Glossary

A

ADX

A popular technical indicator which basically functions to measure the strength of a trend. It calculates a number between 0 and 100 by combining two directional indicators and smoothing the result. Zero means no trend at all while higher numbers indicate a stronger trend. See also technical analysis.

ALGORITHMIC TRADING

This usually means the use of a computer programme to trade automatically. Expert Advisors (‘EAs’) are a prominent example of this type of trading: these are programmed to take certain actions like opening and closing orders in particular circumstances.

AMERICAN SESSION

The third main session of the day in derivative markets from 12.00-21.00 GMT (summer) or 13.00-22.00 GMT (winter). It includes countries like Canada, the USA and Mexico. See also global CFD markets.

ANALYST

In derivative markets, an analyst usually means somebody who is a Member of the Society of Technical Analysts and/or a Certified Financial Technician by the International Federation of Technical Analysts. Analysts typically do not give recommendations; instead, they turn raw data from markets and indicators into summaries for traders.

ASIAN SESSION

The first main session of the day in derivative markets from 21.00 to 10.00 GMT (summer) or 22.05-11.00 (winter). It includes countries like New Zealand, Australia, Japan, China, Singapore and Hong Kong. See also global CFD markets.

ASK (PRICE)

Ask is the price as which you buy an instrument and the price at which selling orders are closed. It’s always higher than bid. Ask is also known as the ‘ask price’ and, in older use, ‘offer’ and the ‘offer price’. Opposite of bid; see also the practical glossary of trading.

AUD

The Australian dollar, the fifth most traded currency in the world. Usually known as the Aussie dollar.

AUS200

The main index of Australian shares. The largest constituent companies of the index by market capitalisation are financial services and mining companies.

B

BALANCE OF TRADE

The difference in the total value of a country’s imports and exports, also known as trade balance. If the figure’s negative, i.e. pricier imports than exports, this is a ‘trade deficit’. Balance of trade is a fairly important event in the economic calendar, although it’s generally more important for some countries like developing ones than others.

BANXICO

The Bank of Mexico, Mexico’s central bank. Also known as the BdeM.

BAR CHART

A type of chart similar to a candlestick but without a coloured body. It consists of four main points: open (left foot), close (right foot), period’s high (top bar) and period’s low (bottom bar). See also ‘candlestick’, ‘line chart’ and technical analysis.

BASE CURRENCY

The first currency of a forex pair. The figure for a pair tells you how much of the counter currency is needed to buy one unit of the base currency. Opposite of ‘counter currency’; see also introduction to CFDs.

BASE RATE

The main rate at which a central bank usually lends money. In practice, there is a wide variety of national names for the base rate including ‘funds rate’ in the USA, ‘key interest rate’ in the EU, ‘key policy rate’ in Japan, ‘bank rate’ in the UK and very many more. See also fundamental analysis.

BEAR

A person who thinks that price will fall. If somebody says ‘I’m bearish on crude’, it means they think that the price of oil will go down and they might sell. Opposite of ‘bull’; see also ‘pig’, ‘chicken’ and ‘sheep’.

BID/ASK SPREAD

Older use term meaning the same as ‘spread’.

BID (PRICE)

Bid is the price as which you sell an instrument and the price at which buying orders are closed. It’s always lower than ask. Bid is also known as ‘bid price’. Opposite of ask; see also the practical glossary of trading.

BITCOIN

The original, largest and, many enthusiasts would argue, best cryptocurrency. Bitcoin is widely seen as the leader of crypto markets to which all other coins are compared.

BLOCKCHAIN

A blockchain is very basically a decentralised database. The technology of blockchain is at the core of any true cryptocurrency.

BoC

The Bank of Canada, Canada’s central bank.

BoE

The Bank of England, the United Kingdom’s central bank.

BoJ

The Bank of Japan, Japan’s central bank.

BOLLINGER BANDS

One of the most popular technical indicators among retail traders. Bollinger Bands are based on a moving average plus standard deviations above and below it. Traders use Bands to attempt to identify support and resistance, conditions of saturation, trends and more.

BREAKOUT

Movement of price beyond an important area, such as a support or resistance or a channel.

BROKER

A person or, more commonly, a company acting as an intermediary between buyers and sellers. They charge a fee for this service, usually a spread but sometimes a commission as well. See also the practical glossary of trading.

BULL

A person who thinks that price will rise. If somebody says ‘I’m bullish on gold’, it means they think that the price of gold will go up and they might buy. Opposite of ‘bear’; see also ‘pig’, ‘chicken’ and ‘sheep’.

C

CABLE

GBP-USD, the forex pair of the pound sterling against the US dollar. Cable is one of the ten most traded CFD symbols.

CAD

The Canadian dollar, the sixth most traded currency in the world. Also known as the ‘loonie’ and among French Canadians the ‘huard’.

CANDLESTICK (CHART)

This is the most popular type of chart among retail traders. Much like the bar chart, candlesticks or candles display opening and closing prices plus the highs and lows of each period. Traders mostly prefer candles to the bar chart because they’re coded by colour, usually black for up periods and yellow for down (this depends on the colour scheme used). See also ‘bar chart’, ‘line chart’ and technical analysis.

CARRY

A positive overnight payment, the opposite of a ‘swap’. Many experienced traders who focus on the long term trade instruments with high carries in an attempt to make a profit primarily from carries instead of changing prices: this is called the carry trade. See also the practical glossary of trading.

CBRF

The Central Bank of the Russian Federation.

CBRT

The Central Bank of the Republic of Turkey. Also known as the TCMB (from Turkish Türkiye Cumhuriyet Merkez Bankası).

CENTRAL BANK

An institution responsible primarily for managing the currency, interest rates, supply of money and economic stability of the country in which it has jurisdiction. Central banks are also known as reserve banks and monetary authorities. They’re usually independent or semi-independent of governments’ control. See also fundamental analysis.

CFD

Contract for difference, a type of financial derivative. CFDs work by exchanging the difference in the price of an underlying asset from their opening to their closing. See also introduction to CFDs.

CHANNEL

A pattern on charts which, as its name implies, looks like price moving within a channel. Channels most often occur in sideways trends, but upward and downward channels are also common.

CHART

A graphical representation of the movement of an instrument’s price over time. This can take the form of a line, bars or candlesticks over various periods from minutes to weeks. See also technical analysis.

CHF

The Swiss franc, the seventh most traded currency. Usually known simply as the franc.

CHICKEN

A somewhat insulting term for a trader considered to be too fearful. See also ‘bear’, ‘bull’, ‘pig’ and ‘sheep’.

CLAIMANT COUNT CHANGE

The change in the number of people claiming jobseeker’s allowance in the UK, one of the most important regular economic releases from the UK for forex markets. As with other employment data such as the NFP, better figures (i.e. fewer claimants) suggest economic improvement. The opposite is also true, with more claimants usually meaning a weaker economy in the future. Claimant count change is released on the second or third Tuesday of every month. See also fundamental analysis.

CNH

The offshore yuan renminbi, the Chinese yuan renminbi in the offshore market outside mainland China. Not to be confused with CNY, the domestic yuan renminbi, which is subject to capital controls and cannot be traded. CNH is the eighth most traded currency. It’s usually known simply as the offshore yuan, but it can also be referred to as offshore renminbi and sometimes the ‘redback’.

COMMODITY

Something useful or valuable; an item of trade. In derivative markets, commodities are usually split into two categories: metals and energies. The most widely traded metals are gold and silver and the most widely traded energy is crude oil.

COMMODITY CURRENCY

A currency which is widely considered to be correlated with the price of a certain commodity. Examples include the Canadian dollar, Norwegian krone, peso and ruble correlated with oil as well as the Australian dollar correlated with minerals and ores such as iron, copper, coal, bauxite etc.

CONSOLIDATION

A period of rangebound activity after an extended movement. The term ‘consolidation’ as opposed to ‘pullback’ or ‘retracement’ implies that the main movement is likely to continue. See also ‘pullback’, ‘retracement’ and technical analysis.

CONTRACT SIZE

The notional amount of currency, oil, gold etc that one CFD represents. This is usually 100,000 units of the base currency in forex, but contract size differs for other instruments such as metals, oil and indices.

CORE INFLATION

Core inflation is basically the same as inflation/CPI but with some volatile aspects removed or minimised. Core inflation typically consists of everything included in a country’s CPI minus fuel, tobacco, distilled beverages, electronics and vehicles. However, some countries also exclude public transport (local and national), food and other products with locally volatile prices. See also ‘inflation’ and fundamental analysis.

CORRELATION

A connection between the prices of two instruments. A direct correlation means that the prices of both tend to rise at the same time, while an inverse correlation means that as one of the two strengthens the other usually weakens. Commodity currencies are examples of direct correlations. Inverse correlations include the yen with JP225 and, to a lesser extent, the dollar with gold.

COUNTER CURRENCY

The second currency of a forex pair, also known as the ‘quote currency’. Opposite of ‘base currency’; see also the practical glossary of trading.

CPI

Consumer price index; see ‘inflation’.

D

DAYTRADING

A popular strategy involving closing all orders on the same day they’re opened. Daytraders basically aim to trade when instruments are at their most active during their main sessions.

DE30

The main index of German shares. Although DE30 is a fairly diversified index, it’s weighted somewhat towards technology and automotive companies.

DEATH CROSS

The point when a faster moving average crosses below a slower one on a chart. This is widely considered to be a strong sell signal on higher timeframes. Opposite of a ‘golden cross’; see also ‘moving average’ and technical analysis.

DEMO ACCOUNT

A trading account for practice that uses simulated money. Demo accounts are mainly for new traders and traders who want to test new strategies. They are an essential part of learning to trade because it’s impossible to lose real money when trading on a demo account.

DERIVATIVE

A financial contract based on the value of an underlying asset. Some of the most common underlying assets for derivative contracts are currencies (forex), commodities and indices. See also introduction to CFDs.

DIVERGENCE

A situation where price and momentum move in opposite directions. Divergence is an important concept in technical analysis. It often occurs near the end of trends, signalling the end of the trend and a possible reversal. See also ‘RSI’ and ‘stochastic’.

DIVERSIFICATION

A popular technique with the aim of reducing risk by trading a number of different instruments. See diversification.

DOVE

A central banker who favours loosening monetary policy, i.e. lowering interest rates and expanding quantitative easing. Dovish central bankers are generally a negative factor for a currency but positive for indices. Opposite of ‘hawk’; see also fundamental analysis.

DOWNTREND

A sustained period of lower lows and lower highs. Also known as a ‘downward trend’; opposite of ‘uptrend’; see also ‘sideways trend’ and technical analysis.

DRAWDOWN

Usually drawdown means a period of rolling losses for a particular trade or set of trades after which they’re closed in profit. It can also mean a reduction of the equity of a trading account.

E

ECB

The European Central Bank, the eurozone’s central bank. See also ‘Executive Board’.

ECONOMIC CALENDAR

A list of significant economic and news events that might or will affect derivative markets organised by date and time. Exness’ economic calendar can be found fundamental analysis.

ECONOMIC INDICATOR

A statistic, usually national and often issued by a nation’s government, which provides information on economic growth, sentiment, employment and/or stability. All significant economic indicators are listed on the economic calendar. See also fundamental analysis.

EQUITY

The balance of a trading account plus or minus total rolling profit or loss. See also the practical glossary of trading.

ESMA

The European Securities and Markets Authority, one of the world’s most important financial supervisory authorities. ESMA is one of the three authorities of the European System of Financial Supervision.

EUR

The euro, the currency of the Eurozone. The euro is the second most traded currency. Occasionally one unit is known colloquially as ‘a quid’ (plural ‘quid’) in Ireland (not to be confused with the same colloquial name for the pound sterling).

EURIBOR

The Euro Interbank Offered Rate, the average rate at which major banks in the eurozone offer each other unsecured loans. This is important for forex markets because the euro generally strengthens as the 12-month Euribor rises. See also ‘Libor’.

EUROPEAN SESSION

The second main session of the day in derivative markets from 6.00 to 17.00 GMT (summer) or 7.00 to 18.00 GMT (winter). It includes all of the eurozone plus countries like Russia, Turkey, South Africa (based on time zone), Sweden, Norway, Switzerland and the United Kingdom. See also global CFD markets.

EXECUTIVE BOARD

When used unqualified, this is the Executive Board of the ECB, responsible for implementing monetary policy in the eurozone. It can also refer to the executive boards of other central banks.

EXOTIC

The third main group of forex pairs. As with majors and minors, there is no universally accepted definition. However, exotics are usually considered to be forex pairs including one or more emerging currencies, such as the baht, lira, forint, zloty, etc. See also ‘major’ and ‘minor’.

EXPERT ADVISOR (EA)

See ‘algorithmic trading’.

EXTENSION/EXPANSION/PROJECTION

See ‘Fibonacci’.

F

FED

The Federal Reserve System, the United States of America’s central banking system. Can also refer to the FOMC (see below).

FIBONACCI

A popular technical tool for identifying and measuring retracements and extensions. Fibonacci numbers are the sequence of numbers in which the next figure is the sum of the previous two. They form the basis of percentages of retracement. Lines corresponding to 38.2%, 50%, 61.8% and other retracements are drawn on charts in an attempt to find points of entry and more. Fibonacci is also used to find possible extensions of movements, also called ‘expansions’ and ‘projections’. See also ‘retracement’ and technical analysis.

FIXED SPREAD

A spread which doesn’t change. Instruments with truly fixed spreads are very rare. Typically fixed spreads are lower than floating spreads during periods of lower liquidity but higher than floating when an instrument is in session. Opposite of ‘floating spread’; see also ‘spread’.

FLOATING SPREAD

A spread which changes over the course of the day, usually lower when an instrument is in session and higher during news and periods of lower liquidity. In practice, almost every spread floats to some degree, but usually not by more than a few points for forex majors. Also known as a ‘dynamic spread’. Opposite of ‘fixed spread’; see also ‘spread’.

FOMC

The Federal Open Market Committee, the committee of the Fed responsible for monetary policy.

FR40

The main index of French shares. This is one of the most diversified indices, with its constituents almost all from a unique sector of business.

FREE MARGIN

The amount of money in a trading account that’s not currently being used as margin for trading. In other words, it’s the amount that a trader could use to open new orders. See also the practical glossary of trading.

FUNDAMENTAL ANALYSIS

The search for the underlying value of instruments and a comparison of this with the current price. Like technical analysis, fundamental analysis attempts to give signals as to direction but, unlike TA, it doesn’t usually give useful information on when to enter and exit orders. See fundamental analysis for a fuller explanation.

FUTURE

An agreement to execute a transaction at a specified time in the future with the price agreed in the present. Opposite of ‘spot’. In modern times, CFDs on futures are quite rare partially because of the high complexity of these products.

G

G20

The Group of Twenty, an international forum of 19 countries plus the EU for the preservation of financial stability. In many respects, the G20 is similar to the G7, but on a broader scale.

G7

The Group of Seven, an intergovernmental economic organisation of the seven largest advanced economies: Canada, France, Germany, Italy, Japan, the UK and the USA.

GAP

A quick movement during which certain prices are skipped without any quotations. Gaps can follow economic data or important news; they can also occur between Friday’s closing and Monday’s opening.

GAP LEVEL REGULATION

Exness’ method of processing pending orders that occur within gaps. If the difference between the price requested and the first price after the gap is more than the gap level for a particular instrument, the order is executed at the first price available. Otherwise, it’s executed at the price requested. For specific gap levels, please consult this article.

GBP

The pound sterling, the fourth most traded currency. Usually known simply as the pound, it’s less often known as ‘sterling’ and one unit is colloquially known as ‘a quid’ (plural ‘quid’).

GOLDEN CROSS

The point when a faster moving average crosses above a slower one on a chart. This is widely considered to be a strong buy signal on higher timeframes. Opposite of a ‘death cross’; see also ‘moving average’ and technical analysis.

GROSS DOMESTIC PRODUCT (GDP)

The total value of a country's final output over a period, often annually but also quarterly and sometimes monthly. The growth of GDP is a very important economic indicator and a key event in the economic calendar for a country. See also fundamental analysis.

H

HAWK

A central banker who favours tightening monetary policy, i.e. raising interest rates and reducing or stopping quantitative easing. Hawkish central bankers are generally a positive factor for a currency but negative for indices. Opposite of ‘dove’; see also fundamental analysis.

HEDGING

Having equivalent opposite positions at the same time. For example, if a trader has two trades open, one buying 0.01 GBP-JPY and one selling 0.01 GBP-JPY, they’re fully hedged. Hedging is distinct from diversification because the former usually refers to the very same symbol, not a different but related one.

HK50

The main index of shares in Hong Kong. Its constituent companies are mostly involved in mixed industry, financial services and property. Note that many of the constituents of HK50 are actually mainland Chinese companies (some owned by the state) which trade publicly in Hong Kong; some of these companies are also traded in Shanghai or Shenzhen.

HKD

The Hong Kong dollar, the ninth most traded currency.

HKMA

The Hong Kong Monetary Authority, which functions as Hong Kong’s central bank.

I

INDEX

A measurement of the performance of a collection of representative shares from a particular exchange. National indices are the most common, but the EU has its own index, and the USA has three main indices. Also known as a ‘share index’, ‘stock index’ and ‘stock market index’.

INFLATION (CPI)

The sustained increase in the general prices of goods and services over time. Usually inflation is measured by a country’s consumer price index (CPI). Central banks typically have targets for inflation which they aim to meet by, among other things, influencing interest rates. Data on inflation are a crucial element of the economic calendar. See also ‘core inflation’ and fundamental analysis.

INSTANT EXECUTION

A type of execution by which orders are placed according to the price requested. In practice, this means that there are requotes. Price can often change slightly just after an order is placed. This is when a requote asks the trader whether they accept the new price. Instant execution means that there will be no slippage outside the maximum deviation. Opposite of market execution.

J

JP225

The main index of Japanese shares. The constituents of this index are highly diverse. JP225 is a widely traded index, and it’s often seen as a bellwether for sentiment on risk because Japan’s is the first major stock market to open every day.

JPY

The Japanese yen, the third most traded currency. Usually known simply as the ‘yen’.

K

KYC

Know your customer (or ‘know your client’). This is the set of protocols that every legitimate broker including Exness needs to follow when a new client opens an account. KYC is an essential element in preventing money laundering.

L

LAGGING INDICATORS

A type of indicator that ‘trails’ or follows what it basically measures (such as the price of a CFD). In terms of technical indicators, all are lagging indicators, though some lag more than others. For economic indicators, most lag, but data on employment are widely seen as leading indicators.

LEADING INDICATORS

A type of indicator that preempts what it measures. No technical indicator is truly a leading indicator. Among economic indicators, though, data on employment - especially the NFP - are widely used as leading indicators because they can give information on future trends in spending.

LEVERAGE

Basically a service offered by brokers allowing traders to open larger orders than what would be possible using only their real funds. Leverage is potentially very dangerous for new traders and very useful for experienced traders. See also the practical glossary of trading and managing risk.

LIBOR

The London Inter-bank Offered Rate, officially known as ICE LIBOR (for Intercontinental Exchange Libor), the average rate at which major banks around the world offer each other unsecured loans denominated in dollars, pounds, yens, francs and, to a lesser extent, euros. It’s important for forex markets because the four main currencies for which Libor is calculated generally strengthen as the relevant 12-month Libor rises. See also Euribor; euro Libor not to be confused with Euribor.

LIMIT (ORDER)

A type of pending order to enter the market after price has moved back in the opposite direction. Buy limits are set lower than the current price and sell limits are set higher. This type of pending order is less commonly used than stop orders partially because in derivative markets with support and resistance it’s not necessarily ‘better’ to buy lower or sell higher.

LINE CHART

A type of chart in most trading platforms which plots a simple line to represent price. This type of chart is not very popular because it doesn’t give the user much information about what happened during individual periods. See also ‘bar chart’, ‘candlestick’ and technical analysis.

LIQUIDITY

The ease of buying and selling an asset or instrument. For an extreme example, a four-bedroom 18th-century listed townhouse in St James’s, London, is a very illiquid asset; its liquidity is low because it’s slow and difficult to buy and sell. Most CFDs are very liquid instruments because it’s quick and straightforward administratively to buy and sell them. The liquidity of most CFDs changes over time based on whether they’re in session and generally how widely traded they are. For example, TRY-ZAR is much less liquid than EUR-USD, and both are less liquid than usual at three in the morning GMT.

LONG

In derivative markets, ‘long’ is often used incorrectly as a synonym for ‘buy’. In most jurisdictions, the term ‘long’ is only applicable to deliverable assets, not CFDs or other derivatives.

LOT

A measurement of the amount traded. Usually a standard lot in forex is 100,000 units of the base currency; a mini lot is 10,000 and a micro lot 1,000. See also the practical glossary of trading.

M

MACD

Moving average convergence divergence, one of the most popular technical indicators among retail traders. It uses two moving averages plus a signal line to give signals on the momentum and strength of a trend, among other things. See also technical analysis.

MACRO

In derivatives, a macro is usually a very long-term trade lasting at least a few weeks and often several months.

MAJOR

One of the most traded forex pairs, for example USD-JPY. There is no universally accepted definition of what a major is. The most prominent official categorisation is that of ESMA which calls any forex pair including two of the US dollar, euro, yen, pound sterling, franc and Canadian dollar a major. See also ‘minor’ and ‘exotic’.

MARGIN

The amount of real funds required to sustain leveraged orders. ‘Trading on margin’ means trading using leverage. See also the practical glossary of trading.

MARGIN CALL

A notification in your trading platform that you should close trades or deposit more funds to avoid stopout. Note that a margin call simply involves the bottom line of the terminal turning red in most cases; brokers don’t actually phone up their clients telling them to act. See also the practical glossary of trading.

MARGIN LEVEL

The ratio of equity to margin as a percentage in a trading platform. Margin level’s main importance is determining margin call and stopout. Typically margin calls occur at a margin level of 50% and stopout at 0%, but there are a number of exceptions for different types of account. See also the practical glossary of trading.

MARKET EXECUTION

A type of execution by which orders are placed according to conditions in the market. In practice, this means that there are no requotes; instead, every trade is placed with the potential for a very small amount of slippage. Opposite of instant execution.

MARKET MAKER

A company, usually a bank or a broker, which makes its own market on which people trade. A market maker normally processes all orders itself without sending any to third parties. In practice, this is the standard type of broker for derivatives.

MARKET ORDER

An order to buy or sell now. Opposite of a pending order.

MAS

The Monetary Authority of Singapore, Singapore’s central bank.

MAXIMUM DEVIATION

A function of most trading platforms including MT4 and MT5 allowing a maximum difference between the price requested and the price of execution for instant execution. Within maximum deviation, a trader will not receive requotes. Maximum deviation is only relevant for instant execution.

METAL-CURRENCY ACCOUNT

A type of account offered by Exness in which there are multiple currencies combined into the balance. Metal-currency accounts can have any combination of the dollar, euro, yen, pound, gold, silver, platinum and palladium making up the balance. Typically these accounts are used by traders whose native currencies are unstable in value. A metal-currency account usually allows deposits to retain a more constant value compared with having a soft currency as the currency of an account.

METATRADER 4

The most popular platform to trade CFDs. Usually called simply MT4, the platform was developed by MetaQuotes Software Corp and released in 2005.

METATRADER 4 MULTITERMINAL

A trading platform which allows the user to manage multiple accounts at the same time. It’s also notable for not featuring charts.

METATRADER 5

The successor to MT4 from MetaQuotes, MT5 was released in 2010. MT5 has a number of additional functionalities compared with MT4, notably in MT5 mobile but also extra timeframes in MT5 desktop. Uptake of MT5 has generally been limited because it uses a different programming language from MT4; any system for algorithmic trading used on MT4 can’t be transferred to MT5 without recoding.

MINOR

A highly traded forex pair but not one of the most traded. As with majors, there is no universally accepted definition. Many traders would consider this category to include any forex pair which is neither a major according to ESMA nor includes an emerging currency, for example GBP-NZD or USD-HKD. See also ‘major’ and ‘exotic’.

MOMENTUM

Basically the speed with which a price changes. Traders and especially technicians talk about an instrument making large, sustained movements over several hours or days as having high momentum. Momentum is a key part of divergence. A wide range of technical indicators can be used to measure momentum, but some of the most popular include stochastics, RSI, moving averages, MACD, Bollinger Bands and ADX.

MOVING AVERAGE

The most popular type of technical indicator, a moving average (MA) is a line on a chart that basically functions to remove ‘noise’ from price action. The three main types of moving average are simple (SMAs), exponential (EMAs) and linear weighted (LWMAs). These all work basically the same but EMAs are weighted somewhat toward recent prices and LWMAs are weighted fairly strongly toward recent prices. See also ‘death cross’, ‘golden cross’, ‘MACD’ and technical analysis.

MPC

Monetary policy committee. Used unqualified, this refers to the Monetary Policy Committee of the Bank of England, responsible for monetary policy in the UK and other territories which use the pound sterling.

MXN

The Mexican peso, the 15th most traded currency. Usually known in forex markets simply as the peso; other currencies of the same name from Chile, the Philippines, Argentina etc are much less widely traded than MXN.

N

NFP

Non-farm payrolls, a measure of the change in the number of people in non-agricultural jobs in the USA. The NFP is the world’s most important regular release of economic data. Nearly every financial market is highly active around its usual release on the first Friday afternoon of every month. See also fundamental analysis.

NOK

The Norwegian krone, the 14th most traded currency. Occasionally known as the ‘Norwegian crown’.

NORGES BANK

Norway’s central bank.

NZD

The New Zealand dollar, the tenth most traded currency. Usually known as the Kiwi dollar.

O

OECD

The Organisation for Economic Co-operation and Development, an intergovernmental economic organisation with 36 members. The OECD is basically similar to the G7 but with more members.

ONE-CLICK TRADING

A function of most popular trading platforms allowing traders to open and close orders with one click and no further confirmation. Traders - particularly those who often make large orders - must be very careful using this feature, but it can save considerable time for short-term traders.

ORDER

An instruction to execute a trade.

OVER THE COUNTER (OTC)

A term with a range of meanings, but usually used to describe any transaction not conducted on an exchange.

P

PAIR

The convention in derivative markets of matching one currency against the other. It also applies to metals and cryptocurrencies, which are quoted against (fiat) currencies. Although energies, indices and shares are not pairs strictly speaking, they are still need to be quoted against a currency (typically the US dollar) for their value to be established.

PATTERN

A particular shape on a chart which signals a certain direction or lack of direction to follow. A pattern might be formed from just one or a small group of candlesticks (such as a doji or a hanging man) or a large number of candlesticks making pattern throughout a general area (such as a flag or a pennant). There is a very wide range of patterns that can be identified.

PBoC

The People’s Bank of China, China’s central bank.

PENDING ORDER

An order to buy or sell at a specific price in the future. Opposite of ‘market order’. Limit orders and stop orders are the two main types of pending order.

PIG

An insulting term for a trader considered to be very greedy or aggressive. See also ‘bear’, ‘bull’, ‘chicken’ and ‘sheep’.

PIP

The second last digit of a quotation, used primarily to measure spreads, profit, swaps and so on. For example, if dollar-yen is quoted as 108.717, the pip is the second 1 in bold. See also ‘point’ and the practical glossary of trading.

POINT

The last digit of a quotation, used mainly in MT4 and MT5 to in place of pips. A point is one tenth of a pip. For example, if dollar-yen is quoted as 108.717, the point is the second 7 in bold. See also ‘pip’ and the practical glossary of trading.

PORTFOLIO

Every trade in total currently held by a particular trader. This term is widely used in the context of investing in deliverable assets but somewhat less so for CFDs.

PRICE ACTION

The movement of price over time; literally the action of a price. Price action forms the ultimate basis of all technical analysis. However, looking at price action itself is a very popular method among technicians and traders generally of finding trends, momentum, support and resistance and many other things. See also technical analysis.

PULLBACK

The tendency of a trending market to retrace a portion of the gains before continuing in the same direction. A pullback is basically just another word for a retracement. See also ‘consolidation’ and technical analysis.

PURCHASING MANAGERS' INDEX (PMI)

An economic indicator which indicates the performance of a certain sector within a country; it can be applied to services as well as manufacturing. Higher figures indicate more activity and lower figures indicate less activity. See also fundamental analysis.

Q

QUANTITATIVE EASING

The injection of money into an economy by a central bank with the aim of stimulating growth. If quantitative easing (QE) is used, this indicates that an economy is weak, so expansions of QE are usually negative for the currencies affected. The opposite is also true, with cuts to QE generally a good sign for the relevant currencies.

QUOTE (QUOTATION)

An indicative price, normally used for informational purposes only. For market execution, the actual rate at which a trade is entered often differs very slightly from the price quoted.

R

RALLY

A recovery in price after a period of decline.

RANGE(-BOUND)

Price moving between a defined high and low, staying within the two boundaries without breaking out. See also ‘channel’.

RATE

The price of the first component of a symbol in terms of the second. Otherwise, the price in dollars of crude oil or an index of shares.

RBA

The Reserve Bank of Australia, Australia’s central bank.

RBNZ

The Reserve Bank of New Zealand, New Zealand’s central bank.

REQUOTE

When trading with instant execution, a requote occurs when the price changes after an order is requested. It asks whether the user wants to accept the new price.

RESISTANCE

A barrier or potential barrier to upward movement. Opposite of ‘support’; see also technical analysis.

RETAIL SALES

A measurement of the total sales in retail shops (usually online as well as on the high street) over a period. Most often it takes the form of a percentage change monthly or annually. Retail sales is a fairly important release on the economic calendar. See also fundamental analysis.

RETRACEMENT

A retreat by price from recent highs or lows against the general direction of a trend. The most common tool to measure retracements is Fibonacci. Note that a retracement is distinct from a reversal because the former is a temporary movement, while a reversal means a change in the direction of the main trend. See also ‘consolidation’, ‘pullback’ and technical analysis.

REVERSAL

The change of an uptrend to a downtrend or the opposite. A reversal is when price retraces more than 100% from the latest high or low on the timeframe being considered. See also technical analysis.

RIKSBANK

The short name for the Sveriges Riksbank, Sweden’s central bank.

RSI

Relative strength index: this is one of the most popular technical indicators among new traders. RSI is basically a momentum indicator but it’s also used to detect saturation. See also ‘stochastic’ and technical analysis.

RUB

The Russian ruble, the 17th most traded currency. Usually known simply as the ruble; sometimes incorrectly coded ‘RUR’ (this was the code for the ruble before redenomination in 1998).

S

SARB

The South African Reserve Bank, South Africa’s central bank.

SATURATION

The situation of excessive supply or demand pushing price beyond what is widely deemed justifiable. ‘Overbought’ is buying saturation and ‘oversold’ is selling saturation. Conditions of saturation in healthy trends usually signal retracements/consolidations. The most commonly used indicators for measuring saturation are the stochastic and RSI. See also technical analysis.

SCALPING

A popular trading strategy that usually involves making large numbers of small ‘in-out’ orders in an attempt to make a small profit from each. Scalpers often trade around and during important news and releases of data when markets tend to be highly active.

SCRIPT

Very basically a series of preprogrammed commands that can be executed immediately. For example, scripts exist to close all open orders with one input, to delete all trailing stops with one input, or take almost any number of other actions together with one input. See also ‘algorithmic trading’.

SEK

The Swedish krona, the 11th most traded currency. Usually known simply as the krona (Norway and Denmark’s currencies are both spelled ‘krone’), it’s also sometimes known as the ‘Swedish crown’.

SGD

The Singapore dollar, the 13th most traded currency.

SHEEP

A somewhat insulting term for a trader who blindly follows exhausted trends and/or belatedly copies what other traders are doing. See also ‘bear’, ‘bull’, ‘chicken’ and ‘pig’.

SHITCOIN

A derogatory colloquial term used by some followers of crypto markets for any cryptocurrency other than bitcoin.

SHORT

In derivative markets, ‘short’ is often used incorrectly as a synonym for ‘sell’. In most jurisdictions, the term ‘short’ is only applicable to deliverable assets, not CFDs or other derivatives.

SIDEWAYS TREND

A trend that does not feature any new highs or lows. Price instead looks like it’s moving between ‘walls’ in a channel. See also ‘downtrend’, ‘uptrend’ and technical analysis.

SIGNALS

Specific ideas or recommendations for trading. Signals are usually short messages sent over apps like Telegram or online forums saying something like ‘dollar-yen buy stop 0.01 at 108.050 target 109.900 stop 107.800’, i.e. giving specific information on what to do but not the reason(s) for doing it. In many cases it’s possible to copy signals automatically by following a provider in MT4 or MT5. Some signals are reliable; however, it’s usually very unwise to follow any signals blindly.

SLIPPAGE

The difference between the price requested and the price obtained due to changing conditions. Slippage is very rarely more than one or two points, but during some periods of very high volatility it can be more significant.

SMA

Simple moving average; see ‘moving average’.

SNB

The Swiss National Bank, Switzerland’s central bank.

SOCIAL TRADING

Similar in some ways to an investment, Social Trading allows inexperienced traders to invest in the strategies of more experienced traders. The investor does not trade; instead, the provider of each strategy trades using their investors’ money and charges the investor a small fee for this service. See Exness’ social trading for more information.

SPIKE

A price that differs significantly from the other prices immediately before and after it. While a spike can be in either direction, it’s more common to call a sudden difference upward a spike and a sudden difference downward a ‘plunge’.

SPOT

A price for buying and selling at the time of making an order; the opposite of a future. The large majority of CFDs are spot CFDs.

SPREAD

The difference between ask and bid; essentially the fee you pay to trade. See also the practical glossary of trading.

STOCHASTIC (OSCILLATOR)

One of the most popular indicators, the stochastic as it’s usually called is used to identify conditions of saturation as well as momentum. It’s also a key component of many strategies to trade divergence. See also technical analysis.

STOP

The common name for stop loss, a function of most trading platforms that closes an order at a predetermined point in loss. Opposite of ‘target’; see also ‘trailing stop’ and managing risk.

STOP ORDER

A type of pending order to enter at a price further away in the same direction. Buy stops are set higher than the current price and sell stops are set lower. This is the most common type of pending order among retail traders because it gives them the potential to exploit breakouts with less risk, other things being equal. See also ‘limit’.

STOPOUT

The end of a trader’s ability to make new orders as a result of their margin level becoming too low. Typically a margin level of 0% results in stopout for Exness’ accounts, but this can vary. See also ‘margin call’, ‘margin level’ and the practical glossary of trading.

STOXX50

The main eurozone-wide index of shares. This index is basically a combination of the largest companies from DE30 and FR40 with a limited number of companies from other countries in the eurozone, mainly Italy, the Netherlands and Spain.

SUPPORT

A barrier or potential barrier to downward movement. Opposite of ‘resistance’; see also technical analysis.

SWAP

A negative overnight charge reflecting differing interest rates and other costs of holding a position overnight. Opposite of a ‘carry’; see also the practical glossary of trading.

SWAP-FREE

A type of account without any swaps or carries. Swap-free accounts are standard for all clients of Exness resident in countries with mostly Muslim populations.

SWING

A term with a range of different meanings depending on the context. In derivative markets, a swing is usually understood to be a sustained movement with high momentum over a number of days, usually about three for currencies.

SWING TRADING

A trading strategy which aims to profit from swings (see above) over at least a couple of days and potentially a fortnight or so.

T

TA

Technical analysis (see below).

TARGET

The more common name for take profit, a function of most trading platforms that closes trades at a predetermined point in profit. Opposite of ‘stop’; see also ‘trailing stop’ and managing risk.

TECHNICAL ANALYSIS

The study of action in markets to forecast future trends and prices. Traders use technical analysis as part of their efforts to determine whether and when to buy or sell. They also use it to decide when to exit their trades. See also technical analysis.

TECHNICAL INDICATOR

Graphical additions to charts which give signals on direction, momentum, saturation and many other things. Indicators are based on some sort of mathematical model related to price. They can perform a wide variety of different functions depending on how they’re calculated. See also ‘ADX’, ‘Bollinger Bands’, ‘MACD’, ‘moving average’, ‘RSI’, ‘stochastic’ and technical analysis.

TECHNICIAN

Traders who rely mainly on technical analysis. Can also mean a professional technical analyst (see ‘analyst’).

TIMEFRAME

The amount of time in one period on a chart. For example, if the timeframe of a chart is set to H1, this means that each candlestick or period represents what happened in one hour. Timeframes in MT4 range from one minute to one month at fairly regular intervals. MT5 desktop has a significantly wider range of timeframes than MT4.

TLTROs

Targeted longer term refinancing operations. These are a crucial element of the ECB’s operations to encourage lending within the eurozone and so stimulate economic growth.

TRAILING STOP

A stop that moves up automatically with the price when the trade for which it’s set is in profit. For example, if a trader buys cable at 1.29000 with a trailing stop of 100 points, this trailing stop will be activated when price reaches 1.29101. If price them moves up to 1.29200, the trailing stop would move up to 1.29100. A downward movement to that level would cause the trailing stop to trigger and the order to close in profit. See also ‘stop’, ‘target’ and managing risk.

TREND

A sustained period of movement, usually in a particular direction. A trend can be an uptrend, a downtrend or a sideways trend. See also technical analysis.

TRY

The Turkish lira, the 19th most traded currency. Usually known simply as the lira.

U

UK100

The main index of British shares. UK100 is weighted toward oil, gas and mining companies. It has a fairly strong direct correlation with crude oil.

UNDERLYING

The actual traded market from which the price of a CFD is derived. For example, the underlying for XAU-USD is the deliverable market of physical gold bought and sold against the dollar.

UNLIMITED LEVERAGE

A service offered by Exness under certain conditions that effectively removes margin requirements. Unlimited Leverage in practice means 1:2,100,000,000. See also ‘leverage’ and the practical glossary of trading.

UPTREND

A sustained period of higher highs and higher lows. Also known as an ‘upward trend’; opposite of ‘downtrend’; see also ‘sideways trend’ and technical analysis.

US30

The first main index of American shares. This is the world's largest index, influenced mainly by major technology shares, retail, and financial services. US30 is usually the first index people buy or sell partially because it features less volatility in general than most others.

US500

The third main index of American shares. US500 differs from the first two American indices mainly because of its diverse constituents and its normally greater sensitivity to economic and political risks.

USD

The US dollar, the world’s most traded currency. Usually known simply as the dollar but also nicknamed the ‘greenback’ and the ‘buck’.

USOIL

American light crude oil, the most traded industrial commodity. For trading purposes, it’s always priced in dollars.

USTEC

The second of the three main indices of American shares. This index comprises almost exclusively technology companies, listing some of the biggest companies in the world by market cap. It also comprises some of the most popular individual shares, such as Facebook, Apple, Amazon, Netflix and Google (‘FAANG’).

V

VOLATILITY

The state of quick and unpredictable changes in a price. Some instruments are consistently quite volatile whereas others go through periods of volatility.

VOLUME

Essentially the amount of trading, volume can be for a specific symbol, for a trader, for a group of traders, for a broker and so on. See also ‘liquidity’.

VOLUMES

A popular technical indicator based on the total volume of buying and selling for the periods in which it’s calculated. Note that because CFD markets are decentralised, Volumes in MT4 and MT5 only displays the volume for the particular broker with which you’re trading.

VPS

Virtual private server. A VPS basically allows a trader to have their platform open all the time. This usually means that algorithmic trading can be made more efficient. VPSes also mean that traders can use trailing stops all the time.

W

WEBTERMINAL

A trading platform which can be used online without the need to download or install a programme. The WebTerminal has more limited functionality that desktop platforms. See also ‘MetaTrader 4’ etc.

X

XAG

Spot silver, the second most traded precious metal.

XAU

Spot gold, the most traded precious metal.

Y

YIELD

The return from an investment. When used alone, 'yield' typically refers to bonds: as yields from bonds increase, traders and investors typically expect higher inflation and/or economic growth plus strength for the relevant currency. In derivative markets, a symbol with a high carry is often called a ‘high-yielding instrument’.

Z

ZAR

The South African rand, the 18th most traded currency. Usually known simply as the rand.