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Trading Dictionary


record of financial transactions for an asset or individual, such as at a bankbrokerage, or credit card company.

Account Balance

The net of debits and credits for an account at the end of a reporting period.

Account Statement report

This report gives the client all the debit and credit activity that occurs in the client account over a user specified time period. Account Statement report therefore is a summary of all transactions on a daily basis.

Account Value

The up-to-date mark-to-market value of a customer’s account given the amount of money deposited and changes as a result of profits and losses from existing and closed out positions, credits and debits from daily rollovers, and charges from such things as commissions, transfer fees or bank related fees if applicable.


An individual or firm authorized to act on behalf of another (called the principal), such as by executing a transaction or selling a service.

Aggregate risk

Size of exposure of a single customer to a market related movement.


All clients must read and sign the Alpha Capital International Customer Agreement before opening an account with Alpha Capital International.

American Option

An option that can be exercised any time during it is life. Options that can be exercised only on maturity are called European Options. And options that can be exercised at selective dates between inception and maturity date are called Bermuda Options.


American Stock Exchange.

Announcement date

The date at which a company will announce the details regarding an issue of debt or equity, dividends, stock split etc.

Annual report

A report from the directors on the company’s financial situation at the end of a fiscal year, together with the balance sheet, profit and loss account, statement of source and application of funds, and the auditor’s report, all prepared for the stockholders of the company each year.

Application Platform

The software program used for trading purposes is Metatrader4.


The simultaneous purchase and sale on different markets, of the same or equivalent financial instruments to profit from price or currency differentials. An arbitrage trade can generate positive profit at no risk – in simple terms, it is a risk-free profit.


The Ask price is the lowest price a dealer or broker will sell a financial instrument such as Forex, Crude Oil, Gold, Silver, Futures Indices and currencies.

At best

An instruction to a broker or dealer to get the best price or rate that he/she is able to at that time in the market.

At par

bond or preferred stock which is selling at a price equal its face (or parvalue.

At the market

A buy or sell order that must be executed at the best price currently available in the market. These are also known as market orders.

At the money

condition in which the strike price of an option is equal to (or nearly equal to) the market price of the underlying security.

Away from the Market

On a limit order, a buy order which is lower than the current market price, or a sell order which is higher than the current marketprice. Such orders are held to be executed later, unless they are of the fill or kill type.

Back Office

The customer support area in charge of Account setup, funds transfers into and out of the customer account, trade reconciliation issues, customer inquiries, and other activities that do not directly involve the buying or selling of a currency pair.

Balance of payment

An accounting record of all transactions made by a country over a certain time period, comparing the amount of foreign currency taken in to the amount of domestic currency paid out.

Bank line

Line of credit granted by a bank to a customer, also known as a ” line”.

Bank of Japan or BOJ

The Central Bank of Japan.

Bank rate

The rate at which central banks lend funds to national banks

Bank wire

An electronic message system allowing major banks to communicate various actions or occurrences regarding client accounts. The wire represents a secure computerized messaging system that sends account information, notifications and transaction requests between banks.


Inability to pay debts.

Base currency

It is the first currency in a currency pair. For example, EURUSD the base currency is the Euro. In a currency exchange, theexchange rate is quoted as the units of one currency in terms of a single unit of a base currency.

Basis Point

Smallest measure of quoting the yield on a bondnote, or other debt instrument One basis point is equal to one hundredth of one percent (0.01%).


An investor who believes that the price of an investment product is going to fall.

Bear Market

A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining.

Best-Efforts Basis

The execution of an order at the next available price taking into consideration the volume available to buy or sell at that price and the quantity and volume of orders that precede the customer’s order.

Bid/Offer Spread

The difference between the current bid and the current ask (in over-the-counter trading) or offered (in exchange trading) of a given security; also called bid/ask spread.

Blue Chip

A nationally recognized, well-established and financially sound company. Blue chips generally sell high-quality, widely accepted products and services.


A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.

Break out

A technical term used by chartists to denote a break of a support, a resistance level, or any technical formation.

Breakeven point

The point at which gains equal losses.


An individual or firm which acts as an intermediary between a buyer and seller, usually charging a commission and bid/offer spread. For securities and most other products, a license is required.


The fee, reward, or commission, given or changed for transacting business as a broker


An investor who believes that prices of particular investment products are going to rise.

Bull Market

An extended period of generally rising prices in an individual item, such as stock or gold; a group of items, such as commodities or oil stocks; or the market as a whole.


Goldsilver, platinum, or palladium, in the form of bars or ingots. Some central banks use bullion for settlement of internationaldebt, and some investors purchase bullion as a hedge against inflation.


The Central Bank of Germany.

Business Day

Any day on which commercial banks are open for business other than Saturday or Sunday in the principal financial center of the country in whose currency a position is taken.

Buy Limit

Specifies the highest price at which the purchase of the base currency can be executed. The limit price in a buy limit order should be below the current dealing ask price.

Buy Stop

A buy stop is an order that is placed ABOVE the current dealing Ask price and is not activated until the market Ask price is at or above the stop price. The buy stop order, once triggered, becomes a market order to buy at the current market price.


In investing terminology, the exchange rate between the U.S. dollar and the British Pound sterling or GBP/USD.

Call Option

An agreement that gives an investor the right but not the obligation to buy a stock, bond, commodity, or other financial instrument at a specified price (strike) within a specific maturity time period.

Capital gain

A capital gain is the positive price difference between what you paid for an investment and what received when you sold that investment.

Capital Markets

A market in which individuals and institutions trade financial securities organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds. Thus, this type of market is composed of both the primary and secondary markets.


The interest cost of financing securities or other financial instruments held.

Cash Market

market in which commodities, such as Forex, goldcrude oil or equities, are bought and sold for cash and delivered immediately. Also called spot market.

Cash Settlement

A settlement method used in certain futures and option contracts whereby, upon expiry or exercise, the seller of the financial instrument does not deliver the actual but transfers the associated cash position based on the price difference.


Chicago Board Options Exchange


Chicago Board of Trade

Central Bank

The national Bank of a country that is responsible for controlling a country’s or regions’ monetary policy. For example, the European Central Bank is the central bank of Europe, the Federal Reserve is the central bank for the United States, the Bank of England is the Central Bank of England and the Bank of Japan is the central bank of Japan.


A Contract for Difference (or CFD) is a contract between two parties, typically described as “buyer” and “seller”, stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. The most popular CFDs are written on Spot Forex, Crude Oil, Gold, Silver, Natural Gas, Futures on Indices and Currencies.


An individual who studies graphs and charts of historical data in an attempt to find trends that will help predict the direction and magnitude of a particular investment product.

Closed or Hedged Position

A transaction to take an opposite position of the current open position thereby getting effectively out of a position and having as a result no market risk. As prices move the position is hedged and therefore generates no profit or loss.

Closing Price

The closing price is the price of a tradable instrument at the time the market closes and is officially designated as the ‘close’.


Chicago Mercantile Exchange


Commodity Exchange of New York.


fee charged by a broker or agent for his/her service in facilitating a transaction, such as the buying or selling of CFDs on Forex, Crude Oil, Natural Gas, Gold, Silver and Futures on Indices.


An electronic or printed notice that describes all the relevant details of a transaction.

Consumer Price Index

Monthly measure of the change in the prices of a defined basket of consumer goods including food, clothing, and transport. Countries vary in their approach to rents and mortgages.


An Over-the-Counter (OTC) agreement to buy or sell a specified amount of a particular currency in return for a specified amount of another currency for settlement on a specified Value Date (normally the Spot Date). The contracted amounts are determined by the foreign exchange rate that the two parties contract to.

Contract Note

Written details of an agreement to buy or sell financial instruments.

Correspondent Bank

The foreign banks representative who regularly performs services for a bank which has no branch in the relevant center, e.g. to facilitate the transfer of funds.

Counter Currency

The second currency in a currency pair. In the Currency Pair EURUSD, the Counter Currency is the USD.

Counter party

The other party in a financial transaction. See also associated counterparties.

Country risk

The risk attached to a transaction by virtue of its association to a particular country. This involves examination of economic, political and geographical factors of a particular country.


The act of performing a transaction that closes out a position.

Credit Risk

The risk that a debtor will not repay; more specifically the risk that the counterparty does not have the currency promised to be delivered.

Cross Currency Contract

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

Currency Pair

The two currencies in a foreign exchange transaction. The “EURUSD” is an example of a currency pair.

Currency Swap

An agreement to swap a series of specified payment obligations denominated in one currency for a series of specified payment obligations denominated in a different currency.

Customer Account Application

The Alpha Capital International application that all clients and customers must fill out and submit for acceptance by Alpha Capital International before a transaction is to take place.

Day Order

Request from an investor to either buy or sell a financial instrument, which, if not cancelled or executed the day it is placed it automatically expires.

Day Trade

A trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day.

Day trader

Traders who take positions in investment products, which are then closed prior to the close of business of the same trading day.

Deal Blotter

A listing of all the deals that were executed over a specified time period, usually the trading day.

Deal date

The date on which a transaction is agreed upon.

Deal Ticket

The primary method of recording the basic information relating to a transaction.

Dealing Desk

Generally speaking, the collection of dealers that facilitate the pricing and execution of customer orders.


Generally speaking a breach of contract.

Delivery date

The final date by which the underlying commodity for a futures contract must be delivered in order for the terms of the contract to be fulfilled.

Delivery Month

The month in which a futures contract expires and delivery of the underlying asset or cash is required.


An expense recorded to reduce the value of a long-term tangible asset. Since it is a non-cash expense, it increases free cash flow while decreasing reported earnings.

Depth of Market

Number of the units of a security that can be traded without causing an appreciable change in its price.


The reduction or elimination of government power/regulatory authority in a particular industry, usually enacted to create more competition within the industry.


A financial contract where the value is derived from an underlying financial instrument such spot FX, Crude Oil, Gold etc. CFDs are therefore derivatives. It is an agreement by the investor to buy or sell the underlying asset in the future at a set price and can be either cash settled or physical delivery.


A deliberate downward adjustment to a country’s official exchange rate relative to other currencies in a fixed exchange rate regime, only a decision by a country’s government (i.e. central bank) can alter the official value of the currency. Contrast to “revaluation”.


The act of releasing all relevant information pertaining to a company that may influence an investment decision.

Discount rate

The interest rate that an eligible depository institution is charged to borrow short-term funds directly from a Federal Reserve Bank.


When two or more averages or indexes fail to show confirming trends.


A portion of a company’s profit paid to common and preferred shareholders. A stock selling for $20 a share with an annual dividend of $1 a share gives the investor a 5% dividend yield.

Dow Jones Industrial Average

The Dow is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing.


A negative change in the rating of a company, country or security.


European Central Bank

Economic Indicator

Statistical data showing general trends in the economy. Those indicators with predictive value are leading indicators; those occurring at the same time as the related economic activity are coincident indicators; and those that only become apparent after the activity are lagging indicators. Examples are unemploymenthousing startsConsumer Price Indexindustrial productionbankruptciesGDPstock market prices, money supply changes, and housing starts. Also called businessindicators.

Employment Rate

The percentage of the labor force that is employed.


Earnings per Share; A company’s profit divided by its number of outstanding shares.


The residual dollar value of a trading account, assuming its liquidation is at the current market price.

Escrow account

Money deposited with Alpha Capital International are deposited in a Bank insured escrow account.

Excess Margin Deposits

Money deposited that is not used for margin against an existing open position.


A physical location where instruments are traded and often regulated. Examples: the New York Stock Exchange, the Chicago Board of Trade.

Execution Only

A broker who buys and sells financial instrument on the instructions of clients but who offers no advice about what to buy and sell. Alpha Capital International is an execution only brokerage firm.

Expiration Date

The date on which the option terminates – seizes to exist.

Expiration Month

The month in which an option expires.

Expiry Date

The last date on which an option can be bought or sold.


The condition of being subjected to a source of risk e.g. market risk (movement of prices in the market), credit risk (the risk that the counterparty will default).

Fast Market

A financial market that has a combination of high volatility and heavy trading.

Fed Fund Rate

The interest rate at which banks lend to each other overnight. This is a closely watched short term interest rate that the Fed controls through open market operations.

Fill or Filled

A deal that has been executed on behalf of an investor’s account given an investor’s order. Once filled, an order cannot be canceled, amended or waived by the investor.

Financial Market

market for the exchange of capital and credit, including the money markets and the capital markets.

Financing Costs

This is the interest the investor pays or receives for every open position he/she carries overnight. This arises because the CFD position are leveraged and going long on gold or oil for example is like borrowing the difference between your deposit and the exposure. For example, a deposit of $1,000 can give you exposure to $100,000. The investor effectively borrows $99,000. If US Libor rate is 1.5% then the interest the investor will pay is approximately $99,000 * 1.5% / 365 = $4.1. This payment amount is then either credited to or, debited from your trading account depending if the investor is long or short.

Fiscal Policy

Government spending and taxing for the specific purpose of stabilizing the economy.

Fixed exchange rate

Official rate set by the country’s or region’s monetary authorities.


A method of determining rates by normally finding a rate that balances buyers to sellers. Such a process occurs either once or twice daily at pre-defined times. Used by some currencies particularly for establishing tourist rates.

Floating exchange rate

An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities.


Federal Open Market Committee

Foreign Exchange

The term “Foreign Exchange” generally refers to off exchange trading in foreign currency. It may also refer to currency trading on exchanges such as the IMM at the Chicago Mercantile Exchange.


An over-the-counter market where buyers and sellers conduct foreign exchange transactions. Contracts for Difference (CFD) is such a Forex market.

Forward / Forward

A forward / forward deal is one where both legs of the deal have value dates greater than the current spot value date.

Forward Deal

A deal with a value date greater than the spot value date.

Front Office

The activities carried out by the dealer, normal trading and dealing activities.


The FSA (Financial Services Authority) is an independent, non-governmental body that regulates the financial services industry in the UK, including most financial services markets, exchanges and firms.

FTSE Index

The FTSE Group (pronounced “footsie”) computes tens of thousands of indices of market performance daily. The most famous stock index of the FTSE Group is the FTSE 100.


The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.


FX is a popular acronym for Foreign Exchange. Foreign Exchange generally refers to off exchange trading in foreign currency.


G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.


The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy.


A significant price movement of a currency, security or commodity between two trading sessions.


Gulf Cooperation Council. It is a political and economic organization involving the six Arab states of the Persian Gulf (Kingdom of Saudi Arabia, Kuwait, United Arab Emirates, Oman, Qatar, and Bahrain).


Gearing effectively allows clients to trade a notional amount that is much bigger that their initial cash deposit. This permits clients to exploit investment opportunities without having to deposit the full amount of capital as they would have done in the cash market to take an equal size position. For example, an investor believes that the price of EUR v USD (EURUSD) will go up and wants to invest USD 100,000. The investor will need to take a long position on EURUSD to take advantage of his view. If he invests in the cash market he will need to invest USD 100,000. Using the Forex EURUSD he can achieve the same exposure by depositing (initial margin) only USD 1,000.


global after-hours electronic trading system.

Going long

The act of buying a currency pair. For example, if a client bought the EURGBP or Gold, he would be “going long” the Euro or Gold respectively.

Going short

The act of selling a currency pair. For example, if a client sold the EURUSD or Crude Oil, he would be “going short” the Euro or Crude Oil respectively.


Earning or profit before deduction of tax.

GSO(Guaranteed Stop Order)

A guaranteed stop loss is similar to a traditional stop loss but whereas a normal stop might suffer from slippage, a guaranteed stop as its name suggests guarantees a certain exit price.
This stop guarantees close a position at a price you specify, should the market move against you, even if there is a gap in the market a GSO will you out at the price you specified , if acts as insurance for your trade and so carries a charge to place one.

GTC Order (Good Till Cancelled)

An order to buy or sell a security at a set price that is active until the investor decides to cancel it or the trade is executed.

Hard Currency

currency in which investors have confidence, such as that of an economically and politically stable country.

Hedging (synonymous to coverage)

A trading strategy designed to reduce investment risk using CFDs on Forex, Gold, Crude Oil, call optionsput options, shortselling, or futures contracts. A hedge can help lock in existing profits. Its purpose is to reduce the volatility of a portfolio, by reducing the risk of loss.

Historical Volatility

The past standard deviation of a security that is used in security analysis. Standard deviation measures the changes in the past price of a security the higher the standard deviation the more volatile the security.


The state of a security or other asset that cannot easily be sold or exchanged for cash. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset.


An organization founded in 1944 to oversee exchange arrangements of member countries and to lend foreign currency reserves to members with short-term balance of payment problems.


International Monetary Market is part of the CME that lists a number of currency and financial futures contracts.

In the Money

For a call option, when the option’s strike price is below the market price of the underlying asset.


A statistical indicator providing a representation of the value of the securities which constitute the index. Indices, other than give the value of the underlying instruments in the Index, often serve as barometers for a given market or industry and benchmarksagainst which financial or economic performance is measured.


The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Initial Margin

Amount of cash or required to be deposited with a broker before engaging in margin transactions.

Initial margin requirement

The minimum margin payment necessary to establish a new open position. Alpha Capital International reserves the right to change the initial margin requirement at it’s sole discretion. The initial margin requirement can be expressed as a percentage (i.e., 2% of EUR position amount) or can be calculated by the leverage ratio. For example, a $100,000 position in USD/JPY would require $1,000 of margin given a 1% margin requirement. Expressed as a leverage ratio, if 1000:1 leverage ratio is used a $100,000 position would require the same Initial Margin ($100,000 / 100 = $1,000).

Interbank Market

The interbank market is the over-the-counter market of dealers that make markets in foreign exchange to one another.


Buy or sell action by a central bank in an attempt to affect the value of its currency. Concerted intervention refers to action by a number of central banks to influence the value of exchange rates.

Intra Day Position

An open position that is usually squared off by the close of the day.

Introducing Broker

A person or legal entity that introduces customers often in return for compensation in terms of a fee per transaction.Introducing Brokers are prevented from accepting margined funds from their clients.

Leading Indicators

An economic indicator that changes before the economy has changed. Examples of leading indicators include production workweek, building permits, unemployment insurance claims, money supply, inventory changes, and stock prices.


Leverage effectively allows clients to trade a notional amount that is much bigger that their initial cash deposit. This permits clients to exploit investment opportunities without having to deposit the full amount of capital as they would have done in the cash market to take an equal size position. See also Gearing above.


London Interbank Offered Rate. A daily reference rate based on short-term interest rates charged among banks in the foreign money market. The maturity of Libor can be 1 day, 1 week, 2 weeks, 1 month, 2 months and up to 12 months. The Libor interest rate can be on different currencies e.g. EUR, USD, JPY etc.

Limit Down

The maximum price decline permitted in one trading session.

Limit Order

A limit order is an investor’s order to buy or sell a specific amount of a currency pair at a specific user defined price. A limit order does not guarantee execution; rather it guarantees only that if execution occurs, it will be at the stated limit price. Note that sometimes the market briefly touches a limit price, only to immediately retreat back away from the limit price level with very little if any volume traded. Under such circumstances the limit order may not have be executed and the limit order will remain in effect, until that time when the order can be executed or until the customer cancels the order. A limit order specifies that execution should be attempted after the market reaches or goes through a set price level – the limit price.

Limit Price

The price that the client specifies when entering a limit order.

Limit Up

The maximum price advance permitted in one trading session.


The condition in the market where there is ample amount of volume to buy or sell.


Any position (long or short) that gets closed not because of an order that the investor gave but because the account run out of cash (equity).

Liquidation Level

The account cash level that initiates the liquidation of the open positions held by the investor at the best price or exchange rate available at that moment in the market. Liquidation occurs when the cash (value) in the account is not sufficient to maintain the current open position(s). A client can prevent liquidation by depositing additional margin into the account, or by closing out existing open position(s).


The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price. Also, liquidity is some time referred as the ability to convert an asset to cash quickly.


The buying of a financial instrument such as a CFD on currency, gold, crude oil, natural gas, silver, futures on indices and currencies with the expectation that the value of the financial instrument will rise.

Maintenance Margin

The minimum margin, which an investor must keep to maintain an open position.


Margin is the amount deposited with a broker in order to be able to trade in leverage positions such as CFDs on Forex and Gold.

Margin Call

A demand for additional funds to be deposited in a margin account to meet margin requirements because of adverse price movements. If additional funds are not provided then the position (whether long or short) will not remain open in the market but it will be liquidated.

Margin requirements

A minimum amount of funds required for each open position held open in clients trading account in accordance with the chosen leverage.


Recording the price or value of a securityportfolio, or account on a daily basis, to calculate profits and losses or to confirm thatmargin requirements are being met.

Market Maker

A brokerage company or a bank that maintains a firm bid and ask price and is ready, willing, and able to buy or sell at publicly quoted prices.

Market Order

An order to buy or sell a chosen financial instrument such as Forex, Gold, Crude Oil, Futures on Indices etc. A Market Order will be executed at the best available price displayed at the moment the user clicks the trade button, but only if the currency price remains within a price range set by the Alpha Capital International.

Maximum Trading Leverage Ratio

Leverage expressed as a ratio, available to open a new position(s). For example, a leverage ratio of 50:1 allows a client the ability to control a $100,000 lot position with $2,000 of margin ($100,000 / 50 = $2,000).

Mid Price

The average of both buying and selling prices.

Moving Average

A way of smoothing a set of price/rate data by taking the average price of data range of values.

Net Position

The difference between total open long and open short positions in a given financial instrument held by an individual.


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


Organization for Economic Cooperation and Development.


The price at which a seller is willing to sell.

Open Interest

The total number of outstanding option or futures contracts that have not been closed out by offset or fulfilled by delivery.

Open Position

A long or short position that is not yet closed. The value of an open long or short position is changing in accordance with the change of the market price of the financial instrument.


Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a given date.


Clients directions either electronically via the Internet Trading Platform, verbally or via an electronic chat application like Live Chat, to enter into a specific foreign exchange contract by buying or selling a specified currency pair now or at a time when the price meets the clients specific requirements.

OTC (Over the Counter)

A negotiated market conducted between buyer and seller. The OTC transaction takes place between two counterparties directly and not via the Exchange. In other words there are no central exchange or meeting place for this market. The underlying financial instrument, however, can be traded on the Exchange. A good example for this is a CFD on Futures Index such Dow Jones. The underlying financial instrument (Dow Jones) trades on the exchange but the CFD trading agreement between two willing trading counterparties takes place outside the exchange i.e. OTC.

OTC Margined Foreign Exchange

Over-the-Counter (Off-exchange) Foreign Exchange markets, in which markets participants, such as Alpha Capital International and Customer, enter into privately negotiated Contracts or other transactions directly with each other for which margin is deposited and pledged against outstanding positions.

Out of Hours Trading

The practice of buying and selling securities during a period of time when the major markets are officially closed.


An open financial positions that the investor chooses not to close it during the day but to carry it over to the next day.

Payment Date

The date on which a declared stock dividend is scheduled to be paid.

Pending Orders report

The pending orders report will show all the pending orders that the client has entered over the user specified dates whether the Pending Order is executed or not. Any pending order that is cancelled by the client will still be displayed, giving the client a full audit trail of the orders.


For any given currency pair is the smallest price movement that can take place. For example the pip for EURUSD is 0.0001 and for USDJPY is 0.01.


collection of investments all owned by the same individual or organization.


The net of the total open positions in a given financial instrument.

Position *

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).


The amount by which a forward rate exceeds a spot rate.


A dealer who buys or sells for his/her own account.

Profit Taking

The closing/unwinding of a position to realize a profit.


Consists of the Bid and Ask for a currency pair.


The high and low transaction prices of a given security or commodity during a given period also called trading range.

Real GDP

Inflation adjusted model of Gross Domestic Product.

Real Time

A real-time quote is one that states the most recent bid or offer.

Regulated Market

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

Resistance Point or Level

A price recognized by technical analysts (chartist) as a price which will usually stop a movement of a foreign exchange rate or any other trading financial instrument from going higher. If a resistance level is “broken”, the technician will conclude that the price movement of the instrument will continue to go higher.


The possibility that actual outcomes may be different from those expected.

Risk Capital

The amount of money the investor is willing to put at risk and, which if lost would not, change the investor’s lifestyle or the investor’s family lifestyle.

Running a position

The act of keeping open positions in hopes of a speculative gain.

S & P (Standard and Poor’s Stock Index)

An index consisting of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large-cap universe.

Same day transaction

A transaction that matures on the day the transaction takes place.

Sector Trading

The term market sector is used in economics and finance to describe a set of businesses that are buying and selling such similar goods and services that they are in direct competition with each other.

Sell Limit

Specifies the lowest price at which the sale of base currency in a currency pair can be executed. The limit price in a sell limit order should be ABOVE the current dealing bid price.

Sell Stop

A sell stop is a stop order that is placed BELOW the current dealing bid price and is not activated until the market bid price is at or below the stop price. The sell stop order, once triggered, becomes a market order to sell at the current market price.

Selling Short

Selling any financial instrument such as CFDs on Forex, Gold, Crude Oil or other instrument with the intention of delivering the instrument or offsetting the difference in cash on the date the transaction is closed.

Settlement Date

The date by which an executed security trade must be settled. That is, the date by which a buyer must pay for the securities delivered by the seller.

Settlement Price

Last price paid for a financial or commodity derivative on any trading day.


Certificates or book entries representing ownership in a corporation or similar entity.


An open position that was created by selling a currency or any other financial instrument. If the investor has sold the EURGBP, the investor is said to be “short” the currency pair (sold the base currency). If the investor bought the EURGBP, he would be long the currency pair, but short GBP. Foreign exchange transactions assume being long one currency and short another.

Short Covering

Buying to unwind a short position of a particular currency pair.

Sophisticated Foreign Exchange Investor

Investor possessing sufficient knowledge, experience and/or capitalization to trade in Foreign Exchange market. The investor has to decide for him/herself if Forex is a suitable investment vehicle for his or her purposes.


Trading in a financial instrument where there is no guarantee that those who trade may not make money. Those who trade for speculative purposes should only risk that capital which is considered risk capital, defined as the amount of which if lost would not, change the investor’s lifestyle.


Refers to a transaction for immediate delivery; spot currency transactions have a value date of 2 business days.


The difference between the Bid price at which you can sell the trading instrument and the Ask price at which you can buy the trading instrument.

Stamp Duty

Taxes on transactions, usually a percentage of total transaction amounts that can be unilateral or bilateral in nature.

Stop Order

An order that becomes a market order when at a specified price level, the stop price, is reached. A sell stop is placed below the market; a buy stop is placed above the market.

Support Levels

The price level which, historically, a stock has had difficulty falling below.


Traditionally, the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have changed. Recently, swaps have grown to include currency swaps and interest rates swaps.


Society for Worldwide Interbank Financial Telecommunication: an international consortium that routes instructions concerning transfer of funds between financial institutions.

Technical Analysis

A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts to identify patterns that can suggest future activity.


The smallest possible movement (up or down) in the price of a security. Also called minimum fluctuation.

Trade Ticket

The primary method of recording the basic information of a trading transaction.


An agreement between a buyer and a seller to buy or sell a financial product such as Forex, Crude Oil, Natural Gas etc. The size of the transaction is specified by the buyer and as such can vary in size.

Treasury Bills

negotiable debt obligation issued by the U.S. government and backed by its full faith and credit, having a maturity of one year or less. Treasury Bills are also called Bill or T-Bill or U.S. Treasury Bill.


The total money value of currency contracts traded is calculated by multiplying size by the number of contracts traded.

Unemployment Rate

Percentage of the civilian labor force which is unemployed. Unemployment rate is a lagging indicator.

Value Date

A future date used in determining the value of a product that fluctuates in price. Typically, you will see the use of value dates in determining the payment of products and accounts where there is a possibility for discrepancies due to differences in the timing of valuation. Such products include forward currency contracts, option contracts, and the interest payable or receivable on personal accounts.

Vanilla Option

A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike.

Variation Margin

Profits or losses on open positions in futures and options contracts which are paid or collected daily.


A statistical measure of the amount of fluctuation in an instrument’s price within a period of time. An instrument with high volatility would have rapid up and down movements in its price. An instrument with very little movement in its price would constitute low volatility.


Long-term certificate issued by a firm giving the holder the right to purchase its securities at a stipulated price (exercise price) in the future. They are similar to call-options but are issued by firms and not by futures exchanges, and have much longer time spans.


Slang for milliard, one thousand million.


The return on an investment expressed as a percentage of the cost of the investment, paid in dividends or interest. Also called rate of return.

Yield Curve

Graph used typically to show yields for different bond maturities, and used for determining the best value in bonds and as aneconomic indicator. Positive (upward sloping) curve indicates an expanding economy whereas a flat or negative (downward sloping) curve indicates a slowing or contracting economy.

Zero Coupon Bond

A bond that is issued at a deep discount from its value at maturity and pays no interest during the life of the bond; the commonest form of zero-coupon security.