Forex glossary

A

Account Balance : Same as balance.
Accumulation Line : See Distribution Line.
AED : ISO 4217 currency code, Currency used in United Arab Emirates, called Dirhams…
Aggregate Supply : Total supply of goods and services in the economy from domestic …
American Option : An option which may be exercised at any time prior to expiration….
ANG : ISO 4217 currency code, Currency used in Netherlands Antilles, called Guilder…
Ascending triangle : A triangle continuation formation with a flat upper trendline …
ASI : See Accumulation swing index.
Ask Offer Price : The price at which the market is prepared to sell a specific Curr…
AUD : ISO 4217 currency code, Currency used in Australia, called Dollars.
Average options : Options that refer to the average rate of the underlying currency…

B

Bear : An investor who believes that prices are going to fall.
Bid Rate : See Bid Price.
Blank closing bozu : A bullish candlestick formation that consists of a long blank …
BOC : See Bank of Canada.
Book : In a professional trading environment, a ´book´ is the summary o…
Breakout of a spread triple top : A bullish point-and-figure chart formation that s…
Bull : An investor who believes that prices are going to rise.
Bull Market : A prolonged period of generally rising prices.
Bullish : Word used to describe an investor´s attitude. Bullish refers to an …
Bullish Harami : A two day pattern that has a small body day completely contained w…
Bullish tsutsumi : Engulfing bar. A bullish two-day candlestick combination. It con…

C

Calendar combination : A compound option strategy that consists of the simultaneous…
Calendar straddle : A compound option strategy that consists of simultaneous buying…
Classes of options : The types of options: calls and puts.
Combination spread : Synthetic future. A compound option strategy that consists of …
Contract : An agreement to buy or sell a specified amount of a particular currency …
Cost of carry : The interest rate parity, whereby the forward price is determined b…
Counter Currency : The second listed Currency in a Currency Pair.
Counter Party : The other organisation or party with whom the exchange deal is bein…
Covered Call Write : A strategy of writing CALL options against a long position in …
Covered Margin : The interest rate margin between two instruments denominated in di…
CYP : ISO 4217 currency code, Currency used in Cyprus, called Pounds.

D

Day Trade : A trade opened and closed on the same trading day.
Day Trader : Speculators who take positions which are then liquidated prior to the …
Dealing Board : The panel of communications equipment forming part of a dealer´…
Declaration Date : The latest day or time by which the buyer of an option must indi…
Derivative : A contract that changes in value in relation to the price movements of…
Devisenterminmarkt : German for forward exchange market.
Discount forward spread : A forward price that is deducted from a spot price to cal…
Discount Rate : The rate at which a bill is discounted. Specifically it refers to t…
Discretion for range to trader stop-loss order : A stop-loss order that gives the tr…
Downside tasuki gap : A bearish two-day candlestick combination. It consists of a s…
Downward breakout of a bullish support line : A bearish point-andfigure chart forma…

E

Electronic Brokerage System : The electronic system on which major banks trade with…
EMU : See European Monetary Union.
Eurocurrency : A currency domiciled outside its country of origin normally held by …
European Monetary Unit : The principal goal of the EMU is to establish a single Eur…
Execution : The Process of completing an order or deal.
Exercice price : See Exercise strike price.
Exercise Price : See Strike price.
Exhaustion gap : Price gap that occurs at the top or the bottom of a Vreversal form…
Exotic : A less broadly traded currency.
Expiry Date : The last date on which an option can be bought or sold.
Exposure : see Position and Mismatch. Various methods of calculating an exposure ex…

F

Federal Reserve System : The central banking system of the US comprising 12 Federal…
FIFO : See First In First Out.
Financial Accounting Standards Board´s Statement Number 8 : Abbreviated FASB 8. The original acco…
Flat : Term describing a trading book with no market exposure.
Floating Rate Interest : As opposed to a fixed rate, the interest rate on this type…
Foreign exchange exposure : The potential effect of currency fluctuations on shareh…
Forward : A transaction that settles at a future date.
Forward Forward : A forward / forward deal is one where both legs of the deal have …
Forward Operations : Foreign exchange transactions, on which the fulfillment of the…
Forward Rate Agreements : Abbreviated FRA. It is an agreement between two parties t…
Free Reserves : Total reserves held by a bank less the reserves required by the aut…

G

G10 : G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussi…
Gap : A mismatch between maturities and cash flows in a bank or individual dealers …
GBP : ISO 4217 currency code, Currency used in United Kingdom, called Pounds.
GNP : See Gross National Product.
Going Short : The selling of a currency or instrument not owned by the seller.
Gold Standard : A monetary system that backs its currency with a reserve of gold, a…
Golden cross : An intersection of two consecutive moving averages that move in the …
Gravestone doji : Gravestone doji form when the open, low and close are equal and t…
Gross National Product : Gross domestic product plus “factor income from abroad” – …
Gross National Product Deflator : See Gross National Product Implicit Deflator.
Gross National Product Implicit Deflator : Deflator tool designed to adjust the Gro…

H

hammer at the bottom : See Karakasa.
Hanging man : Identical in appearance to the hammer, but appears within the context…
Harmonised Index of Consumer Prices : Economical indicator, The harmonised index of…
Hedge : The purchase or sale of options or futures contracts as a temporary substit…
High-low band : A band created by two winding parallel lines above and below a shor…
HNL : ISO 4217 currency code, Currency used in Honduras, called Lempiras.
Hoshi : See Hoshi star.
Hoshi star : A “wait-and see” two-day candlestick combination. It consist…
Households survey : Consists of the unemployment rate, the overall labor force, and…
HRK : ISO 4217 currency code, Currency used in Croatia, called Kuna.
HTG : ISO 4217 currency code, Currency used in Haiti, called Gourdes.

I

IMP : ISO 4217 currency code, Currency used in Isle of Man, called Pounds.
Import and Export Prices : Economical indicator, The prices of goods that are bough…
In-the-money call : A CALL whose present currency price is higher than the strike p…
Industrial Production : An economic indicator that consists of the total output of …
Industrial Production Index : A coincident indicator measuring physical output of m…
Initial Margin Requirement : The minimum portion of a new security purchase that an…
Interest Rate Floor : An agreement which provides the buyer of the floor with a min…
International Monetary Market : Part of the Chicago Mercantile Exchange that lists …
Intervention : Action by a central bank to effect the value of its currency by ente…
Intra Day Limit : Limit set by bank management on the size of each dealer´s I…
Introducing Broker : A person or corporate entity which introduces accounts to FORE…

J

J-Curve theory : Devaluation of a currency will trigger export gains in the long te…
JEP : ISO 4217 currency code, Currency used in Jersey, called Pounds.
Jittai Body of the candlestick : (See Candlestick chart.)
JMD : ISO 4217 currency code, Currency used in Jamaica, called Dollars.
Jobber : A trader who trades for small, short-term profits during the course of a t…
Jobless Claims : Economical indicator, A weekly compilation of the number of indivi…
JOD : ISO 4217 currency code, Currency used in Jordan, called Dinars.
Journal of Commerce Index : Index that consists of the prices of 18 industrial mate…
JPY : ISO 4217 currency code, Currency used in Japan, called Yen.

K

Kabuse : See Kabuse (dark cloud cover).
Karakasa : See Karakasa (hangman at the top, hammer at the bottom).
Kenuki : A “wait-and-see” two-day candlestick combination. It consists of…
Kiwi : Slang for the New Zealand dollar.
KMF : ISO 4217 currency code, Currency used in Comoros, called Francs.
Knock In : A process where a barrier option (European) becomes active as the underl…
Knock Out : Has a corresponding meaning although the option may permanently cease t…
Koma : A reversal candlestick formation that consists of a short bar, either blank …
KRW : ISO 4217 currency code, Currency used in Korea (South), called Won.
KWD : ISO 4217 currency code, Currency used in Kuwait, called Dinars.
KZT : ISO 4217 currency code, Currency used in Kazakhstan, called Tenge.

All the definitions starting by letter K.

L

LBP : ISO 4217 currency code, Currency used in Lebanon, called Pounds.
Leading Indicators : Economical indicator, A composite index of ten Economical indi…
Leading Indicators Index : An economic indicator designed to offer a six- to nine-m…
LIFFE : See London International Financial Futures Exchange and Options Exchange.
Liquidation : Any transaction that offsets or closes out a previously established p…
LKR : ISO 4217 currency code, Currency used in Sri Lanka, called Rupees.
Long : The holding of an excess of a particular currency.
Long black filled-in line : See Long black line.
Long black line : This is a bearish line. It occurs when prices open near the high …
Long Hedge : The purchase of futures contracts for price protection purposes, as a …
Long white empty line : See Long white line.

M

Maintenance Margin : The minimum margin which an investor must keep on deposit in a…
Market Maker : A market maker is a person or firm authorized to create and maintain…
Market Rate : The current quote of a currency pair.
Matching systems : Electronic systems duplicating the traditional brokers´ ma…
Mid Office : The control of the trading activity including position keeping.
Minimum Reserve : Reserves required to be deposited at central banks by commercial …
MKD : ISO 4217 currency code, Currency used in Macedonia, called Denars.
Money Supply : Economical indicator, The monetary aggregates are alternative measur…
Morning Doji star : This a doji star in a downtrend followed by a long, white real …
Moving Average Convergence : See Moving Average Convergence-Divergence.
Moving averages oscillator : An oscillator in which the values of two consecutive m…

N

NAD : ISO 4217 currency code, Currency used in Namibia, called Dollars.
NAPM : See National Association of Purchasing Managers Index.
National Association of Purchasing Managers Index : Abbreviated NAPM. A survey of 25…
National Futures Association : Abbreviated NFA. A self-regulatory organization that…
Netting : A process that enables institutions to settle only their net positions wi…
Neural networks : Computer systems that recognize patterns. They may be used to gen…
New Home Sales : Economical indicator, The number of newly constructed homes with a…
NIO : ISO 4217 currency code, Currency used in Nicaragua, called Cordobas.
NOK : ISO 4217 currency code, Currency used in Norway, called Krone.
Nonfarm sector : Jobs in government, manufacturing, services, construction, mining,…
NZD : ISO 4217 currency code, Currency used in New Zealand, called Dollars.

O

Old Lady : Old lady of Threadneedle Street, a term for the Bank of England.
OMIC : See Open Market Investment Committee.
One Cancels the Other : Abbreviated OCO. A combination of two orders in which the e…
Open Market Committee : See Federal Open Market Committee.
Open Market Operations : Central Bank operations in the markets to influence exchan…
Option currency spread : A long currency option and an offsetting short currency op…
Options : An agreement that allows the holder to have the option to buy/sell a spec…
Order : A customer´s instructions to buy or sell currencies.
Organization for Economic Cooperation and Development : Abbreviated OECD. An international…
Out-of-the-money PUT : A PUT whose present currency price is higher than the strike…
Overnight Limit : Net long or short position in one or more currencies that a deale…

P

Pagoda : See Gravestone doji.
Parabolic system : A stop-loss technical system, based on price and time. The syste…
Philadephia Fed Survey : Economical indicator, A composite diffusion index of manuf…
PHP : ISO 4217 currency code, Currency used in Philippines, called Pesos.
Political Risk : Exposure to changes in governmental policy which will have an adve…
Position : The netted total commitments in a given currency. A position can be eith…
PPI : See Producer Price Index.
Premium forward spread : Forward price that is added to a spot price to calculate a…
Price Channels : Technical overlays that form boundaries above and below the price …
Profit n Loss or PnL or Gain and Loss : The actual “realized” gain or loss resultin…
Purchasing power parity : Abbreviated PPP. Model of exchange rate determination sta…

Q

QAR : ISO 4217 currency code, Currency used in Qatar, called Rials.
Quota : (1) A limit on imports or exports. (2) A country´s subscription to th…
Quote : An indicative price. The price quoted for information purposes but not to d…

R

Rabbitt Q-Rank : A proprietary techincal indicator that combines technical and fund…
Rate : Price at which a currency can be purchased or sold against another currency.
Rate of Change and Momentum : See Rate of Change.
Ratio Calendar Spread : Selling more near-term options than longer maturity options…
Ratio PUT spread : A compound option strategy that consists of a number of long put…
Re-purchase : This type of trade involves the sale and later re-purchase of an inst…
Retail Prices Index : Economical indicator, The Retail Prices Index is the UK´…
Reuter Dealing : A system for screen based trading that has been in operation since…
Risk Management : The identification and acceptance or offsetting of the risks thre…
RSI : See Relative Strength Index.
Running a Position : Keeping open positions in the hope of a speculative gain.

S

Sandwich Spread : Same as a butterfly spread.
SAR : (1) Stands for stop-and-reverse. See Parabolic SAR. (2) ISO 4217 currency cod…
SIT : ISO 4217 currency code, Currency used in Slovenia, called Tolars. [no longer …
SITC : Standard International Trade Classification. A system for reporting trade st…
Special Drawing Right : Abbreviated SDR. A standard basket of five major currencies…
spike : See V-formation.
Spot Market : Market where people buy and sell actual financial instruments (curren…
Standard Deviation Volatility : A statistical indicator that describes a stocks vol…
Straddle : The simultaneous purchase/sale of both CALL and PUT options for the same…
Support Levels : When an exchange rate depreciates or appreciates to a level where …
Swap Price : A price as a differential between two dates of the swap.

T

Tan Book : An economic report prepared by the Federal Reserve for FOMC meetings.
THB : ISO 4217 currency code, Currency used in Thailand, called Baht.
Thin Market : A market in which trading volume is low and in which consequently bid…
Tradeable Amount : Smallest transaction size acceptable.
Traditional percentage retracements : See Traditional (Charles Dow) percentage retr…
Treasury Bonds : Government obligations with maturities of ten years or more.
TRIX : Triple Exponential Smoothing Oscillator. See TRIX Index.
TRY : ISO 4217 currency code, Currency used in Turkey, called New Lira.
TVD : ISO 4217 currency code, Currency used in Tuvalu, called Tuvalu Dollars.
tweezers : See Kenuki.
TZS : ISO 4217 currency code, Currency used in Tanzania, called Shillings.

U

UAH : ISO 4217 currency code, Currency used in Ukraine, called Hryvnia.
Ultimate Oscillator : A technical indicator that combines three moving averages int…
Ultimo : Continental term for month or year end.
Uncovered : Another term for an open position.
Under-Valuation : An exchange rate is normally considered to be undervalued when it…
Unit of Account : A device designed to provide a consistent value with varying curr…
Unrealized Pnl : The theoretical gain or loss on Open Positions valued at current m…
Uptick : a new price quote at a price higher than the preceding quote.
Upward breakout from a consolidation formation : Bullish point-and-figure chart formatio…
Upward breakout of a bearish resistance line : Bullish point-and-figurechart format…
Uwakage : Upper shadow of the candlestick. (See Candlestick chart.)

V

Valeur Compensee : Payments are said to be ” valeur compensee” when payment by one …
Value Date : For exchange contracts it is the day on which the two contracting part…
Value Spot : Normally settlement for two working days from today. See Value Date.
Vanilla : A simple option whose terms and conditions do not include any provisions …
VEB : ISO 4217 currency code, Currency used in Venezuela, called Bolivares.
Vertical bear CALL spread : A compound option strategy of buying two options with a…
Vertical bull PUT spread : A compound option strategy of buying two options with a …
Vertical Bull Spread : The sale of an option with a high exercise price and the pur…
Vertical spread : A compound option that consists of two similar options (i.e., cal…
Virtual Pnl : The theoretical gain or loss on Open Positions valued at current mark…
VND : ISO 4217 currency code, Currency used in Viet Nam, called Dong.

W

Warrant : Warrants are a form of traded option. They are the right to purchase shar…
Wedge : A continuation formation that resembles the outline of a pennant, but witho…
Whipsaw : Slang for a condition of a highly volatile market where a sharp price mov…
Wholesale Price Index : It measures changes in prices in the manufacturing and dist…
Williams %R : A popular technical indicator that uses Stochastics to determine overb…
Working Balance : Discretionary element in the monetary reserves of a central bank.
Working Day : A day on which the banks in a currency´s principal financial ce…
World Bank : A bank made up of members of the IMF whose aim is to assist in the dev…
WST : ISO 4217 currency code, Currency used in Samoa, called Tala.

X

XAF : ISO 4217 currency code, Currency used in Communauté Financière …
XAG : ISO 4217 currency code, Currency used in Silver, called Ounces.
XAU : ISO 4217 currency code, Currency used in Gold, called Ounces.
XCD : ISO 4217 currency code, Currency used in East Caribbean Dollars.
XDR : ISO 4217 currency code, Currency used in International Monetary Fund (IMF) Sp…
XOF : ISO 4217 currency code, Currency used in Communauté Financière …
XPD : ISO 4217 currency code, Currency used in Palladium Ounces.
XPF : ISO 4217 currency code, Currency used in Comptoirs Français du Pacifiq…
XPT : ISO 4217 currency code, Currency used in Platinum, called Ounces.

Y

Yard : Slang for milliard, one thousand million.
YEN : See JPY.
YER : ISO 4217 currency code, Currency used in Yemen, called Rials.
Yield Curve : The graph showing changes in yield on instruments depending on time t…

Z

ZAR : ISO 4217 currency code, Currency used in South Africa, called Rand.
Zero Coupon Bond : A bond that pays no interest. The bond is initially offered at a…
ZEW : Economical indicator, The ZEW works in the field of user-related empirical ec…
ZigZag : A price overlay that shows filtered price movements that are greater than …
ZMK : ISO 4217 currency code, Currency used in Zambia, called Kwacha.
ZWD : ISO 4217 currency code, Currency used in Zimbabwe, called Zimbabwe Dollars.