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Aggregate Risk

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


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

API Trading

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


Application Programming Interface, used in forex to automate trading.


Profiting from differences in the price of a single currency pair

Back Office

The office location, or department, where the processing of financial transactions takes place

Balance of Trade

In economics, a country's exports minus its imports.

Carry Currencies


19.Carry Grid

A grid of positions (including open orders, take profits, and stop losses) built on a carry trading strategy.




Deutsche Aktien Xchange, Germany's primary stock index.

ECN broker

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.


Total assets minus total liabilities; also called net worth

Fisher Effect

The effect of interest rates on international money movement such that money moves into currencies paying higher interest rates.

Firm Quote

When a buyer or seller requests a firm quote, the dealer provides a bid and ask quote that can be immediately executed if the buyer or seller wishes

Going Long

The purchase of a currency pair.

Gold Standard

A commitment made by certain countries to fix the prices of their domestic currencies in terms of a specified amount of gold. Also known as the Bretton Woods System, the Gold Standard was enacted in 1946 and created a system of fixed exchange rates that allowed governments to sell their gold to the United States treasury at a fixed price. On August 15, 1971 President Richard Nixon ended the Bretton Woods system.


A term used to describe reducing risk associated with adverse market movements by using two counterbalancing investments, thereby minimizing any losses caused by price fluctuations. For example, if you sell a house in Holland to relocate to the UK (your new base currency), you are in a long Euro (EUR) position and short Pounds Sterling (GBP). To offset this position you would need to sell the equal amount of EUR to make up for the short GBP position.

Hedge Fund

A private fund which usually solicits investments from wealthy individuals. It is unregulated as it's assumed that the investors are knowledgeable and realize the speculative nature of the fund. It usually invests in high risk, short term instruments in order to achieve above-average returns.


International Foreign Exchange Master Agreement


International Monetary Market. See also: International Monetary Market.

Japanese yen

The yen is the Japanese currency unit. It is the third most-traded currency in the foreign exchange market after United States dollar and the Euro.


A trader who trades for small, short-term profits during the course of a trading session, rarely carrying a position overnight.

Key Currency

For smaller countries, the act of orienting their currency to that of a major trading partner.


Traders term for the New Zealand Dollar. See also: NZD

Leading Indicators

Economic indicators used to predict future economic activity, such as the levels of the S&P 500 index.

Lagging Indicator

Economic indicators that change after the overall economy has changed, used to confirm effects of Fed policy. An example is the Consumer Price Index (CPI).


A set minimum margin that a customer must maintain in his margin account.

Maintenance Margin

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

Naked Put

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

Narrow Market

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

Odd Lot

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


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.


The official value of a currency.

Par Spread

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

Quantitative Analysis

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

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 Japan's attempts to fight domestic deflation in the early 2000s. Interest rates during this time were already close to zero and further cuts could not be implemented so the Bank flooded commercial banks with excess funds to promote lending and by extension, encourage spending.

Rainbow Option

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

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 the way of quoting these two currencies.

Scalping (Forex trading)

A Forex trader who trades currency in this fashion has been nicknamed a "Scalper" because these traders attempt to take small spread differences between the Bid and Ask price. "Forex Scalpers" do not enter positions and carry them overnight. Scalping is a fast-paced trading where a Forex trader seeks 1-5 pips profit from each trades.

Short Covering

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

Technical Indicators

Short-term trends that technical analysts use to predict future price movements of securities and/or commodities. Also called technicals, technicalities. See also: Technical Analysts

Technical Analysis

An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.

Unconvertible Currency

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


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

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.

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

Wealth Creation Business

A professional service that includes a combination of investment advice, tax services, and estate planning.

World Trade Organization

A global organization of countries that trade with one another and set rules by which trading is conducted.


It is precious metal with the highest electrical conduction properties of any metal. It is used mainly in jewelry, photography, and for scientific and industrial purposes. It has been used as the basis for currencies in the past. Silver is traded as a commodity on various security exchanges. Like many precious metals, silver is volatile but generally maintains relatively high prices.


XAU is the ISO 4217 currency code for gold, denoting one troy ounce of gold. Also an index of gold mining shares (stocks). By popular demand, here are live gold bullion prices in eleven major currencies, US Dollars XAU/USD, Pounds Sterling XAU/GBP, Euros XAU/EUR, Australian Dollars XAU/AUD, Canadian Dollars XAU/CAD, Hong Kong Dollars, Rands XAU/ZAR, Rubles XAU/RUB, Rupees XAU/INR, Swiss Francs XAU/CHF, Yen XAU/JPY, and Yuan (Renminbi). All prices are per troy ounce unless otherwise stated.

Yield Curve

A curve that shows the relationship between yields and maturity dates for a set of similar bonds, usually Treasuries, at a given point in time.


The return on an investment. The yield is usually calculated in percentage terms.


A statistical measure that quantifies the distance (measured in standard deviations) a data point is from the mean of a data set. In a more financial sense, Z-score is the output from a credit-strength test that gauges the likelihood of bankruptcy.

Zero Bound

A policy where interest rates are at or very near to zero percent. The major implication of a zero-bound economy is that Central Banks can not use further interest rate cuts to stimulate an economy in this situation, Central Banks typically turn to an alternate monetary tool known as quantitative easing.