Industry’s most common terms at a glance.
The Abandoned Baby is a three-bar reversal candlestick pattern, formed by three candles: one doji and two candles with real bodies. This pattern can be expressed as either a Bullish Abandoned Baby or a Bearish Abandoned Baby. Both patterns signify a rapid shift in the market price.
Absolute drawdown is the decrease of the initial deposit amount in a trading account to zero, after a series of unsuccessful trades.
Account history is a report that keeps track of all the trading activity that takes place within an account.
An account statement report is a record of all the transactions made in a trading account within a specific period.
The account balance shows the total amount of money you have in your trading account. It is only affected when you deposit more funds in your account, close a position, or leave a position open overnight.
The accumulation/distribution indicator uses volume flow and asset price to determine whether an asset is being accumulated or distributed. It can show how supply and demand can affect price.
The accumulative swing index is a trendline indicator used to measure long-term trends in asset prices to determine possible buy or sell signals. It uses the asset’s opening, closing, high and low prices.
Actionary waves theory is a technical analysis method. It is based on the idea that the market forms the same kinds of waves or patterns on a shorter timeframe as on a longer timeframe. These patterns could be indications as to which direction the market may move in next.
Also known as the ADP Jobs Report, the ADP National Employment Report is a monthly national report tracking the level of nonfarm private employment in the US. It is considered a preview of the Bureau of Labor Statistic’s employment situation report.
The advance/decline index, also known as the advance/decline line or A/D index or line, is a breadth indicator representing the progressive difference between the number of climbing and falling stocks in an index. An increasing A/D index indicates the market is gaining momentum while a declining value indicates the market is losing momentum.
Algorithmic trading involves automated pre-set trading instructions and rules. The trader attempts to make trading decisions by taking advantage of the speed and accuracy of a preset code that executes trading orders.
Alligator is a technical indicator that uses smoothed moving averages. It can help the trader read trading signals and confirm the presence of a trend and its direction. It is called the alligator because it involves three overlaying lines on a chart, that altogether represent the mouth of the animal.
The term Altcoin is short for “alternative coin” and refers to any cryptocurrency other than Bitcoin.
An analyst is an individual who examines the market through fundamental or technical analysis. Market analysis usually involves studying relevant financial data and conditions affecting the market.
Currency appreciation refers to the rise in the value of one currency against another. Currency appreciation can occur because of multiple reasons including government policies, trade balances, interest rates and more.
Arbitrage refers to buying and selling a financial asset at the same time at two separate prices to possibly benefit from price differences. The trader places an equal and opposite order on the same asset to possibly capitalize on the difference with minimal risks.
The ascending trend line refers to a bullish chart pattern with two or more higher lows connected with a straight line, creating an upward sloping trend line.
The Asian session is the first trading session of each day and is considered to run between 11:00 pm and 08:00 am GMT.
The ask price is the price at which a trader accepts to buy a financial asset.
The ask rate is the lowest price at which a seller is willing to sell a security.
The term “asset” refers to a commodity, cryptocurrency, currency pair, index, or stock. It is the financial instrument on which the price of a derivative, such as a contract for difference (CFD), is based.
Asset allocation involves apportioning the assets in a portfolio according to a person’s risk tolerance goals, and investment horizon to balance risk and reward.
At the Money, also known as ATM, refers to a trade breaking even. No profit or loss is made.
All time high also known as ATH is the highest price an asset has ever reached on the market breaking all past records.
Average true range is an indicator used for technical analysis. It measures the volatility of an asset on average, within a specific timeframe.
An attorney in charge is an individual who is authorized to act on behalf of another trader.
“Aussie” is a popular nickname for the Australian dollar or AUD – the Commonwealth of Australia’s official currency. Sometimes “Aussie” is used to refer to the AUDUSD (Australian Dollar vs US Dollar) currency pair.
Automated trading systems automatically place buy and sell orders on electronic exchanges based on a predefined set of rules.
“Average hourly earnings” refers to an average of the amount of money employees make per hour in the US for a specific month.
Average directional movement index is a technical analysis indicator that measures the strength of a trend. It helps traders determine whether they should take a long or short position or open a trade at all.
Awesome oscillator is a technical indicator of market momentum plotted above and below a zero centerline as a histogram of the average of two simple moving averages – one of recent momentum and another one covering a longer period in the market. It can be used to forecast potential trend direction or trend reversal.
Account Balance is the amount of money a trader has in their trading account.
Balance of trade (BOT) is a country’s value of exports minus the value of its imports. The balance of trade can be used to gauge the relative strength of a country’s economy.
Bank Of International Settlement also known as BIS is an international financial institution that acts as a bank for central banks. It is dedicated to promoting international monetary and financial stability through cooperation.
Bank interest rate is the interest rate charged by a central bank to its domestic commercial banks when lending them money.
A bar chart consists of multiple price bars showing an asset’s highest and lowest prices for a given period. The bars are placed next to each other making up a chart – a visual representation of the asset’s price movements.
The barrel is a unit of volume amounting to 42 US gallons and it is used for measuring the amount of Brent oil, Crude oil, and other petroleum products. The price of oil is defined per barrel while the barrel can also be used to define contract sizes when trading oil.
A base currency is a currency that appears first in a forex currency pair.
Base rate is the interest rate charged by a central bank to its domestic commercial banks when lending them money.
Also known as bp, bps or bips, it is 0.01% or 0.0001 or 1 percent of 1 percent. It is usually used to refer to interest rate changes which are below one percent.
A currency basket is a group of currencies with various weightings. It can be used by monetary authorities such as central banks to help determine the value of their currency.
A bear is a trader who’s pessimistic about the markets and expects prices to drop from recent highs.
A bear candle is a red candle with a close lower than the open price.
A Bear Market is a state in which the asset prices in a market have fallen by 20% or more.
Bearish refers to the negative sentiment of expecting market prices to fall.
A bearish engulfing pattern is a technical chart pattern signaling lower prices to come. Traders consider this to be a bearish reversal pattern. It includes 2 candlesticks – a smaller up candle followed by a larger down candle that “engulfs” the first candle.
Bid is the amount of money for which a trader is willing to sell a security.
Bid/Ask spread refers to the difference between the ask and bid price of an asset.
The bid-offer spread refers to the difference between the ask and bid price of an asset.
“Binary options” is a type of investing in which investors can only choose between two possibilities. They can forecast whether the price of an asset will exceed or drop below a specified amount and either receive a pre-determined amount of money or nothing at all.
Bitcoin is a decentralized digital currency and the largest cryptocurrency by market cap.
A block is a space in a blockchain where transaction information is encrypted and permanently stored. Blocks work as permanent records of information that cannot be modified or removed.
A blockchain is a system in which a secure and decentralized digital record of transactions is kept, duplicated, and shared across a large network of computers on the system. This makes the information difficult or impossible to alter or remove.
Blue Chip or Blue-Chip stocks refer to the shares of large companies that have exceptional reputation. Coca-Cola Co. and Boeing Co. are two examples of blue-chip stocks.
The term “Bollinger Bands” refers to a technical analysis tool and a volatility indicator. Bollinger Bands can measure volatility, can be used as indicators for levels of support and resistance and can generate oversold or overbought signals. The bands comprise an upper and a lower band, plotted above and below a simple moving average.
A bond is a financial debt instrument that involves lending money to an institution and getting repaid with the principal and a predefined interest upon the maturity date.
Bond yield is the expected earnings an investor realizes on a bond. It is expressed as a percentage or as an interest rate.
A bottom is a significant low on a price chart that can signal the end of a downtrend.
Break-even is a point of zero-profit / zero-loss at which a trader neither makes nor loses money. A trader closes the position at the price at which they entered it.
A bearish breakaway is a five-candle formation that occurs during a bearish reversal. A long green candle appears first. The second candle is green and opens above the previous closing price creating a gap. The third and fourth candles also open above the previous closing price. The last candle has a long red body.
A bullish breakaway is a five-candle formation that occurs during a bullish reversal. A long red candle appears first. The second candle is red, and opens below the previous closing price creating a gap. The third and fourth candles also open below the previous closing price. The last candle has a long green body.
A breakdown occurs when the price of an asset falls below an identified support level signaling possible further drops.
A breakout occurs when an asset’s price climbs above a resistance area or drops below a support area.
Brent Crude also known as Brent oil is a light-sweet crude oil blend drilled out of the North Sea. Its price is considered as a benchmark for other oil prices.
A broker is a firm or an individual that executes buy and sell orders on behalf of retail clients or financial and commercial institutions.
A bull is a trader who is optimistic about the markets and expects prices to rise.
A bull candle is a green candlestick that reveals positive sentiment. The close of a bullish candlestick is higher than its open price.
A bull market is a condition in financial markets during which asset prices go up or are expected to climb higher.
“Bullish” is used to talk about rising prices in the financial markets, or about the optimistic view that asset prices will go up.
The bullish engulfing pattern includes two candlesticks, and it is a reversal pattern that appears in a downtrend. The first candle has a small body and short wicks while the second candlestick has longer wicks and a bigger real body that “engulfs” the previous candle’s body.
A bullish reversal occurs when a bearish market – a market in which prices keep falling for a prolonged period of time – starts to move in the opposite direction.
Bundesbank is the Federal Republic of Germany’s Central Bank.
Business climate is the overall economic environment in a financial system which pertains to the operational and political business activity within an industry or a group of enterprises. Business climate surveys are usually conducted to measure the state of a territory’s business environment on a monthly or yearly basis.
Business confidence expresses companies’ expectations based on survey data for finished goods, orders, and production. The business confidence index can also indicate possible growth and forecast fluctuation in economic activity.
A buy limit order is an order that allows you to purchase an asset at a specified price or below it.
A buy order, also known as purchase order, is an instruction to a broker to buy a certain number of assets at a specified limit price.
Buy–side is part of the financial markets that includes investing institutions like insurance firms, mutual funds, pension funds or hedge funds which buy securities with the intention of generating profit either for their own accounts or for investors.
C
Cable is used to refer to the exchange rate between USD and GBP, or just the British pound.
CAD is the currency abbreviation that refers to the Canadian dollar, also known as the “loonie”.
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) is a composite indicator. It measures the overall activity of the manufacturing sector for China. It is considered a leading indicator for China’s economy and is closely watched by investors every month. A reading below 50.0 indicates a declining economy while a reading above 50.0 indicates an expanding economy.
Candlestick charts contain multiple candlesticks showing the open, close, high, and low prices of a financial asset for a specific period. The charts are used by traders to forecast possible price movements based on previous patterns.
The capacity utilization rate expresses the percentage at which an organization achieved its production’s full potential. Any number below 100% signals that an organization has produced less than the capacity it can reach. The Fed publishes capacity utilization rates for the US economy every month.
Capital expenditure or CapEx refers to the money a government spends on the development of long-term assets including building roads, railways, health or education facilities. Capital expenditure can also refer to the money spent on fixed assets or on investments that could generate profits or dividend in the future.
Capital gain is the gain you receive once you sell an asset for a higher price than what you bought it for.
Capital loss is the loss you incur once you sell an asset for a lower price than what you bought it for.
A carry trade in forex occurs when a trader tries to profit from the interest rate differential between two currencies. Traders buy a high yielding (high-interest) currency against a low yielding (low-interest) currency to receive the interest rate difference between the two currencies from their broker.
Carry-over charges are finance related charges referring to the storage of commodities or forex contracts. In CFD trading, it refers to the rollover or swap fees.
Cash flow refers to the total sum of money that moves in and out of a business.
Consumer Confidence is a survey conducted and released by the Conference Board and it reflects consumer attitudes and confidence. It measures the degree of optimism or pessimism consumers feel about a country’s economic activity and their own personal financial situation. The Fed highly regards this report which could be a determining factor in shaping the US monetary policy.
A central bank is a public financial institution in charge of a nation or a group of nations’ currency. It controls the currency supply by issuing banknotes and coins. It is also responsible for setting the official interest rate.
Central Bank intervention refers to the selling or buying of a currency in the forex market by its central bank. The central bank is looking to increase or decrease the value of its currency against another currency.
CFD stands for Contract for Difference. Contracts for Difference are financial contracts that allow traders to speculate whether the price of a financial instrument will go up or down.
Trading channels or price channels refer to a technical analysis concept. Traders draw a trading channel on a chart by adding parallel trendlines that connect the support and resistance levels within which an asset trades at the time. Trend channels and envelope channels are popular with technical analysts as they often use them to identify optimal levels at which to buy or sell a specific asset.
A trading chart is a graphical representation of an asset’s price that can help traders decide when to enter or exit a position. Bar charts, line charts, point and figure charts, market profile and candlestick charts are some of the most popular types of charts.
A chart pattern is a graphical depiction of an asset’s price movement formed by lines that connect common price points such as highs or lows, during a given period of time. Patterns lie at the core of technical analysis and traders use them to forecast the future movement of an instrument’s price.
Chartists are traders that use technical analysis when they trade. They analyze charts or graphs depicting an asset’s historical prices to forecast the asset’s future movement.
CHF is the abbreviation for the currency of Switzerland – the Swiss franc.
A choppy market is a market that moves sideways with no clear direction. Prices swing up and down and there is no clear progress.
The Claimant Count records the number of individuals who claimed unemployment-related benefits in the UK. It’s a key indicator for unemployment in the UK.
Cleared funds refers to the money in an account that’s available for immediate use or withdrawal.
The MT4 client terminal is a multifunctional window on the Metatrader 4 platform through which traders can control their trading, view their account history, get informed about the latest news, set up alerts, use the internal mail and system journal.
In CFD trading, a closed position refers to a trade that is no longer active and thus eliminated from a trader’s portfolio.
Closing market rate is also known as closing price and it is the final price at which an asset is traded before the market closes.
Closing price is the last price an asset traded at during a trading session.
CNY is the abbreviation for the national currency of People’s Republic of China – the Chinese Yuan Renminbi.
Collateral is an asset a borrower offers a lender as loan security. In CFD trading, you don’t have to pay the full underlying value of a contract, you can use a deposit margin – a percentage of the overall value – as collateral.
Commission is a transaction fee the broker charges the trader.
The Commitment of Traders (COT) report is a weekly report released by the Commodity Futures Trading Commission (CFTC). The report shows how futures traders are positioned in the market and traders can use the COT report to help determine whether they should take short or long positions.
A commodity is a physical asset, usually used as raw material to produce other goods, that can be traded on the commodity markets. Oil, and metals like gold, silver, platinum, and palladium are examples of commodities.
Confirmation is used by traders who perform technical analysis, and it refers to using an additional indicator or indicators to support a trend suggested by one indicator.
The Consumer Price Index (CPI) shows the change in prices for a market basket of goods and services. The CPI, also known as the cost-of-living index, measures inflation in food, clothing, housing, energy, transportation, medical care, education, and entertainment – sectors in which price changes will affect everyday living expenses for consumers.
Continuing jobless claims is a weekly US report released by the US Department of Labor that measures the number of US residents who have filed for unemployment benefits. This report only counts unemployed individuals who have already been receiving benefits.
In trading, a contract could refer to Contract for Difference (CFD). Contracts for Difference are financial contracts that allow traders to speculate whether the price of a financial instrument will go up or down.
Contracts for Difference are financial contracts that allow traders to speculate whether the price of a financial instrument will go up or down.
Convergence is the process of futures contract prices and spot prices moving towards each other as the delivery date nears.
Conversion rate, often used in forex markets, shows what amount of a specific currency needs to be exchanged for the equivalent value in another currency.
The Core Consumer Price Index is a US report that tracks the changes in goods and services’ prices, excluding food and energy.
The core durable goods orders refer to a monthly US report that measures the change in the overall value of new orders for durable manufactured goods. The report excludes transportation items, and a higher reading shows that the manufacturing activity has risen.
A corrective wave is a wave moving opposite the trend and it is a concept appearing in the Elliot Wave Theory.
In trading, correlation is a statistic that shows the rate at which two assets change together. Correlations between assets can be positive – when they move together – or inverse – when they move in opposite directions.
The cost-of-living index refers to the Consumer Price Index (CPI) which measures the change in prices for a market basket of goods and services. The CPI measures inflation in food, clothing, housing, energy, transportation, medical care, education, and entertainment – sectors in which price changes will affect everyday living expenses for consumers.
In finance, cover refers to taking action to decrease the risk exposure of a position, an investment, or a portfolio.
Crack spread is the difference between the price of a barrel of crude oil and its petroleum by-products.
A cross currency pair is a forex pair that does not include the US dollar.
A cross rate refers to any currency pair which doesn’t include the US dollar.
Crude oil is unrefined petroleum that can be extracted from the earth using large drills. Economists consider it the most important commodity in the world, and it is traded in global markets.
Crude oil inventories refer to the stockpile of excess oil supply usually maintained by governments to keep in reserve. Inventories offer useful information on the commodity’s supply and demand, and they can affect its prices.
A cryptocurrency is a virtual currency. Cryptos can often be decentralized networks based on blockchain technology. The main features of cryptos include using cryptography for security and theoretically not being at risk of government manipulation as they are in general not issued by central authorities. Bitcoin and Ethereum are well-known cryptos.
“Cup and handle” is a price pattern on an asset’s price chart that looks like a cup and a handle. It’s considered a bullish signal and it could take between a few days to a year or more for the pattern to fully form.
In short, currency is money issued by a government. It’s banknotes or coins used as a generally accepted method of payment for goods and services within an economy.
A currency basket is a set of currencies with different weightings. The aggregated value of the selected currencies could be used by monetary authorities to determine the market value of another currency.
A currency pair is a price quote between two different currencies. The value of the first currency – the base currency – is quoted against the price of the second currency – the quote currency. The quotation shows how much of the quote currency is needed to buy one unit of the base currency.
Currency trading or forex trading or foreign exchange trading refers to the buying and selling of currencies in the forex market with the purpose of making a profit.
The Cyprus Securities and Exchange Commission (CySEC) is a public legal entity and the financial regulatory body of Cyprus.
E
F
G
R
Risk Warning: Trading our products on margin involves substantial risk, and you are likely to lose all the capital you have invested. These products may not be suitable for all individuals, so it is essential to comprehend the associated risks thoroughly. Kindly refer to our Risk Warning, which is accessible here.
Disclaimer: The information provided in this material is meant for general informational and educational purposes only and should not be construed as investment or financial planning advice. We do not guarantee the accuracy or completeness of this information. TradeFx Pte. Ltd. disclaims any responsibility for any actions taken based on these comments and any resulting consequences. The views and opinions expressed in this content belong to our educators and do not necessarily represent the official policy or position of TradeFx Pte. Ltd.
TradeFx Pte. Ltd. has the option to utilize its associated entities, such as ABS Advanced BackOffice Services Limited and/or TradeFx Pte. Ltd. as payment processors acting on behalf of the Company. Additionally, the Company may enter into agreements with third parties to process or facilitate transactions on its behalf. In doing so, the Company may share relevant information with these related entities or any other company within the same group if such information is reasonably necessary to deliver products or services to its clients.
Copyright ©2025. TRADE FX PTE. LTD. All Rights Reserved.