Forex Term – Dictionary of Concepts

Forex Terms
.

Forex Term Dictionary – Open Position

Open position in the is called buying or selling in anticipation of an increase in a particular pair. An open position means that the current position has not yet been closed with the expectation of profitability and still bears the risk.

Arbitrage

This term entered in the Forex dictionary as Arbitrage allows to take advantage of price differences in two different markets. Thanks to the arbitrage process, the investor can buy the instrument in a low-priced market and sell it in the other high-priced market.

Supply

The supply is interpreted as the willingness to sell a financial instrument at its selling price in current market conditions.

Ask

Ask becomes the selling price.

Bear Market

A bear market refers to situations where the general level of prices is in a downward trend and sales are gaining momentum. The reason why this situation is called a bear market is said to be inspired by a bear’s claw to lower (prices) down.

Initial Margin

It is called the initial amount that the investor deposits into his account in order to open a position.

Base Currency

It is stated as the first value that is seen in the formation of prices in a currency pair. In parities, the base currency is defined as the leftmost currency.

Bif

The purchase price of a financial instrument is called a bid.

BOE (Bank of England)

BOE is used as an abbreviation of the name of the Bank of England. The BOE expression, which is frequently mentioned especially when conducting fundamental analysis, is closely followed in the monetary policy practices of the institution.

Bull Market (Bullish Market)

It refers to the situations in which the general level of prices is in an upward trend and purchases gain momentum. It is stated that the reason why this situation is called a bull market is inspired by the bull’s horns (prices).

BOJ (Bank of Japan)

BOJ is an acronym for the Bank of Japan.

Broker

Persons or institutions that allow buyers and sellers to come together in the markets and gain intermediary income from this situation are called brokers.

Buy Limit

An order that allows to enter a buying transaction at a price level below the current market price is called a buy limit.

Buy Stop

An order that allows to enter a buying transaction at a price level above the current market price is called a buy stop.

CFD (Contract for Diffenrence)

This term entered in the Forex dictionary as CFDs are derivative instruments that allow stocks, indices or commodities to be bought and sold only according to price expectations, without physically owning them. CFDs can be leveraged in the forex market. In this way, it is possible to invest in foreign stocks, indices and commodities with the opportunity to earn high profits with a low investment.

Dealer

Persons or institutions acting for the purchase and sale of various financial instruments on their own behalf and account are called dealers.

Support Level

The levels where the price drops are forced and stopped are called the support level. The support level signals that the prices reaching this point may start to rise again. He states that since it was determined that prices were struggling at similar levels before and could not exceed this point, the probability of a reversal in the same direction is higher.

Demo Account

Demo accounts that allow trading at live prices with virtual money are called demo accounts. Before opening a real account in the Forex market, it is recommended to test the transactions in demo accounts and learn about the market returns and risks.

Resistance Level

The levels where price rises are forced and stopped are called resistance levels. The resistance level signals the investor that the prices reaching this point may decrease again. He states that there is a possibility of a return in the same direction as it has been determined that the prices at similar levels have been forced before and cannot exceed this point.

Dovish

This term entered in the Forex dictionary as Dovish talks about the existence of moderate market conditions. It is stated that prices are more moderate with the pigeon approach.

EA (Expert Advisor)

EA, which is an abbreviation of the word Expert Advisor, is carried out automatically on behalf of the investor thanks to the expert advisor, that is, robot software used in the forex market.

Exotic Parity

The parities with low trading volume in the markets, which are mostly preferred by local investors, are called exotic parities. Examples include Mexican Peso, Turkish Lira, South African Rand and Russian Ruble.

ECB (European Central Bank)

The ECB, which is the English abbreviation of the European Central Bank, is followed in fundamental analysis methods, especially in terms of monitoring the price movements of European currencies.

Commodity

It is mostly called the trade of precious metals and products found in nature as unprocessed raw materials. Gold, silver, petroleum, natural gas, cotton, sugar, copper, corn, wheat and coffee can be cited as examples.

Index

Stock markets that include stocks are called indexes. It is possible to invest in foreign indices and foreign stocks through the forex trading platform.

FED (Board of Governors of the Federal Reserve System)

The abbreviation for the Federal Reserve is called the Fed. The monetary policies to be implemented by the FED, which is a word frequently encountered especially in investments made in the US Dollar, are followed carefully by investors.

Forex

Forex, which is the abbreviation of the words Foreign Exchange, is one of the markets with the largest transaction volume in the world. With Forex, transactions can be made in over 100 parities using leverage and 5 days a week, 24 hours a day.

FOMC (The Federal Open Market Committee)

The Central Bank’s Open Market Operations Committee is the most important financial division in the United States and sets the monetary policy of the reserve system. The FOMC meets 8 times a year in the US state of Washington. All presidents attend the meeting, including 7 members of the board of governors and 5 other central bank presidents, but only 12 members have voting rights.

Graphic

It expresses the shapes consisting of lines with history on the horizontal plane and price levels on the vertical plane. Charts are often used in technical analysis to help us track price movements from past to present.

Hedge

This term entered in the Forex dictionary as ‘Hedge’ is a risk-averse transaction that enables the same amount of transactions in the opposite direction. It is mostly preferred by individuals and institutions to reduce the exchange rate risk.

IB (Introducing Broker)

Forex ibs gain brokerage commission by bringing customers to the institution.

Lever

It acts as an intermediary in a system that provides high profits with a small amount of investment. Thanks to leverage, it is possible to open a position with a volume above the balance.

Take Profit Level

It ensures that an open position is automatically closed in profit if it reaches the desired price level.

Counter Currency

The currency to the right of a pair is called the counter currency.

Short Position

Opening a sell position in order to profit from the price decrease is called a short position.

Commission

Apart from the spread, it also refers to the fee charged by the brokerage houses per lot. These commissions can be received in more ECN account types.

Liquidity

It is defined as the rate at which a market or financial instrument is turned into cash. While the Forex market is more liquid than the stock market, the stock market is more liquid than the real estate market.

Buy Limit

It is attempted to send a purchase transaction at a level below the market price.

Limit Sale

It is attempted to send a sale transaction at a level higher than the market price.

Long

Its counterpart is ‘long’, that is, it shows the buy positions.

Lot

It represents the value of 100,000 units in the base currency of the pair. For example; 1 lot of UsdTry transaction is equivalent to $100,000 transaction.

Margin

It refers to the minimum collateral amount required to open a buying or selling transaction. Margin value can be calculated according to variables such as leverage ratio and traded product.

Margin Call

It warns that an investor with an open position may experience collateral problems due to price movements, and expresses a warning to increase their collateral or close their position.

Market Maker

Intermediary institutions defined as ‘market makers’ that offer their investors the price that can be traded on their platforms are called.

Meta Trader

It is called a trading platform that allows forex transactions to take place online.

Mini Lot

It represents the size of 10,000 units of the base currency on the left side of a currency pair.

Ounce

It is used to calculate the price of precious metals such as rubies and diamonds, especially gold and silver. 1 ounce of gold is equal to 31.1034768 grams of pure gold.

Parity

The currency pair that measures the value of the currencies of two countries relative to each other is called parity.

Pip

This term entered in the Forex dictionary as pip, short for Price Interest Point, is the smallest price movement of the pair.

Pivot

It is used to determine the support and resistance levels of the prices on the chart while performing technical analysis. The pivot point is found by averaging the previous day’s high, low and closing price level.

Profit

The profit obtained is used in the sense of return.

Roll Over

It is used in the sense of postponement or postponement. In forward cfd transactions in the Forex market, it means that the position is protected at the expiration date and automatically opened with a new maturity.

Scalping

It is often tried to open and close trades in order to make small profits.

Sell ​​Limit

It is attempted to enter a sell order at a price above the market price.

Sell ​​Stop

It is attempted to enter a sell order at a price below the market price.

Free Margin

While existing transactions are in progress, the available balance in the account is called up in order to open a new transaction.

Short

A short position is to open a sell transaction with the expectation that prices will decrease.

Silipage

It shows the difference between the current price and the realized transaction price at the opening or closing of a transaction. It occurs mostly in highly volatile markets.

Spike

It is called very sharp movements and jumps seen in the price quotation. It happens especially during the release of important economic data such as Non-Farm Employment.

Spot price

It is defined as the current, instant prices of the market where the transaction is made.

Spread

It indicates the difference between the buying and selling price of a financial instrument. The profit of the brokerage houses is the spread.

Stop Loss

It ensures that the prices are automatically closed from loss when they reach the predetermined level. It avoids the risk of the investor making more losses.

Stop Out

It is attempted to automatically close the transactions by the system by taking a certain ratio with the balance of the investor’s losing positions.

Swap

It is defined as the overnight transportation cost. If the current trading position is not closed on the same day and is moved to the next day, swap costs are incurred.

Take Profit

It ensures that the prices are automatically closed profitably when they reach the determined level.

Technical analysis

It provides prediction of future prices of a financial instrument with the help of certain statistical calculations by looking at its past movements.

Fundamental Analysis

It provides an estimate of the future price of a financial instrument based on expectations of economic data such as inflation and employment.

Over-the-Counter Market

This term entered in the Forex dictionary as ‘Over the Counter’ describes markets that are not listed on any exchange, such as Forex.

Trader

It is called investors who buy and sell transactions in financial markets for profit or hedging.

Trend

The price indicates the trend direction of the index or indicator.

Dispute

Used in technical analysis, it describes situations that show that prices and indicators do not move in harmony.

Long Position

It is called opening a buy order on an instrument with the expectation of a rise.

Volatility

Prices represent the general level of volatility.

SEE ALSO; What is a Forex Robot and How to Use It?

Share this article

Leave a Reply

Your email address will not be published. Required fields are marked *