Glossary

Account Statement A statement providing the balance as well as the full record of all transactions that lead to the current balance.
Ask/offer price The price at which a currency pair or security is offered for sale; the quoted price at which an investor can buy a currency pair. This is also known as the 'offer', 'ask price', and 'ask rate'.
Balance The amount of money in an account in terms of the basic currency.
Base currency In terms of foreign exchange trading, currencies are quoted in terms of a currency pair. The first currency in the pair is the base currency. The base currency is the currency against which exchange rates are generally quoted in a given country. Examples: USD/JPY, the US Dollar is the base currency; EUR/USD, the EURO is the base currency.
Bid price The price at which an investor can place an order to buy a currency pair; the quoted price where an investor can sell a currency pair. This is also known as the 'bid price' and 'bid rate'.
Chart  A type of information graphic that allows to analyze price changes at the market and are used for graphical analysis, building of various indicators and line studies. Charts are a very valuable instrument for analyzing of financial markets.
Close price  The rate at which a position can be closed based on the market price at end of the day.
Closing a position The process of selling or buying a foreign exchange position resulting in the liquidation (squaring up) of the position.
Currency pair  The two currencies in a foreign exchange transaction. The «EUR/USD» is an example of a currency pair. The first currency in the pair is the base currency. The second currency in the pair is labeled quote currency or counter currency.
Cross-rate The exchange rate between 2 currencies where neither of the currencies are USD. The rate at which two currencies exchange based on exchange rates using a third currency.
Day Trading  Refers to a style or type of trading where trade positions are opened and closed during the same day.
Deposit  Reflects funds deposited to the trading account for a particular purpose of investment (the buying and selling of securities or commodities for the purpose of gaining profit).
Derivative A financial instrument whose characteristics and value depend upon the characteristics and value of an underlier, such as a commodity, bond, equity or currency. Futures and options are prominent examples of derivatives.
Hedging A type of protective investment designed to offset adverse price movements in a given asset. Typically, a hedge is an offsetting position taken in a related security or entering positions to reduce risk in another investment.
High price  The greatest price that a security or currency hit during a specific period of time. Most charting packages will usually list an open, high, low, close. If a security or currency closes at the high of the day, it is usually perceived very positive or bullish.
Last price  The price of the last transaction for a given currency pair at the end of a given trading session. Also known as closing price or close.
Leverage The amount, expressed as a multiple, by which the notional amount traded exceeds the margin required to trade (the ratio between the borrowed and owned funds for trading). For example, if the notional amount traded (also referred to as «lot size» or «contract value») is $100,000 dollars and the required margin is $2,000, the trader can trade with 50 times leverage ($100,000/$2,000).
Long position  In foreign exchange, when a currency pair is bought, it is understood that the primary currency in the pair is 'long', and the secondary currency is 'short'.
Lot The standard unit size of a transaction. Typically, one standard lot is equal to 100,000 units of the base currency, 10,000 units if it’s a mini, or 1,000 units if it’s a micro.
Low price  The lowest price that a security or currency pair has reached during a certain period of time (usually, during a day).
Margin The amount of money required to open or maintain a position. For example, 1% margin means that $1,000 of funds on deposit are required for a $100,000 position. Margin can be either «free» or «used». Used margin is that amount which is being used to maintain or open a position, whereas free margin is the amount available to open new positions. If a traders account falls below the minimum amount required to maintain an open position, he will receive a «margin call» requiring him to either add more money into his or her account or to close the opened position.
Margin account  A type of account in which the brokerage lends the client cash with which to purchase securities. In contrast to a cash account, a margin account allows an investor to buy securities not in the hands of the client.
Margin level  Proportion of Equity and Margin (equity/margin), which defines safety factor on trading account.
Open position  Any position (long or short) that is subject to market fluctuations and has not been closed out by a corresponding opposite transaction.
Open — Opening of a position, or entering the market, is the first buying or selling of a certain amount of the security traded. Position can be opened either by execution of a market order or by automatic triggering of a pending order.
Order A customer’s instructions to buy or sell currencies.
Pip (percentage in points)  The smallest increment of change in a foreign currency price, either up or down. For most currencies, denotes the fourth decimal place in the exchange rate (0.0001). For such currencies as the Japanese yen, a basis point is the second decimal place (0.01).
Position A position is a trading view expressed for buying or selling. It refers to the amount of a currency either owned or owed by a trader.
Profit The positive gain resulting from an investment or business operation after subtracting for all expenses. Opposite of loss
Range Range refers to the area between high and low prices a currency pair tends to trade between during a given period of time.
Rate Price at which a currency can be purchased or sold against another currency.
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.
Short position In foreign exchange, when a currency pair is sold, the position is said to be short. It is understood that the primary currency in the pair is 'short', and the secondary currency is 'long'.
Spot In the FX market transactions in the spot market are actually settled two days later, but are delivered right away. In the speculative spot FX markets, unlike the spot commodity markets no good actually change hands. Transactions are simply settled as computer entries between the tow parties in the trade. In other words the sale of 100 million Euro for dollars does not obligate the seller to actually deliver the hard currency to the buyer, but simply requires him to settles out the difference if any between the entry price and the current market price.
Spread The difference between the sell quote and the buy quote or the bid and offer price. For example, if EUR/USD quotes read 1.3200/03, the spread is the difference between 1.3200 and 1.3203, or 3 pips. In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread.
Stop-limit order  An order to buy or sell a certain quantity of a certain security at a specified price or better, but only after a specified price has been reached. A stop-limit order is essentially a combination of a stop order and a limit order.
Stop-loss order  An order to restrict losses at a pre-specified price level. Order to buy or sell when a given price is reached or passed to liquidate part or all of an existing position. The purpose of setting up a stop loss order is to put a «safety net» on transactions. Without a stop, a trader could potentially lose all his funds if the trade went against them. A stop position reflects a trader’s «pain point," where the market has turned so far against him that he needs to exit his position. As a result, stop orders are useful for money management in controlling losses, helping to ensure a trader is controlling their risk exposure.
Stop-out  If at any point of time the Equity (current balance including open positions) is equal or less than 20% of the margin occupied by open positions, a dealer has the right to close one or all open positions at his discretion to meet margin requirements.
Support A price level in which a currency pair has difficulty falling below. At support, price action tends to stall before breaking below, or reverse in the opposite direction. Support level, is the bottom of a stock’s current trading range, or the point at which the price is low enough to stimulate demand among investors. Strong buying at the support level moves the stock’s price up from its low.
Tick The smallest possible change in a price, either up or down. A tick may also be called a minimum fluctuation.
Trading session  The period in which trading activities occurs, spanning from the time the market opens until the closing of the market.
Trend  The general pattern of movement for prices or rates. The relatively constant movement of a variable throughout a period of time. The period may be short-term or long-term, depending upon whether the trend itself is short-term or long-term.
Quote A simultaneous bid and offer in a currency pair. The highest bid or lowest ask price available on a currency at any given time.