Forex Glossary

Our Forex glossary will acquaint you with the meanings of all of the central concepts that you may encounter while you are performing transactions in Forex market.

Bear Market

It shows the fact that the sellers in the market constitute the majority. It is used to imply the markets where the prices tend to drop. It is named after the attack tactic of bear which hunts by hitting its victim with its claw from above.

Balance

It shows the final balance in user’s account without calculating open positions.

Base Currency

It means the unit on the left of currency pair in a parity. For example: in USDJPY parity, the base currency is USD.

Standing Order

It means the position order which is placed as future-dated so that it will be put into practice at a certain price level and on a future date. The relevant orders become active once the designated levels are achieved.

Bull Market

It shows the fact that the buyers in the market constitute the majority. It is used to imply the markets where the prices tend to rise. It is named after the attack tactic of bull which hunts by throwing up and then pulling down its victim.

Bollinger Band

It is a technical indicator which helps to compare price levels and volatilities at a certain time interval in one of the preferred currencies. This indicator consists of 3 bands which move with price activities. Mostly, among these 3 bands, the one at the top level implies the resistance point, while the one on the bottom indicates the support point. Positioning price per middle band can be important in terms of determining the course of the market.

Bretton Woods Agreement

44 countries participated in the conference, which took place in 1944, in order to make several important decisions such as the foundation of the World Bank and IMF. Following the conference, the gold standard was abandoned and the monetary system, which is still in use today, was established. It was decided that all of the currencies become convertible to one another.

According to this agreement, dollar is the only currency that can be converted to gold and prices of gold was fixated as 1 ounce = 35 dollar.

Buy

It means the transactions of buying position in Forex market.

Sell

It means the transactions of selling position in Forex market.

Buy Limit

It refers to the automatic buying order that has given to the market to operate at a level below the current price, at a later date, when the market receives that bid.

Buy Stop

It refers to the automatic buying order that has given to the market to operate at a level higher the current price, at a later date, when the market receives that bid.

CFD

Contract For Differences (CFD) is an investment group which comprises the sum of all the tools that enable contracting over the market without any requirement to physically buy such investment tool. A commodity bought at CFDs is only the expectation as to price rises or falls.

Line Chart

Such graphics are created only for closing prices. It is the form of a chart that provides the simplest demonstration.

Bar Chart

The first transaction price within a designated time slot is indicated with a line to the left on the bar in this chart. Likewise, the closing price which implies the last transaction price is indicated with a line to the right on the bar in this chart. Closing price indicates the last transaction price within a specified time slot and is in form of a line to the right on the bar. The uppermost point of the bar indicates the highest price within a time slot while the lowest point indicates the lowest price.

Support

It means the levels which would be hard to pass for the dropping price trend. Those are important levels in terms of keeping track of the market.

Resistance

It means the levels which would be hard to pass for the rising price trend. Those are important levels in terms of keeping track of the market.

Doji

Doji is a candlestick charting pattern. This pattern is an indicator of indecisive markets where opening and closing prices are equal.

Economic Calendar

It is the calendar which shows time and status of economic indicators and events. Investors can follow the relevant calendar to become quickly informed about developments in the market.

Commodities

It means the group of products considered as commercial commodities in Forex market, among others: soy, petrol, cacao, coffee and many other raw products.

Fibonacci Sequence

Fibonacci Sequence implies the series of numbers where the next number is found by adding up the two numbers before it. Technical analysis can be made based on the proportions of numbers to one another.

Price Channel

It means the channel created when a price of a specific instrument moves between to limits designated on the graphic.

Free Margin

It means the amount of investor’s trade balance in a trading account that is available for opening new positions.

It is calculated as follows: Free Margin = Equity – Margin.

Hedge – Hedging

It means limiting or offsetting probability of loss or profit by opening a transaction of the same size but with a different direction from the position that is open at that moment. It may be used to gain time for a short period. Hedge can be made exactly or proportionally.

Trailing Stop

It is the type of order that tracks the market movement. Trailing stop, which you set while opening position, changes in accordance with the price fluctuation.

Quotation

It implies the buying-selling price levels that are determined instantly.



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