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Forex Glossary

Forex Definitions: The Industry’s Most Important Terms Explained

The forex industry is made up of so many definitions that it's easy to forget a few along the way. Do you know your Loonie from your Loti? Can you tell your Shooting Star from your Evening Star? Take the time to get to grips with forex jargon because understanding forex vocabulary is an important step in a trader’s journey.

Since no forex education can be complete without a glossary of basic forex terms, we've compiled one which explains key words and phrases in the simplest way possible. This way, you'll never be lost or confused with forex terminology!

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A group of 20 countries represented at the highest level by heads of state/government and at the ministerial level by ministers of finance and central banks governors.

They meet to discuss global and economic issues.

The group consists of the following countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, South Africa, Saudi Arabia, South Korea, Turkey, United Kingdom, United States of America, The European Union (represented by the European Council).

A technical analysis tool developed by W. D. Gann.  To draw a Gann Fan, attach the tool at a major bottom/top and drag the mouse to the necessary length.

The resultant Gann Fan consists of seven lines at the following angles:

Time x Price

Degrees

1x8

82,5

1x4

75

1x3

71,25

1x2

63,75

1x1

45

2x1

26,25

3x1

18,75

4x1

15

8x1

7,5

Gann considered the 45 degrees line the most important line, where the market has some form of balance. Prices above the 45 degrees line indicate an uptrend, where below - a downtrend.  During an uptrend, prices will find resistance at the lines above the 45 degrees line.  When prices break below the 45 degrees line. then a possible reversal may be expected. Consequently, prices are expected to find support at the lines below the 45 degrees line.

Similarly, in a downtrend the lines above the 45 degrees line will act as resistance, where the lines below will be support.

A technical analysis tool developed by W. D. Gann.  To draw a Gann Grid, attach the tool at an initial point on the chart. A second point is needed to set the cell grid size.

The resultant Grid consist of multiple lines at 45 degrees angle.

On the Gann Grid, there are three control points. By moving the first and the last points, the size of the grid cell may be set/modified.  The middle point is used to move the Gann Grid on the chart keeping the dimensions intact.

Gann considered the 45 degrees line as the most important in representing  long-term trendlines.

Based on Gann’s theory, prices:

  • above the ascending 45 degrees line indicate an uptrend.  Further acceleration of the upward movement may find resistance at the higher 45 degrees lines.
  • below the ascending line. imply possible change in trend direction.  Further fall of the prices may find support at the lower 45 degrees lines.
  • below the descending 45 degrees line, indicate a downtrend. Further fall of the prices may find support at the lower 45 degrees lines.
  • above the descending line, imply a possible change in trend direction. Further rise of the upward movement may find resistance at the higher 45 degrees lines.

A technical analysis tool developed by W. D. Gann.  To draw an ascending Gann Line, attach the tool at a major bottom and drag the mouse to a higher bottom.

The resultant ascending trendline is drawn at an angle of 45 degrees.

To draw a descending Gann Line, attach the tool at a major top and drag the mouse to a lower top.

The resultant descending trendline is drawn at an angle of 45 degrees.

On the Gann Line, there are three control points. By moving the first and the last points the slope and the length of the line may change. By moving the middle point, the line may be moved without changing its slope and length.

According to Gann’s theory, prices:

  • above the ascending 45 degrees line indicates a strong upwards movement. 
  • below the ascending line implies a possible change in trend direction.
  • below the descending 45 degrees line indicate a strong downwards movement.
  • above the descending line implies a possible change in trend direction.
  • on the 45 degrees line shows a market in balance i.e. one unit of price corresponds to one unit of time.
Unused area on the price chart between two candlesticks. It may occur at Monday’s open or during high impact or unexpected news.

It’s a technical analysis oscillator developed by Bill Williams.  It consists of two histograms, above and below zero. The histogram above the zero line shoes the difference between the teeth (red line) and the jaw (blue line) of the Alligator. The histogram below the zero line show the difference between the lips (green line) and the teeth (red line) of the Alligator. A histogram bar is colored green when the value is greater than the previous bar’s value and in red color when the value is less than the previous bar’s value.

The Gator Oscillator  helps to understand what the  Alligator does:

  1. Sleeps - Both bars are red
  2. Eats – Both bars are green
  3. Awakes –  After sleeping, one bar is green and one bar is red
  4. Fills out – After eating, one of the bars is red

Pound Sterling. The currency of United Kingdom of Great Britain and Northern Ireland, Guernsey, Isle of Man, Jersey. It is subdivided into 100 pence.

Gross domestic product (GDP) is the total value of goods and services a country produces in a one year period. GDP is calculated annually but it can also be calculated quarterly. A GDP Economic report that shows the annualized change in total value of goods and services produced in a country and is an indicator of a country’s economic health.
Lari. The currency of Georgia.  It is subdivided into 100 tetri.
A strategy optimization method that reduces the amount of time needed, by dropping unsuccessful parameter combinations.
Survey of senior purchasing managers in the manufacturing industry looking at business conditions using a number of economic variables (i.e. manufacturing, services, construction and whole economy). Managers are asked to state whether business conditions have improved, remained the same or deteriorated, compared to the precious month.  A reading above 50.0 is good for the currency. Released monthly by Markit.
Survey of senior purchasing managers in the services industry looking at business conditions using a number of economic variables (i.e. manufacturing, services, construction and whole economy). Managers are asked to state whether business conditions have improved, remained the same or deteriorated, compared to the precious month.  A reading above 50.0 is good for the currency. Released monthly by Markit.
Monthly survey looking at the current economic conditions and future outlook for the next 6 months. Released monthly by the Ifo Institute for Economic Research.
It measures the change in the cost of a fixed basket of products and services in Germany. Released monthly by Destatis.
Economic report that shows the change in the value of retail sales. A positive reading is good for the currency. Released monthly by Destatis.
A survey about the economic outlook for the next 6 months. A positive reading is good for the currency. Released monthly by ZEW.
Testing report parameter. Geometric mean of a trade (as opposed to arithmetic mean) shows by how many times the capital changed after each trade on average. The percentage of capital change is shown in parenthesis. A positive number implies a profitable system whereas a negative number, shows  a system that resulted in a loss on average after each trade.
Ghana Cedi.  The currency of Ghana.  It is subdivided into 100 pesewas.
Gibraltar Pound.  The currency of Gibraltar.   It is subdivided into 100 pence.
Dalasi.  The currency of the Gambia. It is subdivided into 100 bututs.
Guinea Franc.  The currency of Guinea.  
To buy a financial instrument with the expectation that it will rise in price.
To sell a financial instrument with the expectation that it will decline in price.

See XAU.

Economic report that shows the difference in value between imported and exported goods.  A positive number (i.e. more exports than imports) is good for the currency. Released monthly.

See HTG.

A Japanese candlestick formation that has an equal (or almost equal) opening and closing price. The Gravestone Doji only has a long upper shadow.  It has possible bearish implications when at the top of an uptrend or near a resistance area.
It’s an MT4/MT5 chart property. When selected, grid is shown on the price chart.
The monetary sum of all unprofitable trades.
The monetary sum of all profitable trades.
A pending order that remains in effect until it is executed or cancelled by the trader.
Quetzal. The currency of Guatemala.   It is subdivided into 100 cents.

See PYG.

Guyana Dollar. The currency of Guyana. It is subdivided into 100 cents.
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