Forex terminology

Forex Brokers  :

Forex Brokers are those people who make their living by connecting Forex buyers with Forex sellers and vice versa, usually charging a commission or fee for the services they render.  Many of these brokers charge a spread, which is the difference between the selling and buying price of a combined pair in Forex trading.  This is the usual manner in which Forex brokers make money through their services.
In another meaning Broker : is an individual/firm that bring buyers and sellers together for a fee/commission.
Bear Market (buyers ) : is a market in which prices are declining.
Bull Market ( sellers ) : is a market in which prices are rising.
Market Maker : is a dealer who quotes both bid and ask prices, hence makes a two-sided market for any financial instrument.
Ask Rate : is the rate at which a trader can buy a currency that is for sale.


Cross Rate : is the exchange rate between any two currencies that are not of the country in which the currency pair is quoted. For example, in the U.S., a GBP/JPY quote would be considered a Cross Rate. The same quote would not be a Cross Rate in either the U.K. or Japan.
Base Currency : is the currency in which other currencies are quoted in a pair. Usually the U.S. dollar is considered the ‘Base Currency’.
Bid/Ask Spread : is the difference between the bid and offer price.
Rate : is the price of one currency in terms of another.
Risk : is an exposure to the chance of loss.
Short Position : is a position that increases in value if the market prices decrease.
Spread : refers to the difference between the bid and offer prices for a currency pair.
Stop Loss Order : is an order in which an open position is automatically liquidated at a specific price. Stop Loss Order minimized potential losses if the market moves in the opposite direction of the investor’s position.
Swap : is the sale and purchase of a certain amount of a certain currency at a forward exchange rate.
Technical Analysis : is an analysis of historical market trends in an effort to forecast future market movements.
Big Figure : is a term used by dealer and/or brokers. It refers to the first few digits of an exchange rate.
Clearing is a term used to refer to a process of settling a trade.
Commission : is the fee that is charged by a broker/dealer.
Confirmation : is a document that states the terms of a transaction.
Contract : is the standard unit of trading.
Currency : is a unit of exchange. Any form of money that has been issued by a government/central bank is a currency. Currencies are used as a medium of exchange, i.e. they are used as a basis for trades.
Day Trading : are trades in which positions are opened and closed on the same day.
Dealer : is an individual/firm that take one side of a position hoping to make a profit by closing out the position in a following trade with a different trader.
Depreciation : is a fall in the value of a currency.
Foreign Exchange, Forex, FX : is the simultaneous purchase or sale of one currency against the purchase or sale of another.
Forward : is the predetermined and agreed upon exchange rate for the settling of a transaction at some agreed future date.
Fundamental Analysis : is the analysis of economic and political information as it aims to determine future market movements.
Inflation : is an economic condition in which the prices of goods rise, hence decreasing the purchasing power of consumers.
Initial Margin : is the deposit given to a broker/dealer; it is the collateral required to enter into a position as a guarantee on future performance.
Limit Order : is an order that sets restrictions on the amount of profit and loss it can make.
Liquidity : is the ability of a market to accept large transaction without it impacting the stability of its prices.
Long Position : is a position that increases in value in value if market prices increase.
Margin Call : is when the broker/dealer request additional collateral to guarantee performance on a position that has moved against the investor.
Maturity : is the date in which a financial instrument is expired or a transaction is settled.
Offer : is the rate at which a dealer is willing to sell.
Open position : is a deal that has not yet been settled with a physical payment.
Overnight Trading : are trades in which positions remain open until the next day.
Pips/Points : is one unit of price change in the bid/ask price of a currency. It is the last digit in a rate; the fourth decimal place in an exchange rate.
Position : is the netted total holdings of a given currency.
Quote : is an indicative market price, normally used for information purposes only and not for deals.
Transaction Cost : is the cost of making a financial transaction whether it is buying or selling.
Appreciation : is when a currency’s value grows stronger.
Roll-Over : is a process in which the settlement of a transaction is pushed forward to another date.