Abenomics

Abenomics is the economic policy framework implemented by Shinzo Abe, former Prime Minister of Japan, from 2012 onwards. It aimed to revitalize the Japanese economy

Accrual Swap

An interest rate swap where the exchange of interest payments is based on the difference between fixed and floating interest rates, plus any accrued interest on the notional principal amount.

Aggregate Demand

Aggregate demand refers to the total demand for goods and services in an economy at a given price level. It is influenced by factors like consumer spending, business investment, government spending, and net exports.

Aggregate Risk

The overall risk exposure considering all individual risks within a portfolio or trading strategy.

ALTFX App

Altitude Forex Trading Mobile Application

ALTFX Webtrader

Altitude Forex Trading Web Trader Platform

American Depositary Receipt (ADR)

An American Depositary Receipt (ADR) is a negotiable certificate issued by a U.S. bank that represents shares of a foreign company's stock and allows them to be traded on U.S. stock exchanges.

American Depositary Receipt (ADR)

A certificate issued by a U.S. bank that represents shares of a foreign company's stock. ADRs trade on American stock exchanges in U.S. dollars, making it easier for U.S. investors to buy foreign stocks.

American Option

A stock option that allows the holder to exercise the right to buy (call) or sell (put) the underlying asset at any time before the expiration date.

Appreciation

An increase in the value of a currency relative to another currency.

Appreciation

Appreciation refers to an increase in the value of an asset over time. In the context of currencies, it means the domestic currency becomes stronger relative to foreign currencies.

Arbitrage

Exploiting price discrepancies between identical or similar assets in different markets to generate risk-free profits.

Ask (Offer) price

The lowest price at which a seller is willing to sell an asset.

Asset Value Depreciation

While not as common in short-term trading, depreciation can also refer to a decrease in the perceived value of an asset like a stock or commodity over time. This can be due to various factors such as declining company performance, negative industry trends, or a general market downturn.

Aussie

A slang term for the Australian Dollar (AUD).

Autocorrelation

In trading, autocorrelation refers to the statistical relationship between a time series's current value and its past values. It measures how much a data point correlates with itself at a certain time lag. In simpler terms, it tells you if price movements tend to be followed by similar movements (positive autocorrelation) or opposite movements (negative autocorrelation) after a specific time period.

Average Rate Option

An option contract where the payout is based on the average price of the underlying asset over a specified period.

Balance of Payments

The BoP is a record of all economic and financial transactions between a country and the rest of the world during a specific period. 

Balance of Trade

The BoT is a component of the current account that focuses specifically on the physical trade of goods between a country and its trading partners. A surplus indicates exports exceed imports, while a deficit indicates imports exceed exports.

Balance Sheet

A balance sheet is a financial statement that summarizes a company's or an individual's financial position at a specific point in time.

Bank of Canada (BoC)

The central bank of Canada, responsible for formulating and implementing monetary policy, issuing currency, and overseeing the financial system.

Bank of Canada (BoC)

The central bank of Canada, responsible for issuing currency, setting interest rates, and managing the country's financial system.

Bank of England (BoE)

The central bank of the United Kingdom, with similar responsibilities as the BoC.

Bank of England (BoE)

The central bank of the United Kingdom, responsible for issuing currency, setting interest rates, and managing the country's financial system.

Bank of Japan (BoJ)

The central bank of Japan, responsible for monetary policy and financial system stability.

Bank of Japan (BoJ)

The central bank of Japan, responsible for monetary policy and financial system stability in Japan.

Bear Market

A bear market is a period of sustained decline in stock prices. It's often characterized by pessimism, falling investor confidence, and a decrease in overall market activity.

Bear(ish)

A market sentiment expecting falling prices. A bearish trader believes that asset prices will decline and may take short positions to profit from the decline.

Bid Price

The highest price a buyer is willing to pay for an asset.

Bollinger Bands

Bollinger Bands are a technical analysis volatility indicator with two bands plotted around a moving average. The bands adjust their width based on the volatility of the underlying asset. When the bands contract, it suggests potentially lower volatility or a consolidation period. Conversely, expanding bands indicate potentially higher volatility or a breakout from a trading range.

Bretton Woods

The Bretton Woods System was a system of international monetary management established at the Bretton Woods Conference in 1944.

Bull Market

A bull market is a period of sustained growth in stock prices. It's characterized by optimism, rising investor confidence, and an increase in overall market activity.

Bundesbank (BUBA)

The central bank of Germany. Since the creation of the European Central Bank (ECB), the Bundesbank functions within the Eurosystem.

Bundesbank (BUBA)

The central bank of Germany. Although Germany is part of the Eurozone, the Bundesbank played a prominent role in shaping the European Central Bank (ECB).

Buyer/Taker

The party entering into a trade by buying an asset and assuming the obligation to pay for it.

CA

Client Area

Cable

A slang term for the British Pound Sterling (GBP).

Call option

A contract that gives the holder the right, but not the obligation, to buy a specific asset at a predetermined price (strike price) by a certain date (expiry date).

Candlestick chart

A candlestick chart is a type of price chart that visually represents price movements over a specific time period. Each candlestick depicts the open, high, low, and close prices for that timeframe. The body of the candlestick reflects the difference between the open and close price, while the wicks (or shadows) represent the high and low prices.

Carry trade

An investment strategy that involves borrowing at a low-interest rate in one currency and investing in an asset denominated in a currency with a higher interest rate. The profit comes from the difference in interest rates, but there is also currency risk.

Central bank

The central bank is the government agency responsible for formulating and implementing monetary policy.

Central bank intervention

Central bank intervention refers to actions taken by a central bank to influence economic activity and financial markets.

CME Group

The world's largest and most diverse derivatives marketplace, offering trading in various asset classes including futures and options contracts.

CME Group

The world's largest and most diverse derivatives marketplace, offering trading in futures, options, and other financial instruments  which includes the Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT), and New York Mercantile Exchange (NYMEX).

Contract (Lot)

The standardized unit of an asset traded in a particular market. For example, a currency contract might represent a specific amount of foreign currency.

Contract (Lot)

In trading, a contract (also referred to as a lot) represents a standardized agreement to buy or sell a specific quantity of an underlying asset at a predetermined price on a future date. The specific quantity can vary depending on the asset type (e.g., currencies, commodities).

Contract for Difference (CFD)

A financial contract that allows speculation on the price movement of an asset without actually owning the asset. The profit or loss is based on the difference between the opening and closing price of the CFD.

Currency basket

A weighted average of multiple currencies used as a reference point to measure the value of another currency.

Currency basket

A currency basket is a weighted average of multiple currencies used as a reference point to measure the value of another currency. This can help smooth out fluctuations caused by a single currency.

Currency Depreciation

This refers to a decrease in the value of a currency relative to another currency. This can impact import/export costs, foreign investment returns, and overall market sentiment for certain economies or assets.

Currency intervention

Actions taken by a central bank to influence exchange rates, typically by buying or selling foreign currency in the foreign exchange market.

Currency intervention

Currency intervention refers to actions taken by a central bank to influence economic activity and financial markets.

Currency swap

A financial agreement between two parties to exchange principal amounts in different currencies and then exchange them back at a future date, potentially with an interest rate differential.

Currency Swap

An agreement between two parties to exchange principal amounts in different currencies and then exchange them back at a future date, potentially with an interest rate differential.

Cyclical

Cyclical refers to fluctuations or trends that repeat over time. In economics, it refers to business cycles, which consist of periods of expansion (growth) followed by periods of contraction (recession).

Cyclical

Cyclical refers to price movements or market trends that exhibit recurring ups and downs over time. These cycles can be short-term (e.g., seasonal cycles) or long-term (e.g., economic cycles).

Cyprus Securities and Exchange Commission (CySEC)

The national authority responsible for regulating investment services, financial markets, and listed companies in Cyprus.

Cyprus Securities and Exchange Commission (CySEC)

The financial regulator of Cyprus, responsible for overseeing investment firms and stock exchanges in the country.

Day Trading

A trading strategy that involves opening and closing positions within the same trading day, typically capitalizing on short-term price movements.

Default

A default occurs when a borrower fails to fulfill a loan obligation, meaning they cannot make required interest or principal payments.

Deficit

A deficit occurs when expenses exceed income in a budget (government, company, or individual). In the context of the BoP, a current account deficit indicates a net outflow of foreign currency.

Deflation

A sustained decrease in the general level of prices for goods and services over time.

Deflation

Deflation is a sustained decrease in the general level of prices for goods and services over time. It can lead to decreased consumer spending, business investment, and economic stagnation.

Depreciation

A decrease in the value of a currency relative to another currency.

Derivative

A financial contract that derives its value from the performance of an underlying asset, such as a stock, bond, currency, or commodity. Examples include options, futures contracts, and swaps.

Divergence

Divergence occurs when a technical indicator and the price movement of an asset go in opposite directions. This can signal a potential reversal in the price trend. For example, a rising price with a declining RSI (Relative Strength Index) could indicate a weakening uptrend.

Easing

Easing refers to actions taken by a central bank to loosen monetary policy. This typically involves lowering interest rates and increasing the money supply to stimulate economic activity.

Economic Indicator

Economic indicators are statistics or data points that provide information about the overall health and performance of an economy. They can be used by traders to gauge market sentiment and potential future trends. Examples include GDP growth, unemployment rate, inflation rate, and consumer confidence.

Economic Indicator

Economic indicators are statistics or data points that provide information about the overall health and performance of an economy. They can be used by traders to gauge market sentiment and potential future trends. Examples include GDP growth, unemployment rate, inflation rate, and consumer confidence.

EFT (Exchange-Traded Fund)

An investment fund that trades on a stock exchange like a stock. ETFs track a basket of assets, such as stocks, bonds, or commodities.

Elliot Wave Theory

Elliott Wave Theory is a technical analysis approach that postulates the price movement of markets follows a specific five-wave pattern. These waves are further subdivided into smaller waves, and the theory suggests these patterns repeat across different timeframes. While some traders find it useful, it is not universally accepted and can be subjective in its application.

Elliot Wave Theory

Elliott Wave Theory is a technical analysis approach that postulates the price movement of markets follows a specific five-wave pattern. These waves are further subdivided into smaller waves, and the theory suggests these patterns repeat across different timeframes.

Equilibrium

Equilibrium refers to a state of balance between supply and demand in a market. At this point, the price of an asset is considered to be in fair value, with no significant upward or downward pressure.

Equilibrium

Equilibrium refers to a state of balance between supply and demand in a market. At this point, the price of an asset is considered to be in fair value, with no significant upward or downward pressure.

Euro Interbank Offered Rate (Euribor)

The Euro Interbank Offered Rate (Euribor) is a benchmark interest rate at which Eurozone banks offer to lend unsecured funds to each other for different time periods. It serves as a reference point for short-term euro interest rates and can influence borrowing costs for businesses and consumers.

Eurobond

A bond denominated in a currency other than the issuer's domestic currency. These bonds are typically issued by governments or corporations to raise funds in international markets.

Eurodollar Bonds

Dollar-denominated bonds issued by non-US entities outside the United States.

European Central Bank (ECB)

The central bank of the eurozone, responsible for monetary policy for the member states and overseeing the euro.

European Central Bank (ECB)

The central bank of the eurozone, responsible for monetary policy for the member countries.

Exotics

Options with unusual or non-standard features, such as barrier options or basket options.

Face Value

The nominal or principal amount of a bond stated on the certificate.

Face Value

Face value, also known as par value, refers to the nominal or stated value of a security, such as a bond or stock certificate. It is typically not the actual market price of the security, which can fluctuate.

Federal Deposit Insurance Corporation (FDIC)

An independent agency of the United States government that protects depositors' money in the event of a bank failure.

Federal Deposit Insurance Corporation (FDIC)

An independent agency of the United States government that protects depositors' money in the event of a bank failure.

Federal Funds Rate (FFR)

The Federal Funds Rate (FFR) is the target interest rate at which depository institutions lend excess reserves to each other overnight. It's essentially the rate banks charge other banks for short-term loans. The FFR is a crucial benchmark that influences other short-term interest rates in the economy.

Federal Funds Rate (FFR)

The interest rate at which banks lend reserves to each other overnight. The Federal Reserve uses the FFR to influence other short-term interest rates in the economy.

Federal Open Market Committee (FOMC)

The Federal Open Market Committee (FOMC) is a vital committee within the Federal Reserve System that plays a central role in shaping the U.S. economy and impacting financial markets worldwide.

Federal Open Market Committee (FOMC)

The policymaking body of the Federal Reserve System, responsible for setting interest rates and conducting open market operations.

Federal Reserve Bank (Fed)

The central banking system of the United States, consisting of 12 regional Federal Reserve Banks and the Federal Reserve Board.

Federal Reserve Board

The governing body of the Federal Reserve System, responsible for setting monetary policy through the Federal Open Market Committee (FOMC).

Federal Reserve Board

The central bank of the United States, with a structure that includes the Federal Open Market Committee and 12 regional Federal Reserve Banks.

Fiat Currency

A fiat currency is a government-issued currency that is not backed by a physical commodity like gold. Its value is based on the faith and credit of the issuing government and its perceived stability. Most currencies used today are fiat currencies.

Fibonacci Numbers

The Fibonacci sequence is a series of numbers where each number is the sum of the two preceding numbers (0, 1, 1, 2, 3, 5, 8, etc.). Some traders use Fibonacci retracement levels, derived from this sequence, to identify potential support and resistance zones in the market.

Financial Conduct Authority (FCA)

The independent regulator of financial services in the United Kingdom.

Financial Conduct Authority (FCA)

The independent regulator of financial services in the United Kingdom.

Fiscal Policy

Fiscal policy refers to the government's use of spending and taxation to influence economic activity. By increasing spending or lowering taxes, the government can stimulate economic growth. Conversely, decreasing spending or raising taxes can help to slow inflation.

Fixed Exchange Rate

A system where governments or central banks intervene to maintain a stable exchange rate between two currencies.

Fixed Exchange Rate

A fixed exchange rate system is one where governments or central banks intervene to maintain a stable exchange rate between two currencies. This is typically done by buying or selling foreign currency in the foreign exchange market.

Forward Contract

An agreement between two parties to buy or sell an asset at a predetermined price on a specific future date.

Fundamental Analysis

Fundamental analysis is an investment analysis approach that focuses on the underlying factors that influence the value of an asset. This can include a company's financial statements, economic conditions, industry trends, and management quality.

Futures Contract

A standardized agreement to buy or sell an asset at a predetermined price on a specific future date. Futures contracts are traded on exchanges and are generally settled in cash rather than physical delivery of the underlying asset.

G7

The G7 (Group of Seven) is an intergovernmental economic organization consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. These countries are some of the world's largest developed economies and meet to discuss and coordinate economic policy.

Gold Standard

The gold standard is a historical monetary system where the value of a currency was directly linked to a fixed amount of gold. This meant that governments could convert their currency into gold at a predetermined rate. The gold standard system was abandoned by most countries in the mid-20th century.

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is the monetary value of all final goods and services produced within a country's borders in a specific period (usually a year). It is considered the primary measure of a country's economic output and is used to assess economic growth.

Gross Domestic Product (GDP)

The total monetary value of final goods and services produced in a country within a specific period.

Hard Currency

A stable and internationally traded currency that is considered a safe haven during times of economic uncertainty. Examples include USD, EUR, and JPY.

Hard Currency

Hard currency refers to a stable and internationally traded currency that is considered to be a safe haven during times of economic uncertainty. The US dollar, Euro, and Japanese Yen are often considered hard currencies.

Hedge/Hedging

A strategy used to manage risk by taking an offsetting position in a related market. For example, a company holding inventory might buy a futures contract to lock in a selling price for the future.

Historical Volatility

Historical volatility refers to the statistical measure of the variations in an asset's price over a specific past period. It is typically expressed as standard deviation or annualized percentage volatility (APY). This information can be used by traders to assess the risk associated with an investment.

Historical Volatility

Historical volatility refers to the statistical measure of the variations in an asset's price over a specific past period. It is typically expressed as standard deviation or annualized percentage volatility (APY).

Hyperinflation

Hyperinflation is a period of extremely rapid and excessive inflation, where prices increase at a rate of over 50% per month. This can lead to severe economic hardship and a breakdown of the monetary system.

Illiquid

An illiquid asset is one that is difficult to buy or sell quickly without incurring significant price impact. This is often due to a lack of trading volume or interest in the asset.

Illiquid

An illiquid asset is one that is difficult to buy or sell quickly without incurring significant price impact. This is often due to a lack of trading volume or interest in the asset.

Implied Volatility

A statistical measure of the expected future price movement of an underlying asset, derived from the price of an option contract.

Implied Volatility

Implied volatility is a statistical measure of the market's expectation of future price volatility for an asset, derived from option prices. It reflects the level of risk and uncertainty priced into options contracts.

Index Funds

Passively managed investment funds that track the performance of a specific market index, such as the S&P 500.

Inflation

Inflation refers to a sustained increase in the general price level of goods and services in an economy over time. It reduces the purchasing power of a currency.

Inflation

Inflation refers to a sustained increase in the general price level of goods and services in an economy over time. It reduces the purchasing power of a currency.

Initial Margin

The minimum amount of capital required to be deposited in a margin account to initiate a leveraged trade.

Inter-bank Offered Rate (TIBOR)

The interest rate at which banks lend to each other. Different tenor (length) rates exist, like TIBOR (Tokyo Interbank Offered Rate).

Interbank/Interdealer Market

The market where banks and other financial institutions trade directly with each other. This market typically offers the most competitive prices and deepest liquidity for large trades.

Interest Rate

The interest rate is the cost of borrowing money, typically expressed as a percentage of the principal amount borrowed. It is a key factor influencing investment decisions, economic activity, and exchange rates.

International Monetary Fund (IMF)

An international organization that works to promote global financial stability and economic cooperation.

International Monetary Fund (IMF)

An international organization that promotes global financial stability and cooperation. The IMF provides loans to countries experiencing financial difficulties.

International Organization for Standardization (ISO)

An international standard-setting body that publishes standards covering a wide range of products and services. (ISO currency codes are used for some traded assets)

International Organization for Standardization (ISO)

An international standard-setting body that develops and publishes standards for a wide range of products, services, and systems to ensure quality, safety, and efficiency.

J-Curve

The J-curve describes the theoretical relationship between a depreciation in a country's currency and its trade balance. Initially, a weaker currency can lead to a worsening trade balance as imports become more expensive. However, in the long run, it can also make exports more competitive, eventually improving the trade balance. This improvement resembles the shape of the letter J.

J-Curve

The J-curve describes the theoretical relationship between a depreciation in a country's currency and its trade balance. Initially, a weaker currency can lead to a worsening trade balance as imports become more expensive. However, in the long run, it can also make exports more competitive, eventually improving the trade balance. This improvement resembles the shape of the letter J.

Jobber

A market participant who provides continuous two-way quotes (bid and ask prices) for a particular security, aiming to profit from the bid-ask spread. Jobbers contribute to market liquidity by facilitating buying and selling.

Key currency

A currency that plays a significant role in international trade and finance. These currencies are typically issued by major economies and are widely held as reserve currencies.

Kiwi

A slang term for the New Zealand Dollar (NZD).

Leverage (Margin)

The use of borrowed capital to amplify potential returns in a trade. This can magnify both profits and losses. Leverage is typically used in margin accounts where the broker lends a portion of the required capital for the trade.

Liability

A financial obligation that a person or entity owes. In trading, liabilities can include margin requirements on leveraged positions and potential losses on trades.

Liability

In the context of trading, a liability refers to a financial obligation that a trader owes. This could include margin debt incurred in margin trading or any outstanding loans used to finance trading activities. Liabilities can impact a trader's financial risk profile and margin requirements.

Liquid Market

A market where currencies can be easily bought and sold at fair prices with minimal bid-ask spreads and high trading volume.

Liquid Market

A liquid market is one where assets can be easily bought and sold at fair prices with minimal bid-ask spreads and high trading volume. This ensures traders can enter and exit positions quickly without significant price impact. Liquidity is desirable for active traders who need to adjust their portfolios frequently.

Liquidity

The ease with which an asset can be bought or sold at a fair market price. Highly liquid assets have tight bid-ask spreads and high trading volume.

Liquidity

Liquidity refers to the ease with which an asset can be bought or sold in a market. It's influenced by factors like trading volume, the number of interested buyers and sellers, and the bid-ask spread. High liquidity is generally preferred by traders as it allows for easier execution of trades and minimizes potential price discrepancies.

London Interbank Offered Rate (LIBOR)

An interest rate benchmark that reflected the interest rates at which banks in London were willing to lend unsecured funds to each other. LIBOR is being phased out due to past manipulation scandals. (Alternative reference rates are being adopted)

London Interbank Offered Rate (LIBOR)

A benchmark interest rate at which banks lend money to each other in the London interbank market. LIBOR is being phased out due to past manipulation scandals.

London International Financial Futures Exchange (LIFFE)

A derivatives exchange based in London, now part of Euronext. (No longer an independent entity)

London International Financial Futures Exchange (LIFFE)

A derivatives exchange based in London, now part of Euronext exchange group. It offered trading in interest rate futures, equity index futures, and other financial instruments.

Lot

The standardized unit of an asset traded in a particular market. For example, a currency contract might represent a specific amount of foreign currency.

Lot

The standard unit of trading for a particular currency pair in the foreign exchange market. The size of a lot can vary depending on the broker and the currency pair.

Macro-based

Refers to a trading strategy or analysis that considers broad economic factors and trends impacting markets, such as inflation, interest rates, and economic growth.

Macro-based

Macro-based refers to trading strategies or decisions that are influenced by broad economic factors and global events. These factors can include economic growth, inflation, interest rates, central bank policies, geopolitical events, and currency exchange rates. Macro-based traders analyze these factors to identify potential trading opportunities and assess overall market risk.

Maintenance (Margin)

The minimum equity level required to maintain an open leveraged position in a margin account. If the value of the position falls below the maintenance margin requirement, a margin call may occur.

Maintenance (Margin)

In margin trading, maintenance margin refers to the minimum equity that must be maintained in a margin account to avoid a margin call. If the account value falls below this level due to price movements,

Margin

The deposit required in a margin account to initiate a leveraged trade. It typically represents a percentage of the total position value.

Margin Call

A demand from a broker to deposit additional funds into a margin account to maintain the minimum equity level (maintenance margin) required for an open leveraged position.

Market Maker

A market participant who actively quotes bid and ask prices for a particular security, aiming to facilitate trading and generate profits from the bid-ask spread. Market makers contribute to market liquidity.

Maturity

The date on which a debt security (bond) reaches its end date and the principal amount becomes due to the investor.

Mean Reversion

Mean reversion is a statistical concept that suggests prices or values tend to move back towards their historical average over time.

Mean Reversion

Mean reversion is a statistical concept that suggests prices or values tend to move back towards their historical average over time. In trading, this implies that after a significant price move, either up or down, there's a higher probability of the price returning closer to its long-term average. Mean reversion strategies involve identifying assets that have deviated significantly from their historical averages and capitalizing on potential price corrections.

Mean Reversion

Mean reversion is a statistical concept that suggests prices or values tend to move back towards their historical average over time. In trading, this implies that after a significant price move, either up or down, there's a higher probability of the price returning closer to its long-term average.

Monetary Easing

Monetary easing refers to actions taken by a central bank to loosen monetary policy and stimulate economic activity. These actions typically involve lowering interest rates and increasing the money supply. Lower interest rates can encourage borrowing and investment, while a larger money supply can lead to higher asset prices (inflationary impact). Traders may adjust their strategies based on the expected impact of monetary easing on specific asset classes and market sectors.

Monetary Policy

Monetary policy refers to the actions taken by a central bank to influence economic activity and inflation. These actions typically involve setting interest rates and managing the money supply.

Monetary Policy Committee (MPC)

A committee within the Bank of England responsible for setting monetary policy for the UK.

Monetary Policy Committee (MPC)

A committee within a central bank responsible for formulating and implementing monetary policy. The FOMC is an example of an MPC.

Money Supply

Money supply refers to the total amount of money circulating in an economy at a given time. It includes physical currency, coins, and various types of bank deposits. Central banks influence the money supply through open market operations and reserve requirements.

Moving Average (MA)

A technical analysis indicator used to smooth out price fluctuations and identify trends in a security's price.

Moving Average Convergence/Divergence (MACD)

The Moving Average Convergence/Divergence (MACD) is a technical analysis momentum indicator that combines two moving averages and a MACD line (difference between the averages) with a signal line (short-term moving average of the MACD line). Traders use the relationship between these lines and crossovers to identify potential trend changes, buying and selling signals, and momentum strength.

Moving Average Convergence/Divergence (MACD)

A technical analysis indicator used to identify trend strength and potential turning points in a security's price.

Net Asset Value (NAV)

Not directly related to currency trading, but relevant for some currency-linked investments. It refers to the net value of the assets in a fund (e.g., an exchange-traded fund) divided by the number of outstanding shares.

Net Asset Value (NAV)

The per-share value of an investment fund's underlying assets.

NIKKEI

The Nikkei 225 is a stock market index that tracks the performance of 225 large and publicly traded companies in Japan.

Non-Farm Payrolls (NFP)

Non-Farm Payrolls (NFP) is a key economic indicator released monthly by the US Bureau of Labor Statistics. It measures the change in the number of jobs created in the private sector (excluding farm jobs) during the previous month. Strong NFP reports can indicate a healthy economy and potentially lead to higher interest rates or a stronger US dollar.

Non-Farm Payrolls (NFP)

A monthly report released by the U.S. Bureau of Labor Statistics that shows the number of jobs added in the prior month, excluding the farming industry. This report is a key indicator of economic health.

Off-Balance Sheet

Off-balance sheet items are financial assets or liabilities that are not included in a company's main balance sheet. This could include guarantees issued, financial derivatives, or certain contingent liabilities. While not directly on the balance sheet, these items can still represent risks or obligations for the company.

Official Settlements Account

A reserve account held by a central bank with another central bank, typically in US dollars.

Official Settlements Account

The Official Settlements Account (OSA) is a reserve account held by a central bank with another central bank, typically in US dollars. It allows for international settlements between central banks and facilitates foreign exchange transactions.

Open Market Operations

Open market operations are a key monetary policy tool used by central banks to influence interest rates and the money supply. These operations involve the central bank buying or selling government bonds in the open market.

Option Class

The basic type of an option contract, such as a call option (right to buy) or a put option (right to sell).

Oscillator

An oscillator is a technical analysis indicator that fluctuates within a specific range or boundaries. It is used to gauge momentum, potential overbought or oversold conditions, and possible trend reversals. The MACD mentioned earlier is an example of an oscillator.

Parity

Parity refers to a state of equal value between two assets or currencies.

Parity

Parity, in a financial context, refers to a state of equal value between two assets or currencies. For example, if the exchange rate between the US dollar (USD) and the Euro (EUR) is 1 USD = 1 EUR, then the two currencies are at parity.

Peg

Similar to a fixed exchange rate, a peg refers to a system where a currency's value is tied to another currency or a basket of currencies.

People’s Bank of China (PBOC)

The central bank of the People's Republic of China, responsible for monetary policy and financial system regulation.

People’s Bank of China (PBOC)

The central bank of the People's Republic of China. It is responsible for formulating and implementing monetary policy, issuing currency (the Renminbi), and overseeing the banking system.

Purchasing Power Parity

A theoretical concept that suggests exchange rates between currencies should adjust to make a basket of goods and services cost roughly the same amount in two different countries.

Purchasing Power Parity

Purchasing Power Parity (PPP) is a theoretical concept that suggests exchange rates between currencies should adjust to make a basket of goods and services cost roughly the same amount in two different countries. Deviations from PPP can indicate potential currency misalignments.

Quantitative Analysis

Quantitative analysis is an investment analysis approach that relies on statistical methods and mathematical models to evaluate assets and make investment decisions. It involves using historical data, financial ratios, and complex calculations to identify potential trading opportunities.

Quantitative Easing

Quantitative easing is a type of monetary easing where a central bank aggressively purchases government bonds and other securities to increase the money supply and stimulate economic activity.

Quote currency

In a currency pair (e.g., EUR/USD), the quote currency is the second currency and represents the price of the first currency in terms of the second.

Quote currency

In a currency pair (e.g., EUR/USD), the quote currency is the second currency and represents the price of the first currency in terms of the second.

Rally

A rally refers to a sustained increase in price over a specific period. It can be used in various contexts, such as a stock price rally, a currency rally, or a commodity price rally.

Rate Differential

The rate differential refers to the difference between interest rates in two different economies. Investors and traders may be attracted to invest in countries with higher interest rates to earn a higher return. However, currency exchange rate fluctuations and other factors need to be considered.

Rate Differential

The rate differential refers to the difference between interest rates in two different economies. Investors and traders may be attracted to invest in countries with higher interest rates to earn a higher return. However, currency exchange rate fluctuations and other factors need to be considered.

Rate of Return

The rate of return is a performance metric used to measure the profitability or loss of an investment over a specific period. It is typically expressed as a percentage and can be calculated for various investment types.

Rate of Return

The rate of return is a performance metric used to measure the profitability or loss of an investment over a specific period. It is typically expressed as a percentage and can be calculated for various investment types, including stocks, bonds, and mutual funds. The rate of return considers both capital gains (increase in asset price) and income generated (e.g., dividends or interest).

Recession

A recession is a period of general economic decline characterized by a decline in real GDP, rising unemployment, and a slowdown in economic activity. It typically lasts for at least six months.

Reciprocal Currency

The reciprocal of a currency pair is the inverse of the quote. For example, the reciprocal of EUR/USD is USD/EUR.

Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a technical analysis momentum indicator used to measure the speed and magnitude of recent price changes. It oscillates between 0 and 100, with traditionally high readings (above 70) indicating potentially overbought conditions and low readings (below 30) suggesting oversold conditions. RSI is used to identify potential trend reversals and buying/selling opportunities.

Relative Strength Index (RSI)

A technical analysis indicator that measures the speed and magnitude of recent price changes to evaluate if an asset is overbought or oversold.

Reserve Bank of Australia (RBA)

The central bank of Australia, responsible for monetary policy and financial system stability.

Reserve Bank of Australia (RBA)

Australia's central bank, responsible for monetary policy, issuing currency, and overseeing the financial system.

Reserve Bank of New Zealand (RBNZ)

The central bank of New Zealand, responsible for monetary policy, financial system stability, and promoting a sound and efficient financial system.

Reserve Bank of New Zealand (RBNZ)

New Zealand's central bank, with similar functions to the RBA.

Reserve Currency

A currency held by central banks and other financial institutions as part of their foreign exchange reserves. These currencies are typically considered stable and liquid.

Retail Prices Index (RPI)

The Retail Prices Index (RPI) is a UK inflation measure that tracks the average change in the price of a basket of goods and services purchased by consumers. It is similar to the Consumer Price Index (CPI) but has been replaced by the CPI for most official purposes.

Retail Prices Index (RPI)

An inflation measure that tracks changes in the price of a basket of goods and services purchased by households.

Revaluation

An upward adjustment in the value of an asset, often used in accounting to reflect changes in market prices or exchange rates.

Risk Management

The process of identifying, assessing, and controlling potential risks associated with trading activities. Risk management strategies can involve diversification, stop-loss orders, position sizing, and hedging.

Rollover

The process of extending the maturity of an existing futures or options contract by closing the current contract and opening a new one with a later expiry date.

Selling Rate

The ask price, which is the lowest price at which a seller is willing to sell an asset.

Selling Short

A trading strategy where a trader borrows an asset (typically from a broker) and sells it immediately, hoping to repurchase it later at a lower price and return it to the lender, profiting from the price difference.

Settlement

The finalization of a trade where the buyer takes ownership of the asset and the seller receives payment.

Short Position

A position where a trader has borrowed and sold an asset with the expectation that the price will decline, allowing them to repurchase it later at a lower price and return it for a profit.

Simple Moving Average (SMA)

The Simple Moving Average (SMA) is a technical analysis indicator that calculates the average price of a security over a specific look-back period (e.g., 50 days, 200 days). It is a basic but widely used tool for smoothing out price fluctuations and identifying the general trend direction.

Simple Moving Average (SMA)

A technical analysis indicator that calculates the average price of a security over a specific number of trading periods.

Slippage

The difference between the intended price of a trade and the actual price at which the trade is executed. Slippage can occur due to sudden price movements or low market liquidity.

Society for World-wide Interbank Telecommunications (SWIFT)

A secure messaging system used for international financial transactions.

Society for World-wide Interbank Telecommunications (SWIFT)

A secure messaging system used for international financial transactions. Banks use SWIFT to send and receive payment instructions.

Sovereign Risk

Sovereign risk is the risk of a government defaulting on its debt obligations. This can be influenced by a country's economic stability, political climate, and external factors. Investors may demand higher yields on government bonds from countries with higher perceived sovereign risk.

Speculation

Speculation is an investment strategy that involves taking a calculated risk on the price movement of an asset in the hope of profiting from short-term or long-term price changes. Speculators often use leverage or derivatives to amplify potential gains (and losses).

Spot Market

The market where assets are bought and sold for immediate delivery (cash settlement) at the prevailing market price.

Spread

The difference between the bid (buy) price and the ask (sell) price of an asset. The spread represents the profit margin for market makers and brokers.

Spread Betting

A form of speculation where traders bet on the future price movements of an asset without actually owning it. Profits and losses are based on the difference between the entry and exit prices.

Stagflation

Stagflation is a rare economic condition characterized by slow economic growth, high inflation, and high unemployment. It presents a challenge for policymakers as traditional tools to address inflation can worsen unemployment, and vice versa.

Sterling

Another term for the British Pound Sterling (GBP).

Stochastic Oscillator

The Stochastic Oscillator is a technical analysis momentum indicator that compares the closing price of a security to its price range over a specific period. It oscillates between 0 and 100, with interpretations similar to RSI (high readings potentially overbought, low readings potentially oversold). It can be used to identify potential turning points in the market.

Stop Price

A pre-determined price level at which a stop-loss order or a take-profit order (T/P) is triggered.

Swap

A financial agreement between two parties to exchange cash flows or assets based on predetermined terms. 

Swiss National Bank (SNB) 

The central bank of Switzerland, responsible for monetary policy and financial system stability.

Swissie

A slang term for the Swiss Franc (CHF).

Systematic Risk

Systematic risk, also known as undiversifiable risk, is the inherent risk associated with the overall market or economic conditions. This type of risk cannot be eliminated through diversification and can affect all asset classes to some degree. Examples include recessions, interest rate changes, or global events.

Take-Profit Order (T/P)

An order placed with a broker to automatically sell an asset (to lock in profits) if the price reaches the take-profit price.

Take-Profit Order (T/P)

An order placed to automatically sell a security once a specific profit target is reached.

Technical Analysis

Technical analysis is an investment analysis approach that studies historical price charts, trading volume, and technical indicators to forecast future price movements. It focuses on identifying trading opportunities based on patterns, trends, and statistical relationships within the price data itself.

Tier One

Tier One can have different meanings depending on the context. In some cases, it refers to the top-ranked or most systemically important banks in a country. In a regulatory context, Tier One capital refers to a bank's core capital, which measures its financial strength and ability to absorb losses.

Tokyo Inter-bank Offered Rate (TIBOR)

The Tokyo Interbank Offered Rate (TIBOR) is a daily reference rate derived from interest rates that banks charge to lend unsecured funds to each other in the Japanese interbank market. It exists in two forms: Japanese Yen TIBOR and Euroyen TIBOR, reflecting rates for lending in Japanese yen and Euros, respectively. TIBOR can be used as a benchmark for short-term interest rates in Japan.

Total Return Swap (TRS)

A Total Return Swap (TRS) is a derivative contract where two counterparties agree to exchange the total return (price appreciation and income) of one asset for the total return of another asset over a specific period. This allows investors to gain exposure to the performance of an asset without directly owning it.

Total Return Swap (TRS)

A derivative contract where one party agrees to exchange the total return (price appreciation and dividends/interest) of an underlying asset for a fixed or floating rate of return from the other party.

Trading Glossary

Trading Glossary

Treasury Securities

Debt instruments issued by the U.S. government to raise funds. These securities are considered relatively low-risk investments and serve as a benchmark for other fixed-income securities. Examples include Treasury bills, notes, and bonds.

Unconvertible Currency

A currency that cannot be freely exchanged for another currency due to government restrictions.

Underlying Asset

The asset that forms the basis for a derivative contract, such as a stock, bond, currency, or commodity. Options, futures contracts, and CFDs are all derivative instruments that derive their value from the underlying asset.

Undervalued

An undervalued asset is considered to be worth more than its current market price. This can be determined through fundamental analysis by comparing the asset's intrinsic value (based on financial health or future potential) to its current market price. Investors may seek to buy undervalued assets in the hope that their price will eventually rise to reflect their true value.

Undervalued

An undervalued asset is considered to be worth more than its current market price. This can be determined through fundamental analysis by comparing the asset's intrinsic value (based on financial health or future potential) to its current market price.

Unemployment Rate

The unemployment rate is a key economic indicator that measures the percentage of the labor force that is unemployed and actively seeking work. A high unemployment rate can indicate a weak economy and can impact consumer spending and business investment.

US Dollar Index (USDX)

A measure of the value of the US dollar relative to a basket of major foreign currencies.

US Dollar Index (USDX)

The US Dollar Index (USDX) is a measure of the value of the US dollar relative to a basket of major foreign currencies, typically including the Euro, Japanese Yen, Eurozone currencies, and British Pound. An increase in the USDX indicates the US dollar is strengthening against these other currencies, while a decrease indicates a weakening US dollar.

US Prime Rate

The US Prime Rate is the interest rate that banks charge their most creditworthy corporate customers for short-term loans. It serves as a benchmark for other short-term borrowing rates and can influence loan rates for businesses and consumers. The US Prime Rate is typically tied to the Federal Reserve's target federal funds rate, but banks may adjust it based on a borrower's creditworthiness.

US Treasury

The department of the US federal government responsible for managing the country's finances, including issuing currency and collecting taxes.

Valuation

Valuation is the process of estimating the fair value of an asset. It can be used in various contexts, such as stock valuation, company valuation, or real estate valuation. Different valuation methods exist, including fundamental analysis (considering financials) and discounted cash flow (projecting future cash flows).

Valuation

Valuation is the process of estimating the fair value of an asset. It can be used in various contexts, such as stock valuation, company valuation, or real estate valuation. Different valuation methods exist, including fundamental analysis (considering financials) and discounted cash flow (projecting future cash flows).

Vanilla

In options trading, vanilla options refer to standard options contracts with plain vanilla features. These options have basic characteristics, such as a single expiry date, American or European exercise style, and a strike price that is close to the current market price of the underlying asset.

Variation Margin

In margin trading, variation margin refers to the additional funds required to be deposited into a margin account to maintain the minimum equity level (maintenance margin) after the value of the position has fluctuated. This is because daily price movements can cause the equity in the account to fall below the maintenance margin requirement.

VIX (TRS)

The VIX (Chicago Board Options Exchange Volatility Index) is a volatility index for the S&P 500 stock market index. It is a measure of the market's expectation of short-term volatility over the next 30 days. The VIX is calculated based on the implied volatilities of S&P 500 stock options prices. A higher VIX indicates that investors expect higher volatility, and a lower VIX indicates that investors expect lower volatility.

Volatility

A statistical measure of the dispersion of returns for a security or market index over time. High volatility indicates that the price of the security can fluctuate significantly, while low volatility indicates a more stable price movement.

Wage Price Index

The Wage Price Index (WPI) is an inflation measure that tracks the average change in wages and prices over time. It can be used to assess how inflation impacts both wages and the cost of living.

West Texas Intermediate (WTI)

West Texas Intermediate (WTI) is a specific type of crude oil produced in the United States. It is one of the most actively traded benchmarks for oil prices globally. The price of WTI can influence the price of other types of crude oil and can be impacted by factors such as global supply and demand, geopolitical events, and economic conditions.

World Bank 

An international financial institution that provides loans and grants to developing countries for capital projects.

World Trade Organization (WTO)

An intergovernmental organization that regulates international trade between nations.

World Trade Organization (WTO) (T/P)

The World Trade Organization (WTO) is an intergovernmental organization that regulates and promotes international trade between nations. It was established on January 1, 1995, under the Marrakesh Agreement, which was signed by 123 nations during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), which had been in existence since 1948. The WTO is headquartered in Geneva, Switzerland.

XAG/USD

This is the currency code for trading silver (Silver / US Dollar). XAG is the ISO 4217 currency code for silver.

XAU/USD

This is the currency code for trading gold (Gold / US Dollar). XAU is the ISO 4217 currency code for gold.

Yard

Slang for one billion.

Yield

Yield refers to the return on an investment expressed as a percentage. 

Yield

Yield refers to the return on an investment expressed as a percentage. It can represent different types of returns.

Yield Curve

The yield curve is a graphical representation of the relationship between yield and the maturity of a bond (time to redemption). It typically shows short-term bonds yielding less than long-term bonds. The shape of the yield curve can provide insights into market expectations about future interest rates and economic conditions.

Yield Curve

The yield curve is a graphical representation of the relationship between yield and the maturity of a bond (time to redemption). It typically shows short-term bonds yielding less than long-term bonds. The shape of the yield curve can provide insights into market expectations about future interest rates and economic conditions.

Z-Score

The Z-score is a statistical measure that indicates how many standard deviations a specific data point is away from the mean (average) of the data set. In trading, it can be used to identify outliers in a price series or compare the volatility of different assets.

Zero Bound

The zero bound refers to a situation where interest rates cannot fall below zero. This can be a challenge for central banks trying to stimulate economic activity through traditional monetary policy tools like lowering interest rates. When interest rates are at the zero bound, central banks may resort to unconventional measures like quantitative easing.