Ask Price
The price at which traders can buy the base currency
Aussie
Slang for the Australian Dollar and US Dollar currency pair
Base Currency
The first currency listed in any currency pair
Bear Market
A pessimistic market with declining prices
Bid Price
The price at which traders can sell the base currency
Bull Market
An optimistic market with rising prices
Cable
Slang for the British Pound Sterling and US Dollar currency pair
Counter Currency
The second currency in any currency pair
Cross Rate
A price quote consisting of any currency quoted against a currency that is not the US Dollar
Day Trading
The practice of opening and closing positions within the same trading day
Fed
Abbreviation for the Federal Reserve, the central banking system of the United States
Forex
The simultaneous buying of one currency and selling of another
Fundamental Analysis
Type of analysis that focuses on the macroeconomic factors that influence the value of a country’s currency
Hedging
The practice of opening several positions at once where one position minimizes the risk of another position
Kiwi
Slang for the New Zealand Dollar and US Dollar currency pair
Leverage
A loan from a broker, which enables trade with a small amount of capital
Long Position
Opening a position in which the trader buys currency in hopes that this currency’s value will increase
Loonie
Slang for the US Dollar and Canadian Dollar currency pair
Lot
The standard unit of trading. One standard lot equals 100,000 units of the base currency, a mini lot equals 10,000 units, and a micro lot equals 1,000 units
Margin
The minimal cash deposit that you have to put up for the transaction
Pip
The smallest price increment in the last digit in the rate, usually the fourth digit after the decimal point
Price Trend
A consistent movement of currency prices in a certain direction
Rate
The price of one currency in terms of another
Risk Capital
The amount of money that a trader can afford to risk, the potential loss of which would not affect their lifestyle
Short Position
Opening a position in which the trader sells currency in hopes that this currency’s value will decrease
Spread
The difference between the bid price and the ask price
Stop Loss
A trade order which automatically closes an open position at a specific price in order to prevent losses in case the market moves against your position
Swissy
Dealer slang for the US Dollar and Swiss Franc currency pair
Take Profit
A trade order which automatically closes an open position at a specific price realizing a specific amount of profit
Technical Analysis
Type of analysis focuses on chart patterns of currency movements. It assumes that a currency’s future movements can be predicted by looking at past behavior