caiibforex glossary

7/26/2019 CAIIBForex Glossary

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Appreciation growth, a currency is said to 'appreciate' when it strengthens in price in response to market demand.

Arbitrage a purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market, in order to takeadvantage of small price differentials between markets.

Ask price the rate at which a client carries out a trading operation of buying. It is shown on the right side of the quotation.

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Balance the amount in the traders account after the last complete transaction.

Bar chart a type of chart which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, whichis marked with a little horiontal line to the left of the bar, and the closing price, which is marked with a little horiontal line of the right of the bar.

Base currency the first currency in a currency pair.

Bear a market participant, who thinks the prices will go down.

Bear market a market distinguished by declining prices.

Bid price the rate at which a client carries out a trading operation of sale. It is shown on the left side of the quotation.

Bookmakers working time the time during which the !ookmaker accepts bets, opens and closes positions.

Breakout the prices crossing of support or resistance levels.

Broker 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 the prices will go up.

Bull market a market distinguished by rising prices.

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Clearing the process of settling a trade.

Close position to sell or buy a certain amount of currency to offset an equal amount of the open position. "his will 'square' the position.

Commission a fee the broker charges for a transaction.

Confirmation is seen when one or more indicators confirm the data of another one.

Consolidation the same as deadlock field. #onsolidation, however, assumes continuation of the preceding tendency.

Contract the standard unit of trading on certain e$changes.

Contract for difference, CFD is over%the%counter market trading instrument that allows to trade on the stock without a real delivery.
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Counter currency the second currency in a currency pair.

Cross currency pairs, Cross rate a rate between two foreign currencies with the e$ception of &(. )or e$ample: *&+-!.

Currency any official form of money.

Currency pair the two currencies that make up a foreign e$change rate. )or e$ample, *&+&( is a currency pair.

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Day trading opening and closing the same position or positions within the same trading session.

Deficit a negative trading or payment balance.Depositthe money placed at a trading account for further operations.Deriatie a contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument./n 0ption is the most common derivative instrument.Diergence a discrepancy, when two or more inde$ charts show discrepancy with the price chart.Downtrend a trend descending, accompanied by diminishing ma$imums andor minimums.

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!lliott "ae theory a system of analysis and price forecast based on +. 1. *lliotts theory. "he main point of it is that the price movement has2 waves in one trend direction waves followed by 3 correction waves.

!uro *uropean &nion currency.

!uropean Central Bank, !CB the #entral !ank for the new *uropean 4onetary &nion.

!uropean #onetary $nion !#$ the principal goal of the *4& is to establish and maintain a single *uropean currency called the *uro.

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Fed, F%&, Federal resere system the central bank of the &/.

Forecast attempt to predict the future tendency with the help of e$amination and analysis of the available data.

Fundamental analysis analysis of economic and political information with the ob5ective of forecasting future movements in a financial market.

Futures a way of trading financial instruments, currencies or commodities for a specific price on a specific date in the future.

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'aming(trading dollar a unit of trading operations by which the profit or loss is calculated.

'ap a situation when the price of an instrument at opening of the trading session varies form the price at closure of the preceding one withformation of an unfilled price range.

'oing long buying shares, commodity or currency for investment or speculation purposes.
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'oing short sale of shares, commodity or currency in anticipation of the prices reduction and its future buying back.

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)edging a policy of risk neutraliation by means of opening a position in the opposite direction and with the same amount to the given one.

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*ndicator, custom(technical indicator mathematical conversion of the price andor financial instrument amount for prediction of thefuture price changes. 0n the basis of the technical indicators signals decisions when and how to open positions are made.

*nflation economic condition where there is an increase in the price of consumer goods, thereby eroding purchasing power.

*nterbank rates the )oreign *$change rates at which large international banks quote other large international banks.

*nterention action by a central bank to effect the value of its currency by entering the market.

*ntra-day any period of time shorter than a single day.

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+eerage ratio of the transaction to the required security deposit.

+ong position a position to purchase more of an instrument than is sold, hence, an appreciation in value if market prices increase.

+ot a unit to measure the amount of the deal. "he value of the deal always corresponds to an integer number of lots.

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#argin the required equity that an investor must deposit to collateralie a position.

#argin call the state of a gaming account when the #lient loses an opportunity to manage it. ln case of a margin call all the positions would beclosed by the !ookmaker on any immediate quotation. 4argin call comes, when a 4argin level reaches 367 and lower.

#argin trade8 operations of buyingselling securities or currencies carried out by a client by means of a special margin account by a broker. "heprinciple of 4argin trade is that the client pays only a part of the deal, the rest of the amount is provided by the broker as a credit.

#arket maker a dealer who supplies prices and is prepared to buy or sell at those stated bid and ask prices. / market maker runs a tradingbook.

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pen position to open a dealtransaction, i.e. to buy or sell a currency.
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rder an order is an instruction, from a client to a broker to trade. /n order can be placed at a specific price or at the market price.

scillator a curve of temp, which fluctuates around the ero line 9or between 6 and 667;, a technical indicator that shows an overbought ofoversold market.

erbought a condition of the market after an abrupt rise. In this situation a correction recession is possible.

ersold a condition of the marked after an abrupt recession. In this situation a correction rise is possible.

er the counter market C used to describe any transaction that is not conducted over an e$change.

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.ip, point, tick the term used in currency market to represent the smallest incremental move an e$change rate can make.

.osition the netted total holdings of a given currency.

.rofit gains e$ceeding over losses.

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/uote, /uotation an indicative market price< shows the highest bid andor lowest ask price available on a security at any given time.

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%ally recovery of the rates af ter a fall.

%ange the difference between the highest and lowest price of a future recorded during a given trading session.

%ate the price of one currency in terms of another.

%eaction movement of the prices against the prevailing trend.

%ebound a change of direction of the market prices movement after a long%term tendency of their growth or reduction led to the situation that themarket participants consider the given levels too high or too low.

%esistance a term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above. +ecurringfailure for the price to move above that point produces a pattern that can usually be shaped by a straight line.

%esistance leel a term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above.+ecurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line.

%etracement, Correction a reverse movement of the price or its rollback from the previous ma$imum or minimum e$pressed in percents, themost popular are 3=7, 267 and >?7 retracements.

%isk e$posure to uncertain change, the variability of returns significantly the likelihood of less%than%e$pected returns.

%oll-oer process whereby the settlement of a deal is rolled forward to another value date. "he cost of this process is based on the interest ratedifferential of the two currencies.
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&hort position an investment position that benefits from a decline in market price. @hen the base currency in the pair is sold, the position issaid to be short.

&pot a transaction that occurs immediately, but the funds will usually change hands within two days after deal is struck.

&pot price the current market price. ettlement of spot transactions usually occurs within two business days.

&pread the difference between the bid and offer prices.

&0uare purchase and sales are in balance and thus the dealer has no open position.

&upport leel a term used in technical analysis indicating a specific price level at which a currency will have the inability to cross below.+ecurring failure for the price to move below that point produces a pattern that can usually be shaped by a straight line.

&wap the simultaneous sale and purchase of the same amount of a given currency at a forward e$change rate. It usually takes place duringtransmission of the position to the following day.

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echnical analysis an effort to forecast prices by analying market data, i.e. historical price trends and averages, volumes, open interest, etc.

rader natural or legal person who sells and buys securities or currencies in the market.

rading buying and selling securities, goods or currencies on a short%term basis for obtaining profit.

rading range a situation when the prices balance between horiontal support and resistance levels.

rading session a continual period of time during which trading deals are made.

rend a prevailing price movement direction. /scending peaks and cavities form an uptrend, descending a downtrend.

rendline a line on the price chart connecting a number of descending and ascending ma$imums. )or building up a trendline at least two pointsare necessary.

urnoer the volume traded, or level of trading, over a specified period, usually daily or yearly.

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$ptrend prices rise accompanied by a number of ascending ma$imums and minimums.

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1alue date the date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., e$changing payments. )orspot currency transactions, the value date is normally two business days forward.
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1olatility a statistical measure of a market or a securitys price movements over time and is calculated by using standard deviation. /ssociatedwith high volatility is a high degree of risk.

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"eighted moing aerage a sliding average, counting which every price value is given a certain weight. &sually the last one receives thebigger.
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caiibforex glossary

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