Terminology
Account is a record of financial transactions of legal entities or individuals in a bank or other financial institutions
Account Statement - the statement provides summary of client deals for a certain period of time
Alert is a notice on previously marked market event; for example: when a price achieves a certain level
Analysis is a study and assessment of information to choose the best market strategy
Analyst is an employee of a bank, a brokerage company or a fund that analyzes the market and provides advice to buy or sell
Arbitrage is a pair of opposite transactions occurring simultaneously and generating profit with zero risk
Ascending bottoms is a technical analysis term for charts whereby every subsequent low price mark is higher than the previous one, and indicates future growth
Ascending tops is a technical analysis term for charts whereby every subsequent upper price mark is higher than the previous one, and indicates future decline
Ask is a rate at which a bank sells a base currency
AUD, Aussie (Australian dollar) is a dealer jargon for Australian dollar
Average is an arithmetic average
Back testing is the process of optimizing a trade strategy with the use of historical data for making forecasts and testing the forecasts’ quality
Bank rate is an official interest rate
Barometer is the economic and market data used for determining general trends; for example, the unemployment rate, interest rates, consumption rates and number of construction startups
Bear is a trader playing for decline
Bear market is a market with a rate decline trend
Bid is a rate at which a bank buys base currency
Big figure is a dealer jargon for the basic number of 100 points
Break above is breaking the level up
Break below is breaking the level down
Breakout is overcoming support/resistance levels
Broker is a person or firm which is an intermediary between buyer and seller, usually charging a commission; usually needs a license to work with securities and the majority of other financial products
Bull is a trader playing for growth
Bull market is a market where price growth trend is evident
Bullish is a bull market, trend, etc.
Buy is a purchase
Cable is a dealer jargon for British Pound Sterling
CAD is a Canadian dollar
Candlestick charts (Japanese sticks) is one of the methods for building technical analysis charts
Cash is money and coins, bank balance, money transfers and cheques
Cash market is a market where deals are paid for with cash or a market of cash goods
Central bank is a primary monetary authority in a country; in the USA – the US Federal Reserve System; usually is responsible for currency issue, management of monetary policy and a country’s banking system
Chart is a graphic depiction of price movements and other information within a time period
CHF – Swiss franc, swissie
Choice is a quote without spread. It is assumed that choice is given when trader bothers a broker. The good behavior rules say that when getting a choice a deal should be made
Clearing house is an agency which provides payments and delivery under made deals
Closed position is market position for which a reverse deal and payment are made
Commodity (products, goods) is material valuables; for example: food, grain or metals which are interchangeable with our valuables of the same type and which investors buy or sell usually via futures contracts; in general this is what is traded at commodities exchanges; here one may include also foreign currencies and financial instruments and indexes
Confirmation is a situation when more than one indicator confirms the signal of another indicator
Congestion is price stagnation (suspension)
Convertible currency is a currency which may be quickly and easily sold or bought or exchanged for other currencies
Cost is cost denominated in money or resources
Cross rate is an exchange rate between currencies except for US dollar; e.g. cross rates: GBP/CHF, EUR/JPY, EUR/GBP
Currency is any form of money which is being circulated
Custodian is a bank or other financial institution which accepts for keeping (custody) securities of mutual fund
DAX 100 is an average index of shares of the German market’s largest companies
Day trading – opening and closing of one or several positions within one trading day
Delayed is a signal that quotes or news are issued with a delay and may be outdated
Deposit is money put to an account for further operations
Disclaimer is a warning made to release from responsibility
Discount rate is an interest rate for which central banks lend money to commercial banks
Divergence is a situation when two or more charts show different market trends
Diversification is an investment into various financial instruments to reduce risk
DJIA, Dow Jones Industrial Average is a most widely used indicator of the stock market’s general situation, average index of 30 most actively traded shares at NYSE, primarily industrial enterprises
Doji is from “candlestick” chart analysis. Doji is a day when opening price equals closing price
Double bottom is when price reaches minimum level two times; shows the price level under which there is a stable demand for currency and when bulls get into the game
Double top is when price reaches maximum level two times; the same as double bottom but the opposite
Downtrend is a trend of market movement towards price decline
Economic indicator is statistical data revealing general economic tendencies
Elliott Wave Theory is a method of technical analysis designed by Ralph Elliot which establishes that market prices follow a pattern of five waves up and three waves down, and the reverse, in case of downtrend
EUR is an international European currency euro; initially one euro equaled one ecu
Eurodollar is US dollar traded at euro currency markets
Euroyen is a Japanese yen traded at euro currency markets
Exchange is any organization, association or group which provides or supports access to a market where securities, options, futures or commodities are traded
Exchange rate is a price of a country currency denominated in monetary units of another country for buy and sell deals; such price may be established through demand and supply balance under a free market or be rigidly fixed by a government decision or its major financial body, usually a central bank
False break is false break
Federal Reserve System is US central banking system comprising the Federal Reserve Department, 12 federal reserve banks and banks of states; the organization target is to regulate money flow and credits in the country
Financial instrument is securities, options, futures, commodities or other valuables denominated in currency or a currency transaction record
First In-First Out (FIFO) is an assessment method (for taxation purposes) of securities portfolio in the order of their inflow, i.e. it is assumed that securities bought earlier should be sold first
Flag is a technical analysis chart figure; big increase then price moves within a narrow range for some time followed by big decline or otherwise
Flat is a period of time when price neither rises nor declines or stays in a neutral position when all positions are closed (it is also called a square)
Floating profit/loss is profit/loss unrealized until position is closed
FOMC, Federal Open Market Committee is a committee comprising 12 members which stipulates credits and interest rate policy for the FRS
Forecast is an assessment of future trend with the help of studies and analysis of available information
Foreign exchange is a term designating conversion operations of deals of currency market agents for exchange of set amounts of monetary units of one country for currency of another country at the agreed rate at a certain date
Forex is a non-stock market where buyers and sellers make currency transactions
Forward contract is a transaction at a trade deal market with payments in cash in which a seller agrees to supply a specific tangible product to a buyer in a certain time in future; unlike futures contracts which are made via a clearing company, forward deals are made confidentially and are not standardized
Forward deal is a purchase or sales of foreign currency with supply at a specific future date
Forward quotation (forward rate) serves as a real indicator of what price a currency will have in a certain period of time. A period has a standard duration: 1,3,6 and 12 months
Fundamental analysis is a method of forecasting price movements based on analysis of the current economic situation;
Futures are standardized contract for sales or exchange which require supply of products, bonds, currency at a certain price and at a certain date in future
G7 is seven largest industrial countries: USA, Japan, Great Britain, France, Germany, Italy and Canada; ministers of finance of these countries arrange meetings of G7 to discuss economic strategy problems
Gap occurs when high price of previous trading period is lower than the low price of current trading period; occurrence of such gap is usually a signal of the market reverse movement due to either excessive supply or excessive demand or it may be related to absence of trade because of holidays, break for the night or product low liquidity
Gather in the stops in an up-going activation of stop orders; a tactics of large market participants when they intentionally move prices to big accumulation of stop orders; as a result stop orders become market ones (i.e. start being executed) which entails an avalanche-like movement (snow ball effect)
GBP (cable) is a pound of sterling
Good Till Cancelled, GTC is an order to buy or sell currency at a fixed price or better; order stays in force until it is either executed or cancelled by customer
Greenback is US paper money
Hard currency is a currency of economically and politically stable countries in which investors have trust
Head and shoulders is a technical analysis figure comprising high peak accompanies at both sides by peaks less high; it is believed that price decline usually follows this figure
Hedge is a specific capital investment made to reduce the risk of price movements, e.g. in options or sales for a certain time without coverage
Hedge fund is a fund employing aggressive strategies which are inaccessible at open funds, including sales for a certain time without coverage, leverage, trade programs, swaps, arbitrage and derivatives; in USA hedge funds may have 100 investors maximum whose minimum investment usually vary from 1 mln dollars
Hedging is making forward deals for purchase or sales of foreign currency to avoid price volatility; the essence of hedging is in purchase (sales) of currency contracts for the time equal to purchase (sales) of available currency with the same delivery time and making of reverse operation when the times for actual delivery of currency comes
High is the highest price paid within a trading period
HKD is Hong-Kong dollar
Housing starts is a number of construction projects for housing started within a certain time period, usually a month
Idle (pause) is a situation when trade is closed or trade is not active
IMM, international money market is the world’s largest foreign currency and futures contracts market
Index is sample for comparison to measure financial or economic efficiency; e.g. S&P 500 or consumer price index
Indicator is data to obtain information on general health of economics or financial markets
Inflation rate is an increase of prices for commodities and services, usually denominated in interest per year
Initial margin is an amount of cash or liquid securities required by a financial company which may be put to a deposit for marginal trade operations
Inside information is information know to a limited number of people and able to affect the market; trade based on leakage of such information is illegal
Interbank rates are currency rates which large international banks quote to other large international banks
Interest is payment for use of loaned money, usually a payment in percentage to a loan amount
Interest rate is an annual interest, as a rule
International Monetary Fund (IMF) is an organization with the following tasks: reduction of trade limitations between countries, stabilization of currencies, lending money to developing countries
Intervention is participation of central banks in regulation of prices at currency market
Intraday is a work within one operational day with obligatory closing of positions for the night
Inverse head and shoulders is inverse head and shoulders
JPY is Japanese yen
Leverage is a ratio of own and loaned money to make trade operations; a loan provided by a bank to a client to make margin trading operations
Limit is either maximum or minimum price value for decision making
Limit order is an order to buy (sell) when price reaches a set value or better
Liquid market is a market with numerous transactions; large number of buyers and sellers always ready to trade makes the market liquid
Lombard rate is an interest rate used by a central bank under a mortgage of real property, gold and currency valuables when using loans to commercial banks
London InterBank Offer Rate (LIBOR) is an interest rate under which the world’s largest banks lend money to each other
Long is a state of actual ownership of securities, contract or product
Loss is capital reduction due to losses
Lot is an amount of money or shares required for formation of a standard contract; in many cases only certain amounts of money or shares divisible by lots are allowed for trade
Low is the lowest paid price for a trading period
Management fee is a payment charged for investment management by a mutual fund
Margin is a trader’s deposit with a dealing centre covering the risk of losses under made transactions
Margin call is a broker’s demand to a customer to increase deposit when a certain value of price is achieved
Margin trading is a trade in currency under a deposit; a reverse deal is a must under marginal trading
Market maker is large banks and financial companies determining the current level of currency rate due to their substantial share in operations on the market’s overall volume; market makers set the current level of currency rate by operations between each other and with less large banks which are market users
Market order is an order to buy or sell at the best price available presently
Market price is the last notice on price value at the current point of time
Market timing is an effort to determine the optimum time for purchase and sales of financial instruments using the analysis of market conditions
Market-user is financial institutions which determine the demand for currency rates – closing date
Maturity date is a drawn-on date
Monetary policy is operations of the Federal Reserve System affecting the circulating amount of money, banking system and, finally, the economy as a whole
Movement is change of value or price
Narrow market is small deals and large price volatility
NASDAQ, National Association of Securities Dealers Automated Quotations system is an automated system set by NASD to facilitate trade by provision of dealer(s) with current supply and demand of price quotes in relation to relatively non-exchange stocks and some shares allowed for circulation
Nikkei Index is an index of 225 leading companies traded at the Tokyo stock exchange
NYFE, New York Futures Exchange is a stock exchange where treasury bonds and some currency futures contracts are traded
NYSE, New York Stock Exchange is the oldest and biggest stock exchange in USA located at Wall Street in New York
NZD is a New Zealand dollar (see Kiwi)
NZD, Kiwi is a New Zealand dollar
Offer is a price offer by a seller; a proposal to sell at a certain price, the same as ask
Offshore company is a company registered in a country with low level of control on behalf of a state and/or low tax rates
Old Lady is the Bank of England. This term was introduced by R. Sheridan, British politician and play writer
Open position is a market position for which a reverse deal is currently not made
Or better is an order to make a deal upon achievement of the set price or better
Order is a customer order to a broker to buy (buy order) or sell (sell order) at a certain price or a market price
Overbought is an overbought market; it occurs after prices went up too high and prices are expected to decline
Overnight rate is an interest rate for transfer of an open position to the next day
Oversold is oversold market; prices went down too low and quick; price rise is expected
Over-the-counter (OTC) market is a market of securities not traded at a stock exchange. Deals are made over a phone, computer networks and telex
Pip(s) point is a minimum possible price change, the last digit of writing a currency rate; for loans 1% of a loan amount; for shares $1; for bonds 1% of face value (usually 10 dollars, 1% of 1,000 dollars)
Point-and-figure chart is a diagram which only depicts price movements without considering time periods
Position is an amount of values owned (long position) or debt value (short position)
PPI, producer price index is an inflation indicator issued by the US Labor Statistics Bureau to assess wholesale prices in the economy
Profit is a positive capital gain as a result of investments or business operations after deduction of all taxes
Profit target is profit target
Quotation is a real no bid or ask price
Quote is the highest bid or lowest ask currently available
Rally is revival, growth, price increase after decline
Range is a market status when prices move within a range between horizontal support and resistance levels
Ratio is a value obtained by division of one value by another
Recession is a period in a country’s economy accompanied by decline in business activity; as a result real GDP is reduced
Repo rate is an interest rate used by a central bank for operations with other banks and credit institutions when buying state treasury bonds
Resistance is a price level when active sales may stop or reverse the up trend
Risk is measured possibility of loss
Risk management is analysis of risk value and determination of optimal strategy
Risk tolerance is a sum materially nominated which you can afford to lose painlessly
Sale is exchange of commodities, services or other property for money
Sell is to transfer the monopoly ownership of securities or other assets in exchange for money or valuables
SGD is a Singapore dollar
Short is a person who holds a short position; also called a short seller
Short position is a position which is a result of a short sale which is not covered yet
Signal is a technical analysis term; indication of a moment when time comes to buy or sell according to a trader’s strategy
Simple moving average is an average value determined from a previous period of fixed length; for every subsequent calculation a period is moved in time; the period length determines smoothing
Speculation is acceptance of big risks especially when trying to predict future; gambling in an effort to make quick and big profit
Speculator is the one who deals in speculations (stock speculations)
Spike is a drastic price rise or fall and return to the initial value
Spot is commodities for immediate delivery; current conversion operation with settlement date for the 2nd working day after the deal date; forex spot international currency market of current conversion operations
Spread is a difference between the current offer (bid) and the current demand (ask)
Stock is a right of ownership for a proportional amount of corporation property and its profit
Stock exchange is a stock exchange where shares and equivalent securities are traded; e.g. NYSE and AMEX
Stockbroker is a person with a license for securities operations. The same as registered representative
Stop loss is a stop order to limit losses; is activated to close a position at a set price level, when it moves towards losses
Stop order is an order to close a position if a certain price is achieved or exceeded
Stoplimit order is an order to buy (sell) at a certain price or better, but only after price achieves a certain value; a combination of stop order and limit order, does not guarantee execution
Support is the level of prices when active sales may suspend or reverse the down trend
Swap is a combination of two opposite conversion deals for an equal sum with various settlement dates; usually swapping is made when transferring an open position to the next day; to swap an open position means to preserve position status (amount and sign) for a certain future period
Swissy is a dealer jargon for Swiss franc
Technical analysis is a method of assessment under the market data: price and volume chart types, to predict future market trends
Technicals are short-term trends which are used by technical analysts to predict future price movements
Thin market is a market with low supply and demand; is characterized by low liquidity, high spread and high volatility
Tight market is a market with insufficient demand; active and competitive market which combines large volume of operations and narrow spread between buyer and seller prices
Trade is a transaction with securities, currency or other valuables
Trader is the one who buys and sells securities at its own account and not on behalf of a customer
Trading is purchase and sales of securities or commodities with a short delay to make quick profit; or any purchase and sales of securities or commodities
Transaction is an agreement between buyer and seller for sales of asset
Trend is a current general direction of price movement
Trendline is a technical analysis term; a range between lines joining a series of extreme high or low points at price chart
U.S. Treasury bonds are long-term government bonds
U.S. Treasury securities are treasury bills, mid-term and long-term government bonds
Unemployment rate is a percentage of unemployed in constant search of a job to the overall number of civil workforce
Uptrend is up going price movement
USD is a US dollar, buck, greenback
Value date is the date of execution of deal terms, i.e.; physical transfer of money; settlement dates may be only working dates excepting days-off and holidays for this currency
Vertical line charting is a technical analysis instrument based on building of a series of records of vertical points at which maximum, minimum and value upon closure of time period for every record are marked; it is used to help to predict future price movements
Volatility is a relative speed of prices movement up and down; an annual quadratic mean deviation of daily price change is calculated
Volume is a number of shares, bonds or contracts sold within a set time period
Wide market is a market with big spread
Yield is a profit on security denominated in percentage to the asset market value