Glossary of terms for Traders
Making a profit on price differences of identical financial instruments, in different markets or in different forms. For example: a pair of opposite transactions that occur simultaneously and generate a profit with zero risk.
The rate at which the bank sells the base currency.
• bank This is an organization, usually a corporation that receives demand deposits and time deposits, pays interest on them, discounts accounts, makes loans and invests in securities, accepts and issues checks.
A trader playing on a slide.
• bear market
A market that has a tendency to decrease in rates.
The rate at which the bank buys the base currency.
• big figure
In dealer jargon, the base number is 100 points.
A promissory note issued for more than one year. The government, states, cities, corporations and many other types of institutions sell bonds.
A person or firm that acts as an intermediary between the buyer and the seller, usually requiring payment for a commission.
A trader playing on a raise.
• bull market
A market in which there is a noticeable upward trend in prices.
• Central Bank
Central bank. One of the functions of the Central Bank is to manage foreign exchange reserves, conduct currency interventions that affect the level of the exchange rate, as well as the level of interest rates on investments in national currency.
Graphical display of price changes and other information over time.
• closed position
The market position at which the reverse transaction was made and the settlement was made.
• cross rate
Exchange rate between two currencies, with the exception of the US dollar. For example, cross-rates: GBP / EUR, EUR / JPY, EUR / CHF.
Any form of money that is in circulation.
• day trading
Opening and closing of one or several positions within one trading day.
• DAX 30.
The weighted average share price index of the 30 largest companies in the German market.
Money deposited to the account for further transactions.
A situation in which two or more graphs of indices give a discrepancy with the price schedule.
A strategy designed to reduce risk by distributing capital investments between various stocks, bonds and real estate.
• The Dow Jones Industrial Average (DJIA)
The most widely used indicator of the general condition of the US stock market. The average weighted index for the 30 largest corporations.
The trend towards the market in the direction of lower prices.
• economic indicator
Statistical data showing general trends in the economy.
• EMS European Monetary System
• EMU European Monetary Unit
• Federal Open Market Committee (FOMC)
A 12-member committee that sets up a loan and an interest rate policy for the Federal Reserve.
• Federal Reserve Bank
One of the 12 regional banks, authorized to support the reserves, the accounts of the issuing bank, and to provide money to state banks.
• Federal Reserve System
The central banking system of the United States, composed of the Federal Reserve Board, 12 Federal Reserve Banks, national banks and state banks. The task of the organization is to regulate the flow of money and credits in the country.
Securities, options, futures, goods or other valuables that have value in currency, or a record of a currency transaction.
Figure on the graph of technical analysis. A large increase, then the price moves in a narrow range for a while, and ends with a big fall, or vice versa.
The price that neither rises nor falls. Or a neutral position, when all positions are closed.
Evaluation of the future trend, through research and analysis of available information.
• foreign exchange
The term denoting conversion operations is a transaction of foreign exchange market agents by exchanging agreed amounts of a monetary unit of one country for the currency of another country, at an agreed rate for a certain date.
• exchange rate
The rate at which the currency can be converted into another foreign currency.
OTC market, where buyers and sellers conduct currency transactions.
• fundamental analysis
Method of forecasting price changes, built on the analysis of the current economic situation. For example: accounting for the impact on the price of events reflected in the news and changes in economic indicators.
Standardized contracts for sale or exchange, which require the delivery of products, bonds, currencies, at a certain price, at a certain future date.
The seven largest industrial countries: the United States, Japan, Britain, France, Germany, Italy, and Canada. At their summits, global issues of world economic development are usually solved.
Conclusion of futures deals on the purchase or sale of foreign currency in order to avoid price fluctuations. The essence of the hedge is the purchase (sale) of foreign exchange contracts for a period at the same time as the sale (purchase) of the currency that is available, with the same delivery period and conducting a reverse operation with the onset of the actual delivery of the currency.
The benchmark for measuring financial or economic efficiency. For example, the S & P 500 or the Consumer Price Index.
Data for obtaining information about the general state of the economy, or financial markets. The current public opinion asserts that technical indicators help to win in the market.
• interbank rates
Exchange rates that large international banks quote to other major international banks. The difference between the rates of buying and selling currencies can be about 0.03-0.08%
The fee for the use of borrowed money, usually – is the annual fee as a percentage of the loan amount.
• interest rate
Work within one business day.
The average value between the last Bid and Ask (or sometimes simply relying on the last Bid value).
The ratio of the use of own and borrowed money, for conducting trading operations. A loan provided by a bank to a client for carrying out margin trading operations.
The maximum or minimum value of the price, for making a decision.
• limit order
the order to buy (sell) when the price is reached or better.
• London Inter-Bank Offer Rate (LIBOR)
The interest rate that the largest international banks provide each other for loans (usually in Eurodollars).
Buy or open Buy position
Reduction of capital as a result of losses.
The smallest indivisible volume of a purchase / sale transaction
Pledge (insurance deposit), providing coverage of possible losses that may arise in the case of margin trading in currency.
• margin call
The message of the dealing center to the trader that it is necessary to add funds to the margin account to cover losses from unfavorable price movements and maintain the margin level established by the dealing center.
Currency trading on bail (margin, see above). In case of a margin trade, a reverse transaction is mandatory.
• market maker
Large banks and financial companies that determine the current level of the exchange rate due to a significant share of its operations in the total volume of the market. Market makers set the current level of the exchange rate by conducting transactions with each other and with smaller banks that are market users.
• market maker spread
The difference between the prices at which a brokerage firm buys and sells a currency.
• market order
An order to buy or sell at the best price available at the moment.
• market price
The last message about the value of the price at the current time.
• National Association of Securities Dealers Automated Quotations system (NASDAQ)
An automated system installed by the NASD to facilitate trading by providing the broker / dealers with the current offer and demand of price quotas, with respect to over-the-counter stocks and certain stocks admitted to circulation.
• Nikkei Index
The index of shares of 225 leading companies, sold on the Tokyo Stock Exchange.
The same as ask. Or an invitation to a deal with the other party.
• offshore company
A company registered in a country with a low level of government control, and / or low tax rates.
• open position
The market position by which the reverse transaction was not conducted at the current time.
Request a client to a broker to buy (purchase order) or sell (sell order) at a specific price or for a market price.
• pip (s), point
The minimum possible price change (the last digit of the writing of the exchange rate).
The number of values in the property (long position) or the amount of debt (short position).
Positive capital gains, as a result of investments, or business transactions, after deducting all expenses.
Higher and lower actual prices for the sale of this product, during this period. Also this is called the price spread.
The level of prices at which active sales can suspend or reverse the trend towards an increase.
Transfer monopoly ownership of securities, or other assets, in exchange for money or valuables.
Sell or open Sell position (see Long)
• short position
The position formed as a result of a short sale, which has not yet been covered.
The transaction at which settlements occur on the second business day after the conclusion of the transaction.
The difference between the current purchase price (Bid) and the sale (Ask), expressed in points (Points, Pips)
A tool for the exclusive use of a part of the corporation’s assets. Grants the right to own a proportional amount in the general holdings of the corporation and in its profits.
• stock exchange
Exchange, on which shares are sold and bought and equivalent securities. For example: NYSE and AMEX.
• stop-limit order
The order to buy (sell) at a certain price or better, but only after reaching the set price. In essence, a combination of a stop order and a limit
Stop order, used to limit losses. It works to close the position at a given value of the price, when it moves in the direction of losses.
• stop order
(stop-loss order) order to buy or sell currency at a fixed price or worse. This order is usually issued to limit losses, in case the market moved in the opposite direction to the expected one.
The price level at which active purchases can suspend or unfold a downward trend.
The combination of two opposite conversion transactions for the same amount with different value dates. Usually, swapping is performed when moving an open position the next day. To open an open currency position means to save the state of the position (size and sign) for a certain period of time in the future.
• technical analysis
Analysis of the state of the market, based on the previous history of price changes. In this analysis, graphs are used that reflect the change in prices over certain periods of time.
• thin market
A market with low supply and demand. Characterized by low liquidity, high spread and high volatility.
Transaction of securities, currency or other valuables.
The one who buys and sells securities for his personal account, and not on behalf of the clientele.
Purchase and sale of securities or goods on a short-term basis, in order to obtain a quick profit. Or any purchase and sale of securities or goods.
Operation of opening / closing position.
The current general direction of the price movement.
An upward price movement.
• value date
Date of the execution of the terms of the transaction, physical movement of funds. Value dates can only be working days, excluding weekends and holidays for this currency.
The relative speed at which the price moves up and down. The annual standard deviation of the daily price change is calculated.
The number of transactions during this time period.