A

Account Manager- A professional assistant who personally handles all client's issues regarding trading, platform and website issues.

Active Account- An account which can be used for trading and processing of orders and other transactions.

Advisor- Automated account control program.

Appreciation- Describes a currency strengthening in response to market demand rather than by official action.

Arbitrage- The process of buying and selling an identical (or very similar) financial instrument at the same time on different markets.  True arbitrage requires that the financial instrument is trading at two different prices, and that the buying and selling trades can be completed at the same time.

Ask Rate- The ask price is the price that a seller is willing to accept for a security. Ask is the opposite of bid.

Asset allocation- An investment strategy that tries to maximize gains while minimizing risks by adjusting the percentage of each asset in an investment portfolio, according to the investor's own investment goals, risk tolerance and time frame.

B

Balance- The total financial result of all completed transactions and deposit/withdrawal operations on the Trading Account.

Bar chart- A type of chart that is used frequently by technical analysts and traders.  Price data is represented on a vertical bar.  The top of the bar is the highest price and the bottom of the bar the lowest.

Base currency- The currency which is the base for quotes. For example, the euro is the base currency for EURUSD quotes, while the US dollar is the base currency for USDJPY.

Bear market- A market in which prices decline sharply against a background of widespread pessimism (opposite of Bull Market).

Bid rate- Bid rate is the highest price that the seller is offering for the particular currency at the moment. 

Broker- In the foreign exchange market brokers act as intermediaries between banks, bringing buyers and sellers together for a commission paid by the initiator or by both parties.

Bull market- A market that is characterized by rising prices.

Buy- A recommendation to purchase a specific security.

C

Candlestick chart- A candlestick chart is a type of price chart widely used by technical analysts.  Candlesticks capture the same price information as a bar chart: the open, high, low and close.  A thick box joins the open and close values.  Thin lines on either end of the body join the high and low prices.  If the open value is higher than the close value, the body of the candle is solid or colored.

Closed position- A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.

Closing price- The last price at which a security is traded on a given trading day.

Commission- The fee charged by a broker for handling transactions. Commissions vary from broker to broker.

Commodity- A natural raw material used as a foodstuff or in manufacturing.

Currency pair- Two currencies with exchange rates that are traded in the retail forex market.

D

Day trader- An investor who opens and closes trades on the same day. A day trader tries to profit by making rapid trades in a single trading day and closes out all positions before the market close.

Deposit- An amount of money transferred into client's personal account with the purpose of trading.

Derivative- An instrument whose price is dependent upon or derived from one or more underlying assets. Common types of derivatives include futures, options, warrants and convertible bonds.

Devaluation- Deliberate downward adjustment of a currency against its fixed parities or bands which is normally accompanied by formal announcement.

Discount- Selling below the listed price.

E

ECN- Electronic Communications Networks, are electronic stock markets which anonymously match buy and sell orders.

Equity- The amount of funds contributed by traders plus retained earnings or losses.

Exchange- A marketplace where currencies, securities, options, futures, or commodities are traded.

Exchange rate- The cost of exchanging one country’s currency for another country’s currency.

Execution- An execution occurs when an open order for a chosen instrument is filled.

Expiration date- The final day that a futures or options contract is valid. Also called "expiry."

F

FED- The United States Federal Reserve.

Fixed- A IFX4U flat rate plan, which offers fixed spreads trading at all times.

Floating profit/loss- Current profit/loss on Open Positions calculated at the current Quotes.

Floating exchange rate- An exchange rate where the value is decided by the market forces dictating the demand and supply of that particular currency.

Forex- Foreign currencies cash market, where currencies of different countries are traded against each other.

Fundamental analysis- Analysis based on economic and political factors.

Futures- Futures are the buying or selling of a standard quantity of a financial asset or commodity at a future date and at a fixed price.  Futures, unlike forwards, are standardized contracts and must be traded on a recognized exchange.

G

GDP- Gross domestic product. Total value of a country's output, income and expenditure.

H

Hedging- An investment with the objective of taking two or more contrary positions on the same product in order to reduce the risk of losing.

I

Index- A statistical measure of the state of the stock market, based on the performance of stocks. 

Initial Margin - The margin required to open a position.

Instant Execution – A mode of execution that allows clients to make deals at the current market prices, which appear at the Market Watch.

Instrument – Any traded product.

J

Joint account- A form of ownership in which two or more parties have equal interests in the account and in which title to the entire account goes to the survivor(s) upon the death of one of the account holders. 

L

Leverage- a financial tool which allows increasing market exposure to a point that exceeds their actual investment.

Limit order- An order to buy or sell a contract at a specified price or better.

Liquidity- The degree to which an asset or security can be bought or sold in the market without affecting its price. Liquidity is typically characterized by a high level of trading activity. Assets that can be easily bought or sold are called liquid assets.

Long position- Purchasing or buying of a financial instrument.

Lot - Refers to the size of the trade.

M

Margin-The amount of money a client must have as collateral to support a position opening.

Money manager- A Professional Advisor who specializes in trading for client accounts instead of gathering customer assets.

Moving average- A technical Indicator showing the average instrument price value for a certain period of time. 

N

Necessary Margin - the margin required by the Broker to maintain open positions.

O

Option- An option contract gives the buyer or holder the right, but not the obligation, to buy or sell an underlying financial asset or commodity.  Unlike futures, where the buyer has to fulfill the contract, an option gives the choice of whether to exercise or not. 

Order- An instruction from the client to the company to open or close a position.

Over the Counter (OTC)- Used to describe any transaction that is not conducted over a regulated exchange.

P

Pip- The smallest demerit of a currency price, found at the fourth digit- 0.0001= 1 pip.

Pending Order - an instruction from the client to the company to open a position once the price has reached a certain level.

Position- The netted total exposure in a given currency. A position can be either flat or square, long or short.

Profit- the actual clean gain after all expenses deduction. 

Q

Quote- The price quoted for information purposes but not to deal.

R

Rate- the price of one currency in terms of another.

Resistance- A price level at which a turning point downward is expected to occur. In case the instrument crosses a resistance level, a new resistance is set up.

Risk management- The calculation of all possible risks in accordance with possible profits. With respect to foreign exchange market, risk management involves, among others, consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.

Rollover- The carrying of opened positions to the next trading session based on the interest rate differential of the two currencies.

S

Short Position- Selling of a financial instrument.

Spread- The difference between the bid and ask prices of a currency or any other instrument.

Stop order- An order to sell/buy at or below a specific price.

Stop loss- An order to close a position when a particular price is reached in order to minimize loss.

Support Level- A price level at which a turning point upward is expected to occur.

Swap- The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward, or in other words positive or negative.

T

Technical analysis- A study of a price that reflects the supply and demand factors of a currency.

Tick- The minimal degree of a currency change (pip).

Transaction- The buying or selling of a financial instrument, resulting from the execution of an order.

Trend- The current direction of an instrument or the market in general.

V

Volatility- A statistical measure of the distribution of returns for a specific instrument or market index. Volatility can be measured by using the standard deviation or by the variance between returns from the same security or market index. Typically, the higher is the volatility, the riskier is the instrument.

Volume- The number of contracts, shares or other unit traded during a specific period.

W

Working day- A day on which the banks in a currency's principal centre of finance are open for business. For Forex transactions, a working day only happens if the banks of both currencies are operating.

Y

Yield curve- A graph showing changes in yield on instruments depending on time to maturity. A system originally developed in the bond markets is now broadly applied to various financial futures.