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ADI Abbreviation for Average Directional Index. It is a technical indicator that is used to gauge the strength or weakness of a trend in the financial markets
Anonymous Trading Bids and offers that are present on the financial markets without disclosing the identity of the market participants
Appreciation A condition whereby the value of a financial instrument increases in response to the demand in the market.
Arbitrage The concurrent purchasing and selling of a financial asset at two separate prices in two separate markets, yielding profits with minimal risks.
Ask Rate Also referred to as offer. It is the lowest price at which a seller agrees to sell a financial asset
Asset The underlying instrument essential for determining a contract. It can be a precious metal, stock, currency pair, or bond
Asset Allocation A strategy that segregates investment portfolio over various asset classes with the intention of maximizing returns and also minimizing risks
At the Money When a trade breaks even – the trader neither profits or loses
Attorney in charge An individual granted the mandate to trade in the financial markets on behalf of another trader.
Authorized Dealer A financial entity that has been given the certification to engage in foreign currency transactions
Away from the market A situation in which the bid on a limit order is lower than the present market price or the offer price is more than the present market price for a financial instrument.
Balance of Payments A systematic record that outlines a country’s transactions with other countries within a particular period of time.
Balance of Trade The difference in value between a country’s exports and imports calculated within a certain period of time.
Bank Rate The interest rate at which a country’s central bank gives loans to domestic commercial banks.
Base Currency The first currency in a currency pair quotation. The base currency always equals “1” while the quote, or counter currency reflects the value of the base currency
Bear A trader who believes that the price of an asset will fall.
Bear Market The financial market in which asset prices are falling.
Bid The selling price of a particular financial asset
Binary Options Also called digital options or all-or-nothing options. They are contracts that are able to give only two potential outcomes; the asset prices with either rise or fall. As such, they are binary i
Blue Chip Shares of large and well-established organizations.
Boundary/Range Instrument A kind of binary option whereby an investor forecasts whether the underlying asset’s value will culminate inside a particular price range or outside of it.
Break Even A term used to describe when there is no overall profit or loss experienced in a transaction.
Breton Woods Agreement A historic agreement signed in 1944 in the U.S. that stipulates the guidelines for an international monetary system.
Broker An individual or an organization that works as the middleman between retail traders and large, established financial corporations.
Bull A trader who believes that the price of an asset will rise.
Bull Market The financial market in which asset prices are rising.
Call Option Also known as a “High option.” When a trader believes that an asset price will rise, he purchases a Call option.
CBOE (Chicago Board Options Exchange) The biggest options exchange in the globe
CCI Abbreviation for Commodity Channel Index. It is a technical oscillating indicator used for measuring when a financial instrument has been overbought or oversold.
CFD Initials for Contract for Difference. It is basically an agreement between an investor and an investment institution. When the agreement expires, the parties exchange the difference betw
Commission The fee paid to a brokerage firm for the service rendered in facilitating transactions.
Commodities A general name that refers to basic physical items that are either grown or mined. Examples include coffee, precious metals, and oil.
Commodity Pairs The three pairs of currencies in the foreign exchange market that are from countries with the most extensive quantities of commodities. These pairs are USD/CAD, AUD/USD, and NZD/U
Counter Currency The second currency in a currency pair quotation. Also called quote currency. This reflects the value of one unit of the first currency in the pair (Base Currency).
CPI Initials for Consumer Price Index. It is a statistical measure that tracks the changes in the purchasing power of a currency as well as the rate of inflation.
Cross Currency Transaction A type of transaction in which two or more currencies are traded at the same time.
Currency A type of a financial asset that can be traded. Currencies are usually traded in pairs.
Currency Trading The act of participating in the exchange of one currency for another currency.
Day Trading The opening and closing of positions in the market on the same day without holding them overnight.
Deficit A state in which liabilities exceeds the value of assets or losses exceeds profits.
Demo Trader A trading account that enables a potential investor to review and get accustomed to the features of a trading platform using virtual money before engaging in actual trading.
Depreciation A condition in which the value of a financial instrument decreases according to the demand in the market.
Derivative A financial contract whose worth relies upon or is derived from the performance of one or more underlying assets. Examples of underlying assets are stocks, bonds, or indices.
Dividend A portion of a company’s profits paid to every shareholder.
Earnings per Share (EPS): The fraction of an organization’s earnings apportioned to every outstanding share of common stock.
ECN Broker A brokerage firm that employs electronic communication networks (ECNs) to enable major brokerages and individuals benefit from the direct access to other market.
Expert Advisor A script that enables the analytical and trading processes in the trading platform to be carried out with little or no manual control.
Expiry time Also called expiration. It’s the time and date when a trade of a financial instrument expires.
Federal Reserve Also commonly referred to as Fed. It is the central bank of the U.S. and the most influential financial institution in the globe. It oversees the monetary and financial system in the U.S.
Fibonacci A popular tool used by technical analysts to identify potential support and resistance levels based on some key numbers.
Fill The process of executing an order on the trading platform.
Financial Instrument Any type of a tradable asset. Examples include currencies, futures, options, and CFDs.
Flat A situation whereby a trader does not have any running position in the market.
Forex The short form of foreign exchange.
Fundamental Analysis A type of market analysis that evaluates the related economic, financial and other qualitative and quantitative aspects that affect the performance of a particular financial instrument.
Gap The disparity that exists on charts between the closing price of one trading session and the opening price of the subsequent trading session.
GDP Abbreviation for Gross Domestic Product. It’s an indicator that measures the economic health of a country by determining the total worth of finished goods and services produced within
GTC Abbreviation for Good Till Cancelled. It is an order to purchase or sell a particular financial instrument at a set price but this order is only valid, said to be good, until the trader chooses to
Hedging A trading strategy that involves developing techniques of reducing or avoiding extensive losses when trading in the financial markets.
In the Money A phrase used to illustrate when a trader makes profit.
Index Represents a group of representative stocks within a stock exchange. Some of the most popular indices are the S&P 500, NASDAQ and the FTSE 100.
Inflation The progressive rise in the price levels of goods and services in a country. When this happens, the purchasing power consequently decreases.
Interbank Rate The interest rate at which banks offer loans to one another so that they can manage liquidity and comply with the statutory conditions.
Japanese Yen It is the Japanese currency unit, which is the third most-traded currency in the forex market.
Jobber Also called a scalper. It is used to describe a trader who opens and closes short-term positions with the intention of making accumulated profits.
Kill An order that is to be cancelled (that is to say “killed”) if it cannot be wholly filled in the market.
Kiwi The slang term for the New Zealand Dollar.
Lagging Indicators Statistics that change after the economy has already started to change or has started to follow a particular direction or trend.
Leading Indicators Statistics that are used to forecast the economic performance of a country since they change before (ahead of) the economy begins to follow a particular direction or trend.
Leverage A financial tool that enables an investor to amplify his or her market exposure to a level that surpasses his or her initial capital.
Liquidity The extent to which a financial instrument can be bought or sold with minimal or no effect to its price.
Long The act of opening a buy position in the market.
Margin It is basically the amount of deposit needed to ensure the running positions in the market are kept active.
Margin Account An account provided by brokers that gives traders the opportunity to borrow funds to engage in securities transactions.
Market Maker A brokerage company that is willing to buy and sell financial instruments to provide the needed liquidity to the markets.
Market Price The present price at which a financial instrument is being traded in the market.
Market Risk The likelihood that a trader will incur losses when the market conditions do not behave as initially expected.
Mine and Yours Language employed by investors to denote the desire to purchase or sell. For purchasing something, they say “Mine”. If they want to sell, they say “Yours”.
Money Market A part of the financial market whereby transactions of financial instruments having high liquidity as well as faster maturities take place.
Moving Average Convergence Divergence (MACD) A common and versatile technical indicator used for determining the trend or the momentum of the market.
NASDAQ The biggest electronic stock exchange in the U.S.
No Touch A kind of binary options that does not attain or exceed its target price.
Noise Frequent price fluctuations in the market that can make it difficult to make a trading decision.
NYSE The New York Stock Exchange.
NFP Non Farm Payroll - economic indicator released monthly by the United States Department of Labor as part of a comprehensive report on the state labor market.
Open order An order that is running in the market until the trader chooses to close it.
Order An instruction to a brokerage firm to either buy or sell a financial instrument at the said price.
Out of the Money A phrase that is used to illustrate a loss in a trade.
Outbound Option A phrase in binary options used to describe when the underlying asset expires beyond the higher and lower limits of the projected prices.
Overnight Position A trading position that continues to run until the next trading day.
Overtrading The dangerous habit of engaging in uncouth and excessive trading practices without carrying out appropriate due diligence.
Payout The amount of money earned from a successful trade.
Pip The smallest unit of measurement used in determining exchange rates between currencies.
Platform The system or technology provided by brokers.
Price/Earnings Ratio A common valuation method used to gauge a company’s profitability by assessing the connection between its stock’s price and its earnings per share.
Principal Value The initial capital that an individual invests for trading in the financial markets.
Put Option Also known as a “Low option.” When a trader believes that an asset price will fall, he purchases a Put option.
Quantitative Easing A technique employed by central banks to stimulate economic growth by encouraging spending.
Quote Currency The second currency in a currency pair quotation. Also called counter currency. This reflects the value of one unit of the first currency in the pair (Base Currency).
Rate The price of one currency compared to another one. Also referred to as the exchange rate.
Rebate Also called refund. It is the portion or the entire invested amount given back to the investor at the end of a trade.
Relative Strength Index (RSI) A technical oscillating indicator used to measure the overbought and oversold conditions of a financial instrument.
Risk Capital The amount of cash that an individual is ready to invest in the financial markets.
Robot Software designed with pre-set trading signals that gauge when to open or close a position in the market without human intervention.
Rollover The act of prolonging the settlement date of a running position in the market.
Scalping A trading strategy that involves opening and closing short-term positions with the intention of making accumulated profits.
SEC US Securities and Exchange Commission.
Security A tradable financial instrument of any kind.
Short The act of opening a sell position in the market.
Slippage The difference between the price displayed on a financial instrument and the actual price when a trade is entered on the trading platform.
Spot Price The present exchange rate at which traders can buy or sell a particular financial instrument.
Spread The difference between the ask price and the bid price of a financial instrument.
Stochastic An oscillating indicator that determines the level of change of the price of a financial instrument from one closing period to the next.
Stock Representation of a share in the ownership of a company that is available for trading on the financial markets.
Stop Loss Order An order designed to limit an investor’s loss by buying (or selling) a financial instrument once its price sails above (or falls below) a certain stop price.
Strike Price The value of a financial instrument at the time when it is bought or sold.
Swap The overnight or rollover interest (which is earned or paid) for having open positions running up to the next trading day.
Security Exchange Commission (SEC) The U.S. government agency that oversees and regulates the national securities industry, stock markets and electronic securities markets.
Technical Analysis A method of evaluating the movement of financial instruments through studying past market data, such as charts of price and volume, as a basis for forecasting future price behavior.
Touch A kind of binary options that attains or exceeds a preset price.
Trader An investor engaging in transactions in the financial markets.
Trailing stop A unique type of stop loss order useful for locking profits on winning trades.
Transaction Date The date upon which the trading of a financial instrument takes place.
Under Valuation An exchange rate that is usually regarded to be undervalued. This happens if it does not exceed its purchasing power parity.
Unemployment Rate The percentage of people within the labor force who are considered to be without jobs.
Value Date It is also called maturity date. It is the date upon which the different parties involved in a financial deal consent to make the final settlement.
Variation Margin Additional amount of money needed by a broker to make up for losses when the balance drops below the required minimum level due to adverse price movements.
Volatility A measure of the rate of fluctuation of the price of a financial instrument over a period of time.
Wire Transfer The electronic transfer of money from one financial institution to another.
World Bank Group An organization that offers technical and financial support to different developing countries around the globe.
X It is a NASDAQ stock symbol. It gives a representation of a mutual fund.
XE Abbreviation for Xpress Engine. It is one of the most visited financial sites that provide useful tools to traders.
Yield Curve A graph that illustrates the correlation between the interest rate and the time to maturity of the debt instrument for a particular borrower using a particular currency.
ZAR The currency symbol of the South African Rand.
Zero Bound A situation whereby interest rates are very low (close to zero percent), making it difficult for central banks to institute measures for stimulating expansion of the economy.

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