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Account Statement Report

An FXCC account statement report shows all transactions made in a trading account over a period of time. For example; every trade (order) the client takes/enters into the market, the cost of each order, the account balance at a particular time and the rolling balance after each action on the account is accounted for.

Account Value

The current value of a client's account, this includes the total equity (amount of net money deposited/remaining in the account) and any changes due to: profits and losses from existing and closed positions, credits and debits from daily rollovers, together with charges from activity such as: commissions, transfer fees, or bank related fees, if such fees are aplicable.

AdjustablePeg

An exchange rate policy adopted by central banks. The national currency is "pegged" (fixed) to a major currency (stronger currency, such as the US dollar or Euro). A recent example being the peg of the Swiss franc to the euro. The peg can be adjusted, generally as improvements to the country's competitive position in the export market.

ADX; average directional index

The Average Directional Movement Index (ADX) was designed as a trading indicator to establish the strength of the trend by measuring price movement in a single direction. The ADX is part of the Directional Movement system created and published by J. Welles Wilder and is the average resulting from the Directional Movement indicators.

Agreement

This relates to the FXCC Customer Agreement. All clients must read and then accept the terms of business by signing (electronically if necessary) the FXCC Customer Agreement, before opening an account with FXCC.

Application

The FXCC trading platform.

Application Programming Interface - API

This is an interface enabling a software program to communicate with other software programs. With reference to forex trading, an API refers to the interface, enabling a platform to connect with the Forex market. APIs contain development features allowing information sharing, such as: real time forex price quotations and trade orders/execution.

Appreciation

A currency's value increases, or strengthens, in response to economic developments and therefore market reactions.

Arbitrage

It is a term used when forex traders simultaneously sell and buy same (or equivalent) financial instruments with the aim to profit from price or/and currency movements.

Ask Price

The price at which the currency, or instrument is offered for sale by FXCC, or another counter party. The ask or offer price is effectively the price a client will be quoted when he/she is attempting to buy or long a position.

Asset

Any good that has a fundamental exchange value.

ATR; average true range

The Average True Range (ATR) indicator measures the size of the period under observation's range, taking into account any gap from the close of the previous trading period.

Aussie (AUD)

An accepted dealer and internationally recognized symbol/term, for the AUD/USD currency pair.

Authorized Representative

This is a third party who a client grants trading authority to, or offers control over a client's account to. FXCC does not, by implication or otherwise, endorse or approve of the operating methods of an authorized representative. FXCC therefore accepts no responsibility for the authorized representative's conduct.

Auto - Trading

This is a trading strategy whereby orders are placed automatically by a system, or program, often referred to as using expert advisors or EAs, as opposed to a client manually placing their trades/orders into the market through their platform. The buy or sell orders are delivered into the market by the program to be executed when the parameters set by the trader's program, are finally met.

Average hourly earnings

It represents the average amount that employees are paid per hour for a given month.

B
Back Office

The FXCC Back Office department deals with account setup, funds transfers into the client's account, trade reconciliation issues, client inquiries and any other activities generally concerning activity that does not directly involve the buying, or selling of a currency pair.

Backtest

It is a method where the trading strategy is tested using historical data in order to confirm that the trading system is viable, so as to avoid trading risks of the trader's capital.

Balance of Payments

It is a statement that summarizes the difference in total value between payments in and out of a country for a specified time period. It is also known as the balance of international payments as it incorporates the transactions between country's residents and nonresidents.

Balance of Trade, or Trade Balance

It is the difference between a country's imports and its exports for a specific time period. It is also the most important part of a nation's current account. In the case that a country exports a greater value than its imports, then the country has a trade surplus, and vice versa, if a country is in a prolonged trade deficit condition (trade gap), the currency versus its trading partners would decline, or weaken, making the cost of imports more expensive and exports cheaper for the trading partners.

Bank for International Settlements (BIS)

It is an international financial organization that promotes the cooperation of central banks with the aim of fostering stability and information sharing among the central banks of the world. Another aim is to be the key center for all the economic research.

Bank Line

Defined as a line of credit granted by a bank to a client, this is also often referred to as a "line".

Banking Day (or Business day)

Banking day is the business day of a bank. It includes all the days when offices of a bank are opened for business to public, where business includes all banking functions. Usually banking day is all days except Saturday, Sunday and legally defined holidays.

Bank of Japan (BOJ)

The central bank of Japan.

Bank Notes

They can be used as a cash equivalent and is a paper which is issued by a central bank as a type of negotiable instrument (promissory note), which is payable to the bearer on demand.

Bank Rate

It is an interest rate based on which the central bank borrows money to its domestic banking system.

Base Currency

This is referred to as the first currency in a currency pair. The base currency is also the currency in which an investor (issuer), maintains its book of accounts. In the FX markets, the US Dollar is normally considered to be the base currency for the majority of FX quotes; quotes are expressed as a unit of $1 USD, versus the other currency quoted in the pair. The exceptions to this convention are: the British Pound, the Euro and the Australian Dollar.

Base Rate

The base rate is the interest rate that the central bank, like the Bank of England or Federal Reserve, will charge to lend money to commercial banks. Better risk borrowers will pay a small amount over base rate, lesser quality borrowers will pay an enhanced rate, above the base rate.

Basis Point

One per cent of one percent. For example; the difference between 3.75% and 3.76%.

Basis Price

The price expressed in annual rate of return or in terms of yield maturity instead of the price in terms of a currency.

Bear Market

Bear market is a market condition where there is a continued period of (generally) falling prices for a particular investment product.

Bear Squeeze

A change in the market condition where investors and/or traders, who are short on an investment product, have to buy back an investment at a higher price than they sold for it, otherwise the rising market condition/s will inflict a loss on their account, or their individual trade/s. A bear squeeze can be an international event created in the investment markets, usually by central banks or market makers.

Bear

An investor who believes that the price of an investment product will fall.

Beige Book

A Beige Book is a commonly used name for the Fed report, published just before the FOMC meeting on interest rates. It is available to the public eight (8) times a year.

Bid Price

The price at which FXCC (or another counter party) offers to buy the currency pair from a client. It is the price the client will be quoted when wanting to sell (go short) a position.

Bid/Ask Spread

The difference between the bid and ask price.

Big Figure

Refers normally to the first two or three digits of a currency's price. For example; EUR/USD exchange rate of .9630 implies a '0' as the first figure. Therefore the price would be 0.9630, with the "big figure" being 0.96.

Bollinger Band (BBANDS)

A technical indicator that measures volatility, created by John Bollinger. They provide a relative definition of high and low, where we can observe the prices as high at the upper band and as low at the lower band.

Break, or Break out

Break out is a term used to describe a sudden, fast rise (or fall) in the price of an instrument leading towards a break through a predetermined level of support or resistance.

Bretton Woods Agreement of 1944

This is a post ' WWII agreement that resulted in fixed exchange rates and set price of gold. The agreement was made between delegates from various independent nation-states representing major economies of the world.

Broker

An agent, such as FXCC, who executes orders to buy and sell financial products, such as: currencies and other related instruments, either for a commission, or the profits on a spread.

Building (Housing) Permits

The number of newly authorized construction projects granted by a government or other regulatory body before the actual construction can legally commence.

Bull Market

A prolonged period of rising prices for a particular investment product.

Bull

An investor who believes that prices of particular investment products will rise.

Bundesbank

The Central Bank of Germany.

Business Day

Any day when commercial banks are open for business, other than Saturday or Sunday, in the principal financial center of the country.

BuyLimit Order

An order that includes special instructions to execute a transaction to buy an asset at a specified price or lower. It is not activated until the market price is at (or lower) the limit price. The buy limit order once triggered, becomes the market order to buy at the current market price.

Buy StopOrder

A buy stop is a stop order which is placed above the current dealing ask price, it is not activated until the market ask price is at (or above) the stop price. The buy stop order once triggered, becomes the market order to buy at the current market price.

C
Cable

This is the term used in the foreign exchange market for the USD/GBP rate.

Candlestick Chart

A type of chart that consists of blocks that resemble the look of candlesticks. It displays the high and the low price, as well as the opening and closing prices.

Carry

The amount that is either credited or debited from an account for holding a currency pair where the underlying overnight interest rates of the components differ.

Carry Trade

In terms of Forex transactions, a carry trade is a strategy whereby an investor borrows money at a low interest rate, in order to invest in an asset that is likely to provide a higher return. This strategy is very common in the foreign exchange market, when central banks' borrowing rates diverge.

Cash Delivery

This is the same day settlement of an obligation.

Cash

Referring to an exchange transaction settled on the day the transaction is agreed upon.

Cash on Deposit

Cash on deposit is corresponding to the amount of funds deposited in the account, taking into consideration the plus or minus of realized closed positions, profit and loss, as well as other debits, or credits, such as rollovers, and commission (if any are applicable).

CCI, Commodity Channel Index

The Commodity Channel Index (CCI) compares the current mean price in the market with the average mean price observed over a typical window of 20 periods.

Central Bank

A bank, which is responsible for controlling a country's or regions' monetary policy. The Federal Reserve is the central bank for the United States, the European Central Bank is the central bank of Europe, the Bank of England is the central bank of England and the Bank of Japan is the central bank of Japan.

Central Bank Intervention

The act by which a central bank, or central banks enter the spot foreign exchange market in an attempt to influence unstable supply and demand, by directly purchasing (or selling) foreign exchange.

CFTC

The Commodity Futures Trading Commission, this is the US Federal regulatory agency for futures traded on the commodity markets, including financial futures.

Channel

It is a term used when the price has been contained between two parallel lines (support and resistance levels) for a specific period of time.

Chartist

This is considered to be an individual who studies graphical information and charts of historical data, in order to attempt to determine trends, or patterns of price movement, that will help predict the direction and volatility of a particular investment product. It is a specific type of practitioner of technical analysis.

CHF

CHF is the abbreviation of the Swiss franc, the currency of Switzerland and Liechtenstein. The Swiss franc is referred to as the "Swissie' by currency traders.

Cleared Funds

Funds that are freely available, resulting from the settlement of a trade, or trades.

Client or Customer

An FXCC Account holder. The client, or account holder can be an: individual, money manager, corporate entity, trust account, or any legal entity that has an interest in the value and performance of the account.

Closed Position

Closed position refers to the position that no longer exists as the trader exited the market under his own discretion. For example, the sell position will be counterweighted by a buy position and vice versa.

CME

Chicago Mercantile Exchange.

Commission

The fee that a broker such as FXCC may charge per trade.

Commodity Pairs

There are three forex pairs which include currencies from the countries which have large amounts of commodities/natural mineral reserves. The commodity pairs are: USD/CAD, USD/AUD, USD/NZD. Commodity pairs are highly correlated to changes in commodity prices. Traders looking to gain exposure to commodity markets' changes, often look to trade these pairs.

Confirmation

An electronic, or printed document exchanged by counterparts that describes all the relevant details of a financial transaction.

Consolidation

Consolidation is a term used to describe a period when prices are less volatile and are moving sideways.

Consumer Confidence

A measure of the overall degree of optimism surrounding the financial conditions within an economy and consumer personal financial situation.

Consumer Price Index

This is defined as the monthly measure of the change in the price level of a basket of consumer goods, usually including: food, clothing, and transport. Countries vary in their approach to rents and mortgages.

Continuation

Continuation is a terms commonly used when it is expected that the trend will extend its course.

Contract

An OTC (Over the Counter) agreement done with FXCC to buy or sell a specified amount of a particular currency, for a specified amount of another currency, where the settlement is set on a specified value date (normally the spot date). The foreign exchange rate that the two parties are contracted to will determine the contracted amounts.

Conversion Rate

The rate used to convert a specific currency pairs' non US dollar profits/losses into dollars, at the end of each trading day.

Convertible Currency

A currency that can be freely traded for other currencies without regulatory restrictions. They are generally associated with open and stable economies, and their prices are typically determined through supply and demand in the foreign exchange market.

Correction

It is a reverse movement and the terms is used to describe price action during a partial reversal of a trend.

Correspondent Bank

A foreign bank representative, who provides services on behalf of another financial institution, which has no branch in the relevant financial center, for example; to facilitate the transfer of funds or conduct business transactions.

Counter Currency

The second currency in a currency pair. For example; in the currency pair EUR/USD, the counter currency is the USD.

Counter Party

An individual or a bank that participates in international financial exchange and is the underwriter of a contract such as loan.

Country risk

It refers to the likelihood of a country to arbitrate or influence the value of a currency. The limit price in a sell limit order should be above the current dealing bid price involves the examination of economic, political and geographical factors of a particular country, in order to determine its overall stability.

Cover

Making a transaction that finally closes out a position.

Crawling Peg

This is also referred to as an "adjustable peg". This is defined as the level a country's exchange rate is set at, in relation to another currency.

Cross Currency Contract

A spot contract to either purchase, or sell one foreign currency, in exchange for another specific foreign currency. The currencies exchanged are not the US Dollar.

Cross Pair

A currency that does not include the USD.

Cross Rate

The exchange rate between two currencies, neither of which are the official currency of the country and both are expressed in terms of a third currency.

Cryptocurrency

Cryptocurrencies are digital, virtual currencies using cryptography for security of the transaction. As it is not issued by central banks, or governments it is referred to being of organic nature, which in theory makes it immune to government interference, or manipulation, such as Bitcoin.

Currency

It is the metal or paper medium, when in actual use or circulation, as a mean of exchange, specifically circulating banknotes and coins.

Currency Basket

It is commonly used to minimize the risk of currency oscillations, and is referred to as a selection of currencies where the weighted average of the basket is used to measure the value of a financial commitment.

Currency Converter

It is an electronic program used for the conversion of currencies; a calculator which converts the value of one currency into the value of another currency. For example; dollars to euros. Converters should use the most recent market quotes available in the foreign exchange market.

Currency Option

Currency options grants the buyer the right, but not commitment, to exchange a fixed amount of funds denominated in one currency into another at a fixed price on a specified date.

Currency Pair

Defined as two currencies in a foreign exchange transaction. The 'EUR/USD' is an example of a currency pair.

Currency Risk

The risk of unfavorable fluctuations in exchange rates.

Currency Symbols

These are the three letter identifiers created by the ISO (International organization for standardization) and typically used in place of the full currency names. For example: USD, JPY, GBP, EUR, and CHF.

Currency Union

The most referred to currency union is the Eurozone. It is an agreement between two or more countries to share a common currency (or peg), so as to maintain their exchange rates to keep the value of their currency at a specific level. Members of the union also share a single monetary and foreign exchange policy.

Customer Account Application

The FXCC application process which all clients must complete and submit for acceptance by FXCC, before a transaction can take place.

D
Daily Cut Off (close of business day)

This is the single point in time, during a particular business day, representing the end of that business day. The trade date of any contract entered into after the daily cut off, is considered executed on the next business day.

Day Order

A buy or sell order that if it is not executed on the specific day, is then automatically cancelled.

Day Trade

It refers to a trade with has been opened and closed within the same day.

Day Trader

Speculators and traders who take positions in investment products, which are then liquidated prior to the close of the same trading day, are defined as day traders.

Deal Blotter

Traders may prefer to keep records of all the transactions executed during a specific period. A personalized deal blotter contains all the basic information relevant to transactions. The forex trader deal blotter might include information such as the opening and closing currency positions, initiated by the trader.

Deal Date

It is the date on which the transaction is agreed on.

Dealing Desk

Forex markets are open 24/5, therefore many institutions have dealing desks in various locations. Dealing desks are also found outside the forex markets; in banks and finance companies, in order to execute trades in many securities. Dealing desks at broker firms, when trading forex as a retail trader, often set their own quotes and spreads when offering forex trading to their clients, as opposed to accessing the market direct, though, for example, straight through processing methods.

Deal Ticket

This is the primary method of recording the basic information relating to any financial transaction.

Dealer

An individual (or firm) acting as a principal, rather than as an agent, in the transaction of foreign exchange (purchase or sell). Dealers trade for their own benefit, trade their own account/s and take their own risk.

Default

This is defined as the breach of a financial contract.

Deficit

A negative balance of trade.

DEMA, (double exponential moving average)

Created by the technician Patrick Mulloy, the Double Exponential Moving Average (DEMA) attempts to provide a smoothed average by calculating faster averaging methodology, potentially with less lag than a standard exponential moving average. The calculation is also more complex than the moving average.

Depreciation

It is a decrease in the value of a currency relative to other currencies, due to market forces.

Depth of Market

This is the measure of the size of volume and is the indicator of the liquidity available for transaction purposes for (as an example) a particular currency pair, at a specific point in time.

Details

In relation to currency trading this is the information required in order to finalize a foreign exchange transaction, for example; name, rate, and dates.

Devaluation

Devaluation is a downward valuation of a country's currency versus: another currency, group of currencies, or as a standard. Devaluation is a monetary policy program used by countries that have a fixed exchange rate, or semi-fixed exchange rate. Devaluation is implemented by the government and central bank issuing a currency. A country may devalue its currency to, for example, combat trade imbalances.

Discretionary Income

This is a figure calculated as the net of tax and any fixed personal spending commitments.

Divergence

Divergence can be positive or negative and it is a signal of a shift in the trend of the price movement.

DM, DMark

Deutsche Mark. The former currency of Germany prior to its replacement by the euro.

DMI, directional movement index

The Directional Movement Indicators (DMI) are components of the Directional Movement indicator system created and published by the founder of many trading indicators, J. Welles Wilder. They are computed in tandem with the Average Directional Movement Index (ADX). Two indicators are plotted, a Positive DI ( +DI ) and a Negative DI ( -DI ).

Doji

A candlestick that forms when the price's open and close are almost equal. It represents a relatively large range between the high and low, but a very narrow range between the open and closing price and looks like a cross or inverted cross.

Dollar rate

The dollar rate is defined as the exchange rate of a particular currency versus the dollar (USD). Most exchange rates use the dollar as the base currency and other currencies as the counter currency.

Domestic Rates

This is defined as the interest rates applicable to depositing, or investing currency in the country of origin.

Done

The term used by FXCC representatives in order to indicate that a verbal deal has been executed and is now a binding deal.

Double Bottom

Used in technical analysis as a chart pattern that may indicate possible bullish future price movements

Double Top

Used in technical analysis as a chart pattern formation that may indicate bearish future price movements.

Dovish

Dovish refers to the sentiment or the tone of language used when a central bank is looking to stimulate the economy and is unlikely to take aggressive actions regarding inflation.

Durable Goods Order

It is an economic indicator that reflects new orders which were placed with domestic manufacturers in the near term. It measures the strength of manufacturing and helps the investors recognize trends in the growth of the economy.

E
Easing

Defined as action taken by a central bank, with the intention of boosting the money supply, with the aim of stimulating economic activity, principally by encouraging rising inflation.

Economic Calendar

This is a calendar used to monitor the economic indicators, metrics, data and reports due to be released by each country, region and independent economic analysis firm. Depending on the impact they have on the markets, data releases are usually graded accordingly; those predicted to have the greatest impact are usually defined as "high impact".

Economic Indicator

A statistic generally issued by a country's government, indicating the current economic growth relevant to the indicator.

Effective Exchange Rate

It is an index describing the strength of a currency comparative to a basket of other currencies. It can also be seen as an attempt to summarize the effects on a country's trade balance of its currency's changes against other currencies.

EFT

Electronic Fund transfer.

EMA, Exponential Moving Average

The Exponential Moving Average (EMA) represents an average of prices, placing more mathematical weight on more recent prices. The weighting applied to the most recent price depends on the selected period of the moving average chosen by the user. The shorter the period for the EMA, the more weight applied to the most recent price.

Employment Cost Index (ECI)

An economic indicator of the U.S. that measures the growth rate and inflation of labor cost.

End of Day Order (EOD)

This is defined as an order to buy, or sell a financial instrument at a specified price, the order remains open until the end of trading.

Either Way Market

Defined as a situation occurring in the Euro Interbank deposit market, when both the bid and the offer rates for a particular period, are precisely the same.

Electronic Currency Trading

Trading currencies through online brokerage accounts. Electronic currency trading encompasses the conversion of the base currency to a foreign currency, at the available market exchange rate, through online brokerage accounts. Through information technology, it brings buyers and sellers together and using an electronic trading platform it creates virtual market places.

Euro

This is the single exchange currency of the European Union bloc.

European Central Bank (ECB)

The central bank of the European Union.

European Currency Unit (ECU)

A basket of the EU member currencies.

European Economic Monetary Union (EMU)

As a system of integration between the members of the European Union, It involves the coordination of economic and fiscal policies, and a common currency ' the euro.

Euro ETF

It is defined as an exchange traded fund which invests in the euro currency, either directly, or by way of euro denominated short term debt instruments.

Euro Rates

This is the interest rates quoted for the Euro currency over a specific period of time.

Eurocurrency

Eurocurrency is currency deposited outside its home market by national governments or corporations. This applies to any currency and to banks in any country. As an example; South Korean won deposited at a bank in South Africa, is then considered to be "eurocurrency". Also known as "euromoney."

Eurodollars

Eurodollars are defined as time deposits measured in U.S. dollars, at banks outside the United States, therefore they do not come under the jurisdiction of the Federal Reserve. As a consequence such deposits are subject to much less regulation than, for example, similar deposits within the U.S.A.

European Union

The European Union (EU) is a group of 28 countries which operates as an economic and political bloc. Nineteen of the countries currently use the euro as their official currency. The European Single Market was established by 12 countries in 1993, to adhere to the four principal freedoms; the movement of: goods, services, people and money.

Excess Margin Deposits

Money deposited with FXCC that is not used for margin against existing open positions.

Exchange

In relation to exchanging financial transactions, an exchange is generally defined as a physical location where instruments are traded and often regulated. Examples: the New York Stock Exchange, the Chicago Board of Trade.

Exchange Control

A system put in place by governments and central banks for the purpose of controlling inflows and outflows of foreign exchange and devices, to include: licensing multiple currencies, quotas, auctions, limits, levies and surcharges.

Exchange Rate Mechanism - ERM

An exchange rate mechanism is a concept of fixed currency exchange rate margins- a system designed to control a currency's exchange rate relative to other currencies. There is variability of the currency exchange rates within the limits of the margins. A currency exchange rate mechanism is often referred to as a semi pegged currency system.

Exotic Currency

A foreign exchange description for a less traded and exchanged currency. Exotic currencies are illiquid and lack the market depth of, for example, the euro and are therefore traded in much lower volumes. Trading an exotic currency can often be far more expensive as the quotes - the bid/ask spread, is consistently wider. Exotics are not easily traded (or available) in standard brokerage accounts. Examples of exotic currencies include the Thai baht and Iraqi dinar.

Exposure

It refers to the risk associated with the fluctations in the market price which may lead to potential profit or loss.

F
Factory Orders

It is a report generated by the U.S. census Bureau providing details of the manufacturing statistics of non-durable and durable orders and measures shipments, unfilled orders, and inventories of domestic manufacturers.

Fast Market

The rapid movement of prices, or rates in a market caused by an imbalance of supply and demand conditions from buyers and/or sellers, also known a condition when financial markets are experiencing unusually high levels of volatility, combined with unusually heavy trading. In such circumstances rates, or prices, may not be readily available to clients until a more orderly market resumes.

Fed Fund Rate

It is the interest rate at which a depository organization lends funds held in the Federal Reserve to another depository organization overnight. It is used to conduct monetary policy and affect changes in the money supply that causes changes in the level of activity in the United States economy.

Fed Funds

Cash balances held by banks within the control of their local Federal Reserve Bank.

Fed

This is an abbreviation for the United States Federal Reserve Bank.

Federal Open Market Committee

Also known as the FOMC. This is the body of individuals which decide the course of monetary policy that will be conducted in United States. The FOMC is directly responsible for pegging the Federal funds rate and the discount rate. Both rates are influential in controlling the levels of money supply growth and the levels of economic activity in the United States.

Federal Reserve Board

The board of the Federal Reserve System, appointed by the US President for a 14 year term, one of the board is also appointed for four years as the chairman.

Federal Reserve System

The central banking system of the USA, comprising 12 Federal Reserve Banks, controlling 12 districts under direct control of the Federal Reserve Board. Membership of the Fed is compulsory for banks chartered by the Comptroller of Currency and optional for state chartered banks.

Fibonacci Retracement

It is a term used in technical analysis which refers to support and resistance levels a correction may hit before returning to the direction of the major price movement.

Fill, or filled

This is a deal executed on behalf of/on a client's account as a result of a client order. Once filled, the order cannot be cancelled, amended, or waived by the client.

Fill Price

It is the price at which the client's order to go long or short is executed.

Firm Quotation

This is defined as a price quote, delivered in response to a request for a firm rate, that guarantees a bid or ask price up to the amount quoted. It is a price at which the quoting party is willing to execute a deal, for spot settlement.

Fiscal Policy

The use of taxation and/or stimulus as a tool, for implementing monetary policy.

Fixed Dates

These are the monthly calendar dates similar to the spot. There are two exceptions. For further detailed description see information on value dates.

Fixed Exchange Rate

This is the official rate set by monetary authorities. It is a currency rate that is set against another currency or currencies.

Fixing

It is defined as a method for determining rates by establishing a rate which balances buyers to sellers. This process occurs either once, or twice daily at specific defined times. Used by some currencies, particularly for establishing tourist rates.

Fix Protocol

The Financial Information Exchange (FIX) protocol was established in 1992 and it is an industry driven messaging standard for the exchange of information related to securities transactions and markets.

Floating exchange rate

Defined as an exchange rate where the currency price is set by market forces constructed on the supply and demand paralleled with other currencies. Floating currencies are subject to intervention by the monetary authorities. When such activity is frequent, the float is known as a dirty float.

FOMC

Federal Open Market Committee, is the committee within the Federal Reserve System consisting of 12 members that set the direction of monetary policy. The Announcements inform the public about the decisions made on the interest rates.

Foreign Exchange

The term "foreign exchange" refers to the off exchange trading in foreign currency, there is no single, centralized, authorized and recognized exchange for trading forex. The term may also refer to currency trading on exchanges such as the IMM at the Chicago Mercantile Exchange.

Foreign Exchange Swap

Transaction which involves a simultaneous purchase and sale of two currencies on a specific date at a rate agreed at the time of the conclusion of the contract, also known as the 'short leg', at a date further in the future at a rate agreed at the time of the contract - 'the long leg'.

Forex

"Forex" is the accepted short name for foreign exchange and commonly refers to off exchange trading in foreign currency.

Forex Arbitrage

A trading strategy used by forex traders attempting to exploit the difference in the pricing of currency pairs. It takes the advantage of the different spreads that are offered by a broker for a specific pair. The strategy involves reacting fast to opportunities.

Forex market hours

Defined as the hours when forex market participants can: buy, sell, exchange and speculate on currencies. The forex market is open 24 hours a day, five days a week. Currency markets combine: banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers and investors. The international currency market has no central exchange, it involves a global network of exchanges and brokers. Forex trading hours are based on when trading is open in each participating country. When the main markets overlap; Asian, European and in the USA, the highest volume of trading occurs.

Forex Pivot Points

This refers to the set of indicators, commonly used by day traders in order to define quickly if the market sentiment may change from bullish to bearish and vice versa. In other words, it is used to determine the support and resistance levels. Forex pivot points are calculated as the average of the: high, low and close (HLC), from the previous day's trading session.

Forex Spread Betting

Spread betting involving bets on the price movements of currency pairs, the bid and the ask price.

Spread betting firms offering currency spread betting quote two prices, the bid and the ask price - the spread. Traders bet if the price of the currency pair will be lower than the bid price, or higher than the ask price.

Forex Trading Robot

Computer software trading program based on technical trading signals, which help determine whether to enter a trade for a particular currency pair at any given time. Forex robots, for retail traders specifically, are often helpful in removing the psychological element of trading.

Forex System Trading

This would be defined as trading based on analysis to determine whether to buy, or sell a currency pair at a specific time, often based on a set of signals generated by technical analysis charting tools, or fundamental news events and data. A trader's trading system is generally formed by technical signals creating their buy or sell decisions, which historically lead to profitable trades.

Forward Contract

Sometimes used as an alternative expression for 'forward deal' or 'future'. More specifically for arrangements with the same effect as a forward deal between a bank and a customer.

Forward Rate

Forward rates are quoted in terms of forward points, representing the difference between the forward and the spot rates. To obtain the forward rate, as opposed to the actual exchange rate, forward points are either added, or subtracted from the exchange rate. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies involved in the transaction. The base currency with the higher interest rate is discounted to the lower interest rate quoted currency in the forward market. The forward points are subtracted from the spot rate. The lower interest rate base currency is at a premium, the forward points are added to the spot rate, in order to obtain the forward rate.

Fundamentals

These are the macro economic factors at the regional or national level, which are accepted as forming the foundation for the relative value of a currency, these will include factors such as: inflation, growth, trade balance, government deficit, and interest rates. These factors have effect on a large population rather than a few select individuals.

Fundamental Analysis

A method used to measure the basic value of a particular currency based in major news on economic indicators, government policies, and any events that have effects on the currency country.

FX

This is an acronym for foreign exchange, which is widely used nowadays.

FXCC

FXCC is an international brand that is authorized and regulated in various jurisdictions, comprising of two entities: FX Central Clearing Ltd and Central Clearing Ltd.

FXCC Demo Trading Platform

FXCC provides a demo trading platform program, which is a full feature replica of the FXCC trading platform for real trading. The demo trading platform allows FXCC clients to become familiar with the actual trading platform's functionality and features, without risking any capital by executing contracted trades. The platform does not involve actual deals or contracts, therefore any profit, or loss generated by using the platform is virtual. It is strictly for demonstration purposes only.

FXCC Risk Disclosure Document

The FXCC Risk Disclosure outlines the risks involved when dealing in CFDs and to assist the client in taking investment decisions on an informed basis.

G
G7

Defined as the seven leading industrial countries the: USA, Germany, Japan, France, UK, Canada and Italy.

G10

This is the G7 plus: Belgium, Netherlands and Sweden, a group linked with IMF discussions. Switzerland is sometimes (marginally) involved.

GBP

Short for the Great Britain Pound.

Going Long

Defined as the action of buying a currency pair. For example; if a client bought the EUR/USD, they would be 'going long' the Euro.

Going Short

This is the action of selling a currency pair. For example; if a client sold the EUR/USD, they would be 'going short' the Euro.

Gold Standard

This is defined as a fixed monetary system, under which a government and or central bank, fixes their currency which can be freely converted into gold because of its fundamental properties. It has non-monetary uses, therefore it is expected to retain a minimum level of real demand. It also refers to freely competitive monetary systems, in which gold, or bank receipts for gold, act as the principal medium of exchange.

Good 'til Canceled (GTC order)

An order to buy or sell at a fixed price that continues to be active until it is either executed or is cancelled by the trader.

Greenback

It is a term used in jargon which represents the U.S. paper dollars.

Gross Domestic Product (GDP)

Defined as the total value of all goods and services produced in a country over a specific period of time.

Gross National Product (GNP)

It is an economic figure equal to GDP plus income earned from output, income, or investment proceeds earned abroad.

GTC

SEE: Good 'til canceled.

H
Hammer

A candlestick that is characterized by a square like body with a long whisker towards the bottom.

Handle

The handle is defined as the whole number part of a price quote, eliminating the decimals. In foreign exchange markets, the handle also refers to the part of the price being quoted which appears in both the bid price and offer price for the currency. For example; if the EUR/USD currency pair has a bid of 1.0737 and ask of 1.0740, the handle would be 1.07; the quote equal to both the bid and the ask price. Also often referred to as "the big figure" the handle is often used as a phrase to describe a prominent looming level, for example, the DJIA approaching 20,000.

Hard Currency

Hard currency is also known as the strong currency and is the most valued form of currency in trading internationally. They are currencies broadly acknowledged globally as forms of payment for goods and services. Hard currencies generally maintain stability through short periods and are very liquid in the forex market. Hard currencies are produced from nations with strong economic and political environments.

Hawkish

The sentiment of the central bank when it is intending to increase interest rates, which may return in positive outcome on the currency.

Head and Shoulders

A chart pattern used in technical analysis that proposes a reversal of a trend, for example, from bullish to bearish trend reversal.

Hedged Position

It involves the holding of long and short positions of the same underlying assets.

High Frequency Trading (HFT)

This is a kind of algorithmic trading with simultaneous large volume of orders, performed at very fast speeds.

High/Low

The highest traded price or the lowest traded price for an underlying instrument for the present trading day.

Hit the Bid

This is a term used to describe the action of a seller of a currency pair, when selling at the market bid side.

HKD

This is the currency abbreviation for the Hong Kong dollar (HKD), the currency of Hong Kong. It is constructed of 100 cents, often represented by the symbol $, or HK$. Three Chinese note issuing banks have authority to issue Hong Kong dollars, subject to Hong Kong government policy. HK$ move through a government exchange fund holding U.S. dollars in reserve.

Holder

In relation to currency trading, this is defined as the buyer of a currency pair.

Housing Market Indicators

Market moving economic indicators relating to housing, mainly in the USA and the UK, based on published housing data.

Housing Starts

This is the number of new residential construction projects (privately owned houses) that have commenced during any given period of time, usually quoted each month or yearly.

I
Ichimoku, (ICH)

Ichimoku has been designed before World War II, as a financial markets forecasting model, a trend following indicator recognizing the mid points of the historical highs and the lows over various points of time. The purpose of the indicator is to generate trading signals similar to that created by moving averages, or by the combination of the MACD. Ichimoku chart lines are moved forward in time, creating wider support and resistance areas, potentially this reduces the risk of false breakouts.

IMF

The International Monetary Fund established in 1946 in order to provide short and medium term international loans.

Implied Rates

It is a rate resulting from the difference between the spot rate and the future rate on a transaction.

Inconvertible Currency

A currency that due to foreign exchange regulations or physical barriers cannot be exchanged for another currency. Inconvertible currencies can be constrained from trading, due to particularly high volatility, or by political sanctions.

Indirect Quote

An indirect quote is when the USD is the base currency of the pair and not the quote currency. Since the USD is the dominant currency in global foreign exchange markets, it is usually used as the base currency and other currencies, for example Japanese yen or Canadian dollar are used as the counter currency.

Industrial Production Index (IPI)

An economic indicator that measures market activity. It is published by the Federal Reserve Board of the U.S.A on monthly basis and is measuring the production output of the mining, manufacturing, and utilities.

Inflation

Defined as the rise in prices of consumer goods, directly related to the reduction in purchasing power.

Initial Margin Requirement

This is defined as the minimum margin balance necessary, in order to establish a new open position, where the Initial margin has to be less than or equal to the margin available. The initial margin requirement can be expressed as a percentage (for example; 1% of US dollar position amount), or can be calculated by the leverage ratio.

Interbank Market

The interbank market is defined as the over the counter market of dealers, in FX trading they would constitute creating markets in foreign exchange to one another.

Interbank Rates

Foreign Exchange rates quoted between international banks.

Inter Dealer Broker

This is a brokerage firm operating in the bond (or OTC derivatives) markets, acting as mediators between major dealers and inter dealer trades. For example; members of the London Stock Exchange, who are only permitted to deal with market makers, as opposed to the general public.

Interest Rates

The amount charged to use money. Interest rates are influenced by the rates set by the Fed.

Interest Rate Parity

As a consequence of this phenomenon, the interest rate differential and the differential between the forward and spot exchange rate between two counties are equal. Interest rate parity connects: interest rates, spot exchange rates and foreign exchange rates.

Intervention

It is an action by a central that affects the value of its currency, by selling or buying foreign currency in exchange for their own domestic one, as an attempt to influence the exchange rate.

Intraday Position

Classified as positions run by a client of FXCC within the day. Usually squared by the close.

Introducing Broker

Referred to as a person, or a legal entity that introduces customers to FXCC, often in return for compensation in terms of a fee per transaction. Introducers are prevented from accepting margined funds from their clients.

J
Joint Float

It is defined as a deal by which a group of currencies keep a fixed relationship relative to each other, where their currencies move jointly relative to another currency conditional to the supply and demand conditions in the exchange market. The central banks participating in this agreement maintain the joint float through buying and selling each other's currencies.

JPY

This is the currency abbreviation for the Japanese yen (JPY), the currency for Japan. The yen comprises 100 sen, or 1000 rin. Yen is often represented (as a symbol) by the capital letter Y, with two horizontal lines through the center.

K
Key Currency

Defined as the currency used as the reference in international transactions and when setting exchange rates. Central banks keep key currencies in reserve and the U.S. dollar is seen as the world's most dominant key currency.

Keltner Channel (KC)

The Keltner Channel was developed and created in 1960 by Chester W. Keltner and featured in his book "How To Make Money in Commodities". Keltner Channels plots three lines, consisting of a: simple moving average, with upper and lower bands plotted above and below this moving average. The width of the bands (creating the channel), is based on a user adjusted factor applied to the Average True Range. This result is added to and subtracted from the middle moving average line.

Kiwi

Slang for the New Zealand dollar.

KYC

Know Your Customer, this is a compliance procedure followed by brokerage firms such as FXCC.

L
Leading and lagging indicators

Nearly all (if not all) technical indicators lag, they do not lead; they do not offer proof that, for example, a currency pair will behave in a certain manner. Some fundamental analysis can lead, given that it can be a forward indication of events. A survey of consumers buying habits in the future may indicate the health of the retail sector. A survey of a housing construction body may provide evidence of their members commitment to construct more homes. The CBOT survey indicates the commitment traders have made to purchase and trade certain financial instruments.

Left-hand Side

Selling the quoted currency, also known as taking the bid price of the quote.

Legal Tender

The value of ones' country currency, which has been recognized by law as the official method of payment. The national currency is considered to be authorized tender in most countries, and is used to pay a private or public liability, as well as to meet financial commitments. A creditor is obligated to accept legal tender towards repayment of a debt. Legal tender is issued by the national body authorized, such as the U.S. Treasury in the United States and the Bank of England in the UK.

Leverage

This is the control of a large notional position, through the use of a small amount of capital.

Liability

Liability is an obligation to deliver an amount of currency at a specified date in the future to the counterparty.

LIBOR

The London Inter-Bank Offered Rate.

Limit Order

A limit order can be used to place a trade to enter the market at a pre-defined price. Once the market price reaches the pre-set price, the order may be triggered (a limit order does not guarantee that the order will be executed) at the stated limit price. It may occur, due to the volatility in the market that the market reaches the limit price and immediately retreats back from the limit price level, with very little volume traded. Then, the limit order may not be triggered and will remain in effect until the time it can be executed or until the client voluntarily cancels the order.

Limit Price

This is the price that the client specifies when placing a limit order.

Line Charts

The simple line chart connects single prices for a selected time period.

Liquid

This is the condition in the market where there is sufficient amount of volume being traded, in order to easily buy, or sell instruments generally on (or close to) the quoted prices.

Liquidation

Defined as a transaction that offsets, or closes out a previously established position.

Liquidation Level

Once the client's account does not have sufficient funds to hold the opened positions, liquidation will occur based on a specific account level which will liquidate opened positions at the best price available at the given time. A client can prevent liquidation of their account and positions by depositing additional margin into the account, or by closing out existing open position(s).

Liquidity

This is the term used to describe the amount of volume available to buy, or sell at a point in time.

London Spot Fix

As a result of the conference call of the London Gold Pool (Scotia-Mocatta, Deutsche Bank, Barclays Capital, Societe Generale and HSBC), the price per ounce of precious metals, such as gold, silver, platinum and palladium is set on daily basis at 10:30 (London a.m. fix) and 15:00 GMT (London p.m. fix). The London spot fix price is considered to be fixed once the conference call terminates.

Long

When a client opened a new position of buying a currency pair, it is considered that he went 'long'.

Loonie

Dealer and slang term for the USD/CAD currency pair.

Lot

Defined as a unit used to measure the value of a transaction. Transactions are referred to by the number of lots traded, rather than by their monetary value. It is a standard trading term referring to an order to 100,000 unit.

M
MACD, Moving Average Convergence and Divergence

It is an indicator which shows the connection between two moving averages and how they interact when the price changes. It is trend following momentum indicator.

Maintenance Margin

This is the lowest margin required, which a client must have at FXCC, in order to keep open, or sustain an open position.

Major Pairs

Major pairs refers to the currency pairs that are most traded in the forex market, such as EUR/USD, USD/JPY, GBP/USD, USD/CHF. These major currency pairs drive the global forex market, the USD/CAD and AUD/USD pairs could also be regarded as majors, although these pairs are generally known as "commodity pairs".

Manufacturing Production

It is the total output of the manufacturing sector of the Industrial Production figures.

Managed Forex Accounts

It is a term used when a money manager will for a fee trade on the clients' account in a similar method to hiring an investment advisor, in order to manage an investment account of, for example, equities.

Margin Call

Margin Call occurs when the clients' margin level drops to 100% as set by FXCC. The client has the option to add more funds in order to meet the margin requirements and avoid the Stop Out or can close the least profitable trades.

Margin

This is defined as the total amount of customer cash pledged against the combined open positions.

The margin and leverage are interconnected. Namely, the lower the leverage, the higher the margin

Required to maintain an opened position and vice versa. Mathematically expressed; margin = open position/maximum trading leverage ratio. For example; a USD/CHF 100,000 USD position at the maximum trading leverage ratio of 100:1, will require pledged margin equal to 100,000/100 or $1,000. To calculate margins for currency pairs, where USD is not the base (first) currency (e.g. EUR/USD, GBP/USD) and crosses (EUR/JPY, GBP/JPY), and the counter currency amount is firstly converted into USD, by using the average exchange rate(s). Example; if a customer buys 1 lot of EUR/USD, when the price is 1.0600. Therefore, 100,000 EUR equals 100,600 USD. $100,600/100 leverage ratio = $1,006.00

Market Close

The term is used for the specific time of the day when the market closes, which is 5 PM EST on Friday for spot forex brokers.

Market Depth

It shows the buy/sell orders in the market for a specific instrument.

Market Execution

Generally used by STP and ECN brokerages, this is a method of execution when a trader is not guaranteed to obtain the price observed on the screen of the terminal, but is guaranteed to get the trade executed. There are no re-quotes with this type of execution.

Market Maker

A market maker is defined as a person, or firm authorized to create and maintain a market in an instrument.

Market Order

A market order is regarded as an order to buy, or sell a chosen currency pair, at the current market price. Market orders are executed at the price displayed at the moment the user clicks the 'BUY/SELL' button.

Market Rate

It is the currency pairs' current quote for which one currency can be exchanged for another in real time.

Market Risk

It refers to the risk that can arise from market forces, for example, supply and demand, which as a result causes the value of an investment to fluctuate.

Market Trading

This is the term used to illustrate the relationship of total equity, versus free equity.

Maturity

Defined as the date for settlement for a transaction which is pre-determined at the time of entering into the contract.

Maximum Trading Leverage Ratio

Leverage is expressed as a ratio, available to open a new position. It allows the traders to enter the market with higher volume trades than the initial deposit alone would allow them. For example; a leverage ratio of 100:1 allows a client the ability to control a $100,000 lot position, with $1,000 of margin ($100,000/100 = $1,000).

Micro Lot

It is the smallest contract unit size in trading Forex that is equal to 1,000 units of the base currency.

Micro lots enable novice traders to trade in smaller increments and therefore reduce their risk significantly.

Micro Account

In the micro account, clients are able to trade micro lots, thus this account type is usually popular among novice traders where they can trade small amounts.

Mini Forex Account

This account type enables traders to enter the market with positions of 1/10 the size of the standard lot.

Mini Lot

Mini lot has a currency trading size of 0.10, where the value of one pip if based in USD equals to $1.

Minor Currency Pairs

Minor currency pairs, or "the minors" consist of many other currency pairs and cross currencies. For example, we would classify the Euro against the UK's pound (EUR/GBP) as a minor currency pair, despite it being heavily traded and the spread being consistently low. The New Zealand dollar versus the US Dollar (NZD/USD) can also be classified as a minor currency pair, despite it also being classed as a "commodity pair".

Mirror Trading

It is a trading strategy allowing investors to 'mirror trade' other forex traders and investors. They would basically copy the trades of other investors which will reflect in their own trading account.

MoM

Month-on-month. Abbreviation used for calculating the percentage change in indices during a monthly period.

MOMO Trading

This term is used when the trader is considering only short-term direction of the price movement, not the fundamentals. The strategy is based only on momentum.

Money Market Hedge

Money market hedge is a way to protect against currency oscillations and allows a company to reduce the currency risk when doing business with a foreign company. Before conducting a transaction, the value of the foreign company currency will be locked in, so as to assure the cost of the future transaction and ensures the domestic company will have the price it is able and willing to pay.

Moving Average (MA)

Defined as a method of smoothing a set of price/rate data by taking the average price of data range of values.

N
Narrow Market

This occurs when there is low liquidity in the market but great oscillations in prices and high spread. In a narrow market generally there is a low number of bid/ask offers.

Negative Roll

Defined as the negative interest of (SWAP) rolling over a position overnight.

Neckline

In charting pattern formations, the base of a Head and Shoulder or its opposite.

Net Interest Rate Differential

This is the difference in interest rates from the countries of two diverse currencies. For example, if a trader is long in EUR/USD, then he owns the Euro and is borrowing the US currency. If the spot next rate for the Euro is 3.25% and the spot/next rate in the US is 1.75%, then the interest differential is 1.50% (3.25% - 1.75% = 1.50%).

Netting

Defined as the method of settling, under which only the differences in the traded currencies are settled at the close.

Net Position

Net position is the amount bought or sold which is not counterbalanced by a position of an equal size.

Net Worth

It is defined as assets minus liabilities. Can also be referred to as net assets.

New York Session

Trading session between 8:00 AM EST ' 5:00 PM EST. (New York Time).

News Feed

Regarded as a data format used in trading platforms for providing users with frequently updated content.

No Dealing Desk (NDD)

FXCC is a "no dealing desk" forex broker. NDD is defined as unhindered access to the interbank market, where foreign currencies are traded. Forex brokers using this model route orders through to market liquidity providers, rather than dealing with a single liquidity provider. A trader's order is offered to numerous providers, in order to get the most competitive bid and ask prices.

Noise

It is a term that is used to specify certain price movements that cannot be explained by fundamental nor technical factors.

Non-Farm Payroll

Statistical data gathered by the U.S. Bureau of Labor Statistics, which corresponds to the payroll data for the majority of the United States. It does not include: farm workers, private household employees, or non-profit organization employees. It is a fundamental indicator released monthly.

Notional Value

Notional value on a financial instrument is the value of a position in dollar terms.

NZD/USD

It is the abbreviation for the New Zealand dollar and the U.S. dollar currency pair. It portrays to the traders the amount of U.S. dollars needed to but one New Zealand dollar. Trading the NZD/USD currency pair is often referred to as "trading the Kiwi".

O
OCO Order (One Cancel the Other Order)

An order type where stop and limit order is set at the same time and if either trade is executed, the other one will be cancelled.

Offer

This is the price at which a dealer is looking to sell a currency. The offer is also called the ask price.

Offered Market

It is a situation that may occur in the forex market, which is usually temporary and represents the occurrence where the number of traders selling an instrument exceeds the number of traders willing to buy.

Offsetting Transaction

This is a trade that serves to remove, or reduce some, or all of the market risk in an open position.

Old Lady

Old lady of Threadneedle Street, a term for the central bank of England.

Omnibus Account

It is an account amid two brokers where individual accounts and the transactions are joined in an omnibus account, rather than designated separately. The futures merchant will open this account with another company, where the processing of the deals and operations in the name of the account holder are performed.

Online Currency Exchange

Defined as an online system permitting the exchange of nations' currencies. Forex market is decentralized and it is a network of computers that connect banks, online currency exchanges and forex brokers that allow for delivery of the currencies traded.

On Top

Attempting to short the market, at the current market price.

Open Interest

The entire sum of unsettled contracts held by market participants at the end of every trading day.

Open Order

It is defined as an order that will be executed once the market moves and reaches the stated price.

Open Position

Any position that has been opened by a trader which has not been closed by an equivalent or opposite deal of the same size.

Open Position window

The FXCC window which demonstrates all the current client positions that are open.

Order(s)

Orders are defined as an instruction from the client to either buy or sell a specific currency pair, through FXCC trading platform. Orders can be set to be triggered as well, once the market price reaches the client's pre-determined price.

OTC Margined Foreign Exchange

Over the counter (off exchange) foreign exchange markets, in which market participants, such as FXCC and the client, enter into privately negotiated contracts, or other transactions directly with each other, for which margin is deposited and pledged against outstanding positions.

Overheated Economy

An occurrence when a country has a good economic growth over a long period of time, resulting in a growing aggregate demand that cannot be supported with the productive capacity can face overheated economy, which usually as results in increased interest rates and higher inflation.

Overnight Position

Defined as a deal from today until the next business day.

P
Parity

Parity occurs when the price of an asset matches the price of another asset, for example; if one euro equals one US dollar. A "parity price" concept is also used for securities and commodities, if two assets have an equal value. Convertible bond traders and investors might use the parity price concept, in order to determine when it's beneficial to convert a bond into equities.

Pip

A pip is defined as the smallest price movement that a given exchange rate makes, based on market convention. Most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point. For most pairs, this is the equivalent of 1/100 of 1%, or one basis point.

Pip Value

The worth of each pip in a given trade, which is converted into a trader's account currency.

Pip value = (one pip/exchange rate).

Pending Orders

This is regarded as the unsettled orders still pending and waiting to be executed, at the price determined by the client.

Political Risk

Exposure to changes in government policy that may have an opposing consequence on an investor's position.

Point

Minimum oscillation or smallest increase in price movement.

Position

Defined as the netted total commitments in a given currency. A position can be either flat, or square (no exposure), long, (more currency bought than sold), or short (more currency sold than bought).

Positive Roll

Net positive (SWAP) interest of keeping a position opened overnight.

Pound Sterling (Cable)

Other references for the GBP/USD pair.

Price

The price at which an asset or underlying currency can be sold or bought.

Price Channel

Price channel is formed by placing two parallel lines on the chart for the desired instrument. Depending on whether the movement of the market, the channel can be ascending, descending or horizontal. Lines are used to connect the highs and the lows, where the upper line represents the resistance level and the lower line represents the support level.

Price Feed

This is the flow of market data (real time, or delayed).

Price Transparency

Depicts market quotes that each and every market participant has equal access to.

Price Trend

Regarded as the steady movement of prices in a certain direction.

Prime Rate

It is the rate used to calculate the lending rates by banks in the US.

Producer Price Index (PPI)

PPI measures the price changes at the wholesale level of a fixed basket of capital, rent consumer good production taken on by the producers, and acts as an indicator of forthcoming retail price changes.

Profit Taking

The closing or unwinding of a position in order to realize a profit.

Purchasing Managers Index (PMI)

An economic indicator that measures the economic strength of the manufacturing sector. By gathering monthly surveys of approx. 300 purchasing executives, it provides information of the business conditions and acts as a decision making tool for managers.

PSAR, Parabolic Stop and Reverse (SAR)

It is an indicator that is used to define trailing stops for short and long positions. SAR is a trend following system.

Q
QoQ

Quarter-on-quarter. Abbreviation used for calculating the percentage change in various indices.

Quantitative Easing

It is a monetary policy used by Central Bank to lower the interest rates and increase money supply by purchasing securities from the market. This process aims to directly increase private sector spending in the economy and return inflation to target.

Quote

Consists of the bid and the ask for a currency pair.

Quote Currency

As trading Forex involves currency pairs, quote currency represents the second currency in the pair.

For example; with EUR/GBP, the UK's pound is the quote currency and the euro is the base currency. In direct quotes, the quoted currency is always the foreign currency. In indirect quotes, the quote currency is always the domestic currency.

R
Rally

It is a continuing period of increase in the price of an asset.

Range

Range can be defined as the difference between the high and the low price of a currency, future contract or index during a given time period. It is also an indication of the asset price volatility.

Range Trading

Range trading identifies when the price fluctuates within a channel and using technical analysis, the main support and resistance levels can be identified, allowing a trend trader to make the decision of either buying or selling and instrument depending if the price is near the bottom of the channel or near the top.

Rate

Defined as the price of one currency in terms of another, normally against USD.

Realized P/L

This is the profit and loss generated from closed positions.

Rebate

Defined as a refund of part of the original payment for some service (e.g. Forex commission/spread rebate).

Recession

Recession refers to the occurrence when the economy of a country is slowing and thee is a decline in business activity.

Regulated Market

This is a market which is regulated, usually by a governmental agency that issues a number of guidelines and restrictions designed to protect investors.

Relative Purchase Power Parity

When prices in countries may vary for the same product at the same proportional rate over extended time. The reasons for the price difference could include: taxes, shipping costs and product quality variances.

Relative strength index (RSI)

A momentum oscillator, which is a leading indicator. Measures the strength and weakness according to closing prices in the specified trading period.

Reserve Bank of Australia (RBA)

The Central Bank of Australia.

Reserve Bank of New Zealand (RBNZ)

The Central Bank of New Zealand.

Re-quote

A market situation which occurs when an investor initiates a trade at a certain price, but the broker returns the request with a different quote. FXCC provides its clients with direct access to a liquid Forex ECN model in which all clients obtain the same access to the same liquid markets and trades are executed instantaneously, without any delay or re -quotes.

Reserve Assets

Often referred to as "reserves" this could be considered: currencies, commodities, or other financial capital, held by monetary authorities. For example; central banks might use reserves in order to finance: trade imbalances, control the impact of FX fluctuations and address any other issues the central bank has a remit for. Reserve assets are usually liquid and directly under the monetary authority's control.

Reserve Currency

Considered as well to be a safe-haven currency. It is usually held in substantial amounts by central banks in order to be used to pay off international debt commitments.

Resistance Point, or Level

It is used in technical analysis and is either a price or level which will stop a movement of a foreign exchange rate going higher. If the level is breached, then it is expected that the instrument price will continue going higher.

Retail Foreign Exchange Dealer - RFED

In cases where over-the-counter buying or selling financial instruments do not involve any exchanges, individuals or organizations are required to act as counter-party. RFED acts in transactions involving futures contracts, options on futures contracts and options contracts with participants who are not eligible contract participants.

Retail Investor & Retail Trader

When an investor/trader is buying or selling securities, CFDs, currencies, equities, etc. for his/her personal account, he/she is considered to be a retail investor/trader.

Retail Price Index (RPI)

It is a measure of the change in the cost of retail goods and services. In addition to CPI, RPI is also a measure of inflation of a given country.

Retail Sales

As fundamental economic measurement of consumption and indicator of economic strength.

Revaluation Rates

These are market currency rates (from a point in time) used as a base value by currency traders to determine whether or not a profit, or a loss has been realized on the day. The revaluation rate is generally considered to be the closing rate of the previous trading day.

Right Hand Side

Corresponding to the ask, or offer price of a foreign exchange rate. For example; on EUR/GBP if we see a price of 0.86334 - 0.86349, the right hand side is 0.86349. The right hand side is the side that a client would buy at.

Risk

Defined as exposure to uncertain change, the variability of returns, or the likelihood of less than expected returns.

Risk Capital

When trading forex, traders need to make sure that they do not risk more funds than the liquid funds set aside for trading. Risk capital refers to the amount a trader feels comfortable with investing when speculating on a currency pair.

Risk Management

It is considered as analyzing the forex market and identifying the potential losses that may occur with the investment, thus applying trading techniques which may assist in lowering the investment risk.

Risk Premium

Risk premium is a term used for the fees or costs payable that are used to compensate a party for adopting a particular risk.

Rollover (SWAP)

When a position is held overnight, and interest occurs where the client may pay or earn on the open position, depending on the interest rate associated with it. FXCC will debit or credit the client's account depending on the interest rate differential between the base currency and the counter currency and the direction of the client's position. For example; if the client is long a currency pair as the overnight rate for the base currency is higher than the counter currency, the client will earn a small credit for positions held overnight. If the opposite situation exists, then the client account will be debited for the difference in the interest rate differential. If a client is long a higher yielding currency, they should benefit from being able to invest and earn a higher return overnight than they'd have to pay for being short the lower yielding currency.

Running a Position

Defined as the act of keeping open positions open, in the anticipation of a speculative gain.

S
Safe Haven Currency

In times of market turbulence or geopolitical turmoil, an investment that is anticipated as to keep or increase its value, is referred as 'Safe Haven'.

Same Day Transaction

Defined as a transaction that matures on the day the transaction takes place.

Scalping

Defined as a strategy utilizing small changes in price. The trader can profit by promptly opening and closing large numbers of positions from trading sessions.

Sell Limit

This specifies the lowest price at which the sale of base currency in a currency pair can be executed. It is an order to sell the market at a price that is above the current price.

Sell Stop

Sell stops are stop orders placed below the current dealing bid price and are not activated until the market bid price is at, or below the stop price. Sell stop orders, once triggered, become market orders to sell at the current market price.

Selling Short

It is the sale of a currency that is not owned by the seller.

Settlement Date

This is the date by which an executed order must be settled by the transfer of instruments, or currencies and funds between buyer and seller.

Short

Refers to having position opened that was created by selling a currency.

Slippage

It occurs when there is high volatility in the market and is defined as the difference between the expected price and the price which was available in the market and was used to execute the trade. Slippage does not have to always be negative, and with FXCC clients can experience positive slippage, also known as price improvement.

Society of Worldwide Interbank Financial Telecommunications (Swift).

Money transfers and other financial operations are done through Swift, as it is communication platform for financial information exchange.

Soft Market

The occurrence when there are more sellers than buyers, which leads to low prices due to the surplus of supply over demand.

Sophisticated Foreign Exchange Investor

When an investor has sufficient experience and knowledge of the foreign exchange market, he/she is expected to assess the risks of an investment opportunity.

Sovereign Risk

It is referred to the risk when a government cannot or is unwilling to meet debt repayments.

Speculative

Trading, for example, foreign exchange is speculative; there is no guarantee that those who invest in FX will profit from the experience. Clients can lose their entire deposited margin, making trading FX highly speculative. Those trading foreign exchange should only risk capital which is considered risk capital, defined as the amount that if lost would not change the client's lifestyle, or their family's lifestyle.

Spike

An occurrence in the Forex market defined as positive or negative movements in price action, which is usually short-lived.

Spot Market

Spot markets have built in mechanisms for financial instruments that are traded immediately and orders are settled instantly, as the participants in the spot forex market do not receive or deliver the physical currency which they are trading.

Spot price/rate

It is the price of an instrument which can be sold or bought in the spot market.

Spot Settlement Basis

It is a standardized procedure for settlement of foreign exchange transactions where the value date is set 2 business days forward from the Trade Date.

Spread

The difference between the prices given for immediate order (ask price) and immediate sale (bid price) for currency pairs.

Stagflation

It is an economic problem within a country where there is a high inflation along with a problem of high unemployment, causing slow economic growth and rising prices.

Square

The condition when there is no open position and the client's purchases and sales are in balance.

Standard Lot

A standard lot in forex trading terms, is the equivalent to 100,000 units of the base currency in a forex trading currency pair. A standard lot is one of the three commonly known lot sizes, the other two are: mini-lot and micro-lot. A standard lot is 100,000 units of a currency pair, a mini-lot represents 10,000, a micro-lot represents 1,000 units of any currency. A one-pip movement for a standard lot corresponds with a $10 change.

Sterilization

Sterilization is defined as a type of monetary policy, whereby a central bank limits the effects of inflows and outflows of capital on the domestic money supply. Sterilization involves the purchase or sale of financial assets by a central bank, offsetting effects of foreign exchange intervention. The sterilization process manipulates the value of a domestic currency relative to another, it's initiated in the foreign exchange market.

Sterling

British pound, otherwise known as cable when trading the currency pair GBP/USD.

Stochastic

The Stochastic (Stoch) attempts to normalize price as a percentage between 0 and 100. With stochastic lines, two lines are plotted, the fast and the slow stochastic lines. It is a popular oscillating technical indicator used by traders to chow strength of trends.

Stop Loss Order

This is a specific order placed by the client to close out a position if the price moves in the opposite direction of the position by a certain amount of pips. In most circumstances stop loss orders are executed as soon as the market reaches, or goes through the client's set stop level. Once issued, the stop order will be held pending until the stop price is reached. Stop orders may be used to close out a position (stop loss), to reverse a position, or to open a new position. The most common use of stop orders is to protect an existing position (by limiting losses, or protecting unrealized gains). Once the market hits, or goes through the stop price, the order is activated (triggered) and FXCC will execute the order at the next available price. Stop orders do not guarantee execution at the stop price. Market conditions including volatility and lack of volume may cause a stop order to be executed at a price different than the order.

Stop Price Level

This is defined as the price where a client entered a price that activates a stop loss order.

Structural Unemployment

When within an economy there is a long lasting form of unemployment, it is referred to as Structural Unemployment. The reason may be due to fundamental shifts in an economy caused by various factors, such as technology, competition and government policy.

Support Levels

They are used in technical analysis to indicate the level for an asset where the price is expected to have difficulties to breach and will automatically correct itself.

Swap

A currency swap is the simultaneous borrowing and lending of the same amount of a given currency at a forward exchange rate.

Sweep/Sweeping

When a client of FXCC has a P/L in another currency other than US dollars, the P/L must be converted at the close of each business day into US dollars, at an exchange rate prevailing at the time (known as the conversion rate). This process is called sweeping. Until the P/L is swept, the client's account value will fluctuate slightly (up or down), as an exchange rate for the profit and loss and currency changes. For example; if the client has a profit in yen, if the value of the yen rises after the position is closed, but before the profit is swept into dollars, the account value will change. The change is only on the profit/loss amount, therefore the effect is minimal.

SWIFT

Society for World-wide Interbank Telecommunications is a Belgian based company that provides the global electronic network for settlement of most foreign exchange transactions. The society is also responsible for the standardization of the currency codes used for confirmation and identification purposes (i.e. USD = US Dollars, EUR = The Euro, JPY = Japanese Yen)

Swing trading

This is a version of a speculative trading strategy holding a position open from one (to several days) in an effort to profit from price changes, which are often called 'swings'.

Swissy

Market slang for Swiss Franc, CHF.

T
Take Profit Order

It is an order placed by the client with a pre-defined price that once the market prices reaches the desired level, the order will be closed. Once the order is realized, it would result in profits for the given trade.

Technical Analysis

Technical analysis uses historical price trends and patterns in an attempt to forecast the price direction.

Technical Correction

It is defined as the occurrence of a market price drop when there is no fundamental reason for a decrease. An example would be when the price returns to a substantial resistance after shortly breaking through it.

Terms of Trade

The ratio between a country's export and import price indices.

Technical Indicator

Technical indicators are used as an effort to predict the future market trends. It is an essential part of the technical analysis used as a chart pattern and are designed for analyzing short-term price movements.

Thin Market

It is defined as market where there not many sellers and buyers, which as a consequence has low trading volume and the overall liquidity of the trading instruments is low.

Tick

This is defined as the minimum change in price, up or down.

Tomorrow next (Tom next)

Tomorrow next involves positions closed out at a specific business day at the closing rate and then re-opened the following day. The delivery is two (2) days after the transaction date. It is the concurrent buying and selling of a currency in order to avoid any actual delivery of the currency.

Track record

History of trading performance, usually described as the yield curve.

Trade Date

This is the date on which a trade is performed.

Trade Deficit

Trade deficit occurs when a country has more imports than exports. It is an economic measure of the negative trade balance and characterizes an outflow of domestic currency to foreign markets.

Trading

The buying or selling of any goods, services and instruments with other parties. Forex trading could be defined as the speculation on the change in rate of foreign currencies.

Trading Desk

Trading desks are also known as 'dealing desks'. It is where the selling and buying transactions take place and can be found in banks, finance companies, etc. it can provide traders with instant execution of their orders.

Trading Platforms

A software application where a client can give an order to execute a transaction on the customer's behalf. FXCC-MT4 (MetaTrader 4) is an example of a trading platform.

Trailing Stop

Trailing stop is used to protect the gains occurred from a specific trade by maintain a trade opened and allowing the continuation of the gain (profit) for as long as the price is moving in the desired direction. It is not set on a single amount but a specified percentage.

Transaction

This is buying, or selling of, for example, a foreign exchange amount resulting from the execution of an order.

Transaction Cost

This is the cost of buying, or selling a financial instrument.

Transaction Date

This is the date on which a trade occurs.

Transaction Exposure

When companies are participating in international trade, the risk they are facing is the transaction exposure, in case that the currency exchange rates will alter after the entity has entered into financial commitments.

Trend

The direction of the market or the price, usually related to the words: "bullish, bearish, or sideways" (ranging) and can be short term, long term or immediate trends.

Trend line

This is a form of technical analysis (an indicator), also referred to as linear regression. Trend lines can work as simple statistical tools, discovering trends by plotting the most appropriate line across the: lowest, highest, or closing and opening prices.

Turnover

Turnover is similar to the volume definition and represents the total money value of all the transactions that were executed within a specific time period.

Two-Way Price

It is the quote that indicates the bid and ask price in the foreign exchange market.

U
Uncovered Position

It is a term for an open position.

Under Valuation

When the exchange rate for a currency is below its purchasing power parity, it is considered to be undervalued.

Unemployment Rate

The percent of the labor force that is currently out of job.

Unrealized P/L

It is a term for the real time profit or loss given at the current exchange rate. For example, if the client decides to go log for a specific currency pair, he/she will need to sell at the bid price and the unrealized P/L maintains until the given position is closed. Once closed, the P/L will be either added or deducted from the amount left on deposit, in order to obtain the new cash on deposit amount.

Uptick

This is the new price quote that is at the higher price versus the preceding quote.

US Prime Rate

The interest rate used by the US banks to lend to their customers or prime corporate traders.

USD

This is the legal tender of the United States of America, represented as USD when conducting foreign exchange transactions.

USDX, U.S. Dollar Index

The dollar index (USDX) measures the value of the U.S. dollar versus the value of a basket of currencies of the U.S.A.'s significant trading partners. Currently, this index is calculated by factoring in the exchange rates of the six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. The euro has the most weight versus the dollar in the index, constituting 58% of the weighting value, followed by the yen with circa 14%. The index started in 1973 with a base of 100, values since then are relative to this base.

V
V-Formation

It is a pattern referred to by technical analysts, where it is looked as a signal of a trend reversal.

Value Date

It is the date when the exchange of payments between counterparts of a financial transaction takes place. The maturity date for spot currency transactions is normally two (2) business days from when the position is opened.

VIX

VIX is a ticker symbol for the CBOE Volatility Index, a popular measure of the implied volatility of SPX index options; the VIX is calculated by the Chicago Board Options Exchange (CBOE). If the VIX reading is high then investors and traders traditionally believe that the risk of trading is elevated; that the main equity markets may be in a transition period. The VIX provides us with a weighted thirty day standard deviation of annual movement in the SPX. For example, a reading of 20% would expect a 20% move, up or down, during the next twelve months.

Volatility

Defined as the measure of price fluctuation, which can be measured by using standard deviation or variance between returns of the same instrument.

Volume

Calculation of the total amount of trading activity of a particular: equity, currency pair, commodity, or index. Sometimes it's also considered as the total number of contracts traded during the day.

VPS

Defined as a "virtual private server". Dedicated access to a remote server, which allows traders to load and operate their EAs remotely, enabling them to trade 24/5 at reduced latency, without needing to have their personal computers switched on. The service through FXCC is provided by BeeksFX.

W
Wedge Chart Pattern

This pattern signals the reverse of a trend, currently formed within the wedge. Wedges are similar to triangle shape, having support and resistance trend lines. This chart pattern is a long-term pattern which shows a narrowing price range.

Whipsaw

Defined as a condition of a highly volatile market, in which a sharp price movement is then quickly followed by a sharp reversal.

Wholesale Money

It represents the occurrence when money is borrowed in large quantities from financial institutions and banks, rather than small amounts directly from small investors.

Wholesale Price Index

It is the price of a representative basket of wholesale goods and a measurement of change in price in the manufacturing and distribution sector of the economy. Often leads the consumer price index by 60 to 90 days. Food and industrial prices are often listed separately.

Working Day

A day when the banks in a currency's financial center are open for business, for example, a bank holiday in the US, such as Thanksgiving day, would mean that it is NOT a working day for any USD based quoted pair.

World Bank

It is an international financial institution comprised of members of the IMF whose assist in the development of member states by making loans where private capital is not available.

Writer

Known as the grantor of the trade or the seller of a currency position.

Y
Yard

A rarely used slang term for a billion.

Yield

Defined as the return on capital investment.

Yield Curve

It is a line which plots the interest rates in a certain point in time where instruments have same credit quality but shorter or longer maturity dates. It is used to provide an idea of the economic activity expected in the future, as well as interest rate changes.

YoY

Year-on-year. Abbreviation used for calculating the percentage change in indices over an annual/yearly period.

RISK WARNING: Trading in Forex and Contracts for Difference (CFDs), which are leveraged products, is highly speculative and involves substantial risk of loss. It is possible to lose all the initial capital invested. Therefore, Forex and CFDs may not be suitable for all investors. Only invest with money you can afford to lose. So please ensure that you fully understand the risks involved. Seek independent advice if necessary.

RISK WARNING: Trading in Forex and Contracts for Difference (CFDs), which are leveraged products, is highly speculative and involves substantial risk of loss. It is possible to lose all the initial capital invested. Therefore, Forex and CFDs may not be suitable for all investors. Only invest with money you can afford to lose. So please ensure that you fully understand the risks involved. Seek independent advice if necessary.

FXCC does not provide services for United States residents and/or citizens.

FX Central Clearing Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC), under CIF Licence Number 121/10 and operates under the EU Markets in Financial Instruments Directive (MiFID). FX Central Clearing is on the FSA(UK) Register (Reference Number 549790) and EEA Authorised.

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