one unit of it equals in the second currency.
Base rateLending rate set by a country's central bank.
BasingChart pattern where supply and demand balance, forming a narrow range where support and resistance converge.
Basis pointUnit measuring the smallest possible change in a product's price.
Bearish / Bear marketOutlook expecting prices to fall and a market to decline.
BearsTraders expecting prices to fall, often holding short positions.
Bid priceThe price at which the market buys; in FX, what you receive for selling the base currency.
Bid/ask spreadThe gap between a product's bid and ask prices.
Big figureThe first three digits of a quote; a 1.5 big-figure move equals 150 pips.
BISBank for International Settlements in Basel, which often intermediates large central bank transactions.
Black boxTerm for systematic, model-based or technical traders.
Blow offUpside equivalent of capitulation, when shorts give up and cover remaining positions.
BOCBank of Canada, Canada's central bank.
BOEBank of England, the UK's central bank.
BOJBank of Japan, Japan's central bank.
Bollinger bandsTechnical tool with bands two standard deviations from a moving average, often marking support and resistance.
BondDebt issued for a specified period of time.
BookSummary of a trader's or desk's total positions in a professional setting.
BRC shop price indexUK inflation gauge tracking price changes for goods sold in retail stores.
BrokerIntermediary matching buyers and sellers for a fee, unlike a dealer who takes one side of trades.
BuckSlang for one million units of a dollar-based pair, or for the US dollar itself.
Bullish / Bull marketOutlook expecting prices to rise and a market to strengthen.
BullsTraders expecting prices to rise, often holding long positions.
BundesbankGermany's central bank.
BuyTaking a long position in a product.
Buy dipsBuying small 20–30 pip pullbacks within an intraday trend.
C
CableNickname for GBP/USD, dating to transatlantic telegraph cables in the mid-1800s.
CADCanadian dollar, also called loonie or funds.
Call optionThe right, but not the obligation, to buy an asset at a set price before a given date.
Canadian Ivey PMI indexMonthly gauge of Canadian business sentiment published by the Richard Ivey Business School.
Candlestick chartChart showing a period's range, open and close, shading the body when price closed lower.
CapitulationEnd of an extreme trend when losing traders exit, often signalling an imminent reversal.
Carry tradeStrategy profiting from interest-rate gaps by buying a high-yield currency and selling a low-yield one.
Cash marketUnderlying market on which a derivatives contract is based.
Cash pricePrice for immediate delivery at a given moment.
CBsShorthand for central banks.
Central bankGovernment or quasi-government body managing a country's monetary policy, such as the Federal Reserve.
CFDsDerivatives giving exposure to an asset's price changes without owning it, often with leverage.
ChartistTechnical trader who studies charts and historical data to predict price movements.
ChoppyShort-lived price moves with little follow-through, unsuitable for aggressive trading.
Cleared fundsFreely available money sent to settle a trade.
ClearingThe process of settling a trade.
Closed positionExposure eliminated by an equal and opposite trade, leaving it squared.
ClosingEnding a live trade by executing its exact opposite.
Closing pricePrice at which a position was closed, or the last trade of a session.
CollateralAsset pledged to secure a loan or guarantee performance.
CommissionFee charged for buying or selling a product.
Commodity currenciesCurrencies of economies reliant on natural-resource exports, such as Canada, New Zealand and Australia.
ComponentsThe dollar pairs whose combination forms a cross, such as EUR/USD and USD/JPY for EUR/JPY.
COMPXSymbol for the NASDAQ Composite Index.
ConfirmationDocument exchanged by counterparties stating the terms of a transaction.
ConsolidationRange-bound trading following an extended price move.
Construction spendingMonthly US Census Bureau measure of spending on new construction.
ContagionSpread of an economic crisis from one market to others.
ContractThe standard unit of forex trading.
Contract noteConfirmation detailing the exact terms of a trade.
Contract sizeNotional number of shares one CFD represents.
Controlled riskPosition with limited downside because of a guaranteed stop.
Convergence of MAsMoving averages of different periods moving toward each other, often forecasting consolidation.
Corporate actionEvent changing a company's equity structure, such as dividends, mergers, splits or spin-offs.
CorporatesCorporations hedging or managing finances; their long-term interest is less useful for short-term trading.
Counter currencyThe second currency listed in a pair.
CounterpartyOne of the participants in a financial transaction.
Country riskRisk in cross-border dealings from legal, political or other national conditions.
CPIConsumer Price Index, a measure of inflation.
CraterMarket poised for a sharp sell-off.
CrossCurrency pair that does not include the US dollar.
Crown currenciesCAD, AUD, GBP and NZD, currencies of Commonwealth-linked economies.
CTAsCommodity trading advisors: speculative traders resembling short-term hedge funds, often futures-focused.
CurrencyMoney issued by a government or central bank and used as legal tender.
Currency pairTwo currencies forming an exchange rate, such as EUR/USD.
Currency riskProbability of an adverse change in exchange rates.
Currency symbolsThree-letter codes representing currencies, such as USD.
Current accountBalance of trade plus net income from interest, dividends and transfers.
D
Day traderSpeculator who opens and closes positions within the same trading day.
Day tradingOpening and closing a trade in the same product within a single day.
DCLG UK house pricesMonthly UK survey of completed home sales that tracks property price trends.
DealA live trade executed at the current market price, rather than a pending order.
DealerFirm or person that takes one side of trades and aims to profit from the spread.
Dealing spreadThe gap between the buying and selling price of a contract.
Defend a levelTrader action to keep a price from trading through a specific zone, often to protect an option position.
DeficitA negative balance of trade or payments, where outflows exceed inflows.
DelistingRemoving a stock's listing from an exchange.
DeliveryA trade in which both sides actually exchange the traded product.
DeltaThe ratio of a product's price change to the change in its underlying market.
Deposit rateComposite yearly rate for borrowing or lending a currency over a set period.
DepreciationA decline in an asset's value over time.
DerivativeA contract whose value depends on an underlying asset such as an index, stock, commodity or currency.
DevaluationOfficial weakening of a pegged currency, the opposite of revaluation.
Discount rateInterest rate banks pay to borrow short-term funds directly from the Federal Reserve.
DivergenceWhen price and momentum move in opposite directions, hinting at a possible reversal.
Divergence of MAsMoving averages of different lengths spreading apart, which typically suggests a developing trend.
DividendA portion of company earnings paid to shareholders, usually expressed per share.
DJIA or DowThe Dow Jones Industrial Average, also called US30, tracking major US industrial companies.
DoveA policy view favouring looser monetary policy and lower interest rates; the opposite of hawkish.
DowntrendPrice movement made of successively lower highs and lower lows.
DXYTicker symbol for the US Dollar Index.
E
ECBThe European Central Bank, which sets monetary policy for euro-area countries.
Economic indicatorGovernment statistic showing economic growth and stability, such as employment, GDP or inflation.
End of day order (EOD)A buy or sell order at a set price that stays active until the trading day ends.
EST/EDTThe New York time zone: Eastern Standard or Eastern Daylight Time.
ESTX50Name for the Euro Stoxx 50 index.
EuroThe official currency of the eurozone.
European Monetary Union (EMU)Umbrella term for policies coordinating economic and fiscal rules among EU members.
European sessionTrading hours in London, roughly 07:00 to 16:00.
Eurozone labour cost indexMeasures annualised inflation in pay and benefits for eurozone workers, a key inflation driver.
Eurozone OECD leading indicatorMonthly OECD index combining ten measures to forecast eurozone economic health.
Ex-dividendA share bought without the right to the next dividend, which goes to the seller.
Expiry date/priceThe exact date and time an option expires, commonly New York 10:00 or Tokyo 15:00.
ExportersCompanies selling goods abroad that receive foreign currency and typically convert it to their home currency.
ExtendedA market that has moved too far, too fast.
F
Factory ordersDollar value of new orders for durable and non-durable goods.
FedThe US Federal Reserve, or the FOMC policy committee within it.
Fed officialsMembers of the Federal Reserve Board of Governors and regional Fed bank presidents.
Figure / the figureTrader shorthand for the hundred-level digits in a quote, such as 1.2600.
FillAn order that has been fully executed.
Fill or killAn order cancelled if it cannot be completely filled immediately.
First in first out (FIFO)Rule that closes positions in a currency pair in the order they were opened.
FixScheduled daily times when large currency orders are executed, often causing volatility.
Flat / squareA position fully offset so no exposure remains.
Flat readingEconomic data unchanged from the previous period.
Follow-throughContinued buying or selling after a price break; lack of it suggests the move may reverse.
FOMCThe Federal Reserve's policy-setting committee.
FOMC minutesRecord of policy meetings, released three weeks later, that can move markets.
Foreign exchange (forex, FX)Simultaneously buying one currency and selling another, and the global market for such trades.
ForwardA pre-set future exchange rate based on the interest-rate differential between two currencies.
Forward pointsPip adjustments added to or subtracted from the spot rate to calculate a forward price.
FRA40Index of the top 40 French companies, also called CAC 40.
FTSE 100The UK 100 index of large listed companies.
Fundamental analysisEvaluating economic and other factors to forecast price direction.
FundsHedge-fund participants in the market; also a nickname for USD/CAD.
FutureAn agreement to execute a transaction at a set price at a specified future time.
Futures contractA standardised obligation to exchange a product at a set price and date, traded on exchanges.
G
G7Seven major economies: US, Japan, Germany, UK, France, Italy and Canada.
G8The G7 nations plus Russia.
Gap / gappingA sudden price jump that skips levels without trades, often after news.
Gearing (leverage)Trading a notional value larger than the capital held, expressed as a ratio or percentage.
GER40Index of the top 40 German companies, also known as the DAX.
GivenA bid has been hit or selling interest has appeared.
Giving it upA technical level finally breaks after a hard-fought battle.
GMTGreenwich Mean Time, the forex reference zone that does not shift for daylight saving.
Going longBuying an asset expecting its price to rise.
Going shortSelling an asset not owned, expecting its price to fall.
GoldGold usually moves opposite to the US dollar, though short-term correlations are less reliable.
Gold certificateOwnership document used to trade gold without handling physical bullion.
Gold contractThe standard gold trading unit, equal to 10 troy ounces.
Good 'til cancelled (GTC)An order that stays open until filled or cancelled by the client.
Good 'til dateAn order that expires on a chosen date if not filled.
Good for dayAn order that expires at day's end if unfilled.
GreenbackNickname for the US dollar.
Gross domestic product (GDP)Total value of a country's output, income or spending within its borders.
Gross national product (GNP)GDP plus income earned from investments or work abroad.
Guaranteed orderAn order that ensures a fill at the requested price, even if the market gaps.
Guaranteed stopA stop-loss that closes a position at the set level even when the market gaps.
GunningTraders pushing prices to trigger known stops or technical levels.
H
HandleEach 100-pip block in the FX market.
Hawk / hawkishPolicymakers favouring higher rates to curb inflation; the opposite of dove.
HedgeA position that reduces the risk of another position.
Hit the bidSelling at the current market bid price.
HK50Name for the Hong Kong Hang Seng index.
I
IlliquidThinly traded market with low volume, often producing choppy, unpredictable price action.
IMMChicago-based currency futures market, part of the Chicago Mercantile Exchange.
IMM futuresStandard futures contracts pairing major currencies against the US dollar on the CME.
IMM sessionTrading window from 08:00 to 15:00 New York time.
INDUTicker abbreviation for the Dow Jones Industrial Average.
Industrial productionOutput of manufacturers, mines and utilities; often leads employment and income trends.
InflationRising consumer prices that reduce how much money can buy over time.
Initial margin requirementUp-front collateral deposit needed to open a position.
Interbank ratesExchange rates that large international banks quote to one another.
InterestCash adjustments reflecting the financing cost or income from holding a CFD position.
InterventionCentral bank action to influence its currency's value, sometimes coordinated among several banks.
Introducing brokerEntity that refers clients to a broker in exchange for a fee.
INXTicker symbol for the S&P 500 index.
IPOA private company's first sale of shares to the public.
ISM manufacturing indexSurvey of US factory conditions; above 50 signals expansion, below 50 contraction.
ISM non-manufacturingSurvey of US service firms; readings above 50 signal growth.
J
Japanese economy watchers surveySentiment poll of consumer-facing businesses; above 50 signals improvement.
Japanese machine tool ordersValue of new orders for machine makers, a leading signal of industrial output.
JPN225Name for the Nikkei 225 index.
K
Keep the powder dryAvoid trading in choppy or very narrow markets until a clear opportunity appears.
KiwiNickname for the NZD/USD currency pair.
Knock-insOptions that activate only after the underlying trades at a set price.
Knock-outsOptions that become void if the underlying trades through a specified level.
L
Last dealing dayFinal day on which a product can be traded.
Last dealing timeFinal time of day on which a product can be traded.
Leading indicatorsStatistics considered to predict future economic activity.
LevelA significant price zone, based on technical factors or known orders.
LeverageAbility to trade notional values far above account capital, such as 100:1.
Leveraged namesShort-term traders, largely within the hedge-fund community.
LiabilityPotential loss, debt or financial obligation.
LIBORFormer London interbank lending benchmark, replaced by SONIA.
Limit orderOrder to buy below or sell above the current market at a set maximum or minimum price.
Liquid marketMarket with enough buyers and sellers for prices to move smoothly.
LiquidationClosing an existing position by executing an offsetting trade.
London sessionTrading window from 08:00 to 17:00 London time.
Long positionPosition that gains when price rises, created by buying the base currency.
LongsTraders who have bought a product and expect its price to rise.
LoonieNickname for the Canadian dollar or the USD/CAD pair.
LotUnit measuring trade size.
M
MacroLongest-term traders using fundamental analysis, holding positions for months or years.
Manufacturing productionOutput of 13 manufacturing sub-sectors, roughly 80% of industrial production.
Margin callBroker demand for extra funds after a position moves against the customer.
Mark-to-marketRevaluing open positions at current prices, which then sets margin requirements.
Market makerDealer that continuously quotes both bid and ask prices for a product.
Market orderInstruction to buy or sell immediately at the current price.
MaturityDate on which a financial product settles or expires.
ModelsAutomated systems trading on technical or quantitative algorithms.
MoMChange in a data series compared with the prior month.
MomentumTechnical indicators, such as RSI and MACD, measuring the rate of price change.
Momentum playersTraders riding intraday trends, aiming to capture 50–100 pips.
N
NAS100Abbreviation for the NASDAQ 100 index.
Net positionAmount bought or sold that has not yet been offset by opposite trades.
New York sessionTrading window from 08:00 to 17:00 New York time.
No touchOption paying a fixed amount if the market never reaches the barrier level.
O
Offer (ask) priceThe price at which the market will sell a product, the upper side of a two-way quote.
OfferedA market under heavy selling pressure.
Offsetting transactionA trade that cancels some or all of the market risk of an open position.
One cancels the other (OCO)Two linked orders where executing one automatically cancels the other.
One touchAn option that pays a fixed amount if the market reaches a set barrier level.
Open orderAn order that waits to execute until the market reaches its specified price.
Open positionAn active trade with unrealised profit or loss.
OptionThe right, but not the obligation, to buy or sell at a set price before a date.
OrderAn instruction to carry out a trade.
Order bookA display of buy and sell interest at prices beyond the best available quotes.
Over the counter (OTC)Any transaction conducted outside a formal exchange.
Overnight positionA trade left open until the next business day.
P
PaidDealing on the offer side of the market.
PairThe forex convention of quoting one currency against another.
ParabolicA market accelerating up or down in a curved pattern.
Partial fillAn order that has been only partly executed.
Personal incomeAn individual's total gross earnings from wages, businesses and investments.
PipThe smallest standard price increment, usually the fourth decimal place (0.0001).
Political riskExposure to government policy changes that could hurt an investment.
PortfolioA collection of investments owned by one entity.
PositionThe net total holdings of a given product.
PremiumThe amount by which a forward or futures price exceeds the spot price.
Price transparencyQuotes that every market participant can access equally.
ProfitThe gain when a sale price exceeds the original cost.
PullbackA temporary retracement of part of a trend's gains before it resumes.
Purchasing managers index (PMI)Indicator of how a country's manufacturing or services companies are performing; above 50 signals expansion.
Put optionThe right, but not the obligation, to sell at a specified price.
Q
Quantitative easingA central bank injecting money into an economy to stimulate growth.
Quarterly CFDsContracts with expiry dates every three months.
QuoteAn indicative market price, normally for information only.
R
RallyA price recovery after a period of decline.
RangePrice moving between a defined high and low without breaking out.
RateThe price of one currency expressed in terms of another.
RBAThe Reserve Bank of Australia.
RBNZThe Reserve Bank of New Zealand.
Real moneyLarge traders such as pension funds and insurers, signalling long-term market interest.
Realised profit/lossThe money gained or lost once a position has been closed.
Resistance levelA price that may act as a ceiling limiting upward movement.
Retail investorAn individual trading with personal funds rather than for an institution.
Retail salesMonthly measure of goods and services sold by retailers, reflecting consumer spending.
RevaluationAn official move allowing a pegged currency to strengthen.
Rights issueGiving shareholders the chance to buy more stock, usually to raise capital.
RiskExposure to uncertain change, usually implying possible adverse outcomes.
Risk managementUsing analysis and techniques to reduce or control exposure to risk.
RolloverClosing and reopening a position for the next settlement date, adjusted for interest differentials.
Round tripA trade opened and later closed by an equal and opposite deal.
Running profit/lossThe unrealised gain or loss on open positions at current prices.
RUTSymbol for the Russell 2000 index.
T
Take profitA limit order that closes a trade to lock in gains.
TakeoverGaining control of a company by buying its stock.
Technical analysisStudying past price charts and patterns to forecast price direction.
ThinIlliquid, light-volume conditions that produce erratic trading.
TickThe minimum possible price change, up or down.
Time to maturityThe time remaining until a contract expires.
Tokyo sessionTrading hours in Tokyo, roughly 09:00 to 18:00.
Tom/nextSimultaneously buying and selling a currency for delivery the next day.
Trade balanceThe difference between a country's imports and exports.
Trade sizeThe number of units of a product in a contract or lot.
Trading haltA temporary postponement of trading.
Trading rangeThe span between a security's highest and lowest prices over a period.
Trailing stopA stop that follows favourable price moves and closes the trade on an adverse move.
Transaction costThe expense of buying or selling a financial product.
TrendSustained price direction marked by higher highs and lows, or lower highs and lows.
TurnoverThe total value or volume of executed transactions over a period.
Two-way priceA quote showing both bid and offer rates.
U
UK OILA name for Brent crude oil.
UK100A name for the FTSE 100 index.
UnderlyingThe actual market from which a product's price is derived.
Unemployment rateThe percentage of the labour force that is jobless and seeking work.
Unrealised gain/lossThe theoretical profit or loss on open positions at current rates.
UptickA new quote priced higher than the preceding quote.
US OILA name for WTI crude oil.
US prime rateThe rate US banks charge their most creditworthy corporate customers.
US30A name for the Dow Jones index.
V
Value dateThe date counterparties settle their obligations, typically two business days after a spot trade.
Variation marginFunds traders must keep to cover market fluctuations.
VIXMeasures expected 30-day S&P 500 volatility, often called the fear gauge.
VolatilityHow strongly and quickly prices move; active conditions often create opportunities.
W
Wedge patternA narrowing price range that typically ends in a breakout.
WhipsawA sharp move quickly followed by a sharp reversal.
Wholesale pricesPrices retailers pay for finished goods, often signalling inflation early.
Working orderA limit order that has been placed but not yet filled.
X
XAG/USDSymbol for silver priced in US dollars.
XAU/USDSymbol for gold priced in US dollars.
Y
YardA billion units.
YieldThe percentage return generated by an investment.
YoYYear over year: comparing a value with the same period one year earlier.
YuanThe base unit of China's currency; renminbi is the currency's name.
353 terms in total.