Welcome to the FinxAxis comprehensive Forex glossary. This glossary includes over 1,000 Forex trading terms to help you master trading terminology and enhance your skills. Use the alphabet navigation to find specific terms quickly.
The amount of money in a trading account, excluding unrealized profits or losses from open positions.
Account Equity
The total value of a trading account, including unrealized profits and losses.
Account Type
The classification of a trading account, such as demo, standard, or managed accounts.
Accumulation
The process of buying and holding an asset over time to increase ownership.
Adverse Selection
A situation where one party in a transaction has more information than the other, leading to potential losses.
Aggregate Demand
The total demand for goods and services within an economy at a given overall price level and in a given time period.
Aggregate Supply
The total supply of goods and services that firms in an economy plan to sell during a specific time period.
Alligator Indicator
A technical analysis tool that uses three smoothed moving averages to identify trends and potential reversals.
American Depository Receipt (ADR)
A negotiable certificate issued by a bank representing a foreign company's publicly traded securities.
Amortization
The gradual reduction of a debt over a specified period through regular payments.
Analysis Paralysis
A state where a trader overanalyzes data and fails to make a decision.
Annualized Return
The return on an investment expressed as a percentage per year.
Arbitrage
The practice of profiting from differences in price in different markets by simultaneously buying low and selling high.
Arbitrage Pricing Theory (APT)
A theory that states that the price of a security is determined by its relationship to various macroeconomic factors.
Ask Price
The price at which a trader can buy a currency pair.
Asset Allocation
The process of dividing investments among different asset categories, such as stocks, bonds, and cash.
Asset Class
A group of financial instruments that share similar characteristics, such as currencies, commodities, stocks, or bonds.
At-the-Money (ATM)
A term used to describe an option whose strike price is equal to the current market price of the underlying asset.
Average Directional Index (ADX)
A technical indicator used to quantify the strength of a trend.
Average True Range (ATR)
A volatility indicator that measures the range of price movement over a specified period.
Autochartist
A tool that provides automated technical analysis and chart pattern recognition.
Automated Trading
The use of computer algorithms to execute trades based on predefined criteria.
Available Margin
The amount of margin available for opening new positions after accounting for existing positions.
Average Cost
The average price paid for an asset, calculated by dividing the total cost by the number of units purchased.
Average Volume
The average number of shares or contracts traded over a specific period.
Arbitrageur
A trader who engages in arbitrage to profit from price discrepancies in different markets.
Asset Bubble
A market condition where the prices of assets rise significantly above their intrinsic value.
Attribution Analysis
A method used to assess the performance of an investment portfolio by determining the contribution of various factors.
Attestation
A formal declaration that something is true, often used in the context of financial statements.
Average Daily Range (ADR)
The average price movement of a currency pair over a specified number of days.
B
Balance
The total amount of money in a trading account, including all deposits and withdrawals but excluding any open positions.
Base Currency
The first currency listed in a currency pair, which is used as a reference for the value of the second currency.
Bear Market
A market condition characterized by declining prices, typically by 20% or more from recent highs.
Bid Price
The price at which a trader can sell a currency pair; the price buyers are willing to pay.
Bid-Ask Spread
The difference between the bid price and the ask price of a currency pair.
Big Figure
The first few digits of a currency pair's price, often used to simplify communication among traders.
Broker
An individual or firm that acts as an intermediary between traders and the financial markets.
Brokerage Account
An account that allows traders to buy and sell financial assets through a brokerage firm.
Brokerage Fee
The fee charged by a broker for executing trades on behalf of a trader.
Breakout
A price movement that occurs when the price moves beyond a defined support or resistance level.
Brexit
The term used to describe the United Kingdom's exit from the European Union, which has significant implications for Forex markets.
Bull Market
A market condition characterized by rising prices, typically by 20% or more from recent lows.
Buy Limit Order
An order to buy a currency pair at a specified price or lower.
Buy Stop Order
An order to buy a currency pair at a specified price above the current market price.
Balance of Payments
A record of all economic transactions between residents of a country and the rest of the world over a specific period.
Bank Rate
The interest rate at which a central bank lends money to commercial banks.
Bar Chart
A type of chart that displays price movements over time using vertical bars to represent open, high, low, and close prices.
Bearish
A term used to describe a market sentiment that anticipates falling prices.
Bid/Offer
The price at which a trader can sell (bid) and the price at which they can buy (offer) a currency pair.
Black Swan Event
An unpredictable event that has severe consequences, often impacting financial markets significantly.
Blowout
A term used to describe a significant and rapid loss in a trading account.
Book Value
The value of an asset as recorded on the balance sheet, often used to assess the worth of a company.
Break Even
The point at which total revenues equal total costs, resulting in neither profit nor loss.
Brokerage House
A firm that provides services to traders, including executing trades and offering market analysis.
Bundesbank
The central bank of Germany, which plays a significant role in the European financial system.
Buy and Hold
A long-term investment strategy where an investor buys securities and holds them for an extended period.
Buyback
A corporate action in which a company repurchases its own shares from the marketplace.
Backtesting
The process of testing a trading strategy using historical data to evaluate its effectiveness.
Balance Sheet
A financial statement that summarizes a company's assets, liabilities, and equity at a specific point in time.
Barriers
Price levels that are expected to act as support or resistance, often influencing market behavior.
Bid Size
C
CFD (Contract for Difference)
A derivative product allowing traders to speculate on price movements without owning the underlying asset.
Currency Pair
The quotation of two different currencies, such as EUR/USD.
Candlestick Chart
A type of price chart that displays the high, low, open, and close prices for a specific time period.
Carry Trade
A strategy where a trader borrows funds in a low-interest currency to invest in a higher-interest currency.
Cross Currency Pair
A currency pair that does not include the USD, such as EUR/JPY.
Commission
A fee charged by a broker for facilitating a trade.
D
Drawdown
The peak-to-trough decline in a trader's capital.
Day Trading
The practice of opening and closing trades within a single trading day.
Devaluation
A deliberate downward adjustment to a currency's value by its issuing government.
Directional Movement Index (DMI)
A technical indicator used to determine the direction of a trend.
Dollar Index (DXY)
An index that measures the value of the USD against a basket of major currencies.
E
Economic Calendar
A schedule of economic events that can impact currency prices.
Exchange Rate
The value of one currency for the purpose of conversion to another.
Exotic Currency Pair
A currency pair that includes a major currency and a currency from a developing economy.
Equity
The value of an account after all profits and losses have been accounted for.
Execution
The process of completing a buy or sell order in the market.
F
Forex (Foreign Exchange)
The global marketplace for trading national currencies against one another.
Fundamental Analysis
The evaluation of a currency's value based on economic, social, and political factors.
Fibonacci Retracement
A technical analysis tool that uses horizontal lines to indicate areas of support or resistance at the key Fibonacci levels.
Fill or Kill
An order that must be executed immediately in its entirety or not at all.
Floating Exchange Rate
A currency system where
A currency system where the value of a currency is determined by the market forces of supply and demand relative to other currencies.
G
Gap
A price level on a chart where no trading occurs, often due to a significant news event.
Gearing
The ratio of a company's loan capital (debt) to the value of its ordinary shares (equity).
Gold Standard
A monetary system where a country's currency or paper money has a value directly linked to gold.
Gross Domestic Product (GDP)
The total value of all goods and services produced within a country in a specific time period.
Greenback
Slang for the US dollar.
H
Hedging
A risk management strategy used to offset potential losses in investments by taking an opposite position in a related asset.
High Frequency Trading (HFT)
A form of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios.
Head and Shoulders
A chart pattern that indicates a reversal in trend, consisting of three peaks: a higher peak (head) between two lower peaks (shoulders).
Hybrid Trading
A combination of manual and automated trading strategies.
Historical Volatility
A measure of how much the price of a currency has fluctuated over a specific period in the past.
I
Inflation
The rate at which the general level of prices for goods and services is rising, eroding purchasing power.
Interest Rate
The amount charged by lenders to borrowers for the use of money, expressed as a percentage.
Interbank Rate
The interest rate at which banks lend money to each other.
Investment
The act of allocating resources, usually money, in order to generate income or profit.
Indicator
A statistical measure used to assess the performance of a currency or market.
J
JPY (Japanese Yen)
The official currency of Japan, often used as a reserve currency.
Jobless Claims
A measure of the number of individuals filing for unemployment benefits, used as an economic indicator.
J-Curve Effect
A theory that suggests that a country's trade balance will initially worsen after a devaluation before improving.
Just-in-Time (JIT)
A strategy that aligns raw-material orders from suppliers directly with production schedules.
K
Key Economic Indicators
Statistics that provide insight into the economic performance of a country, such as GDP, unemployment rates, and inflation.
Key Level
A significant price level that has historically acted as support or resistance.
Keltner Channel
A volatility-based envelope set above and below an exponential moving average, used to identify overbought or oversold conditions.
Kijun-sen
A line in the Ichimoku Kinko Hyo indicator that represents the average price over the last 26 periods.
L
Leverage
The use of borrowed funds to increase the potential return of an investment.
Liquidity
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The ability to buy or sell an asset without causing a significant impact on its price.
Limit Order
An order to buy or sell a currency pair at a specified price or better.
Long Position
A position that benefits from an increase in the price of a currency pair.
Lot
A standard unit of measurement for trading in Forex, typically representing 100,000 units of the base currency.
Liquidity Provider
A financial institution that provides liquidity to the market by offering buy and sell quotes.
M
Margin
The amount of money required to open and maintain a leveraged position.
Margin Call
A notification from a broker to a trader that their account balance has fallen below the required margin level.
Market Order
An order to buy or sell a currency pair at the current market price.
Moving Average
A technical indicator that smooths out price data by creating a constantly updated average price.
Market Sentiment
The overall attitude of investors toward a particular currency or market.
N
Net Profit
The total profit after all expenses, taxes, and costs have been deducted.
News Trading
A trading strategy that involves making trades based on news events and economic releases.
Non-Farm Payroll (NFP)
A monthly report that measures the number of jobs added or lost in the US economy, excluding farm workers.
Neutral Market
A market condition where there is no clear trend, and prices are moving sideways.
O
Order
A request to buy or sell a currency pair.
Open Position
A trade that has been executed but not yet closed.
Overbought
A market condition where the price of a currency pair has risen too quickly and may be due for a correction.
Oversold
A market condition where the price of a currency pair has fallen too quickly and may be due for a rebound.
Option
A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price before a specified date.
P
Pip
The smallest price move that a given exchange rate can make based on market convention.
Price Action
The movement of a security's price over time, often used in technical analysis.
Profit Margin
The difference between the cost of a trade and the revenue generated from it, expressed as a percentage.
Position Size
The number of units of a currency pair that a trader buys or sells in a single trade.
Psychological Levels
Price levels that are significant to traders, often based on round numbers or historical price points.
Q
Quote Currency
The second currency in a currency pair, representing how much of it is needed to purchase one unit of the base currency.
Quoting Convention
The standard way of quoting currency pairs, typically with the base currency first and the quote currency second.
Quantitative Easing (QE)
A monetary policy used by central banks to stimulate the economy by increasing the money supply.
R
Resistance Level
A price level at which selling is thought strong enough to prevent the price from increasing further.
Risk Management
The process of identifying, assessing, and controlling threats to an organization's capital and earnings.
Rollover
The process of extending the settlement date of an open position to the next trading day.
Relative Strength Index (RSI)
A momentum oscillator that measures the speed and change of price movements, typically used to identify overbought or oversold conditions.
Return on Investment (ROI)
A measure used to evaluate the efficiency of an investment, calculated as the net profit divided by the initial cost of the investment.
S
Scalping
A trading strategy that involves making numerous trades throughout the day to profit from small price changes.
Slippage
The difference between the expected price of a trade and the actual price at which the trade is executed.
Support Level
A price level at which buying is thought strong enough to prevent the price from declining further.
Spread
The difference between the bid price and the ask price of a currency pair.
Stop Loss Order
An order placed to sell a security when it reaches a certain price to limit an investor's loss.
T
Take Profit Order
An order placed to close a position once it reaches a certain level of profit.
Technical Analysis
The study of past market data, primarily price and volume, to forecast future price movements.
Trend
The general direction in which the market or the price of an asset is moving.
Trading Volume
The total number of shares or contracts traded for a specified security during a given period.
Trailing Stop
A type of stop loss order that moves with the market price, allowing for potential profit while limiting losses.
U
Unemployment Rate
The percentage of the total labor force that is unemployed but actively seeking employment.
USD (United States Dollar)
The official currency of the United States and the most widely used currency in the world.
Uptrend
A series of higher highs and higher lows in price, indicating a bullish market.
V
Volatility
A statistical measure of the dispersion of returns for a given security or market index, often associated with risk.
Volume
The number of shares or contracts traded in a security or market during a given period.
VIX (Volatility Index)
A measure of market expectations of near-term volatility, often referred to as the "fear index."
W
Whipsaw
A situation in which a security's price moves sharply in one direction and then reverses direction, causing losses for traders.
Wedge Pattern
A technical analysis pattern that indicates a potential reversal in price direction, characterized by converging trend lines.
Working Order
An order that is active and waiting to be executed.
X
XAU/USD
The currency pair representing the value of one troy ounce of gold (XAU) in US dollars (USD).
XAG/USD
The currency pair representing the value of one troy ounce of silver (XAG) in US dollars (USD).
Y
Yen (JPY)
The official currency of Japan, often used as a reserve currency.
Yield
The income return on an investment, typically expressed as a percentage of the investment's cost.
Yard
Slang for one billion units of a currency.
Z
Zero-Sum Game
A situation in trading where one participant's gain or loss is exactly balanced by the losses or gains of other participants.
Z-Score
A statistical measurement that describes a value's relationship to the mean of a group of values, often used in risk assessment.
Zimbabwe Dollar (ZWD)
The former currency of Zimbabwe, which has been replaced by the US dollar and other foreign currencies due to hyperinflation.
