Forex Glossary (A-Z)

My dear visitors the term forex glossary means the terminology which is being used in forex articles, forex tutorials, or in the forex education as well. Every person who wants to explore the different forex topic or trying to get the forex education must be knowledgeable with the fallowing forex terms.


Aussie: It means Australian Dollar

ADX (Average Directional Index): It is the standard indicator to measure strength of trend over the graph

Aggressor: The existing price in the market with which the trader dealing with.

Arbitrage: It is kind of strategy to take profit from the difference in the price of a single currency pair that is traded on more than one market.

Appreciation: It means increase in the value of asset/ currency/ stocks etc

Ask: The current price offered for sale in term of currency/ stock/securities. This is also known as ask price

Aggregate: Very simple who knows English, it means total value


Base Currency: In Fx trading, currencies are quoted or mentioned in terms of a currency pairs. The first currency in the pair would consider as base currency.. Examples: USD/JPY, the US Dollar is the base currency; EUR/USD, the EURO is the base currency.

Bid: It’s also known as bid price or bid rates. It will the present price of the pair at which the buyer buy the currency.


Bear Market: The market scenario where the prices would decline. It means the downward trends and the bull market is quite opposite to it.

Bid/Ask Spread: The difference between the ask price and bid price will call it spread.

Bank Rates: The rate at which a central bank is prepared to lend money to its domestic banking system

Basis: The difference between the cash price and futures price.

Break Even Point: It is the point where nothing gain or nothing loss after investment.

Big Figure: Apart of minor values (like pips) the major portion of the value like first three or two number of currency like USD/JPY rate of 108.05/10 the big figure is 108. EUR/USD price of .8325/28 the big figure is .83.

Buy Limit Order: It is the order to execute the transaction at specific price ( at some limit)

Buy On Margin: The word margin means that the amount actually invested by the client rather then he barrowed means forex leverage .So buy on margin currency buys within limit.

Bundesbank: It’s the name of Germany’s central bank. This index only looks at price changes in goods purchased in retail outlets

British Retail Consortium (BRC) Shop Price Index: This is the parameter to judge the inflation rate in the prices by different retailers.

Balance of Trade: The difference in the values of country’s exports minus imports.

Break Out: When the value of the currency crosses previous high price(resistance) or previous low( support) price is called break out.


CPI: consumer price index

Cable: Alternative name of British pound

Candlestick Chart: It is a Japanese chart given us not only the idea of trend but also daily price range (open, close, high and low)

Capital Account: It is the total position of export and imports either long or short term position of the country

CBOT or CBT: Chicago Board of trade

CBOE: Chicago Board Options Exchange.

Central Bank: As it reveals by the name that it provide the services to the Government and other commercial banks. It is also responsible the change of interest and watch the monetary policy.

CFTC: It is the commodity future trading commission. It is the US Federal regulatory agency responsible for the trading regulations of future, commodities, and foreign exchange.

CIBOR: It stands for Copenhagen Interbank Rate, It is the rate, This rate calculated by the Denmark central banks on the basis or recommendation over the Denmark bankers association .This rate then used by the banks for unsecured loans.

Closed Position: It is the end result (squaring up) what our the position open either buy or sell of any currency pair while forex trading.

Chartist: It means the expert who can predict the future price of the currency by analysis of various forex charts.

Commission: The either charge by the forex broker or any signal providing company on every transaction.

Confirmation: The final acknowledgement of the trade in term of every detail such as size of trade, date of trade, pricing, and commission.

Counterpart: The customer or bank with which a foreign exchange deal is executed

Cross-Rate: It is the exchange rate of the two currencies where neither of the currencies are USD

Currency Risk: Means the unfavorable exchange rate may be possible during the transaction.

Currency Pair: The pair of two currencies which responsible for foreign exchange rate for example EURO/USD

Carry Trade: Sell the pair of currencies with less interest rate and purchase the pair with high interest rate.

Currency symbols:
AUD – Australian Dollar
CAD – Canadian Dollar
EUR – Euro
JPY – Japanese Yen
GBP – British Pound
CHF – Swiss Franc

Capital Market: Where the medium and long term and short term equities and bonds traded.


Deal Date: The date on which the transaction accrued.

Deficit: The short fall either in Government Budgets, Balance of trade and the balance of payment.

Derivatives: The contract that changes the price movements either of security or currency.

Desk: It is also known as dealing desk where the trader trades the single currencies or the group of currencies.

Discount Rate: These are discretionary rates of central bank. Over which the central bank is generally discount the various bills to other financial institution or commercial banks for the sake to easing there liquidity and is more accurately referred to as the official discount rate

Day Order; The order which should be executed over the specific day otherwise automatically cancelled.

Day Trading: It is the style of trading in foreign exchange market where the positions opened or closed during the same date.

Day Trade: The trade open and closed on the same day.

Day Trader: The trader who buys and sells the currencies over the short term price movements.

Dealer: You can say that forex broker as your dealer

Depreciation: A fall in the value of the currencies by the virtue of market forces.

Devaluation: It is the deliberate reduction in the value of the currency by the government due to specific circumstances.

Divergence: When two or more averages or indexes fail to show confirming trends


Exotic: The less trading pair in currency market or u can say less traded currency.

Exchange Rate Risk: The amount of loss that could cause from an adverse movement in exchange rates.

European Union: It is the group of the sixteen nation’s countries, using the Euro and sharing the financial issues.

ECB: European central bank.

Either Way Market: It is the inter banks deposits transactions where the bid and ask rate may be same for the particular period of time.

EMU: European Monetary Union

EOE: European Options Exchange.

Economic Indicator: These are overall statistics of any country which indicates the Economic situation in the country.

Exposure: The total amount of money loaned to a borrower or country

Execution: The process, when deal or order either currency or stocks completed.


FOMC: It means Federal Open Market Committee; the role of FOMC in US is that it responsible in supplying the money through out the country by fed reserves and controls the interest rates as well.

Foreign Exchange: The sale and purchase of one currency against the sale and purchase of other.

Floor: The area where trade occurs. In other means trading area.

Fast Market: When the market reacts extraordinarily due to involvement of the buyer and seller due to some interests and market graphs reacting quickly by either way.

Federal Deposit Insurance Corporation (FDIC): It is the regulatory body of US government to watch the bank depository insurance amount in the country.

Federal Reserve (Fed): This abbreviation means the central bank of United States.

Federal Reserve System: The US central Banking system.

Forward Contract: A transaction that settles at a future date.

Forward Deal: A deal with a value date greater than the spot value date.

Forward Points: The points those are added and subtracted from the current spot rates to calculate the forward rates will call the forward points. Generally these points basically depend upon the difference between the interest rates of two pairs.

Forward Rate: It is rate by which the currency purchase or sold in the future. This rate would be extracted by the result of forward points.

Fundamentals: These are basically shown as Economic affairs of the country and to some extent political affairs as well.

FX: The forex market.

Fill: The process of to fill the customers orders to buy and sell the currency pairs.

Fill Price: The exciting price by which the order of either sell or buy executed.

Flat: The point where the client will not ready to buy and sell the currency.

Free Reserves: The excessive reserves held by the banks apart of reserves required by authority


GDP: It is very important abbreviation which means Gross Domestic products. This factor is basic shows the growth of the country. Because the out shows the total income minus the expenditures within the country’s own borders.

GNP: It is the Gross National product. Calculation is simple and important, Total GDP numbers plus any other income produced from from any foreign investment or foreign remittances

GTC Good Till Cancelled: The order placed by the dealer either buy or sell on behalf of client and remain intact over the same price until cancelled.

G10:These are the group great 10 industrial countries. Which include US , Germany, Japan, France, UK, Canada, Italy, Belgium, Netherlands and Sweden.

G7: It is the group of seven leading industrial countries. Which include US , Germany, Japan, France, UK, Canada, Italy

G5: The five leading industrial countries – US, Germany, Japan, France, UK.


Hedge: It is the kind of investment required to make, to reduce the risk of adverse price movements. The perfect example of hedge is would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations.

Hedging: It is basically a process to purchase opposite positions in the market in order to ensure a certain amount of gain or loss on a trade.


IMF: International monitor fund, the role of this institution to provide the loaning facilities to the members countries if they would be in trouble in term of monitory problems.

Indirect quote: Where the foreign currency is a variable amount and the domestic currency is fixed at one unit.

Intervention: It means the involvement by any economical factor which effects the values of the currency suppose the central bank change the interest rate etc.

Interest Rate Swaps: An agreement to exchange interest rate exposures from floating to fixed or vice versa. There is no swap of the principal. The principal amount is notional as at the end of the tenure only cash flows related with the interest payments (whether payment or receipt) are exchanged

Intra Day Limit: The limit set by the bank management against the open positions of the dealer.

Intra Day Position: The total open position either runs by dealer or client on the basis of margin limit.

Interest Rate Risk: The expected losses against the expected change in interest.

Inter bank Rates: These are the rates of interest set by the national or international banks for there internal transactions.

Initial Margin: The amount needs to be deposit by the customer for purpose of forex trading.

ISDA (International Securities Dealers Association):


ISM Manufacturing Index

ISM Non-Manufacturing


Japanese Economy Watchers Survey: It is the parameter adopted by Japanese Government to survey such kind businesses in which the fallowing categories professional involved

Such as





Jobber: The kind of trader who is looking for short term trading opportunities.



Kiwi: It means the NewZeelands Dollar.



LIBOR: It means that London interbank offered rates. These are variable rates which banks charges internally for there internal barrowings.

Limit Order: An order placed with a brokerage to buy or sell at some specific prices or even at better price.

Leading Indicators: One can define it as the total statistics of the countries Economy. These statistics are generally helpful to predict the future prices.

Liquidity: It means the strength in the market, as the market behave normal while the huge transaction accrued without having any major impact on the interest rates.

Long: This indicates that currency has been buying.

Long Position: When the customer entered into buying it mean long position.

Liquidation: It means to close the previous positions either buy or sell.

Lay Off: Same as Liquidation.

LDC: Less developed countries.

Leverage: Also called margin. The ratio of the amount used in a transaction to the required security deposit.

Lot: It is the unit to measure the amount of deal, by which the customer entered in the market.


Margin: The required amount of money that a investor should have deposit for the purpose to play forex game.

Margin Call: In case of the some losses accrued and the total investment comes to end then the dealer can call the investor to invest further if he wants to open the positions in the forex market.

Marginal Risk: The risk to loose the investment.

Market Value: The existing price of the currency in the market.

Mark – To – Market: It means to asses your existing open positions with your dealer.

Market Maker: It means the dealer or forex broker.

Maturity: Date for settlement of the transaction which is decided at the time of entering into the contract.

Money Supply: The amount of money supply by the central banks into the market.

Momentum: The flow of the movement of a currency pair in the certain directions.


Net Position; The total number of open positions either buy or sell of any pair in forex .


Offer: This is the kind of price which the client can buy the pair.

Open Order: The orders in term of buy and sell remain intact until executed or cancelled by the customer.

Open Position: The positions either buy or sell which has been executed by the customers and yet to closed

Order: A customer’s instructions to buy or sell currencies.

Overnight Position: The trader remains long and short with currencies in overall trading day.

OCO-One Cancels the Other Order: A combination of two orders in which the execution of either one automatically cancels the other.

Over The Counter (OTC);A telephonic or computerized transaction held between the dealer or principle rather then exchange trading floor.

Official Settlements Account: A US balance of payments measure based on movement of dollars in foreign official holdings and US reserves. Also referred to as reserve transaction account.


Pip: The smallest variation in the pair of foreign currency.

Par: The official value of the currency.

Parity: It is the slang used by the forex dealers which actually means correct market price.

Political Risk: Any unpredictable political new which can affect the price of the currency.


PPI: Producer Price Indices

Price: The existing price at which any currency can bought or sold.

Price Transparency: Mentioned the quotes of every pair in forex market which are accessible to every participant.

Principal Value: A dealer who buys or sells stock for his/her own account

Purchasing Managers Index Services (France, Germany, Eurozone, UK): Its also known as PMI. Generally it helps in measure the services and manufacturing sectors.

If we more specific with the manufacturing sector it will enable us to look they surveys related to employment, production, new orders, supplier deliveries, and inventories. Readings above 50 generally indicate expansion, while reading below 50 suggests economic contraction.


Quote: It is the used as symbol of market price


Resistance: The price level where the trader prefer to sell the currency.

Rate: The rate or price level at which the currencies can sold or purchased.

Revaluation: Increase or decrease in the price level of foreign exchange by any government order.

Risk (Foreign Exchange Risk):

Risk Management: It is the kind of technique which is applied to reduce the financial risk in foreign exchange or forex.

Roll-Over: This term means the interest earned or paid over any open position of the pair by the close of New York trading hours at 1700 EST. It also shows the difference between the interest rate of two currency pairs.

Reserve Currency: The currency stored by the central bank {usually safe currencies acted as reserve} generally its US Dollar, British pound, Euro Etc.

Retail Price Index: It is the measurement of the monthly difference of retail prices, its normally defined group of goods.

Rally: A recovery in price after a period of decline

Range Bond: In forex term it means the movement of price range from specifically lower or highest levels known as range bond.

Retail Sales: This is very important factor to measure the growth in the Economy of nay country. Because the data has given the idea of the customers spending behavior, which is the key factor to judge any Economy. It can be judge by measure the monthly retail sales of all goods and services.


Spot Market; It is the physical market where the foreign currency pair tend to be sold and purchased is known as spot market.

Spot Price: The current market price of any currency.

Spot Trade: The immediate trade either sale or purchase of any currency pair is known as spot trade.


Short Position: In the forex market when the currency tends to sell, the position is said to be short position. It is understood that the primary currency in the pair is ‘short’, and the secondary currency is ‘long’.

Simple Moving Average (SMA): It is the important indicator used in technical analysis can play of the role either support or resistance.

Spread: This point or pip difference between the bid and ask price of a currency pair.

Square: The point where the purchase and sales are in balance and thus no open option.

Sterling; slang of British Pound.

Sell Limit Order: It is the execution of the transaction at specified price


Support Levels: This term generally used in the technical analysis which means the area where the traders love to enter in purchasing mode.

Swap: A transaction which moves the maturity date of an open position to a future date.


Take Profit Order: The client’s instructions to buy or sell a currency pair which, if implemented, will reduce the current position and said position shows a profit.

Technical Analysis: This is to judge the direction of the price by using graph, trend lines, based upon the previous price history.

Tomorrow Next (Tom/Next), (T/N), T/N Roll: Moving the value of a solution forward one day open a day after the trade date (tomorrow), the date of the next valid value (next), the spot value date.

Transaction Date: The date on which a trade occurs.

Turnover: The total volume of all transactions in a given period.

Two-Way Price: A listing on the foreign exchange market that indicates a bid and an offer price.

Terms of Trade: The relationship between export and import price indices.

TIBOR: Tokyo Inter-bank Offered Rate.

Thin Market: A market in which trading volume is low and then purchasing and quotes are wide and the instrument traded is low.

Tick: The smallest change in the price either up or down


U.S. Treasury: U.S. Treasury Department responsible to issue any bonds, notes and bills.

Under-Valuation: The exchange rate is generally considered to be undervalued when it is below its purchasing power.


Value Date: Expiry date of the settlement currency, usually within two working days (one day in Canada) after the trade occurred.

Variation Margin: Funds, which are required to bring the equity in an account back up to the initial margin level, calculated on a day-to-day basis.

Volatility (VOL): Statistical measure of the change in the price of a financial currency pair over a period of time.

Value Spot: In general, the solution is two working days of its completion. Today, the value of the transaction is performed on the same day settlement, also sometimes referred to as “cash transaction”.


Withholding Tax: Income tax on salaries of employees of the reservation and payment directly to a Government employee.

Wholesale Price Index: measure price changes in the manufacturing and distribution of the economy and tends to CPI from 60 to 90 days. The index is often quoted separately for food and industrial products.


Yield Curve: Chart of changes made, depending on the length. Originally developed in the bond market are already very different futures. A positive sloping curve has lower interest rates is less than the loan, the greater the longer term. A negative sloping curve has higher interest rates for mortgages.

Yard: A slang word used in the currency industry meaning ‘billion’.


Zero Coupon Bond: A bond that pays no interest. The bond is initially offered at a discount to its redemption value.