FOREX BASIC TERMINOLOGY


To get a better understanding of how the forex market works it is essential to know some FX terminologies. Have fun learning with our forex glossary.
Cable
Trader jargon referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800's.
Candlestick Chart
A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.
Central Bank
A government or quasi-governmental organization that manages a country's monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank. others include the ECB, BOE, BOJ.
Chartist
An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.
Choice Market
A market with no spread. All trades buys and sells occur at that one price.
Clearing
The process of settling a trade.
Contagion
The tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high volatility in their domestic currency, the Rupiah. From there, the contagion spread to other Asian emerging currencies, and then to Latin America, and is now referred to as the 'Asian Contagion'.
Collateral
Something given to secure a loan or as a guarantee of performance.
Commission
A transaction fee charged by a broker.
Confirmation
A document exchanged by counterparts to a transaction that states the terms of said transaction.
Contract
The standard unit of trading.
Contract (Unit or Lot)
The standard unit of trading on certain exchanges.
Counterparty
One of the participants in a financial transaction.
Country Risk
Risk associated with a cross-border transaction, including but not limited to legal and political conditions such as war etc.
Cross Rates
The exchange rate between two currencies expressed as the ratio of two foreign exchange rates that are both expressed in terms of a third currency. Foreign exchange rate between two currencies other than the U.S. dollar, the currency in which most exchanges are usually quoted.
Currency
Any form of money issued by a government or central bank and used as legal tender and a basis for trade
Currency Risk
The probability of an adverse change in exchange rates.

PACKED WITH THE KNOWLEDGE OF THE BASIC TERMS, YOU ARE ONE STEP AHEAD IN MAKING YOUR TRADING JOURNEY A PROSPEROUS ONE.