A-Z Forex Glossary

Posted by forex on August 26th, 2010

Adjustable Peg

Country?s exchange rate is fixed (pegged) with another country. It can be adjusted.

Aggregate Risk

Exposure of the bank for contracts of a single customer.

Ask Price

It is the price at which sellers wants to sell their currency. It is also known as ask rate, or offer.


AUD/USD currency pair is referred by this word.

Back Office

Department of location where the processing of the transactions is done.

Base Currency


The base currency is the first currency in a pair. The value is always considered 1 unit. As an example EUR/USD=1.500, means To buy 1 unit of Euro you have to pay 1.500 USD. Euro is the base currency here.


A Bear market is a pessimistic market with declining prices.

Bid Price

The bid price is the price at which dealer is selling the base currency.


A Bull market is a market with rising prices.


Dealers are using this word to refer to GPB/USD currency pair.


Dealers are using this word for Danish Krone.

Counter Currency


The counter currency means the second currency in the currency pair. It value is against the base currency. As an example EUR/USD currency pair, USD is the counter currency.

Cross Rate

A price of a currency against any currency which is not USD.

Currency Pair

The two currencies which make a pair, one is sold to buy another in exchange. Forex trade is always done in currency pair.

Day Trading

Trading between normal trading hours, end of the day there is no open position.



This word is referring to the Federal Reserve. It is the central banking system of the United States. They are deciding the US monitory policy which has a great influence on the forex market.  



This word is a short form of Foreign Exchange. It is a market for trading currencies, where one currency is sold to buy another one, and trading is always done in a currency pair.

Fundamental Analysis

Analysis which is based on macroeconomic factors which are influencing currency rate of a particular country.



Advanced technique of trading where more than one positions are opened at once, where one position minimize the risk of another position.


International Monetary Market.


International Monetary Fund.


Dealers are using this word for NZD/USD currency pair.



It is a ration of margin to the position allowed by the trader. Say for an example, with the margin of $1000 and leverage of 100, you can take position of $100000. Leverage allows you to take more risk, you can make more profit also and more losses also.

Long Position

Long means trader is expecting currency price to go up, means he buys at a low rate and wants to sell it at a higher price.


This word is used for the currency pair USD/CAD.



This is referring to quantity of the units being traded. It can be 100000 or 10000 or 1000 units. It is always referring to the units of the base currency.



Money you have to deposit with the broker for transaction to take place. It increases your risk. It can increase amount of the profit, as well as increase amount of losses also.

Market Maker

Forex dealers who provides bid/ask rate to buy or sell currencies.



It means ?Percentage in Price?. Pip means the smallest movement in the price of a current measured by the last digit, usually the 4th digit after the decimal. Only exception is USD/JYP currency pair.

Price Trend

A steady movement of a currency prices in one direction. Traders are trying to spot trends for trading.



It is the price of a currency in terms of another currency.

Risk Capital

The amount of losses traders can risk.

Short Position


Trader is expecting currency price to decline, so he sells the currency. Trader is selling for high and expects to buy it a lower rate.



The difference between the bid and the ask price.

Stop Loss


Automatically closing your open position at a given price to prevent big losses. This is to prevent the unexpected big losses in case of a market falling sharply.


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Joined: August 18th, 2010
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