ALERTS (also known as trading alerts)
Set specific criteria and be notified immediately once that criteria has been met. There are three main types: economic announcements, price alerts and indicator alerts.
A financial professional who has expertise in evaluating investments and puts together buy, sell and hold recommendations for clients.
Arbitrage refers to the practice of buying an asset then selling it immediately to take advantage of a difference in price.
ASIAN CENTRAL BANKS
Refers to the central banks or monetary authorities of Asian countries. These institutions have been increasingly active in major currencies as they manage growing pools of foreign currency reserves arising from trade surpluses. Their market interest can be substantial and influence currency direction.
23:00 – 08:00 GMT.
The ask refers to the price at which you can buy an asset or security from a seller. It can be variously referred to as ask, the ask, or asking price.
AUTOMATED TRADING (also known as algorithmic trading)
Is the use of algorithms for making trade orders.
BALANCE OF TRADE
The value of a country's exports minus its imports.
A type of chart which consists of four significant points: the high and the low prices, which form the vertical bar; the opening price, which is marked with a horizontal line to the left of the bar; and the closing price, which is marked with a horizontal line to the right of the bar.
BANK OF ENGLAND
The Bank of England (BoE) is the central bank for the United Kingdom. Sometimes known as the ‘Old Lady of Threadneedle Street,’ the bank says its mission is to ‘promote the good of the people of the United Kingdom by maintaining monetary and financial stability.’ Major peers outside the UK include The Federal Reserve (Fed) in the US, the European Central Bank (ECB) and the Bank of Japan (BoJ).
In trading the term base currency has two main definitions: the first currency quoted in a forex pair, or the accounting currency used by banks and other businesses.
The base rate, or base interest rate, is the interest rate that a central bank – like the Bank of England or Federal Reserve – will charge to lend money to commercial banks.
A basis point (also referred to as bp – pronounced bip or beep) is a unit used in trading to describe movements in interest rates or other percentages. It is equal to one hundredth of one percent, or 0.01%.
Bears are traders who believe that a market, asset or financial instrument is going to head in a downward trajectory. In that regard, they hold an opposite view to bulls, who believe that a market is going to head upwards.
When the market is on a sustained downward trajectory, with little optimism from traders to bring about a rally, it is referred to as a bear market.
In trading and investing, the bid is the amount a party is willing to pay in order to buy a financial instrument.
Bollinger bands are a popular form of technical price indicator. They were developed by a pioneering technical trader called John Bollinger in the 1980s.
An individual or firm that acts as an intermediary, bringing buyers and sellers together for a fee or commission. In contrast, a dealer commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.
Market slang for one million units of a dollar-based currency pair, or for the US dollar in general.
Bulls are speculators who believe that a market, instrument, or sector is going on an upward trajectory. This belief puts them at odds with bears, who take a pessimistic view on a market’s direction.
When a market, instrument or sector is on an upward trend, it is generally referred to as a bull market.
Germany's central bank.
Buying a financial instrument means taking ownership of it from someone else, whether it is a commodity, stock or another asset.
Cable is one of a few slang terms for different currency pairs; in this case referring to British pound sterling against the US dollar. This may also be shown as GBP/USD or GBPUSD. Occasionally, people also refer to the price of the British pound as cable.
The Canadian dollar, also known as Loonie or Funds.
A trading strategy that captures the difference in the interest rates earned from being long a currency that pays a relatively high interest rate and short another currency that pays a lower interest rate. For example: NZD/JPY (New Zealand Dollar/Japanese Yen) has been a famous carry trade for some time. NZD is the high yielder and JPY is the low yielder. Traders looking to take advantage of this interest rate differential would buy NZD and sell JPY, or be long NZD/JPY. When NZD/JPY begins to downtrend for an extended period of time, most likely due to a change in interest rates, the carry trade is said to be unwinding.
CFD trading is the speculation on financial markets via contracts for difference (CFDs), a form of financial derivative.
A chartist is a trader who relies predominantly on charts to help them understand a financial instrument’s historical price movements, in order to better predict and to speculate on its future performance. They are also commonly known as technical analysts, or technical traders.
Commission is the charge levied by an investment broker for making trades on a trader’s behalf.
Currencies from economies whose exports are heavily based in natural resources, often specifically referring to Canada, New Zealand, Australia and Russia.
A period of range-bound activity after an extended price move.
CPI stands for consumer price index, an average of several consumer goods and services that are used to give an indication of inflation.
Any form of money issued by a government or central bank and used as legal tender and a basis for trade.
The two currencies that make up a foreign exchange rate. For example EUR/USD (Euro/U.S. Dollar).
A currency peg is a governmental policy of fixing the exchange rate of its currency to that of another currency, or occasionally to the gold price. It can sometimes also be referred to as a fixed exchange rate, or pegging.
Day trading is a strategy of short-term investment that involves closing out all trades before the market closes.
A term that denotes a trade done at the current market price. It is a live trade as opposed to an order.
Deposit margin is the amount a trader needs to put up in order to open a leveraged trading position. It can also be known as the initial margin, or just as the deposit.
The decrease in value of an asset over time.
Dovish refers to data or a policy view that suggests easier monetary policy or lower interest rates. The opposite of hawkish.
Price action consisting of lower lows and lower highs.
When traders talk about the ECB, they are referring to the European Central Bank, the central bank for the eurozone.
A government-issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.
The currency of the Eurozone.
07:00 – 16:00 (London).
An exchange is a marketplace where financial instruments – such as commodities, stocks, or derivatives – are traded. They can be either physical, like the New York Stock Exchange, or purely digital like a bitcoin exchange.
In trading, execution is the completion of a buy or sell order from a trader. It is carried out by a broker.
The point when a trading position automatically closes is known as the expiry date (or expiration date).
The FCA, or Financial Conduct Authority, is the United Kingdom’s financial regulatory body. It is the successor to the FSA, or Financial Services Authority.
The Federal Reserve bank, or the ‘Fed’ for short, is the central bank in charge of monetary and financial stability in the United States. It is part of a wider system – known as the Federal Reserve system – with 12 regional central banks located in major cities across the US.
A Fibonacci retracement is a key technical analysis tool, used to gain insight into when to place and close trades, or place stops and limits.
Fill is a trading term that refers to the completion of an order to trade a financial asset. When an order has been completed, it is often referred to as ‘filled’.
One of approximately five times during the forex trading day when a large amount of currency must be bought or sold to fill a commercial customer’s orders. Typically these times are associated with market volatility. The regular fixes are as follows (all times NY):
5:00am - Frankfurt
6:00am - London
10:00am - WMHCO (World Market House Company)
11:00am - WMHCO (World Market House Company) - more important
8:20am - IMM
8:15am - ECB
The FOMC, or Federal Open Market Committee, is the branch of the Federal Reserve bank that is in charge of short and long-term monetary policy decisions.
Written record of FOMC policy-setting meetings are released three weeks following a meeting. The minutes provide more insight into the FOMC's deliberations and can generate significant market reactions.
Forex is how market participants convert one currency to another. It can variously be referred to as foreign exchange, FX, or currencies.
Forex trading is the act of taking part in the forex market in order to speculate and attempt to make a profit. It can also be known as FX trading, foreign exchange or currencies trading.
Fundamental analysis is a method of evaluating assets on the basis of external events and influences, as well as financial statements on the asset itself. It is used by traders to make decisions on different assets by measuring the economic, financial and market conditions that can affect its price.
A quick market move in which prices skip several levels without any trades occurring. Gaps usually follow economic data or news announcements.
GDP stands for gross domestic product, or the total value of the goods and services produced in a country over a specified period. It is used as an indicator of the size and health of a country’s economy.
A country's monetary policymakers are referred to as hawkish when they believe that higher interest rates are needed, usually to combat inflation or restrain rapid economic growth or both.
A hedge is an investment or trade designed to reduce your existing exposure to risk. The process of reducing risk via investments is called 'hedging'.
HIGH FREQUENCY TRADING
High frequency trading (or HFT) is a form of advanced trading platform that processes a high numbers of trades very quickly using powerful computing technology. It can be used to either find the best price for a single large order, or to find opportunities for profit in the market in real time.
Inflation is the increase in the cost of goods and services in an economy. As that in turn means that each unit of the currency’s economy is worth less of any good or service, inflation can also be viewed as a devaluing of currency.
In finance, interest can have more than one definition. Firstly it refers to the charge levied against a party for borrowing money, which can be either a cost or a means of making profit for a trader. Secondly, it can mean the portion of a company’s stocks held by a particular shareholder.
The amount that a lender charges to a borrower for the loan of an asset, usually expressed as a percentage of the amount borrowed. That percentage usually refers to the amount being paid each year (known as annual percentage rate, or APR) but can be used to express payments on a more or less regular basis.
Action by a central bank to affect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.
Nickname for NZD/USD (New Zealand Dollar/U.S. Dollar).
Statistics that are considered to predict future economic activity.
Leverage is a concept that can enable you to multiply your exposure to a financial market without committing extra investment capital.
LIBOR, or the London Interbank Offered Rate, is a benchmark that dictates daily interest rates on loans and financial instruments around the world.
A limit order is an instruction to your broker to execute a trade at a particular level that is more favourable than the current market price.
In investment, liquidity is the ease of buying or selling a particular asset in the market without affecting its price. It can also refer to the facility of converting an asset to cash quickly and easily.
08:00 – 17:00 (London).
When used in trading, long refers to a position that makes profit if an asset’s market price increases. Usually used in context as ‘taking a long position’, or ‘going long’.
A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.
A margin call is the term for when a broker requests an increase maintenance margin from a trader, in order to keep a leveraged trade open.
In trading, margin is the funds required to open and maintain a leveraged position.
Market can have several meanings within investments. Generally it is defined as a medium through which assets are traded, with their value determined by supply and demand.
A market maker is an individual or institution that buys and sells large amounts of a particular asset in order to facilitate liquidity.
A market order is an instruction from a trader to a broker to execute a trade immediately at the best available price.
A series of technical studies (e.g. RSI, MACD, Stochastics, Momentum) that assesses the rate of change in prices.
A moving average (often shortened to MA) is a common indicator in technical analysis, used to examine price movements of assets while lessening the impact of random price spikes.
NEW YORK SESSION
8:00am – 5:00pm (New York time).
Non-farm payrolls are a monthly statistic representing how many people are employed in the US, in manufacturing, construction and goods companies. They can also be known as non-farms, or NFP.
Offer is the term used when one trader expresses an intention to buy an asset or financial instrument from another trader or institution.
Your open positions are the trades you have made that are still able to incur a profit or a loss. When a position is closed, all profits and losses are realised and the trade is no longer active.
In trading, an order is a request sent to a broker or trading platform to make a trade on a financial instrument.
OTC stands for over-the-counter, and refers to a trade that is not made on a formal exchange. It is often also referred to as off-exchange trading.
A pip is a measurement of movement in forex trading, defined as the smallest move that a currency can make.
Pip value is the value attributed to a one-pip move in a forex trade.
PMI stands for purchasing managers index, a useful indicator of health in a particular sector within an economy. In the UK, Markit produce a PMI for the manufacturing, services and construction industries.
A position is the financial term for a trade that is either currently able to incur a profit or a loss (an open position) or has recently been cancelled (a closed position). Positions are the way in which a trader will hope to make a profit.
PROFIT AND LOSS
Profit and loss are two terms that are central to trading: the financial returns (or outgoings without returns) from any business enterprise or trade.
Quantitative easing (or QE, for short) is an economic monetary policy intended to lower interest rates and increase money supply. It saw an increase in profile and use after the 2008 financial crash and subsequent recession.
The quote currency is the second currency listed in a forex pair. It is also known as the counter currency.
A rally is a period in which the price of an asset, market or index sees sustained upward momentum. Typically, a rally will arrive after a period in which prices have been flat or in a decline.
Range is the difference between a market’s highest and lowest price in a given period. It is mostly used as an indicator of volatility: if a market has a wide range, it's a sign that it was volatile over the period analysed.
Reserve Bank of Australia, the central bank of Australia.
Reserve Bank of New Zealand, the central bank of New Zealand.
A resistance level is a key tool in technical analysis, indicating when an asset has reached a price level that market participants are unwilling to surpass.
An individual trader who trades with money from personal wealth, rather than on behalf of an institution.
A reversal is a turnaround in the price movement of an asset: when an upward trend (or a rally) becomes a downward one (a correction), or vice versa. They can also often be referred to as trend reversals.
In trading, risks are the ways in which an investment can end up losing you money.
In trading, a rollover is the process of keeping a position open beyond its expiry.
RSI stands for the relative strength index. It is a key tool used in technical analysis, assessing the momentum of assets to gauge whether they are in overbought or oversold territory.
In trading, short describes a trade that will incur a profit if the asset being traded falls in price. It is also often referred to as going short, shorting or sometimes selling.
After a decline, traders who earlier went short begin buying back.
A situation in which traders are heavily positioned on the short side and a market catalyst causes them to cover (buy) in a hurry, causing a sharp price increase.
Short selling is the act of selling an asset that you do not currently own, in the hope that it will decrease in value and you can close the trade for a profit. It is also known as shorting.
When the price at which an order is executed does not match the price at which it was made, it is referred to as slippage.
SNB stands for Swiss National Bank, the central bank for Switzerland.
In trading, spot refers to the price of an asset for immediate delivery, or the value of an asset at any exact given time. It differs from an asset’s futures price, which is the price for delivery at some date in the future, or its expected price.
Spread betting is a leveraged financial derivative. When spread betting, you are making a bet on the direction in which a market will move. The accuracy of your bet determines the profit or loss when the position is closed.
In finance, the spread is the difference in price between the buy (bid) and sell (offer) prices quoted for an asset.
A nickname for the British pound or the GBP/USD (Great British Pound/U.S. Dollar) currency pair.
STOP LOSS ORDER
This is an order placed to sell below the current price (to close a long position), or to buy above the current price (to close a short position). Stop loss orders are an important risk management tool. By setting stop loss orders against open positions you can limit your potential downside should the market move against you. Remember that stop orders do not guarantee your execution price – a stop order is triggered once the stop level is reached, and will be executed at the next available price.
Stop orders are types of order that instruct your broker to execute a trade when it reaches a particular level: one which is less favourable than the current market price. They can also be known as stop-loss orders.
A support level is the price at which an asset may find difficulty falling below as traders look to buy around that level.
The nickname for the Swiss franc or the USD/CHF (U.S. Dollar/Swiss Franc) currency pair.
Technical analysis is a means of examining and predicting price movements in the financial markets, based on an asset’s chart history. It is one of the two major schools of market analysis, with the other being fundamental analysis.
09:00 – 18:00 (Tokyo).
A trading plan is a strategy set by the individual trader in order to systemise evaluation of assets, risk management, types of trading, and objective setting. Most trading plans will comprise two parts: long-term trading objectives, and the route to achieving them.
A trailing stop is a type of stop-loss that automatically follows positive market movements of an asset you are trading. If your position moves favourably but then reverses, a trailing stop can lock in your profits and close the position.
When a market is making a clear, sustained move upwards or downwards, it is called a trend. Identifying the beginning and end of trends is a key part of market analysis.
Measures the total workforce that is unemployed and actively seeking employment, measured as a percentage of the labor force.
A market’s volatility is its likelihood of making major, unforeseen short-term price movements at any given time.
In trading, volume is the amount of a particular asset that is being traded over a certain period of time. It is often presented alongside price information, as it offers an extra dimension when examining an asset’s price history.