Forex Glossary with FX Trading Terms and Definitions

It aims to mitigate the risk faced by investors in the shape of variations in forex exchange rates, bonds, stocks, indexes, and commodities. Double Bottom – Double Bottom is a technical analysis term. It’s formed when a price drops and rebounds consecutively from a particular level. This pattern is bullish in nature as it demonstrates a weakness in a selling trend and pre-indicates a potential buying trend in the market. It is exactly the opposite of a double top pattern.For example, if Gold prices drop and rebound from $1260 twice. That makes $1260 a double bottom level, which means that we may see another pullback or buying behavior if the prices test this level in the future.

During deflation, the purchasing power of a currency gradually increases. It’s banknotes or coins used as a generally accepted method of payment for goods and services within an economy. Crude oil inventories refer to the stockpile of excess oil supply usually maintained by governments to keep in reserve. Inventories offer useful information on the commodity’s supply and demand, and they can affect its prices. In trading, correlation is a statistic that shows the rate at which two assets change together.

Namibia Dollar

The euro is to be issued by a future European central bank, to be independent of political control and federal in nature. All countries which https://day-trading.info/ fulfil the five convergence criteria in 1998 will proceed to EMU in 2000. Sweden’s joining is subject to ratification by parliament.

Ethereum is a blockchain based decentralized platform with smart contract functionality. Its native cryptocurrency is Ether or ETH – the second largest cryptocurrency by market cap. An economic calendar shows when significant events or releases, which have the potential to move asset prices or markets as a whole, are scheduled to take place. Cryptos can often be decentralized networks based on blockchain technology. The main features of cryptos include using cryptography for security and theoretically not being at risk of government manipulation as they are in general not issued by central authorities.

Jamaican Dollar

Central Bank – Governmental bank whose job is to manage and run the monetary policy in the country, while at the same time maintaining the currency’s strength and stability. Bullish Market – An optimistic market characterized by rising prices. Bearish Market – A pessimistic market characterized with falling prices. Algorithmic Trading – Algorithmic trading is a process of trading with the help of computer programs which follows certain commands to open and close trades. Algorithmic trading avoids human emotions and enhances the speed at which a trade can be executed.

INTEREST RATE – The percentage of an amount of money paid for the use of borrowed funds. It is calculated on a daily basis and paid on the first day of each month. HEDGE – A position that reduces the risk of a trader’s primary position. FUTURES CONTRACT – A future is a contract for the execution of a transaction at a set date in the future. The price for the future transaction is agreed in the present.

Top Reversal Day

MACD uses data from various moving averages and it is designed to identify changes in the momentum of an asset’s price. Investors use MACD to determine potential investment opportunities around support and resistance levels. Day trading is the buying and selling of financial assets within the same trading day, holding no positions overnight. Day traders aim to profit from small intraday price fluctuations. A chart pattern is a graphical depiction of an asset’s price movement formed by lines that connect common price points such as highs or lows, during a given period of time.

The rate of interest at which banks borrow funds (denominated in U.S. dollars) from other banks, in marketable size, in the London interbank market. Some interest rate futures contracts, including Eurodollar futures, are cash settled based on LIBOR. One can hedge either a long cash market position (e.g., one owns the cash commodity) or a short cash market position (e.g., one plans on buying the cash commodity in the future). An investment trust, syndicate, or similar form of enterprise operated for the purpose of trading commodity futures or option contracts.

Funds held against future contingencies., normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. Buying a specific quantity of options and selling a larger quantity of out of the money options. The use of cash generated by positive variation margins on a futures position to increase the size of the position, each reinvestment in successively smaller increments.

It is the difference between the lowest price of a period and 13-period exponential moving average. A buy signal is triggered when the Bears Power index is below zero and rising while a trend indicator (i.e. moving average) is pointing upwards. 64% of retail investor accounts lose money when trading CFDs with this provider. Sometimes called a “demo account”, “dummy account”, “virtual currency account”, or “practice account”, a demo account is a forex trading account that makes use of virtual funds.

Capital gains definition

LIQUIDITY – Refers to the relationship between transaction size and price movements. If large transactions can occur with only minimal price changes, a market can be called ‘liquid’. INSTRUMENT – Any tradeable financial product such as a currency pair, a CFD or a commodity. INDEX – In a broader sense, it is statistical measure of change in economy. In the financial markets, indices are imaginary securities portfolios that represent a particular market or market segment, and index variations indicate market trends. IFO – It stands for Institute for Economic Research (Institut für Wirtschaftsforschung).

• The results help traders and developers to assess the performance of their strategies.
• It involves, position size, stop loss, diversification, asset allocation and reward to risk ratio.
• In the cotton trade, the term refers to cotton certified for delivery.
• Divergence between the oscillator and price hints at reversals.
• A fiat currency is a national currency that is not pegged to the price of a commodity such as gold or silver.

The way that where the price of gold is fixed against the currency it means that the increased supply of gold does not lower the price of gold but causes prices to increase. Foreign exchange deal which matures on any day past the spot delivery date. The latest day or time by which the buyer of an option must indicate to the seller his intention to the option. A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency. A stop-loss order that must be executed at the requested level regardless of market conditions. An instruction given to a dealer to buy or sell at the best rate that is currently available in the market.

Retail sales Measures the monthly retail sales of all goods and services sold by retailers based on a sampling of different types and sizes. This data provides a look into consumer spending behavior, which is a key determinant of growth in all major economies. Revaluation When a pegged currency is allowed to strengthen or rise as a result of official actions; the opposite of a devaluation. Rights issue A form of corporate action where shareholders are given rights to purchase more stock.

Market capitalisation definition

The most pertinent are those released on a regular basis by government agencies regarding inflation, GDP, employment and prices of major commodities . Closing out an existing position in a financial instrument with an opposing transaction. A pending buy order with the value placed above the market price.

So, in the EUR/USD pair, the euro would be the base currency and the US dollar would be the quote currency. Majors/minors – Currency pairs are generally split into two different categories. Major currency pairs all involve the US dollar and are more frequently traded. Minor currency pairs are those which don’t include the dollar.

A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes. Can be implied from futures pricing, see implied volatility. A dual exchange rate system where normally only one rate is open to market pressure, e.g.

The rate at which interest earned on a loan can be reinvested. The rate may not attract the same level of interest as the principal amount. A currency that is normally quoted as dollars per unit of currency rather than the normal quote method of units of currency per dollar.

The central bank is looking to increase or decrease the value of its currency against another currency. Stock analysis is the method used by how do currency exchange rates work 2020 a trader or investor to examine and evaluate the stock market. It is then used to make informed decisions about buying and selling shares.

The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country of the foreign currency. The enquirer is the party who must make sure that his spot day coincides with the one applied by the respondent. The adjustment of the maturity for a particular month does not affect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day.Also referred to as maturity date.

Some brokers preserve the right to close clients’s positions without previous notification if the equity for the required margin is below 100%. A standard lot means $100,000 of any currency you fund your account with. LIMIT ORDER – It is apending order used to close a trade when the market is moving profitably to the open position.