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!
A feature of trading platforms that allow the testing of expert advisors on historical data. The results help traders and developers to assess the performance of their strategies.
The amount of money in the account, excluding credit and the floating profit of currently open orders.
Convertible Mark. The currency of Bosnia and Herzegovina. It is subdivided into 100 fenings (or phenigs).
Average outstanding loans provided to Japanese residents and businesses by domestic banks. Released monthly by the Bank of Japan.
A Bank of Central Banks, based in Basel Switzerland. It facilitates collaboration among its members and serves Central Banks in their pursuit for global monetary and financial stability.
The rate at which a country's central bank lends money to its domestic banks.
The major US Banks are examined under a number of conditions such as global recession and high unemployment, to assess whether they will be able to lend to households and businesses under three scenarios: severely adverse, adverse, and baseline. Released by the Federal Reserve.
The western technique for price charting, comprising of a vertical line representing the price range of a certain period. The highest point represents the high price and the lowest point on the vertical line represents the low price. A tick to the left represents the opening price whereas a tick to the right represents the closing price.
The current bar’s closing price is lower than that of the previous bar.
The current bar’s closing price is higher than that of the previous bar.
Unit of volume used contract sizes for Brent, Crude Oil and other petroleum products. One barrel is equal to 42 US gallons.
The first currency in a pair is called the base currency. For example, in USD/JPY pair, USD is the base currency.
The interest rate that a Central Bank will charge for lending to commercial banks.
One percent of one percent. Usually used for changes in Interest Rates where references are less than one percent. 1bp = 0.0001.
Previous month’s approved mortgages by the members of the British Bankers’ Association. Released monthly.
Barbados Dollar. The currency of Barbados. It is subdivided into 100 cents.
Taka. The currency of Bangladesh. It is subdivided into 100 poisha.
A trader whose outlook on the market or a specific financial instrument is negative. A trader who expects prices to fall.
The close of the candlestick is lower than the open price, revealing negative sentiment.
When the prices of certain financial instruments, or markets are declining.
A short-lived breakout below a bottom triggering a sell entry. After the false breakout, prices switch direction.
The belief that the market or specific financial instrument will fall.
Certain price formations that signal the end of an uptrend and the beginning of a downtrend.
The negative outlook towards a financial instrument or market.
A technical analysis oscillator developed by Alexander Elder. It is the difference between the lowest price of a period and 13-period exponential moving average. A buy signal is triggered when the Bears Power index is below zero and rising while a trend indicator (i.e. moving average) is pointing upwards.
A subfield of finance that attempts to explain traders’/investors’ decision making in the financial markets. It combines theories of Psychology and Finance. It is in contrast to Efficient Market Hypothesis.
A Japanese candlestick pattern signaling a bullish reversal. It forms at the end of a decline or near a support area. The candle has a long white body and very small or non-existent lower shadow, that is, Shaven Bottom. It reveals the determination of the bulls to push prices higher.
A Japanese candlestick pattern signaling a bearish reversal. It forms at the top of an uptrend or near a resistance area. The candle has a long white body and very small or non-existent upper shadow, that is, Shaven Top. It reveals the determination of the bears to push prices lower.
Bulgarian Lev. The currency of Bulgaria. It is subdivided into 100 stotinki.
Bahraini Dinar. The currency of Bahrain. It is subdivided into 1000 fils.
The price at which a trader is prepared to sell a financial instrument.
Burundi Franc. The currency of Burundi.
See Bank of International Settlements.
A decentralized digital currency used for peer-to-peer transactions. It was introduced in 2009 by a programmer using the name Satoshi Nakamoto. The number of bitcoins in circulation will not exceed 21 million.
Bermudian Dollar. The currency of Bermuda. It is subdivided into 100 cents.
Brunei Dollar. The currency of Brunei Darussalam. It is subdivided into 100 cents (or sen).
Boliviano. The currency of Bolivia (Plurinational State of). It is subdivided into 100 cents (or centavos).
A technical indicator developed by John Bollinger. The upper band is drawn 2 standard deviations above a simple moving average and the lower band 2 standard deviations below the simple moving average. Bollinger Bands measure volatility and display price extremes.
A debt instrument, where the issuer borrows money from the buyer, with the obligation to repay the principal and predefined interest at the maturity date.
The annual interest divided by the value the bond was purchased.
A significant low on the price chart where buying pressure overcomes selling pressure.
A five-candle bearish reversal formation. The first candle is a long white body trading in the direction of the uptrend, showing the bulls’ strength. The second candle is white, and of a regular size gapping above-reaffirming the upward move. The third and fourth candles are white bodies of regular size, higher than the previous close. Finally, a long black body is formed that closes in the gap created by the first two candlesticks.
A five-candle bullish reversal formation. The first candle is a long black body trading in the direction of the decline, showing off the bears’ strength. The second candle is black, and of a regular size gapping below-reaffirming the downward move. The third and fourth candles are black bodies of regular size, closing lower than the previous close. Finally, a long white body is formed that closes in the gap created by the first two candlesticks.
The beginning of an upward/downward movement after a sideways price pattern. Breakaway gaps do not usually get filled, especially when accompanied by heavy volume.
Brent is considered one of the major benchmarks for crude oil pricing globally. It contains 0.37% Sulphur and has an API gravity of 38.06.
In 1944, representatives from 44 allied nations met in the town of Bretton Woods, New Hampshire USA, to discuss monetary policies in order to rebuild the international economic system. The delegates agreed to tie their currencies to gold and the US Dollar and maintain an exchange rate within a parity band of 1%.
Brazilian Real. The currency of Brazil. It is subdivided into 100 centavos.
A bearish pattern, it can also be called a megaphone or expanding triangle. Its Trendlines diverge, as opposed to all other triangles which converge.
An intermediary between the traders and the liquidity providers. It facilitates in the execution of clients’ orders.
Bahamian Dollar. The currency of The Bahamas. It is subdivided into 100 cents.
Ngultrum. The currency of Bhutan. It is subdivided into 100 chhertum.
Number of building approvals. Released monthly by the Australian Bureau of Statistics.
The number of housing building permits approved in the previous month. Released monthly by the Census Bureau.
A trader whose outlook on the market or a specific financial instrument is positive. A trader who expects prices to rise.
The close of the candlestick is higher than the open price, revealing positive sentiment.
When the prices of certain financial instruments or markets are rising.
A short-lived breakout above a top, triggering a buy entry. After the false breakout, prices switch direction.
The belief that the market or a specific financial instrument will rise.
Certain price formations that signal the end of a downtrend and the beginning of an uptrend.
A technical analysis oscillator developed by Alexander Elder. It is the difference between the highest price of a period under study and a 13-period exponential moving average. A sell signal is triggered when the Bulls Power index is above zero and falling while a trend indicator (i.e. moving average) is pointing downwards.
Germany’s Central Bank.
A unit of measurement for agricultural commodities.
A Monthly report outlining the relative level of current business conditions and expectations for the next 6 months.
A monthly report excluding January. It’s a survey of the business outlook in the next 12 months.
A survey providing an early indicator of levels of activity in the New Zealand manufacturing sector. Also known as Performance of Manufacturing Index. Released monthly by Business NZ.
A pending order to buy at a predefined price lower than the market price in anticipation that the market will eventually rise.
An order to carry out a transaction at, or lower than, a specified price, the word 'limit' referring to the specified price.
To place an order to own a financial instrument.
A pending order to buy at a predefined price higher than the market price, in anticipation that the market will continue to rise.
A technical analysis indicator developed by Bill Williams. If the Momentum (Awesome Oscillator) and Acceleration (Accelerator Oscillator) are in sync then there is a very strong trend.
Green Zone : Both AO and AC are green; strong bullish trend.
Red Zone : Both AO and AC are red; strong bearish trend.
Gray Zone : Both Oscillators have different colors; in transition.
Price bars are painted to reflect the current zone.
Pula. The currency of Botswana. It is subdivided into 100 thebe.
Belarusian Ruble. The currency of Belarus. It is subdivided into 100 kopeks.
Belize Dollar. The currency of Belize. It subdivided into 100 cents.