Investor's Dictionary

Before you start your adventure with forex market or the stock exchange, it is worth knowing a few important concepts. Do you know what is leverage, datafeed, margin? Do you know who a broker is? The investor's dictionary will answer all your questions. Below you will find the most popular definitions from the world of investment and capital markets.

A

A

ADP - a company that prepares monthly reports on employment in the non-agricultural sector in the USA

The appreciation - an increase in the price of a currency in relation to other currencies

Arbitration - a strategy based on using the difference in the exchange rate of the same instrument in different markets or on the same market or other form

Ask - price at which sales orders are executed

Aussie - in colloquial slang about drawing a pair AUD / USD

B

B

Bad tick - tick (move) on the chart, which is caused by the platform error (or the data feed), while in fact such a market rate was not

Central bank - the institution responsible for the functioning of the country's banking system. He also deals with monetary policy, e.g. by regulating the money supply and determining interest rates

Bear - An investor or speculator who assumes a decrease in the rate of a given financial instrument

Beige Book - beige book, a document issued by the US Federal Reserve Bank describing the state of the American economy

Ben Bernanke - former chairman of the US Central Bank (FED)

The bear market - also called bear market. This term is the opposite of the bull market. It is a period of long-term decline in prices on a given market.

Bid - price at which buy orders are executed

BoC - Bank of Canada; Central Bank of Canada

BoE - Bank of England; Central Bank of England

BoJ - Bank of Japan, Central Bank of Japan

Break Even Point - the position's profitability threshold, ie the rate at which the position has a zero balance, taking into account the spread and / or commission

Broker - a person or institution that performs orders forwarded by investors; intermediary in the transaction

Bull - similarly to Bear, it is an investor or a speculator assuming an increase in the rate of a given financial instrument

Buy Limit - a pending buy order where the trigger level is below the current market price

Buy Stop - a pending buy order where the trigger level is above the current market price

C

C

Cable (cable) - a common definition of the GBP / USD currency pair

Carry Trade - it is an investment strategy based on using the difference in the level of interest rates. We borrow money in a country where interest rates are lower and we buy currency by investing our funds in a country where interest rates are at a higher level.

CBOT - Chicago Board of Trade; Chicago and at the same time the oldest futures and options exchange in the world

CFD - Contracts For Difference; currency exchange contracts

CM extension - Chicago Mercantile Exchange (The Merc); Chicago, the largest commodity exchange in the world

Commission - commission, i.e. the rate that is paid for the purchase / sale of a financial instrument, most often expressed as a percentage of the transaction value

Commodities - English term for raw materials, goods, precious metals, grain products

CPI - Consumer Price Index; consumer inflation

Cross Rate - so-called cross rates, i.e. currency pairs not including the US dollar

D

D

Datafeed - data source from which quotations are provided

daytrading - an investment technique consisting in opening and closing a given position on the same day

Margin deposit - funds that are frozen in the client's account against open positions

Depreciation - a decline in the value of a currency relative to other currencies

Margin available - available funds on the account that we can use to open a position

Financial leverage - a tool offered by a broker, thanks to which by engaging less funds than normally, we can control a contract that has a much higher value

E

E

ECB - European Central Bank; European Central Bank

ECN - Electronic Communications Network; ECN broker creates a peculiar market where it collects orders from Market Maker brokers, banks, other financial institutions and professional investors. There is no dealing desk and orders are executed directly on the market. The broker charges an additional commission for each order.

Eddie - in colloquial slang, the EUR / USD pair

Equity - Balance on the account including the value of open positions

Expert Advisor (EA) - a computerized strategy that performs operations or concludes transactions on the account

F

F

FED - Federal Reserve; The Federal Reserve Bank, or the Central Bank of the United States

figure - otherwise 100.0 pips

Fiscal cliff - a term that means reducing the budget deficit by means of a tax increase and a simultaneous cut in budget expenditure to reduce the budget deficit

FOMC - Federal Open Market Committee; The equivalent of the Polish Monetary Policy Council; this committee determines the size of the money supply and the interest rate in the USA.

foundations - macroeconomic data affecting the prices of financial instruments

Futures - futures without delivery of the instrument they are calling for

G

G

GDP (Gross Domestic Product) - Gross Domestic Product

GNP (Gross National Product) - Gross National Product

GTC - Good till Canceled, i.e. an order valid until canceled by the investor

G7 - a group of seven most industrialized countries in the world including the USA, Germany, Great Britain, Italy, France, Japan and Canada

H

H

Boom - otherwise known as the bull market. A period of long-term price increases in a given market. Most often, this term is used in relation to exchanges, where as a bull market we interpret the long-term growth of a given value (e.g. shares, commodities, currency pairs, cryptocurrencies).

I

I

IMF - International Monetary Fund; International Monetary Fund

Indicator/Indicator - or technical analysis indicator

Interbank - the network in which currency transactions are made between the largest banks in the world

J

J

JForex - the broker's proprietary transaction platform Dukascopy

K

K

Cables - GBP / USD pair

Kiwi - slang determination of the NZD / USD currency pair

KNF - The Polish Financial Supervision Authority, the central state administration body supervising the financial market in Poland

L

L

LAW (Leading Economic Indicators) - is a set of 10 different indicators. These are: average length of the working week, newly registered unemployed, new orders, sales performance (sales results), new orders for capital goods not taking into account the defense industry orders, building permits, index level S & P500, M2 index adjusted for inflation, 10-year bond interest rate differential and fed funds rate, consumer expectations index.

Siphon (Leverage) - see Financial Leverage

LIBOR - London Interbank Offered Rate - interest rate on deposits offered by London banks

Long - long position assuming an increase in the rate of the given instrument

Batch (1.0) - it is generally accepted that it is 100 000 units of the base currency

M

M

MACD (Moving Averages Convergence / Diver) - indicator of convergence and divergence of moving averages. The most popular indicator for identifying the direction of the prevailing trend. The indicator consists of a histogram, the value of which reflects the difference of the two exponential moving averages (standard 12 and 26 periods) and a signal line (9-period moving average of the MACD value). Buy signals are generated when the descending signal line crosses the negative histogram. Likewise, a sell signal occurs when the rising signal line crosses the histogram that is at positive levels. It is also possible to analyze divergence and extreme values. An uptrend divergence occurs when a new peak in the price chart is not confirmed by a corresponding peak in the MACD indicator chart. In a downtrend, prices set a new minimum, while the bottom of the MACD chart is above the previous one. Such behavior of the indicator is a clear signal of the possibility of changing the current trend.

Margin - the amount of funds that has been frozen by the broker towards the open position

margin Call - a call to top up the deposit; occurs when a significant loss is created on the account and the broker will require additional funds to the account in order to protect against the consequences of sudden and unfavorable changes in the exchange rate

Margin Level - Equity to Margin ratio expressed as a percentage / Margin Level = Equity / Margin * 100%

Market Maker - a type of broker who does not execute client orders directly on the interbank market but can secure a position on this market by himself, associates his clients' orders or is himself a transaction party. It does not charge any commission beyond the spread.

Mini flight - transaction volume, tenth of a full lot (0.1 lots)

Micro flight - transaction volume, hundredth part of a full lot (0.01 lot)

Minimum Bid Rate - ECB decision on interest rates. Official website of the indicator: http://www.ecb.int/

Momentum - the indicator determines the strength of the prevailing trend. The most frequently used parameters in the construction of the momentum indicator are 10, 14 and 25. Values ​​above 100% indicate an uptrend, while below this level they indicate a downtrend. Changes in the indicator following the trend confirm its strength. Buy or sell signals are generated when the equilibrium line breaks at 100%. Attention should also be paid to the emerging divergences reflecting the weakening of the current trend and may suggest its change. Moreover, a common way to analyze this indicator is by examining extreme levels. Due to the lack of standardization of the momentum index (strict limitation in terms of the adopted values), the determination of extreme levels is based on historical values.

Mortgage Approvals - approved mortgage applications

MQL - MetaQuotes Language, the programming language used in the MetaTrader 4 platform to create machines, indicators and scripts

MT4 - short for MetaTrader 4, the most popular Forex trading platform

O

O

Options - a financial instrument with an asymmetrical withdrawal profile; the right, but not the obligation to buy or sell assets such as currencies, before or on a given day

Over The Counter (OTC) - a transaction or an over-the-counter market

P

P

pips (1.0 pips) - this is the smallest change in the currency pair rate (for EUR / USD pair 1.0 pips is 0.0001, while for USD / JPY it is 0.01)

SMEs - an indicator showing activity in the US manufacturing sector, compiled monthly by the Institute of Supply Management (ISM)

PPI - Producer Price Index; producers' inflation

Price Action - technique for analyzing financial instruments using a pure graph and behavior of courses

R

R

Rebuildables - Reserve Bank of Australia, the central bank of Australia

Rekwotowanie - another inquiry about the price by the broker

Repo - purchase by the central bank of securities from commercial banks in order to improve the liquidity in the market

Resistance - resistance; the upper level of the course at which you can expect a significant sale of a given currency

rolling - shifting the moment of settlement of the transaction to the next settlement date on the basis of the interest difference of the given currency pair

RPI - Retail Price Index; Inflation of retail prices

S

S

Shorts - a short position assuming a decrease in the price of a given instrument

Sell ​​Limit - pending sell order where the activation limit is above current market price

Sell ​​Stop - pending sell order where the activation limit is below current market price

scalping - a technique consisting in frequent and quick concluding many transactions a day, even with a small profit; there is no unambiguous definition of what level of profit and at what time the position must be included to be considered scalping

Slippage - otherwise price slip, i.e. the amount of deviation of the price, which we are able to accept that our transaction would be concluded without asking for a price again

SNB - Swiss National Bank; Central Bank of Switzerland

Spot - the spot transaction is carried out immediately, and the flow of funds itself usually takes 2 working days from its completion

spread - the difference between the buying and selling rate of a given financial instrument; broker profit

Sterling - the ancient definition of the British pound

Stop Loss - pending order aimed at cutting losses if the situation on the market develops out of our head

Stop-out level - the level at which the broker closes the most lossy position, or after which it closes all open positions on the client's account, due to significant loss of funds

STP - Straight Through Processing, the broker's market model by which his clients' orders are transferred directly to their liquidity partners

Support - support, the bottom level of the course within which you can expect mass purchases of a given currency

swap (swap points) - these points encumber or enrich the position balance in case it is held for the next day; their size results from the amount of interest rates for currencies in a given country

Swissy - common pair USD / CHF

T

T

take Profit - pending order aimed at realizing a specific profit if the determined rate is reached

Time Frame - graph time interval

TKO (Theoretical Opening Rate) - new orders appear in the central order book before the trading session opens. On their basis, the theoretical opening price is calculated on an ongoing basis and its last value becomes the opening price of a given value.

Trailing Stop - the so-called trailing stop, the equivalent of a Stop Loss order, which is automatically shifted behind the price at the indicated distance from the rate along with increasing position profit

U

U

Unemployment rate - the unemployment rate

V

V

Volatility - with volatility, it often refers to the extent of market fluctuations in a given period of time

W

W

Base currency - the first currency, which is quoted, i.e. in EUR / USD, the base currency is EUR

Currency quoted - the second currency that is quoted, i.e. in EUR / USD, the quoted currency is the US dollar

WIBOR (Warsaw Interbank Offer Rate) - the reference interest rate for loans on the interbank market