From beginners getting acquainted with the world of investing to experts with decades of experience, all traders need to clearly understand a huge number of terms.
The price at which the market sells a currency. The trader can buy the base currency at this price.
An item that has exchange value.
A list of all our underlying assets with definitions regarding what each asset is.
One of the most popular types of financial charts. Each bar on a chart represents the open, high, low, and close for that time period displayed as a bar. Also referred to as OHLC chart.
A market in which prices are noticeably declining.
The price at which the market buys a currency. This is the price that the trader may sell the base currency.
Created in early 2009 by Satoshi Nakamoto, Bitcoin is a form of digital currency that relies on cryptography for security. It is decentralized and not controlled by a single entity.
Peer-to-peer electronic cash for the internet, created in August 2017. It is essentially a clone of the original Bitcoin blockchain but with increased block size capacity.
A decentralized, digital ledger where transactions made in bitcoin or other cryptocurrencies are recorded chronologically and publicly.
A technical analysis tool used for pattern recognition and trading approaches.
When the market price of an asset moves through a previously strong support or resistance area or level of interest, followed by increased volatility and heavy volume.
An agent or company that executes orders to buy and sell currencies and related instruments for their clients.
A market characterized by rising prices.
When the trader chooses the upward direction for an asset price by expiry.
A type of chart used to indicate the trading range for the day and opening/closing prices. It shows the move between the open and the close.
A trading strategy where investors sell or borrow assets with lower yielding interest rates to fund or buy higher yielding assets.
The institution that plays a key role in the currency markets by controlling monetary policy and influencing money supply, demand, and currency prices.
A tool used to plot price movements over a specific time period, allowing traders to analyze historical prices and forecast future activity.
The end of a trading period or the process of ending a position.
A transaction fee charged by a broker.
Marketable goods or services produced to meet a demand, including energy, metals, and agricultural products.
An index that measures the change in price of a representative basket of goods and services.
In the commodities market, traders invest in contracts for assets. Contracts standardize assets and simplify speculation.
A financial derivative product that allows traders to speculate on the price movements of various underlying assets without owning the assets themselves.
In trading, correlation is a measurement of the relationship between two assets. A positive correlation suggests that Security B will move in the same direction as Security A.
The amount of crude oil, gasoline, and distillate in a country.
A digital or virtual currency that uses cryptography for security and operates independently of a central bank. Examples include Bitcoin, Ethereum, and Ripple.
Made up for a Base currency and a Quote currency (or Counter currency), it’s the way of displaying and pricing one currency against another to be used to make a trade.
The chance that is involved in exchange rates to have negative effects.
A trading strategy where traders open and close positions within the same trading day, aiming to profit from short-term price fluctuations.
A sustained decrease in the general price level of goods and services in an economy, often accompanied by a decrease in economic activity.
A financial instrument whose value is derived from an underlying asset or group of assets. Examples include futures contracts, options, and swaps.
A strategy where an investor regularly invests a fixed amount of money into a particular asset or portfolio, regardless of the asset’s price, with the aim of reducing the impact of short-term market fluctuations.
Chart pattern in technical analysis.
A stock market index that represents the performance of 30 large publicly-traded companies in the United States.
An economic indicator is a measurement or data point on the economy that provides a barometer of how the country is doing, which could influence an asset’s value.
A technical analysis approach that attempts to predict future price movements by identifying repeating patterns in market charts.
A decentralized, open-source blockchain platform that enables the creation and execution of smart contracts and decentralized applications (DApps). It has its own cryptocurrency called Ether (ETH).
The European Central Bank (ECB) is the central bank for Europe’s single currency, the euro. The ECB’s main task is to maintain the euro’s purchasing power and thus price stability in the euro zone. The euro zone comprises of 17 European Union and 5 non-European Union countries that have introduced the euro since 1999.
A platform or marketplace where financial instruments, such as currencies, stocks, or commodities, are traded.
Exchange Rate Risk refers to the potential loss that could be incurred from an adverse movement in exchange rates.
Exotic Currency refers to a currency that is not popularly traded or considered one of the eight major currencies.
Fibonacci channels serve as a methodology for predicting support and resistance levels in a given market. They utilize the identification of peak and valley formations in the market to make informed projections about major changes in trend directions. The key to effectively utilizing Fibonacci channels is correctly identifying the relevant peaks and valleys to work with. Once the appropriate tops and bottoms have been identified, support and resistance lines can be projected into future weeks and months. It is important to consider only significant tops and bottoms as the base line for a channel, incorporating one or more prominent side swings. The widest swing within the time frame of the base line is used as a trigger line.
Short for foreign exchange. It refers to the global decentralized market where currencies are traded against each other.
A deal with a value date greater than the spot value date.
A method of analyzing financial markets by examining economic, social, and political factors that may affect the supply and demand of an asset.
A standardized agreement to buy or sell a specific quantity of an asset at a predetermined price and date in the future.
A gap occurs when a market rapidly transitions from one accurately quoted price to another significantly different and accurately quoted price. Gaps can be caused by various factors, including economic data, company announcements, political events, natural disasters, etc. However, the consequence is that any execution of a stop loss, limit, or new order may take place at a level different from the trader’s requested price.
Processing fee in the Ethereum network. It serves as the metering unit for executions on the EVM. Gas units are predetermined and vary based on the computational requirements of the transaction, payable in ether with GWei as the denomination.
Precious metal widely used in jewelry, electronics, and various equipment for its conductivity, malleability, and durability. In the past, it served as a standard for monetary exchange, but this practice ceased with the introduction of the fiat system in the US in 1971
The aggregate value of goods and services produced within the borders of the United States, irrespective of asset ownership or labor nationality involved in the production. The growth of GDP is measured in real terms, accounting for inflation-adjusted increases in output.
A risk management strategy used to offset potential losses in one investment by taking an opposing position in a related asset or derivative.
Hedge funds are investment vehicles managed by professional portfolio managers. They employ aggressive investment strategies with the aim of achieving high returns for investors. Despite their name, hedge funds prioritize maximizing profits for investors. They have the flexibility to trade various financial instruments in the foreign exchange market, including spot contracts, futures contracts, and swaps.
An economic condition characterized by a rapid increase in price levels as a nation’s currency rapidly loses its value. This typically arises from a significant surge in the money supply that exceeds the growth of the gross domestic product (GDP), creating an imbalance in the supply and demand for money.
An index is a statistical measure tracking the changes in a portfolio of stocks representing a specific market segment. It serves as a benchmark for evaluating market performance and trends. Examples include DAX, ASX200, and Dow Jones. It’s essentially a list of stocks that anyone can create.
A sustained increase in the general price level of goods and services in an economy over a period of time, often resulting in the devaluation of currency.
A fundraising method used by cryptocurrency startups, where they sell a portion of their newly issued cryptocurrency tokens to early adopters and investors in exchange for funding.
Initial margin is the deposit of collateral required to enter a trade, providing security against potential losses. It ensures both parties have adequate funds/assets. It maintains the trading system’s integrity and reduces default risk. The amount depends on factors like volatility and liquidity.
The amount charged or earned as a percentage of an invested amount, typically for borrowing or lending money. It influences borrowing costs, investment returns, and currency valuations.
Interest rate differential (IRD) is the difference in interest rates between similar interest-bearing currencies in the foreign exchange market. It affects currency valuations and capital flows. Traders monitor IRD for arbitrage opportunities and currency speculation. Changes impact currency attractiveness and exchange rates.
Interest rate risk refers to potential losses from interest rate fluctuations. It affects bonds, loans, and fixed-income securities. When rates change, their values can fluctuate inversely. Rising rates lead to bond price declines and capital losses. Risk level depends on factors like duration, rate changes, and instrument sensitivity. Investors manage it through hedging and diversification strategies.
The process of investing money in the economic market.
The currency of Japan. One of the major traded currencies. Currency code (JPY).
A pair of private and public keys used in public key cryptography for data encryption and decryption.
Ratio of transaction amount to required deposit, amplifying investment with a small percentage of trade value.
London Inter-Bank Offered Rate, widely accepted reference rate for borrowing between banks.
An order to buy or sell an asset at a specified price or better. It will only be executed if the market reaches the specified price.
The degree to which an asset or security can be bought or sold in the market without affecting its price. High liquidity means an asset can be easily traded, while low liquidity may result in larger price fluctuations and difficulties in executing trades.
Cryptocurrency similar to bitcoin, created by Charlie Lee in 2011, with faster block creation and additional features.
Beneficial position as market price rises, buying base currency pair.
Unit of measurement for transaction amount, always an integer.
Moving Average Convergence/Divergence, an indicator used in technical analysis to show price differences.
Initial deposit of collateral required for a position or forex trade.
Demand for additional funds to cover open trade positions.
An order to buy or sell an asset at the best available price in the market. It is executed immediately and may be subject to slippage if the market price has changed since the order was placed.
Rate of change in asset price, used in technical analysis.
Process by which a monetary authority controls money supply to influence economic growth, stability, and employment.
A commonly used technical analysis indicator that calculates the average price of an asset over a specific period of time. It helps identify trends and smooth out price fluctuations.
Cryptocurrency and platform for managing various assets, offering additional features to blockchain technology.
Unsettled currency bought or sold without offsetting transactions.
Estimate of payroll jobs at nonfarm businesses and government agencies, including unemployment rate and earnings.
Active trade that has not been closed.
Derivative contracts that give the holder the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a specified price within a specific time period.
Market conducted directly between dealers without a regulated exchange.
Position held until the next trading day.
Stocks with low share prices, typically trading at less than $5 per share. They are often associated with high volatility and speculative trading.
Smallest value change in a currency pair’s exchange rate.
A collection of financial assets, such as stocks, bonds, and cash equivalents, held by an individual or institution.
Net exposure in a currency, either flat, long, or short.
Price movement of a security represented in charts and graphs.
Monthly report detailing purchasing price of consumer goods.
Second currency in a currency pair.
A company that owns, operates, or finances income-generating real estate. It allows individuals to invest in real estate without directly owning the properties.
Price oscillator used in technical analysis to measure strength of prices.
A price level in technical analysis where an asset’s price has historically had difficulty rising above, often indicating a potential reversal or a level of selling pressure.
Estimate of total sales of goods by retail establishments.
Ratio of expected returns to predetermined risk of loss.
Cryptocurrency and payment platform for real-time global transfers.
Amount of money one is willing to lose.
The process of identifying, assessing, and prioritizing risks and implementing strategies to mitigate or manage potential losses.
Short-term trading strategy aiming for small profits from bid-ask spread.
A U.S. government agency responsible for regulating the securities industry, protecting investors, and maintaining fair and efficient markets.
Order to sell an asset at a downward price direction.
Position where the base currency is sold, benefiting from price declines.
Difference between expected and actual fill price.
Current market price of an asset.
Indicator comparing closing prices to high and low prices over a period.
A marketplace where buyers and sellers trade shares of publicly traded companies.
An order placed by a trader to sell an asset automatically if its price reaches a specified level. It is used to limit potential losses by exiting a position when the market moves against the trader’s expectations.
Price at which an option is opened in the market.
Simultaneous buying and selling of the same currency amount at a forward exchange rate.
Short-term trading strategy holding positions for more than a day.
Order to automatically close a position once a certain profit level is reached.
A method of analyzing financial markets by studying historical price and volume data, using various indicators and chart patterns to predict future price movements.
Minimum price change, up or down.
Suggestions or signals indicating profitable underlying assets and directions to open positions.
Total amount traded during a specific period.
Line connecting high or low prices on an asset’s chart, representing a trend.
Government agency responsible for managing the money resources of the United States.
Percentage of people in the workforce without jobs, measured against the total workforce.
A measure of the price fluctuations or variability of an asset’s price over time. High volatility indicates large price swings, while low volatility suggests a more stable price environment.
Storage method for cryptocurrencies.
Group of international financial organizations providing assistance to member countries.
The return on an investment, usually expressed as a percentage, considering both income (such as dividends or interest) and capital gains or losses.
A graphical representation of the interest rates of various maturities of bonds or debt securities plotted against their respective time periods. It helps indicate the market’s expectations of future interest rates and economic conditions.
Zig Zag is a technical analysis tool used to filter out price movements that are not significant and highlight the important ones. It helps traders visualize the overall trend by connecting swing highs and swing lows on a price chart. The Zig Zag indicator eliminates smaller price fluctuations and focuses on major price changes, allowing traders to identify key support and resistance levels. It is particularly useful in identifying trend reversals and assessing the strength of price movements.
