Concerns over Local Currencies’ Strength Boost Dollar 2012

Indications from around the globe of a more restrictive official stance toward capital flows and currency volatility have been contributing to a reduction in risk appetite in trading recently. Concerns in countries outside the U.S. and China are mounting over the weak Dollar and Yuan. Recently several emerging-market central banks have taken measures seen as an attempt to control their currency’s appreciation versus the Dollar. The link of the Yuan to the weakening Dollar continues to push the Chinese currency down, adding to pressure from China’s export competitors to let the Yuan appreciate.

Brazil, South Korea and Indonesia have unveiled this past week various measures and forms of capital control to help better manage foreign exchange risks and imbalances. These measures are seen as attempts to limit their respective currencies’ appreciation versus the Dollar.

As the U.S is the world’s largest importing economy and China is the world’s largest exporting economy the continuous weakness in these currencies is hurting exporters in competing countries. The exporters suffer both from erosion in profits as well as extreme competition from China which hinders global economic recovery.

This concern over the strength of local currencies aided the USD during Thursday’s trading and if the restrictive stance is set to continue, these one sided interferences with the exchange rate might provide a much needed boost to the Dollar.

source: forexyard.com

AUD and NZD Decline on Reduced Risk Appetite 2012

The Australian and New Zealand Dollars headed for their first weekly loss against the USD this month as well as their first weekly decline versus the Yen in three weeks as Asian equities extended a global slump, reducing demand for higher yielding assets. Putting further pressure on the South Pacific currencies was the release of weak U.S economic data which signaled sluggishness in the recovery of the world’s largest economy, reducing risk appetite further.

The New Zealand Dollar was at 73.07 U.S. cents from 73.11. It has dropped 1.7 % this week. Australia’s dollar was at 91.88 U.S. cents, heading for a 1.4% weekly drop. It slid 1.2% Thursday as a drop in equities discouraged carry trades. In carry trades investors buy higher yielding assets with assets from countries with relatively low interest rates, namely Japan and currently the U.S as well. Borrowing costs are near zero in the U.S. and 0.1% in Japan while interest rates are 3.5% in Australia and 2.5% in New Zealand; this disparity attracts investors to the South Pacific nations’ assets.

Australia’s currency has risen 51% in the past 12 months against the greenback, the top performing currency against the Dollar as the Reserve Bank of Australia became the first central bank to increase borrowing costs twice this year. However, investors are becoming more skeptical as to the chances of a 3rd consecutive increase this December, putting more strain on the AUD.

source: forexyard.com

The EUR Turns Bearish on Waning Risk Appetite 2012

The single Euro-Zone currency slid broadly on Thursday as investors’ revived safe-haven demand for the U.S. and Japanese currencies accelerated the EUR losses. The EUR weakened as equity and commodity markets fell encouraging investors to pare back exposure to risk and buy back the U.S and Japanese currencies against perceived riskier currencies. On Wednesday, the EUR climbed more than half a percent against the dollar but struggled on Thursday to break back above $1.5000.

The European currency fell 0.4% to $1.4911 vs. the U.S dollar on speculation the German economy could face a double-dip recession in late 2010 or early 2011 as extra public spending are withdrawn. The EUR currency also slid to a more than 2 week low against the Japanese yen, although later rebounding to 132.58 yen. However it was still down 0.9% for the day in volatile trading with almost 2 yen separating the day’s high and low.

The British pound depreciated for the first time in 5 days against the EUR, weakening 1% to 89.50 pence. The Pound also dropped vs. the U.S dollar 0.7% to $1.6644 today.
The Sterling fell for a 3rd day versus the U.S dollar after the Daily Telegraph said U.K. lenders are in a worse state than those elsewhere, citing the world’s largest credit-checking company. Analysts said that there are ongoing concerns about the state of the banking sector in the U.K., and that is weighing on Sterling.

source: forexyard.com

U.S Unemployment Claims to Impact the dollar 2012

- It’s the primary gauge of consumer spending, which accounts for a majority of overall economic activity.

- British retail sales have stayed unchanged in the past 2 months, disappointing the Pound. This time, they’re expected to rise by 0.6%. Like in every country, this is a major release; any number will move the market.

13:30 GMT U.S Unemployment Claims

- The number of individuals who filed for unemployment insurance for the first time during the past week.

- This is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes.

16:00 GMT EUR ECB President Trichet Speaks

- The president of the European Central Bank sometimes slips a worried call that shakes the markets, although he’s been rather mild in the last rate decision.

- This week, he speaks in three events: the first was on Wednesday at 8:40 GMT, the second, that focuses on monetary policy, will take place Today at 16:00 GMT is of higher importance, and the third one is about the exit strategy to the crisis, and will happen on Friday at 10:30 GMT – probably the most important speech.

- As head of the ECB, which controls short term interest rates, he has more influence over the EUR value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.

source: forexyard.com

Crude Oil Prices Set to Decrease 2012

Crude oil rose above$80 a barrel on Wednesday as the dollar weakened, prompting investors to once again buy into commodities. However, as I will demonstrate below, Crude Oil may very well be heading for a reversal later today. This might be a good opportunity for forex traders to enter the trend at a very early stage and a great entry price.

• The indicators used are the Slow Stochastic, RSI and MACD.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure.

• Point 4: The MACD indicates an impending bearish cross, which may signal a downward movement is going to occur in the near future.

Crude Oil 4-Hour Chart

source: forexyard.com

Potential Reversal for GBP/CHF 2012

The GBP/CHF pair provides strong signals for a possible change of trends. The pair is reaching towards a support level at the moment. If the level is breached, the downward move is likely to extend.

• The chart below is the GBP/CHF 4-hour chart by ForexYard.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD/OsMA and the Relative Strength Index (RSI).
• The chart provides a very distinct bullish channel. However, the chart is touching its lowest border.
• A bearish cross on the Slow Stochastic has successfully predicted the modest bearish correction that we’re currently experiencing, which led the pair to the 1.6974 level.
• Currently, both the MACD and the RSI are on the verge of indicating a bearish reversal. If the MACD will indeed perform a bearish cross, and the RSI will drop below the 70 line (both marked in red), it will be a string sign for a significant drop.
• There are 3 consecutive support levels that can be observed at the moment. The support levels are placed at the 1.6950, 1.6800 and the 1.6650 prices. If a certain level will be breached, the pair is likely to reach towards the next support level.

source: forexyard.com

Dollar Stabilizes before GDP data 2012

The U.S dollar rose Tuesday as a decline in stocks and dimming expectations about the U.S. economic recovery increased demand for U.S currency perceived as safer. Some investors buy the Dollar, seen as a safe haven, against other higher-yielding currencies and sell assets like stocks and commodities when economic optimism diminishes.

The greenback also climbed on speculation traders exited bets against the dollar before the U.S. Thanksgiving holiday. Analysts said that risk aversion is back in the markets supporting the greenback and putting pressure on high-yielding currencies like the EUR. In the current environment a weak U.S. Gross Domestic Product (GDP) number weighs on sentiment. Traders are a little more sensitive to sentiment changes because they want to get out of positions ahead of the long U.S. weekend.

The Commerce Department will release its second estimate of 3rd quarter GDP at 13:30 GMT today. The data may show the world’s largest economy expanded at a 2.8% annual rate, compared with the 3.5% estimated last month, according to economists. Traders will keep on eye on the advance estimates on corporate profits to be released together with the GDP report. The U.S. economic data have become more mixed and a further poor U.S. economic data and a general desire to reduce risk ahead of year-end are likely to interact to support the U.S dollar.

The Federal Reserve will also release minutes of its Nov. 3-4 meeting at 19:00 GMT, which will include economic projections for the next two years. Market players will particularly focus on the Fed’s forecasts for unemployment in the U.S.

source: forexyard.com

Concerns over Strong Exchange Rate may Support USD vs. NOK 2012

It looks as if the USD may be getting some support against the Norwegian Krone as the Norwegian government plans to begin withdrawing its stimulus. According to the Finance Minister, Sigbjoern Johnsen, “Norway must remove government stimulus or risk faster interest rate increases that would strengthen the Krone and stifle an export recovery”. As a country that is mainly an exporting country, a very strong exchange rate erodes the exporters’ profits and hinders recovery and economic growth.

Norway’s economy is growing quite well and the government continues to stimulate the economy which supports the Krone further; the reason for it being that investors expect the central bank to continue raising interest rates. This expectation has helped the Krone to be the best performer of the 16 most tracked currencies since the end of June. The Krone gained 7.8% against the EUR and 15% against the USD in that period.

The trend receives support from technical analysis as well as can be seen below

• The chart below is the 2-hour USD/NOK chart by ForexYard.

• The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI), and Williams Percent Range.

• There is a fresh bullish cross on the Slow Stochastic which suggests that a bullish movement is building.

• The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• The Williams Percent Range is testing the lower border at the -100 mark, which merely highlights some added upward pressure.

USD/NOK 2-Hour Chart

source: forexyard.com

The USD Rebounds from a 15-Month Low 2012

The U.S dollar advanced against 10 of its 16 most-traded counterparts after Federal Reserve Chairman Bernanke said yesterday central bank policy will ensure that the dollar remains strong.

The greenback managed a brief rally off Monday’s lows after Federal Reserve Chairman Ben Bernanke said the U.S. central bank is attentive to changes in the currency. The USD immediately jumped off the day’s lows with investors finding it unusual for a Fed chairman to talk on the Dollar. A temporary spike in the U.S. currency after the Fed chief’s comments helped it offset some of its session losses to the EUR but was quickly reversed. The USD turned negative as the Fed’s Chairman failed to convince investors that the U.S. would take action to shore up the greenback.

In Tuesday trading the U.S dollar was slightly up versus majors after the previous session’s sharp drop, supported by waning risk appetite as most Asian stock markets slumped. The U.S currency remained under pressure as U.S. equities advanced before Industrial production report which probably rose for a 4th consecutive month in October, signaling manufacturing is leading the rebound in U.S economy. The positive data suggests improvement in the U.S. economy and may embolden investors to move toward riskier assets and away from the relative safe-haven status of the greenback.

source: forexyard.com

Swedish Krona Continues to Gain on the Dollar 2012

The Swedish krona continues to be one the strongest performing currencies against the dollar. Since the beginning of the month, the krona has climbed over 2.5% on the greenback. Last week the outlook for the economic recovery in Sweden was updated as signs the global economic crisis is weakening. This was a catalyst for the krona as the currency further strengthened, particularly against the dollar.

The economic output of Sweden is predicted to fall by 4.9% this year while growing by 2% in the following year. This is according to the Sweden Ministry of Finance. The previous forecasts were slated to be a contraction of 5.2% for the current year and growth of 0.6% in the following year. Unemployment forecasts were also reduced for next year to 10.7% from 11.4%.

The revised forecasts were followed by strong comments from the Swedish Finance Minister, Anders Borg. Borg would like to see further economic policy enacted to assist in the expansion of the Swedish economy. Along with a government stimulus package and spending on new infrastructure projects, the government is in the position to further cut taxes.

These economic measures bode well for the Swedish economy and in particular the krona. It may explain why traders have bid up the price of the krona in recent trading. As the dollar continues to fall against the major currencies and the Swedish government continues to submit favorable legislation on the part of the economy, being short on the USD/SEK is preferred.

source: forexyard.com

Dollar Gains on U.S. Unemployment Data 2012

The dollar rose against most of it major currency pairs on Thursday after U.S. weekly jobless claims came in lower than expected.The weekly report has had greater impact on trading in recent months because of investor concern that the U.S. economic recovery will be tepid and creates few new jobs to replace those lost during the recession.

The USD/JPY cross is actually currently trading higher by 80 pips today at 90.47. However, against the EUR, the Dollar is trading higher by 150 pips at 1.4855, as we see a sharp correction in the pair’s behavior. The GBP/USD pair is level today at 1.6550, as market volatility seems to have slowed down as late night trading approaches.

As for tomorrow, many impacting economic indicators are expected from the U.S. economy. Traders are advised to pay special attention to two leading indicators, the U.S Trade Balance and Prelim UoM Consumer Sentiment. A positive result from both this indicators might boost the Dollar towards another day of rising trends.

source: forexyard.com

Scandinavian Economies Leading Europe out of Recession?

Following last week’s employment data from the United States it appears as if the US Dollar has entered a free-fall and many other global currencies are reaping the benefits. The Scandinavian currencies have largely entered bullish trends against the greenback, but also surprisingly against the EUR.

While some analysts were concerned about a swift Swedish recovery due to the Baltic crisis, most countries in the northerly region have seen strong and steady growth. Norway’s economy has benefited largely from climbing Crude Oil prices and Denmark’s debate about entry into the EU’s legal regulations has helped its economy find direction.

The NOK, SEK and DKK have all climbed to 2-week highs versus the USD, as well as a near-2-week high against the EUR. Following Norway’s decision to hike interest rates recently, the region appears to be on the receiving end of recent risk appetite. If this continues, Scandinavia may find itself leading the broader region out of this economic downturn.

Technical Analysis

- The chart below is the 2-hour EUR/SEK chart by ForexYard.

- The indicators used are the Relative Strength Index (RSI) and the Stochastic (slow).

- Point 1: The RSI shows that this pair is currently over-sold and experiencing upward pressure.

- Point 2: The Stochastic (slow) shows a deep bullish cross followed by an upward cascading price movement. This suggests that there is momentum behind the current upward correction.

source: forexyard.com

EUR/USD Hits $1.50 level 2012

European’s currency rose against a broadly weaker U.S. dollar yesterday after the Group of 20 promised to keep stimulus policies in place until the global economic recovery was assured. The EUR is trading about 1% higher against the U.S. dollar amid general risk appetite for high-yielding assets on Tuesday.

The European currency’s strength was in line with other global currencies that took advantage of renewed risk appetite that suggested U.S. interest rates will stay low for some time; particularly after last week’s soft U.S. jobs data

source: forexyard.com

EUR’s Trends to be Set by German ZEW Economic Sentiment 2012

The EUR’s trends for the upcoming day are likely to be set by the outcome of the German ZEW Economic Sentiment publication at 10:00 GMT. The forecast is 58.9, versus the 56.9 previous result. A result matching the forecast, or even better is likely to boost the EUR. Therefore, we could see the EUR/USD cross surpass the 1.5050 level. However, a result worse than this could lead to a very bearish EUR indeed. Traders, it is highly recommended that you open your positions in the EUR’s main crosses as soon as possible.

source: forexyard.com

USD/JPY on Course for Bearish Correction 2012

USD/JPY sustained upward movement has finally pushed its price into the over-bought territory on the hourly chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

USD/JPY Hourly Chart

source: forexyard.com

U.S. Unemployment Claims to Set the Pace of the USD 2012

The U.S. Unemployment Claims Report will set the pace of the USD today. Despite the Dollar diving against the GBP so far today, in the coming hours there is some mouthwatering data that is set to be released from the U.S. Britain kept her rates unchanged earlier today, as the Bank of England (BoE) revealed that its quantitative easing will conclude sooner rather than later. This is why the GBP/USD cross is set for a 3 day winning streak. The pair is already up by over 100 pips today at the 1.6618 mark.

However, in the coming few hours, the leading currencies, such as the GBP/USD cross will be under much pressure from the Dollar, as a string of data is set to be released from the U.S. At 13:30 GMT, the Unemployment Claims, Prelim Nonfarm Productivity and the Prelim Unit Labor Costs will all be published simultaneously from the U.S. Surrounding these releases; there will be very high volatility in the forex market. Thus to open big positions in the U.S. Dollar now will be the wisest decision that you make this week.

source: forexyard.com

The U.S Dollar Slips after Fed Decision 2012

The USD lost some ground against major counterparts Wednesday after the Federal Reserve left Interest Rates unchanged and made only slight changes to its monetary statement. The greenback slid 0.9% to $1.4860 per EUR from $1.4724 yesterday.

It touched $1.4902, the weakest level since Oct. 27. The U.S dollar suffered a broad-based decline, trading lower against every major foreign denomination except the Japanese yen. The Dollar advanced 0.8% to 91.03 yen, from 90.33.

As expected, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%. The central bank said it would buy $175 billion of agency debt, down from prior plans to purchase $200 billion, as there was a limited availability of the securities.

The Dollar was not forecast to gain any serious ground to the EUR for many more months or at least until the U.S. Federal Reserve decides the time is right to raise rates. A decision and statement later Wednesday from the Fed should confirm that will not come for some time.

source: forexyard.com

USD/NOK Expected to Rebound Today 2012

In yesterday’s trading, the USD/NOK cross experienced much bearishness, as it now stands at 5.6840. However, it seems that this trend may be coming to an end. I will illustrate below that the USD/NOK may very well be heading for a reversal. Forex traders have the opportunity to wait for the upward breach on the hourlies and go long in order to ride out the impending wave.

• The technical indicators that are used are the Williams Percent Range and Slow Stochastic.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 3: The Williams Percent Range indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

USD/NOK 4-Hour Chart

source: forexyard.com

USD/ZAR Looks to Drop towards the 7.60 Level 2012

After stretching the Fibonacci Retracement lines, it becomes very clear that the pair is testing a very significant support level at the moment. If the pair will breach this level, the next support level looks to be located at 7.60.

• The chart below is the USD/ZAR chart by ForexYard.

• The technical indicators used are the Bollinger Bands, the Relative Strength Index (RSI), the Slow Stochastic and the MACD/OsMA. The Fibonacci Retracement lines are used as well.

• The Slow Stochastic shows a sequence of bearish crosses, and has recently located below the 20 line. This indicates that the pair’s downtrend could extend.

• The MACD provides a clear bearish signal as a bearish cross has recently taken place. The MACD is pointing directly down, strengthening the bearish indication.

• The pair is currently traded around the 50% line located at the 7.74 level. It seems that if the pair will breach the 7.725 level, a sharp drop could take place with potential to reach the 7.60 level – the 38.2% line, the next significant support level.

• The RSI is currently located near the 30 line. If the RSI will drop below this line, this will state that the pair has reached the Over-Sold zone, and could put extra bearish pressure on the pair.

source: forexyard.com

Impending Bearishness for GBP/USD 2012

The GBP/USD cross has experienced a bullish trend for the past day. However, it seems that this trend may be coming to an end, as described below. Forex traders can take advantage of this imminent downward movement by entering short positions at an excellent entry price.

• The technical indictors used are the Slow Stochastic, Relative Strength Index (RSI) and Williams Percent Range.

• Point 1: Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-bought territory, indicating downward pressure.

• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The Williams Percent Range also supports the downward direction.

GBP/USD Hourly Chart

source: forexyard.com

EUR/USD Channel Line 2012

A long term perspective may be taken with an existing channel line and an opportunity for entering the market may exist for the EUR/USD pair.

The original trend line (1) has been drawn, connecting with yesterday’s closing price of 1.4732. A parallel channel line (2) has been drawn from the prominent peak of 1.3630. Notice the pair has dropped down to the original trend line at yesterday’s close and is now proceeding upward. This may present an opportunity for entering into the market with a new long position.

source: forexyard.com

M 2012

1.


M1


Money supply component which consists of all cash in circulation, plus all of the money held in checking accounts, as well as all the money in travelers checks.


2.


M2


Money supply component which consists of M1 plus all of the money held in money market funds, savings accounts, and small Certificates of Deposits.


3.


M3


Money supply component which consists of M2 plus all of the large Certificates of Deposits.


4.


Maintenance


A set minimum margin that a customer must maintain in his margin account. See also: Maintenance Margin


5.


Maintenance Margin


The minimum margin that must be available in an account to support all open trades.


6.


Make A Market


A dealer makes a market by providing a two-way quote a bid and ask price in which they stand ready to buy or sell. In this way, dealers are also known as market makers.


7.


Managed Float


Exchange rate policy where central banks regularly intervene to stabilize and/or steer the direction of their currency.


8.


Manual Trader


A trader that inputs his/her trades manually without an API.


9.


Margin


The minimum deposit required to maintain an open position. For example, with an open position of $250,000 and a leverage of 50, the required margin would be $5000.


10.


Margin Account


An account that allows leverage buying and short selling on credit.


11.


Margin Call


A notification that more funds must be deposited into an account because the value of the account has fallen below the minimum margin needed to cover the size of existing positions.


12.


Mark-To-Market


For an open position, what its value would be if it were closed out at the current market rates.


13.


Market Close


In the 24-hour forex market, the market never closes. For administrative purposes, many banks institute 5pm EST as the market close in order to differentiate between value dates, as well as More…


14.


Market Maker


A dealer who provides a two-way quote a bid and ask price in which they stand ready to buy or sell. In this way, dealers are also known as market makers.


15.


Market Order


An order for immediate execution at the best available price.


16.


Market Rate


The most current quote for a currency pair.


17.


Market Risk


The risks that occur when demand and supply pressures in the market cause the value of an investment to fluctuate.


18.


Martingale System


A betting strategy where the gambler doubles his/her bet after every loss, so that the first win recovers all previous losses plus wins a profit equal to the original stake. This strategy More…


19.


Maturity


The date on which payment of a financial obligation is due.


20.


Maximum Leverage


The biggest position that a margin deposit would cover. At a leverage of 50, one could enter a maximum leveraged position of $100,000 by depositing $2,000 worth of margin.

forexglossary.com

N 2012

1.


Naked Put


A put sold by someone who is not short the underlying asset.


2.


Narrow Market


Also known as a thin market, where there is light trading.


3.


NAV


Net Asset Value. The total value of an asset less liabilities. In the case of a trading account, the NAV is the balance of deposits, realized and unrealized profit/loss, and interest, minus More…


4.


Negative Carry Pairs


A carry trade where you are long the lower interest currency and short the higher interest currency. This type of trade might be part of a hedging strategy.


5.


Negative Sloping Yield Curve


A yield curve is a graph that plots the various yields (usually government bonds) beginning with short term rates on the left side of the graph and extending towards long term rates to the More…


6.


Net Interest Rate Differential


The difference in the interest rates associated with two currencies.


7.


Net Position


Currency positions that have not been offset with opposite positions.


8.


Netting


Settlement method where only the difference (profit or loss) is settled at the close.


9.


New Zealand dollar


The New Zealand dollar is the currency of New Zealand. It also circulates in the Cook Islands, Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents. See also: NZD


10.


News Trader


An investor who bases his/her decisions on the outcome of a news announcement and its impact on the market.


11.


NFP


Non-Farm Payroll. Reported monthly, this figure represents the total number of paid U.S. workers of any business, excluding farm employees, general government employees, private household More…


12.


Noise


The term used to describe market activity that does not always match overall market sentiment, resulting in a series of variables that, in reality, do not match their modeled counterparts. More…


13.


NOK


Currency symbol for the Norwegian Krone.


14.


Non-Client Order


An order on an exchange that is made by a participant firm or on behalf of a partner, officer, director, or employee of the participant firm. Where a participant firm is a firm that is More…


15.


NYCE


New York Cotton Exchange.


16.


NZD


NZD is the currency symbol for the New Zealand Dollar. See also: Kiwi

N 2012

1.


OCO


See also: One Cancels the Other Order


2.


Odd Lot


A non-standard transaction size. In forex, a standard lot is usually 100,000 units of a particular currency.


3.


Off-Shore


A business entity that may or may not be physically located in a country, but whose operations and regulation fall outside the country, primarily because it is incorporated elsewhere.


4.


Offer


Also known as the Ask Price, it is the price at which a seller is willing to sell.


5.


Offer Price


See Offer.


6.


Old Lady


Term for the central bank of England.


7.


Omnibus Account


An account that one futures commission merchant carries for another in which the transactions of multiple individual account holders are combined. The identities of the individual account More…


8.


One Cancels the Other Order


Two orders that are submitted simultaneously. If either one is executed, the other one is automatically canceled.


9.


Open Order


Buy or sell order that does not expire until canceled. In theory the order does not expire. However, it usually does so at the end of the trading month rather than lasting forever.


10.


Open Position


A position whether long or short that is subject to market fluctuations and thus profits or losses. See also: Closed Position


11.


Options


The right, but not the obligation, to buy (long call) or sell (long put) an underlying asset.


12.


Order


Instructions to buy or sell.


13.


Oscillators


Technical analysis tools that provide buy and sell signals, characterized by a signal that oscillates between overbought and oversold levels.


14.


Out of the Money


When the strike price of the option is more expensive than the underlying asset’s current price.


15.


Over the Counter


Refers to trading that is not done over a formal exchange. Traditional forex is traded over the counter, meaning traders entered into forex transactions with one another over telephones or More…


16.


Overbought


A currency pair is overbought when its price rises much more quickly than usual in response to net buying. Once overbought, the pair is then expected to make a contrarian move, meaning its More…


17.


Overheated Economy


An economy with inflation and high interest rates.


18.


Overnight


Trades that extend past the current trade day into the next.


19.


Overnight Limit


The maximum amount of a net long or short position that a dealer can carry over into the next dealing day.


20.


Overnight Position


A dealer’s net position that is carried into the next trading day.

forexglossary.com

P 2012

1.


Par


The official value of a currency.


2.


Par Spread


The term used to describe the situation where the bid and ask prices for a forward spread rate are identical.


3.


Paris


Nickname for the US Dollar-French Franc currency pair before the French Franc was converted to the Euro.


4.


Parity


See Purchasing Power Parity.


5.


Partial Lot


Some brokerages allow trading in partial lots, which are fractions of 100,000 units that normally make up a full lot.


6.


Pegged


A system where a currency’s value is tied with that of another currency. For example, the Chinese yuan with the US dollar. Most pegs are allowed to deviate within a small band.


7.


Petrodollars


Refers to the forex reserves as a result of oil sold by oil producing nations.


8.


Pip


The smallest upward or downward price movements quoted in forex. In EUR/USD, a movement of 0.0001 is one pip (for example, from 140.005 to 140.004 euro). In USD/JPY, a movement of 0.01 is More…


9.


Point & Figure Charts


Technical analysis graphs that focus solely on price without any consideration of time.


10.


Political Risk


Changes in government policy or to a wider extent, government instability that might have negative effects on the currency.


11.


Position


A trade that is still in effect. See Open Position and Closed Position.


12.


Premium


See Carry.


13.


Premium Spread


Refers to the situation where the bid price of a forward spread rate is greater than the ask price.


14.


Price


The cost of purchasing a second currency in terms of a first currency.


15.


Price Transparency


The ability of all market participants to trade at the same price.


16.


Principal Value


The original amount invested.


17.


Principals


Refers to the major currencies that are traded.


18.


Producer Price Index


An economic indicator that gauges the month-to-month price change that producers receive for their output.


19.


Profit Taking


Closing a position in order to realize a gain.


20.


Purchasing Power Parity


Refers to functional equivalency. It is the relationship between the amount of currency needed to buy a common good in one country and the amount needed to buy the same good in the second More…

forexglossary.com

Q 2012

1.


Quantitative Analysis


A technique used to analyze an observed behavior by employing complex mathematical and statistical modeling, measurement, and research.


2.


Quantitative Easing


Quantitative easing is a monetary tool used by central banks to encourage spending within an economy. One of the most well-known instances of quantitative easing remains the Bank of More…


3.


Quote


When both a bid and ask price are provided for a currency pair.


4.


Quote Currency


The second currency of two in a currency pair. For the EUR/USD, USD is the quote currency. The exchange rate quoted is how many units of the second currency you will receive for one unit of More…

forexglossary.com

R 2012

1.


Rainbow Option


An option that has two or more underlying assets. The option only pays out when all the underlying assets act accordingly.


2.


Rally


A period where prices surge upward.


3.


Range


The difference between the highest and lowest price of a currency pair during a given trading period.


4.


Rate


Price at which a currency can be purchased or sold against another currency.


5.


Rate Differentials


The difference between the interest rates of two countries. The country with the higher interest rate will attract investment that will be financed in the lower rate country.


6.


Rate of Return


The percentage of money gained or lost on an investment relative to the amount of money invested.


7.


Ratio Spread


Holding an unequal amount of long and short options positions. Two short and one long is a popular ratio spread strategy.


8.


Reaction


When prices fall after a period of advance.


9.


Realized P/L


The profit and loss that is generated by closing a position.


10.


Reciprocal Currency


A currency pair involving the US Dollar in which the US Dollar is not the first currency quoted. An example is the euro which is the base currency when paired with the US dollar. EUR/USD is More…


11.


Regulated Market


A market in which a government agency monitors and regulates industry activity to protect investors. An example is forex trading in the United States.


12.


Resistance


Price level at which technical analysts note persistent selling of a currency.


13.


Resistance Point or Level


See Resistance.


14.


Retail FX Market


Comprises a wide range of non-institutional traders, from large organizations to individual investors. In less than 10 years, a relatively small number of online currency brokers and market More…


15.


Retail Side


The sale of services, goods, or commodities in small quantities directly to consumers.


16.


Revaluation


Daily calculation of potential profits or losses on open positions based on the difference between the settlement price of the previous trading day and the current trading day.


17.


Revaluation Rate


A rate, possibly historical (as in the closing rate for the previous trading day), which is used to revalue a dealer’s position or book.


18.


Right Hand Side


Refers to the ask or offer price. This is the price at which traders buy.


19.


Risk (Foreign Exchange Risk)


The risk that the exchange rate on a foreign currency will move against the position held by an investor such that the value of the investment is reduced.


20.


Risk Capital


The amount of money one could risk without impinging on one’s accustomed lifestyle.

forexglossary.com

S 2012

1.


S/N Roll


See Spot/Next Roll.


2.


Same Day Transaction


A position that is opened and closed on the same day.


3.


Sell Limit Order


An order to execute a transaction only at a specified price (the limit) or higher.


4.


Sell Stop


A limit order with a limit placed below the current market price. Once triggered, the limit order becomes a market order.


5.


Selling Rate


Same as the Ask or Offer rate.


6.


Selling Short


Selling a currency pair that involves being short the base currency and long the quote currency, with the intent of buying the currency pair at a later time when prices are lower in order More…


7.


Settlement


The physical delivery of currencies made when a contract matures. In forex, it is usually two days after the trade. In practice, traders don’t take delivery, but profits and losses are More…


8.


Settlement Date


In forex, the date when physical delivery must take place. For most currency pairs it is two days after the trade date. However, the USD/CAD currency pair settles one day after its trade More…


9.


Settlement Risk


Loss as a result of one’s counter-party being unable to settle.


10.


Short


Selling a currency pair that involves being short the base currency and long the quote currency, with the intent of buying the currency pair at a later time when prices are lower in order More…


11.


Short Call


An option that obliges the seller to sell the underlying asset to the buyer.


12.


Short Covering


Buying the exact same units of a currency pair to offset an earlier short sale of the same currency pair.


13.


Short Position


In foreign exchange, when a currency pair is sold, the position is said to be short. It is understood that the primary currency in the pair is ‘short’, and the secondary currency More…


14.


Short Put


An option which obliges the seller to buy the underlying asset from the buyer.


15.


Short Sale


See Selling Short.


16.


Short Squeeze


When short sellers frantically scramble to cover their short positions as the market is experiencing a sharp upward movement. The attempt exacerbates the problem because more buying makes More…


17.


Shout Option


An option that lets the holder lock in profits while continuing to participate in the movement of the underlying asset.


18.


Sidelined


When there is above ordinary interest in a currency pair, other major currency pairs that are thinly traded as a result of this are considered sidelined.


19.


Slippage


It’s the experience of not getting filled at (or even very close to…) your expected price when you place a market order or stop loss. This can happen because either: market price is More…


20.


Society for World-wide Interbank Telecommunications


Global electronic network for forex settlement, whose office is based in Belgium. Known for the SWIFT Code, which is an 8 or 11 alphanumeric character international standard that uniquely More…

forexglossary.com

U 2012

1.


Unconvertible Currency


A currency that cannot be exchanged for another because of foreign exchange regulations.


2.


Uncovered


See Open Position.


3.


Under-Valuation


See Undervalued.


4.


Undervalued


When a currency is below its purchasing power parity it is considered undervalued.


5.


Unit


A widely used quantity of currency. In FXTrade, one unit of USD is equal to one United States dollar, while one unit of EUR is one euro. For JPY, one unit is equivalent to one yen. One unit More…


6.


Unrealized P/L


A hypothetical valuation of the current position and the resultant profit or loss if the position were to be liquidated at that moment.


7.


Uptick


A trade that must be executed at a price higher than the previous trade. Certain rules on the New York Stock Exchange require this during sessions of extreme volatility.


8.


US Dollar


The currency of the United States of America.


9.


US Prime Rate


The interest rate at which banks in the US will lend to their most valued customers.


10.


US Treasury


The department within the United States government that is responsible for issuing Treasury bills, notes, and bonds.

forexglossary.com

V 2012

1.


Valuation


The process of determining the value of an asset or company.


2.


Value Date


The settlement date for a currency contract, usually two business days. For USD/CAD it is one business day.


3.


Variation Margin


Funds, which are required to bring the equity in an account back up to the initial margin level, calculated on a day-to-day basis.


4.


Volatility


Measure of how much the price of a currency changes over time.


5.


Vostro Account


An account of a foreign bank held at a domestic bank where the foreign bank has no branches. It is used for cash management purposes. Vostro means yours in Latin. See Nostro Account.

forexglossary.com

Electronic Communication Network 2012-2013

ECN
An electronic communication network (ECN) is the term used in financial circles for a type of computer system that facilitates trading of financial products outside of stock exchanges. The primary products that are traded on ECNs are stocks and currencies. FX ECNs broker provide access to an electronic trading network, supplied with streaming quotes from the top tier banks in the world. By trading through an ECN broker, a currency trader generally benefits from greater price transparency, faster processing, increased liquidity and more availability in the marketplace.

ECN broker 2012

Forex ECNs broker provide access to an electronic trading network, supplied with streaming quotes from the top tier banks in the world. By trading through an ECN broker, a currency trader generally benefits from greater price transparency, faster processing, increased liquidity and more availability in the marketplace.

Electronic Communication Network 2012

ECN
An electronic communication network (ECN) is the term used in financial circles for a type of computer system that facilitates trading of financial products outside of stock exchanges. The primary products that are traded on ECNs are stocks and currencies. FX ECNs broker provide access to an electronic trading network, supplied with streaming quotes from the top tier banks in the world. By trading through an ECN broker, a currency trader generally benefits from greater price transparency, faster processing, increased liquidity and more availability in the marketplace.

NZD 2012

NZD is the currency symbol for the New Zealand Dollar.

New Zealand dollar 2012

The New Zealand dollar is the currency of New Zealand. It also circulates in the Cook Islands, Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents.

Kiwi 2012

Traders term for the New Zealand Dollar.

Slippage 2012

It’s the experience of not getting filled at (or even very close to…) your expected price when you place a market order or stop loss. This can happen because either: market price is simply moving too fast, the market is not liquid or you’re talking to an unmotivated broker.

Swap 2012

A transaction that moves the maturity date of an open position to a future date.

Bank of Japan 2012

The central bank of Japan. The Bank is often called Nichigin (日銀) for short. The Bank of Japan is headquartered in Nihonbashi, Tokyo, on the site of a former gold mint (the Kinza) and, not coincidentally, near the famous Ginza district, whose name means “silver mint”. www.boj.or.jp/en/

Good-Till-Сancelled order (GTC) 2012

type of limit order that remains in effect until it is either executed (filled) or cancelled, as opposed to a day order, which expires if not executed by the end of the trading day. A GTC option order is an order which if not executed will be automatically cancelled at the option’s expiration.

Adjustable Peg 2012

Exchange rate regimen where a currency’s exchange rate is pegged (fixed) in relation to a stronger currency, such as the US dollar or the euro. The pegged rate is adjusted occasionally in an attempt to improve the country’s competitive position. For example, China’s yuan is sometimes pegged to the US dollar.

Aggregate Risk 2012

A bank’s exposure to forex contracts from a single customer.

Agio 2012

A fee charged to exchange money from one currency to another.

API Trading 2012

Trading that is conducted through an Application Programming Interface. APIs, such as the one available for FXTrade, enable users to build custom trading functionality into their own software systems.

APIs 2012

Application Programming Interface, used in forex to automate trading.

Arbitrage 2012

Profiting from differences in the price of a single currency pair that is traded on more than one market.