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Forex Glossary

A - H C - E F - L M - Q R - S T - Y


Appreciation A rise in the price or value of a currency (or other asset) over time.
Arbitrage The purchase of securities on one market for simultaneous or immediate resale on another market with the goal of profiting from a price discrepancy. Currency traders often arbitrage against exchange risk by buying a currency for immediate delivery but also selling that currency on the forward market at the same time.
Ask Price The rate at which a Client carries out a trading operation of buying.
Asset Any item of economic value owned by an individual or corporation, especially that which could be converted to cash.
Asset Allocation The division of funds between different assets (items of value such as property, financial instruments, commodities and cash) with the goal of diversifying ones personal holdings to manage specific risk / reward expectations.


Back Office The departments and processes related to the settlement of financial transactions.
Balance The amount in the trader’s account after the last complete transaction.
Bank Wire A computer message system linking major banks. It is used as a mechanism to advise the receiving bank of some action that has occurred, i.e., the payment by a customer of funds into that bank's account.
Bar chart A type of chart which consists of four significant points: the maximum and minimum prices which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line to the right of the bar.
Base Currency

The first currency in a currency pair. For example, in the following pair USD/EUR, the first currency (in this case USD) is referred to as the base currency. The primary base currency is the US dollar, meaning that quotes are most commonly expressed as a unit of $1 USD per the other currency quoted in the pair.

Basis Point Someone who expects the price of a given financial instrument or the overall value of a given financial marketplace to decline in value and thereby is a seller of the instrument(s). This individual is said to be bearish on the instrument / marketplace. Opposite of bull (bullish).

A market participant, who thinks that prices will go down.

Bear Market A market distinguished by declining prices.
Big Figure Dealer expression referring to the first few digits of an exchange rate. These digits rarely change in normal market fluctuations, and therefore are omitted in dealer quotes, especially in times of high market activity. For example, a USD/Yen rate might be 107.30/107.35, but would be quoted verbally without the first three digits i.e. "30/35".
Bid Price The rate at which a client carries out a trading operation of sale.
Bid / Ask Spread The difference between the buy (bid) and sell (ask) price. In the following example - 0.9853/58 the spread is 0.0005 or 5 PIPs.
Breakout The price’s crossing of support or resistance levels.
Bretton Woods Agreement An agreement signed by the original United Nations members in 1944 that established the International Monetary Fund (I.M.F.) and the post-World War II international monetary system of fixed exchange rates.

An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

Bull A market participant, who thinks that prices will go up.
Bull Market A market distinguished by rising prices.
Buying / Selling FX An investor/speculator buys a currency pair (takes a long position), if he/she believes the base currency will go up relative to the quote currency, or equivalently that the corresponding exchange rate will go up. Selling the currency pair implies selling the first, base currency, and buying the second, quote currency. An investor / speculator sells a currency pair (takes a short position), if he/she believes the base currency will go down relative to the quote currency, or equivalently, that the quote currency will go up relative to the base currency.

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