Terminology – 1st page

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

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

 Annuity – any annually fixed series of payments or proceeds during some number of years.

 Appreciation – A currency is said to 'appreciate' when it strengthens in price in response to market demand.

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

 Ask – The price at which the market is prepared to sell a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can buy the base currency. In the quotation, it is shown on the right side of the quotation. For example, in the quote USD/CHF 1.2627/32, the ask price is 1.2632; meaning you can buy one US dollar for 1.2632 Swiss francs.

 Assets – any property owned by a person or firm.

 At Best – An instruction given to a dealer to buy or sell at the best rate that can be obtained.

 At or Better – An order to deal at a specific rate or better.

 Aussie – Dealer slang for the Australian dollar and currency pair AUD/USD.

 Base Currency – The first currency in a Currency Pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.2615 then one USD is worth CHF 1.2615 In the FX markets, the US Dollar is normally considered the 'base' currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.

 Balance – total financial outcome of all complete transactions and deposit/withdrawal of funds from trade account operations. In Meta Trader this name is used to indicate the balance of trade account without counting open positions, so it is the startup mode of balance before opening of trade positions and the actual balance if there are no open positions.

 Balance of Trade – The value of a country's exports minus its imports.

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

 Bear – a speculator who sells in anticipation of falling prices to make a profit on repurchase.

 Bear Market – A market distinguished by declining prices.

 Bid Price – The bid is the the price at which the market is prepared to buy a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can sell the base currency. It is shown on the left side of the quotation. For example, in the quote USD/CHF 1.2627/32, the bid price is 1.2627; meaning you can sell one US dollar for 1.2627 Swiss francs.

 Bid/Ask Spread – The difference between the bid and offer price. Big Figure Quote - Dealer expression referring to the first few digits of an exchange rate. These digits are often omitted in dealer quotes.. For example, a USD/JPY rate might be 117.30/117.35, but would be quoted verbally without the first three digits i.e.

 BOC – Bank of Canada, Canada’s Central Bank

 BOE – Bank of England, England’s Central Bank

 BOJ – Bank of Japan, Japan’s Central Bank

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

 Bretton Woods Agreement of 1944 – An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.

 Breakout – A movement in the price out of an established trading range either above a resistance level or below a support level.

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

 Bull Market – A market distinguished by rising prices.

 Bundesbank – Germany's Central Bank.

 Cable – The British pound/US Dollar exchange rate GBP/USD. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800's.

 Candlesticks chart – A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.

 Cash flow – A revenue or expense stream that changes a cash account over a given period.

 Change – difference between actual price and price closed the previous trading day.

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

 Central Bank – A government or quasi-governmental organization that manages a country's monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.

 Chart – it is the graphic representation of price movements. The main types of charts are Tick chart, Line chart, Bar chart, Candlesticks chart, Point and figures chart, Volumes chart.

 Chartist – An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.

 Choppy market – A stock market condition whereby prices swing up and down considerably but with no resulting overall price movement in either direction.

 CFD – Contracts for Difference — special trading instrument that allows financial speculation on stocks, commodities and other instruments without actually buying.

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

 Clearing – The process of settling a trade.

 Closed position – Exposures in Foreign Currencies that no longer exist. The process to close a position is to sell or buy a certain amount of currency to offset an equal amount of the open position. This will 'square' the position.

 Close Order – closing of actual transaction.

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

 Commission – A transaction fee charged by a broker.

 Confirmation – A document exchanged by counterparts to a transaction that states the terms of said transaction.

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

 Correction – A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index. Corrections are generally temporary price declines, interrupting an uptrend in the market or asset. To measure the correction they use normally Fibonacci levels - 38.2%, 50% and 61.8%

 Consolidation – the movement of an asset's price within a well-defined pattern or barrier of trading levels.

 Contract – The standard unit of trading.

 Convertible Currency – a currency that can be exchanged for another without special permission. Today, most of the currencies which were previously unconvertible are now convertible.

 Counter Currency – The second listed Currency in a Currency Pair.

 Counter party – One of the participants in a financial transaction.

 Cost – any expenditures during the accounting period and represented on a level with sales proceeds for the same period.

 Creditworthiness – A creditor's measure of an individual's or company's ability to meet debt obligations.

 Crossover – the point on a stock chart when a security and an indicator intersect. Some of the indicators that use crossovers are "moving average" and "Bollinger bands".

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

 Currency – Any form of money issued by a government or central bank and used as legal tender and a basis for trade.

 Currency Pair – The two currencies that make up a foreign exchange rate. For Example, EUR/USD.

 Currency Risk – the probability of an adverse change in exchange rates.

 Country Risk – the probability of an adverse change in exchange rates.

 Currency Swap – A swap that involves the exchange of principal and interest in one currency for the same in another currency.

 Currency Symbols – AUD - Australian Dollar CAD - Canadian Dollar EUR - Euro JPY - Japanese Yen GBP - British Pound CHF - Swiss Franc.

 Currency Option – A contract that grants the holder the right, but not the obligation, to buy or sell currency at a specified exchange rate during a specified period of time.

 Currency Swaption – the buyer gains the right but not the obligation to enter into a specified swap agreement with the issuer on a specified future date.

 Currency Warrant – currency warrants are priced the same way as currency options and allows holders the right to exchange an amount of one currency into another currency at a specified exchange rate before or on a specified date.

 Day Order – Any order to buy or sell a security that automatically expires if not executed on the day the order is placed.

 Day Trader – Speculators who take positions in commodities which are then liquidated prior to the close of the same trading day.

 Day Trading – The purchase and sale (or the short sale and cover) of the same security on the same day.

 Dealer – An individual or firm that acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

 Dealind – non-cash currency trading.

 Dealind center – company that provides access to the money market.

 Deficit – A negative balance of trade or payments.

 Depreciation – A fall in the value of a currency due to market forces.

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

 Devaluation – The deliberate downward adjustment of a currency's price, normally by official announcement.

 Diverhence – When the price of an asset and an indicator, index or other related asset move in opposite directions.

 Direct Quote – A foreign exchange rate quoted as the domestic currency per unit of the foreign currency.

 Diversification – A risk management technique that mixes a wide variety of investments within a portfolio.

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

 Dollar Rate – The amount of foreign currency quoted against one US Dollar. Some currencies are quoted in the amount of US Dollars per foreign currency unit, like the British Pound.

 Day Order/DO – Any order to buy or sell a security that automatically expires if not executed on the day the order is placed.

 Deflation – A general decline in prices, often caused by a reduction in the supply of money or credit.

 Double Top – a technical analysis’ figure at which the rate rose on some level twice, and then again fell.

 Double Bottom – a technical analysis’ figure at which the rate fell on some level twice, and then again rose.

 Downtrend – Describes the price movement of a financial asset when the overall direction is downward. A formal downtrend occurs when each successive peak and trough is lower than the ones found earlier in the trend.

 ECB – the Central Bank for the new European Monetary Union.

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

 End Of Day Order (EOD) – An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.

 Equity – the secure part of the client account, considering the open positions, bound with the balance and floating rate (profit/loss) by the following formula: Balance + Floating rate + Swap, i.e. the funds on the client account less the current amount for the open positions, plus the current earnings for the open positions.

 Exchange rate – the exchange rates between two currencies specify how much one currency is worth in terms of the other.

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

 Exchange Rate 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.

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

 Federal Deposit Insurance Corporation (FDIC) – The regulatory agency responsible for administering bank depository insurance in the US.

 Federal Reserve (Fed) – The Central Bank for the United States.

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

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

 Fibonacci levels – the levels with a high probability of trend break or bounce, calculated as the 23.6%, 32.8%, 50% and 61.8% of the trend range.

 Foreign exchange – (Forex, FX) - the simultaneous buying of one currency and selling of another.

 Figure – price change for 100 pips. For example, price change EUR/USD from 1.3770 to 1.3870 – this means figure increase.

 Forward operations – operations with the pre-specified exchange rate for a foreign exchange contract settling at some agreed future date.

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

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

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

 Floating Profit/Loss – The profit/loss that may only be realized if the open contracts are liquidated (settled).

 Floating Rate Interest – An interest rate that moves up and down based on the changes of an underlying interest rate index.

 Foreign Exchange Swap – An agreement between two parties to exchange two currencies at a certain exchange rate at a certain time in the future.

 Free Margin – the funds, which are not used for the security of the opened positions. It is calculated by the formula: Free Margin = Equity – Margin.

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

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

 Gaps – A break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between.

 Going Long – The purchase of a stock, commodity, or currency for investment or speculation.

 Going Short – The selling of a currency or instrument not owned by the seller.

 Greenback – A slang term for U.S. paper dollars.

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

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

 GTC - Good Till Cancel(led) – An order to buy or sell at a specified price. This order remains open until filled or until the client cancels.

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

 High/Low – the highest/lowest price for the trading instrument during the trading day.

 Hit the bid – Acceptance of purchasing at the offer or selling at the bid.

 Indirect Quote – one unit of national currency represents in terms of a foreign currency.

 Initial Margin – The minimum Margin Balance necessary to establish a NEW Open Position.

 Interbank Rates – The Foreign Exchange rates at which large international banks quote other large international banks. Intervention - Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.

 Intraday – trade aiming to get a profit during the trading day.

 Instant Execution – quotes are available to clients without their request. A client is able to execute the order for trading operation immediately.

 Inflation – An economic condition whereby prices for consumer goods rise, eroding purchasing power. Initial Margin - The initial deposit of collateral required to enter into a position as a guarantee on future performance.

 Kiwi – Slang for the New Zealand dollar.