Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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 Japanese candlestick pattern signaling a reversal. It consists of three candles. In a downtrend, a long black candle is followed by a Doji that gaps lower. A third candle, with a long white body gaps above the Doji’s high.

The lowest point a trader’s balance reaches below the Initial Deposit.

History of performed trades on a specific account on the MT4 platform.

A technical Indicator developed by Mark Chaikin.  When the close price is above the mid-point of the daily range, then a positive number is returned implying buying pressure (accumulation).  Similarly, when the close price is below the mid-point of the range, then a negative number is returned implying a selling pressure (distribution). The daily volume is multiplied by the above number to determine the weight of the price in the calculation of the indicator.

Calculation: [ (close – low) – (high – close) x volume] / (high – low)

In Elliott Wave Theory, there are waves that move in the direction of the trend of one larger degree.

 A technical Indicator developed by Perry Kaufman to account for market volatility.

Estimated change of US employed people, excluding the farming and the government sector. Released by Automatic Data Processing, Inc. about two days before the official NFP report.

A Japanese candlestick bullish reversal pattern. Also known as Three White Soldiers.  It consists of three long white candles with short or non-existent shadows. Each open is below the previous close.  Each close is above the previous close.

Advance Directional Movement Index. It’s a technical indicator designed by Welles Wilder to determine the presence of price trend. A reading above 25 indicates the presence of a trend.  Buy/Sell signals are provided by the crossing of +DI and -DI.

UAE Dirham. The currency of the United Arab Emirates. It is subdivided into 100 fils.

An Affiliate is a member of the corresponding FXTM Partners' program, who directs online traffic to FXTM and benefits from the trading of his referrals in accordance with the Hybrid Affiliate commission plan.

See AFN.

Afghani.  The currency of Afghanistan.  It is subdivided into 100 pul.

When a bank or financial body is exposed to forex contracts from a single customer.

Step by step programming instructions on how to carry out trading orders in electronic financial markets.   Discipline and emotion- free trades are the advantages of this type of trading.

Lek. The currency of Albania. It is subdivided into 100 qindarka.

A technical Indicator designed by Dr. Bill Williams. It consists of 3 moving average lines: The Alligator’s Jaw (blue line) is a 13-period Smoothed Moving Average shifted into the future, by 8 bars.  The Alligator’s Teeth (red line) is an 8-period Smoothed Moving Average shifted into the future by 5 bars.  The Alligator’s Lips (green line) is a 5-period Smoothed Moving Average shifted into the future by 3 bars.

Armenian Dram. The currency of Armenia. It is subdivided into 100 luma.

A technical analysis tool developed by Dr. Alan Andrews.  It is drawn by selecting 3 major consecutive tops and bottoms. The result is a line study of 3 parallel lines acting just like support and resistance.

Netherlands Antillean Guilder.  The currency of Curaçao and Sint Maarten (Dutch part). It is subdivided into 100 cents.

Kwanza. The currency of Angola.  It is subdivided into 100 centimos.

The simultaneous buying and selling of a financial instrument in different markets to take advantage of different pricing.

Argentine Peso. The currency of Argentina. It is subdivided into 100 centavos.

A technical analysis price pattern, where price action is contained within two upward sloping parallel lines. The basic line is drawn through the bottoms, whereas the return line is drawn through the tops.

An upward sloping line connecting two or more bottoms.

Trading activity between 11:00 pm (GMT+2) and 08:00 am (GMT+2).

The price at which a trader accepts to buy a financial instrument.

An item/resource of value.

Refers to portfolio diversification among stocks, bonds, commodities, cash and other asset classes.

The Average True Range is an indicator developed by Welles Wilder to measure volatility.

Wilder believed that high ATR readings occur at bottoms after a strong downtrend characterized by “panic” sell-off. Low ATR readings are usually found at tops and during periods of consolidation.

Trend reversals are usually accompanied by high ATR values, whereas sideways movements or weak trends are accompanied by low values.

The True Range is the greatest of the following:

  • The difference between the current period’s high and low
  • The absolute value of the difference between the previous period’s close and current period’s high
  • The absolute value of the difference between the previous period’s close and current period’s low

The Average True Range is the moving average of the true range values.

Australian Dollar.  The currency of Australia, Christmas Island, the Cocos (Keeling) Islands, Kiribati, Nauru, Norfolk Island and Tuvalu. It is subdivided into 100 cents.

Australian Dollar.

 An MT4 chart setting, that when enabled, it sifts automatically to the left to display the new incoming price (I.e. candlestick).

A computer program that submits orders to electronic exchanges based on a set of pre-defined instructions.

A change in the labour pay excluding the farming sector.  Released monthly by the Bureau of Labor Statistics.

A technical indicator (AO) designed by Dr. Bill Williams.  It’s the difference between a 5-period simple moving average and a 34-period simple moving average, applied to bar’s mid-point prices (H-L)/ 2.
Buying opportunities arise when the AO crosses above the zero line. Similarly, sell opportunities arise when AO crosses below the zero line.

Aruban Florin.  The currency of Aruba. It is subdivided into 100 cents.

Azerbaijanian Manat.  The currency of Azerbaijan.  It is subdivided into 100 qepik.

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