Glossary

We’ve all been there before – be it as an experienced trader or a trading newbie,
there are times when trading terminology can be hard to understand.
To make the complex world of trading less mortifying,
we have compiled a list of definitions to aid traders attain their financial goals.

All A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

    A

  • Accrual

    An accrual is either a revenue or an expense that has an overall impact on an income statement; this effect is also carried on over to the balance sheet.

  • Adjustment

    Adjustment is the term to refer to a central bank's intervention on a currency's exchange rate.

  • Aggregate Risk

    The total amount of exposure that a bank has with a customer.

  • Aggressive

    The term used to describe traders or the movement of prices when it appears to act with conviction.

  • Analyst

    An analyst is a person who has experience in dealing with and evaluating investments; putting together recommendations for clients.

  • Appreciation

    When a product or currency gains in value and in price, it is said to appreciate.

  • Arbitrage

    Arbitrage is the contemporaneous buy and sell of an asset in order to profit from its price differences in different markets.

  • Ask Price

    The ask price, also known as the Ask, is a price a seller is willing to accept for a product. Prices as such are quoted two-way. The ask price might also show the quantity of the product available to be sold at that specific price.

  • Asset

    An asset is something which possesses economic value that an entity owns with the expectation that it will provide immediate or future benefit.

  • B

  • Back Office

    The back office refers to an administrative and support branch in a company, primarily dealing with functions such as accounting, record updates, settlements and clearances.

  • Base Currency

    The Base Currency is the first currency in a currency pair.
    For instance: USD/SGD; the term currency would be the USD.
    See also: Term Currency

  • Base Rate

    The base rate is the term used to refer to the lending rate of the central bank of a country.

  • Bear Market (Bearish)

    A bearish market is a term used to describe a market trend which is falling, and that widespread pessimism in its recovery causes this trend to continue. As a mnemonic device, a bear swipes its paws down, signalling a downward market.

  • Bid Price

    The bid price, also known as the Bid, is a price a buyer is willing to accept for a product. Prices as such are quoted two-way. The buy price might also show the quantity of the product intending to be bought at that specific price.

  • Bid/Ask Spread

    A spread showing the price difference between the Bid and the Ask.

  • Bull Market (Bullish)

    A bullish market is a term used to describe a market trend which is rising, and that widespread optimism in its success causes this trend to continue. As a mnemonic device, a bull drives its horns up into the air, signalling an upward market.

  • Buy Limit Order

    A buy limit order is a type of order used to buy a product at a specific price. When a trade places this order, he will only pay the specific price or lower to purchase the product that they want. However, while this price is guaranteed, the filling of this the order is not so. If the price never reaches the indicated level, for instance, no products will be purchased.

  • Buy Stop

    A buy stop order is an order to buy the market at a price above the current price. When the price reaches a pre-set amount, the instrument will be bought.

  • C

  • Cable

    Refers to the GBP/USD pair.

  • Capitulation

    A capitulation describes a scenario when traders quickly and abruptly give up gains in order to get out of the market and into less risky investments. This is generally accompanied by panic selling, and usually signals that a reversal is about to happen.

  • Carry Trade

    A carry trade is a specific trade strategy that focuses on the manipulation of interest rates - borrowing at low interest rates and then investing in an asset that provides better returns e.g. borrowing one currency at lower interest rates and investing in another with higher ones.

  • Cash and Carry

    Cash and Carry is a specific trading strategy which an investor buys an asset and sells a future contract on that very same asset.

  • Certificate of Deposit (CD)

    A certificate of deposit (CD) is a certificate issued by a bank as evidence of a deposit with said bank which also indicates various details like maturity value and interest rate. The term of a CD generally lasts from one month to five years.

  • Choppy

    A choppy market describes a market which has constant and irregular price movement and thus not conducive for aggressive trading.

  • Closing Price

    The closing price refers to the price that the product was traded to close a position.

  • Collateral

    Collateral refers to either property or any other assets that a borrower offers a lender to secure a loan. If the borrower does not act in accordance with payment terms as described on the contract, the bank can seize this property to recoup their losses.

  • Comex

    Refers to the Commodity Exchange of New York.

  • Commision

    A commission is type of a return for brokers or investment advisor due to his provision of service. Commission may vary on the type of service rendered i.e. sale, purchase, investment advice.

  • Contract For Difference(CFD)

    Contract for Difference (or CFD) is form of agreement between two traders to exchange the difference between the opening price and closing price of a contract.

    CFDs are traded on margin between a trader and a CFDs provider, to exchange the cash difference between the opening price and closing price of a transaction. CFD products are introduced for products that are usually less accessible to retail investors, allowing retail clients to trade shares, equity indices and futures. Trading CFDs is flexible as there isn't any commission, trading fees, clearing fees or stamp duty.

  • Counterparty

    The counterparty refers to the opposite party in a contract or financial transaction.

  • Crawling Peg

    Where a country's exchange rate is fixed in relation to another currency, it is considered as "pegged".

  • Currency

    The currency is a form of money issued by a government or a central bank that is legal tender.

  • Currency pairs

    A currency pair refers to the various combinations of different currencies. This refers to any two currencies that make up a foreign exchange rate, for example EUR/USD.

  • D

  • Daily Chart

    The daily chart is a graph that shows the price movement of a product through the day.

  • Day trader

    A day trader is a speculator who takes a position and closes that same position before the close of the same trading day.

  • Day trading

    Day trading refers to the act of opening and closing a trade in the same product in one day.

  • Deficit

    A deficit refers to a negative balance of payments or trades.

  • Deflation

    Refers to an economic phenomenon when prices for consumer goods dips, thus increasing purchasing power.

  • Demo Account

    A demo account is a type of account that is funded with virtual money; primarily used for exploring and training purposes.

  • Depreciation

    Depreciation refers to the decrease of value in an asset over time.

  • Devaluation

    When a pegged currency is weakened artificially via governmental means.

  • Dove(Dovish)

    When a country artificially lowers interest rates, they are referred to as "dovish". This is the opposite of "hawkish"

  • Drawdown

    When the value of an investment drops, the length between its peak and its low is called the drawdown.

  • E

  • Electronic communication network(ECN)

    Electronic Communications Network (ECN) is a type of network that allows clients to have direct access to providers and other participants.

  • Equity

    The equity refers to a value of an asset minus its liabilities.

  • Exchange Rate

    The rate at which one currency can be exchanged for another.

  • Execution

    Execution refers to the transaction when a trade is carried out and completed.

  • Exotic Currency

    Exotic Currencies are currencies that are thinly traded. Because of this low trading volume, trading such currencies are generally quite expensive.

  • Exposure

    Exposure refers to the total amount of money that is loaned to a specific entity. It can also refer to the risk involvement that a trader may face in the market.

  • F

  • Federal Reserve

    The central banking system of the US.

  • Fill

    The fill describes a scenario when an order is fully executed.

  • Fill or Kill

    The Fill or Kill is an order that is used when an investor has a specific price that he wants to transact at. If the order is not filled at that specific price, then the order is cancelled, or killed.

  • Fill Price

    The price at which an order was completed.

  • Fixed Exchange Rate

    The fixed exchange rate refers to an exchange rate that is fixed in accordance with requirements from governmental controls or by central banks.

  • Floating Exchange Rate

    The floating exchange rate refers to an exchange rate that is not fixed, but adjusts in accordance with supply and demand requirements from the market.

  • Forex

    The forex market is more liquid than any other financial market as it opens to participants globally and at all times, making its trading volume the highest with a turnover of US$ 5 trillion daily. Foreign exchange is often referred to as forex or FX, and is the domain in which the exchange of money between two countries takes place at a mutually agreed rate.

  • Forex signals

    Refers to a system which gives out signals to traders to assist them in deciding whether a given timeframe is suitable to buy or sell.

  • Forward

    A forward is a kind of contract between two parties to transact at a specific price on a future date.

  • Futures

    Futures refer to an agreement between two parties at a certain time in the future, with a specified price agreed in the present.

  • FX

    See: Foreign Exchange; Forex

  • G

  • Gap

    A gap refers to a rapid, abrupt market move where price levels skip several units without trades happening.

  • Gold Standard

    The gold standard refers to a standard where currency is pegged to gold.

  • Good Till Cancelled(GTC)

    The Good Till Cancelled (GTC) order is an order type that buy or sell until it Is manually cancelled or filled.

  • Good Till Date(GTD)

    The Good Till Date (GTD) order is an order type that will expire a set date, if it is not filled beforehand.

  • Greenback

    The sobriquet for the US dollar.

  • Greenwich Mean Time(GMT)

    Greenwich Mean Time (GMT) is the mean solar time at the Royal Observatory in Greenwich, London - it incidentally is also the most commonly referred to time zone in the forex market.

  • Gross Domestic Product (GDP)

    This refers to the total value of a country's output, income or expenditure in a given year or quarter.

  • H

  • Hawk (Hawkish)

    When a country artificially increases interest rates, they are referred to as "hawkish". This is the opposite of "dovish"

  • Hedging

    Hedging is a technique used by investors to protect themselves by reducing their risk to unfavourable market movement. It means to make two investments which counterbalance and thus in a sense negate each other; minimizing most of the losses the investor would face in the process.

  • Hit the bid

    Refers to selling at the current market price.

  • I

  • Illiquid or Illiquidity

    The opposite of liquidity, it refers to a currency pair having little volume being traded in the market, leading often to choppy markets.

  • Immediate-Or-Cancel order(IOC)

    The Immediate-Or-Cancel order (IOC), is a type of order where it is either executed immediately or cancelled entirely.

  • Inflation

    "Refers to an economic phenomenon when prices for consumer goods rise, thus lowering purchasing power.
    See also: Stagflation

  • Interbank rates

    These rates are the rates that banks quote to each other. Also indicates the interest rate charged on short-term loans between banks.

  • Interest

    Interest refers to an expense when borrowing money, generally shown as an annual percentage rate. It can also refer to a revenue when lending money.

  • Introducing Broker(IB)

    An Introducing Broker (IB) is someone who directly liaises with a client, but relegates the other roles to the merchant firm.

  • K

  • Kiwi

    Refers to the NZD/USD.

  • L

  • Leverage

    The leverage, also known as margin, is a percentage increase in the trade amount, directly correlated with the capital that a trader has. It allows traders to trade values higher than the amount of capital that they have currently. Your initial outlay is supplemented to increase the value of your underlying investment. The higher the leverage, the larger the position the trader can execute for the same amount of initial deposit. For example, a client using 100:1 leverage could hold a position in the forex market of $100,000 with a margin of $1,000. For a 200:1 leverage, the client would need a $500 margin to hold the same position. Leverage increases the possibility of potential in high return when the market moves in their favour. Leverage, however, works both ways; when the market moves disadvantageously, the potential for loss is also greater.

  • Leverage Levels

    Different leverage levels apply to different account types.

  • Liability

    A liability refers to a potential loss, debt or financial obligation.

  • Liquidity

    Liquidity refers to total volume available in the market for a certain currency pair.

  • Live Account

  • Long Position (Buying Long)

    A position that benefits from a rise in market price. When the base currency in a currency pair is bought, the position is then said to be long.

  • Loonie

    Refers to the Canadian dollar.

  • M

  • Major Currency pairs

    A major currency pair, also known as the Majors, are made up of two major currencies.

  • Margin

    This refers to the amount of money needed in your account to maintain an open position.

  • Margin Account

    A margin account is a type of account where a broker loans the client money to purchase securities. When using a margin account, a trader is essentially using leverage.

  • Margin Call

    A margin call refers to a type of notification that alerts that trader to deposit more money in his trading account so that there will be enough margin to keep his positions open. The margin call then, is a level set by a brokerage that defines the minimum amount of money required to trade in the market. When your account falls below the margin call level, you will need to make an additional deposit to maintain your positions. Alternatively, you can close some of your positions to reduce your required margin. At Blackwell Global, Margin Call is set at 120%.

  • Margin Level

    The margin level refers to the ratio of your equity in contrast with your margin.

  • Margin Requirement

    "When an investor opens an account with a broker, an initial deposit is required in order to open a position in the market. The required cash deposit will act as a deposit to cover any credit risk. Depending on the agreement, the investor could be able to leverage up to a certain limit.
    The margin requirement for a metal trade is calculated by using the following formula:Margin = (Lot Size * Contract Size * Opening Price) / Leverage
    Examples below based on a Standard /Classic account 1:100.
    Forex Margin requirement for one standard contract position in EUR/USD at 1.2500 is calculated as follows: Margin = (1 * 100,000 * $1.2500) / (100) = $1250.00
    Spot Gold Margin requirement of one standard contract position in Gold at 1579.01 is calculated as follows: Margin = (1 * 100 * $1579.01) / (100) = $1579.01
    Spot Silver Margin requirement for one standard contract position in Silver at 28.70 is calculated as follows: Margin = (1 * 5000 * $28.70) / (100) = $1435.00
    Note: Interest is not required to be paid on the borrowed amount, but if the investor decides to hold his position overnight, interest will be charged as the rolled over rates on the total positions held."

  • Market Order

    A Market Order refers to an order that is placed when a trader wants to buy or sell and investment at its best current price.

  • Middle Rate

    Refers to the price the falls exactly in between the bid and ask price.

  • Minor Currency pairs

    A minor currency pair is a pair that consists of one major currency with a lesser traded one.

  • Money Manager(MM)

    A money manager is a person who assists a client in the management of their investments and helps them plan ways to grow these investments so that they will reach the clients' financial goal.

  • Money Supply

    The total amount of money in the economy at a given time.

  • N

  • Nostro Account

    A nostro account refers to a bank account held in a foreign country by a domestic bank, primarily used to facilitate transactions and settlements.

  • O

  • Off Shore

    An off shore banking unit refers to the concept of some countries permitting local banks to do business only with other foreign banks.

  • Option

    An option is a type of derivative that represents a contract sold by one trader to another. The contract gives the right, but not the obligation to buy or sell during a certain time and time.

  • Overnight Limit

    The overnight limit refers to the amount of currency positions a trader can carry over into the next dealing day. The central bank that regulates these currencies sets the overnight limit; which is reviewed often.

  • Overnight Position

    The overnight position refers to a position when a trader’s position is kept open and then carried over to the next business day.

  • Over-The-Counter(OTC)

    Over-the-Counter refers to a specific kind of trade. Each trade does not go through an exchange and trading is settled "on the spot", as opposed to at a set date in the future.

  • P

  • Parities

    Parity refers to two things being equal to each other, generally used for dealing purposes to see the price of a currency in terms of another.
    See also: Rate

  • Pips

    Pips refer to the smallest unit of price for any currency. Most currency pairs are priced to four decimal points, with the smallest change being seen in the last decimal.

  • Political Conditions

    Governmental policies can cause drastic changes in the market. A change of governmental policies could see a potential of loss or expropriation.

  • Portfolio

    A portfolio is the total sum of financial assets that an entity holds.

  • Position

    A position is the sum total amount of assets with liabilities. It can either be profitable or not, depending on the state of the market at that time.

  • Profit

    When a sale price is higher than its cost price, it can be said that a profit has been made. Profit, hence, is the difference between the sale price and the cost price; when the former is higher than the latter.

  • Q

  • Quote Currency

    "The Quote Currency, also known as the Term Currency, is the second currency in a currency pair.
    For instance: USD/SGD; the term currency would be the SGD.
    See also: Base Currency"

  • R

  • Rate

    Also known as parities, the rate is generally used for dealing purposes; the rate is the price of a currency in the terms of another.

  • Realized loss

    Realized loss refers to a loss realized when assets are sold at price lower than its purchase price or book value.

  • Realized profit

    Realized profit refers to a profit realized when assets are sold at price higher than its purchase price or book value.

  • Resistance Level

    The diametrical opposite of support, the resistance level is a technique that is used in analysis that determines a specific price ceiling where an exchange rate would automatically correct itself. It's the level in which buying is expected to take place.

  • Risk

    Risk is a term to describe the possibility of actual returns not being in line with expected ones. Risks are present and associated with all markets.

  • Risk aversion

    Risk aversion is a technique that is used by traders to limit financial risk. Traders use various strategies and analysis to reduce their exposure.

  • Rollover

    Rollover is a term used to refer to the interest rate that traders pay out or earn if they were to hold a position overnight. The difference in the interest rates of the two currencies will determine this amount.

  • Round Trip

    A round trip refers to the total amount of funds that are used when a trader opens and closes a position.

  • S

  • Scalping

    Scalping refers to the method of making a profit from the quick opening and closing of a specific position. This generally can only be done based on real-time analysis.

  • Sell Limit

    A sell limit order is an order to sell the market at a price above the current price. When the price reaches the pre-set amount, the position will be automatically closed.

  • Sell Stop/Stop Loss Order

    A sell stop order is an order to sell the market at a price below the current price. When the price reaches the pre-set amount, the position will be automatically closed.

  • Short Position (Selling Short)

    A position that benefits from a fall in market price. When the base currency in a currency pair is sold, the position is then said to be short.

  • Slippage

    Slippage occurs when a trader executes a price different from the expected execution price, primarily due to volatile market conditions. When this happens, most traders execute the trade at the next best price.

  • Slippery

    Much like its namesake, a slippery market is a term used when the market seems ready for a quick and abrupt move in any direction.

  • Sloppy

    A sloppy market is a market possessing trading conditions that lack any meaningful trend.

  • Soft Currency

    A 'soft" currency is a currency which is unstable and possesses a tendency to fluctuate greatly in accordance with its political or economic climate.

  • Speculation

    A speculator is a trader who takes big risks when trading, choosing to trade with investments with higher risk in the hope that they will also return higher profits.

  • Spike

    A sudden and large upward or downward movement of a price in a short period of time is also known as a spike.

  • Spot

    A spot is one of the most common foreign exchange transactions; it refers to the transaction of a currency with its settlement date being two business days away.

  • Spreads

    The price difference between the ask and bid price of a currency pair.

  • Square

    A term that is used to describe breaking even on a position i.e. the creation of a neutral position by buying and selling at the same amount.

  • Stagflation

    Coined from the word "stagnation" and "inflation", stagflation is the term used to describe slow economic growth and high unemployment rates.

  • Sterling

    The sobriquet for GBP/USD. Also known as the Pound or as the British Pound.

  • Stop Entry Order

    The stop entry order is an order that is placed to buy above a current price. These orders are to automatically enacted when the price rises to a certain level. If the currency rises above to or beyond this specific price, the investor's stop entry order would be executed and he will buy in.

  • Stop Loss Order

    A stop loss order is an order that is placed if an investor wishes to limit his losses; it automatically enacts when a currency falls beyond a certain price. If the currency does drop to or beyond that specific price, the investor's stop-loss order would be executed and the investor would be stopped out.

  • Stop Order

    A stop order is an order that is placed if an investor wishes to buy at a specific price; it automatically enacts when a currency falls to a certain price. When this price is reached, the investor's stop order will be executed at the best available price.

  • Stop Out

    Stop out is a consequence of the Stop Loss order - it automatically enacts when a currency falls beyond a certain price. If the currency does drop to or beyond that specific price, the investor's stop-loss order would be executed and the investor would be stopped out. In the event you are unable to maintain sufficient funds in your account after hitting Margin Call, and if your account value depreciates to the Stop Out level, your positions will be closed automatically to prevent further loss to your capital. At Blackwell Global, Stop Out level is set at 80%.

  • Straight Through Processing (STP)

    Straight Through processing (STP) is a process that is used by some companies to optimise the speed of transactions. This is done by transferring electronically entered information from one party to another; without the need of manually re-entering them through the entire process.

  • Support

    Support refers to price levels that a currency doesn't often go under, either due to market psychology or the laws of supply and demand.

  • Support Level

    The diametrical opposite of resistance, the support level is a technique that is used in analysis that determines a specific price floor where an exchange rate would automatically correct itself. It's the level in which buying is expected to take place.

  • Swap

    A swap is the contemporaneous buy and sell of the same amount of a currency at a forward rate. This is most often used by institutions at the end of every working day; in the form of "tom-next" swaps. Often referred to as Rollover Interest, swaps are charged when holding onto a position overnight due to the difference in interest rates between the base currency and the quote currency. Blackwell Global deals with both precious metal and forex trading on a "spot" basis. All trades are settled in two business days from inception as per market convention. Swaps are automatically calculated and settled at 21:59 GMT (Server Time 22:59) on a daily basis and Blackwell Global does not arrange for physical delivery. Any open positions held from Wednesday to Thursday on a trade date basis will be charged three times the value. The extra payment is to cover the interest that would normally have been charged on Saturday and Sunday when the market is closed.

  • Swissy

    Refers to the USD/CHF.

  • T

  • Take Profit Order (T/P)

    The Take Profit Order (T/P) refers to an order that is placed to close a position once it reaches a certain price.

  • Term Currency

    "The Term Currency, also known as the Quote Currency, is the second currency in a currency pair.
    For instance: USD/SGD; the term currency would be the SGD.
    See also: Base Currency"

  • Thin

    "A thin market describes an illiquid, slippery, or choppy market environment. Often possesses erratic or unpredictable trading conditions.
    (see Illiquid, Slippery, Choppy)"

  • Tom-Next Swaps

    For traders who wish to hold their position overnight, a "tom-next" swap allows them to retain their position; the position will be closed out as per closing rate, and then re-established immediately the following day.

  • Trailing Stop

    A trailing stop is a function which allows a trade to continue if it gains in value, but automatically closes a trade if the market price goes beyond a certain specified amount.

  • Transaction

    The buying or selling of securities as a result of the execution of an order.

  • U

  • U.S. Commodity Futures Trading Commission (USCFTC)

    The U.S. Commodity Futures Trading Commission (USCFTC) is the US Federal regulatory agency for all futures traded on commodity markets.

  • V

  • Volatility

    A volatile market is an active market which often presents plenty of trade opportunities.

  • W

  • Whipsaw

    Often used as a slang to describe an extremely volatile market where a sharp price movement is proceeded with a sharp reversal.

  • White Label

    A product or service that is produced by one company; which other companies rebrand to make it look as if they had made it.

  • Writer

    The seller of a position. To "write" a currency is to sell it.

  • Y

  • Yield

    Usually denominated in percentages, the yield is a return from an investment.