G10 – Refers to the G7 member states, completed with four further countries (Belgium, the Netherlands, Sweden and Switzerland), and aims to coordinate fiscal and monetary policies for the sake of a stable global economic system.
G7 – Stands for Group of Seven, and refers to the worldwide leading industrial nations that meet to discuss global economic issues. The G7 members are Canada, France, Italy, Japan, the United Kingdom and the United States.
GATOR OSCILLATOR – The Gator Oscillator helps visualize upcoming changes in trends (i.e. the periods in which Alligator Indicator lines widen or narrow down).
GDP – Short form for Gross Domestic Product. GDP is often correlated with the living standard, as it is the market value of all services and goods produced in a country during a particular time period. It indicates the pace of a country’s economic growth and is determined in three different ways: through product output, income and expenditure.
GOING LONG – Refers to the purchase of a currency pair.
GOING SHORT – Also known as selling short, it refers to selling a currency pair by first borrowing it, then returning it at a later time by buying it back.
GOLDEN CROSS – In technical analysis, golden cross refers to the fact that two moving averages intersect: usually a short one like a 20-day and a long one such as 40-day. This is considered a favorable sign that the underlying currency will move in the same direction.
GROSS DOMESTIC PRODUCT DEFLATOR – The GDP deflator is a measure of price levels for all goods and services in an economy; in other words, it measures the annualized quarterly implied rate of inflation for all economic activities. By using the deflator, the difference between nominal and real GDP can be calculated.
GROSS PROFIT – The difference between company revenues or sales and sales costs.
GTC – It stands for good-till-cancelled order. It is a type of limit order that remains in effect until it is either executed or cancelled, as opposed to a day order, which expires if not executed by the end of the trading day.
HARD CURRENCY – As opposed to soft currency, hard (or strong) currency is currency that investors have confidence. In terms of economics, it refers to a globally traded currency, which is stable. Due to its stability and reliability, investors have confidence in hard currency.
HEAD-AND-SHOULDERS – A price trend pattern with three peaks, the one in the middle being higher than the surrounding two. It is a pattern seen as an indicator of a trend reversal.
HEDGE – A position that reduces the risk of a trader’s primary position.
HEDGE FUND – An investment fund that aims to gain absolute return (profit made on an asset irrespective of market movements), using trading methods like short selling, swaps, derivatives, program trading, and arbitrage.
HEDGING – It is a trading practice of holding open buy and sell positions on the same instrument, hence mitigating the risk of market fluctuation.
HIT THE BID – Selling at the bid price.
HYPERINFLATION – Refers to extremely high, out-of-control inflation: the general price level increases rapidly as the internal currency, as opposed to a foreign currency, and loses its value at an accelerated rate (e.g. the hyperinflation in Zimbabwe between 2004-2009).
ICHIMOKU KINKO HYO – The IKH, also called ichimoku, is a candlestick charting technique that provides a clearer picture of potential price action, as it indicates market movement with its entry and exit points. It is used to determine market trends, support and resistance levels, and to create sale and purchase signals.
IFO – It stands for Institute for Economic Research (Institut für Wirtschaftsforschung). Based on the feedback of over 7,000 German business leaders, the German IFO business survey is considered to be a leading economic indicator for both Germany and Europe. It provides assessment of the current and upcoming economic climate, based on latest economic data.
IMF – Short form for International Monetary Fund, which consists of 186 member countries and provides financing and policy advice to members in economic difficulties. It cooperates with developing countries to help them achieve macroeconomic stability and decrease poverty.
IMPLIED VOLATILITY – The volatility (degree to which the value of a security changes over time) that the market expects in the price of a security. It is a measure, but not the direction, of future price movements, with a tendency to rise in bear markets and fall in bull markets.
INDEX – In a broader sense, it is statistical measure of change in economy. In the financial markets, indices are imaginary securities portfolios that represent a particular market or market segment, and index variations indicate market trends.
INDICES – The world’s indices are the exchanges where a country’s stocks are traded, such as the Japanese NIKKEI, the German DAX, the English FTSE and the American NASDAQ.
INDUSTRIAL PRODUCTION – IP is an economic measure of the changes in output for the industrial sector (such as manufacturing, mining and utilities) of the economy, indicating a country’s industrial capacity.
INFLATION – An economic condition in which prices for consumer goods and services rise, eroding purchasing power.
INITIAL MARGIN – The deposit that clients need to make before they are allocated a trading limit. The first deposit that a client makes and that determines a corresponding maximum trade size.
INSTRUMENT – Any tradeable financial product such as a currency pair, a CFD or a commodity.
INTEREST RATE – The percentage of an amount of money paid for the use of borrowed funds. It is calculated on a daily basis and paid on the first day of each month.
INTERNATIONAL TRADE – International Trade measures the difference between imports and exports (trade balance) of all goods and services. The level of the international trade balance, along with the changes in exports and imports, indicate market trends, and so they are closely followed by foreign exchange markets.
INTRADAY TRADING – Positions that are supposed to be opened and closed within one day.
KIWI – Informal name given to the New Zealand dollar (NZD). The $1 coin depicts the kiwi bird, which New Zealand is mostly associated with.
LEVERAGE – Leverage is a way for an investor to boost their trading power and manage a greater position on the market with a nominal investment. An online broker may offer leveraged trading for up to 200 times the value of trader’s investment.
LIMIT ORDER – It is apending order used to close a trade when the market is moving profitably to the open position.
LINE CHART – As a basic chart type, line charts visualize a trend in data over time intervals by connecting the closing price values straight-line segments.
LIQUIDATION – Refers to the closing of an existing position through the execution of an offsetting transaction.
LIQUIDITY – Refers to the relationship between transaction size and price movements. If large transactions can occur with only minimal price changes, a market can be called ‘liquid’.
LIVE ACCOUNT – A live account that gives you the possibility to access and deal in the financial market through your trading platform.
LOCKED MARGIN – The amount of margin for two trades opened by one symbol and to different sides, e.g. EUR/USD buys 1 lot and EUR/USD sells 1 lot. The rate of EUR/USD is 1.33361The full margin for these trades should be 1333.61+1333.61=2667,22. For example, RealForex trading accounts the locked margin is 50%. If you have two positions with the same volume and currency pair but with opposite directions, the actual margin deducted from the normal value will be 50%. For a better understanding, see two examples below: You have 1 lot EUR/USD buy with margin 100 and 1 lot EUR/USD sell with margin 100. Without taking into account the locked margin, the normal margin will be 100+100=200. However, if you take into account, the 50% locked margin, you will have 1/2 of the 200 normal margin, so your margin will be 100. You have 2.3 lots EUR/USD buy with margin 230 and 1.3 lots EUR/USD sell with margin 130. The 2.3 lot position is represented as an amount of 1.3 lots and 1 lot. You will have a locked margin for 1.3 lots and 1 lot will have a normal margin. If 1.3 lot margin is 130, the total margin will be $130 (locked margin from two 1.3 lot EUR/USD positions) +100 = $230
LONG HEDGE – Hedging position that involves the purchase of futures contracts in order to protect investors and traders against price rises in the corresponding cash markets.
LONG POSITION – A long position refers to the purchase of an instrument, with the expectation that its market value is set to rise.
LONG POSITION – When a currency pair is bought, the primary currency in the pair is 'long', and the secondary currency is 'short'.
LONG-TERM POSITION – Positions supposed to last for several months or even years.
LOT – Foreign exchange is traded in lots. A standard lot means $100,000 of any currency you fund your account with. Trading with only $1 is not possible.
MARGIN – The minimum deposit needed to maintain an open position (e.g. with an open position of $250,000 and a leverage of 50, the required margin is $5000).
MARGIN CALL – A demand for adding funds to cover positions. Some brokers preserve the right to close clients’s positions without previous notification if the equity for the required margin is below 100%.
MARKET DEPTH – Volume of market liquidity that refers to the ability of the market to handle large trading volumes without significantly affecting prices. Market depth is relevant to traders as they can study it to to determine how and when particular orders may impact price action, and to help them find the right timing for entering and exiting trades.
MARKET FACILITATION INDEX – The MFI determines the efficiency of price movement by analyzing the amount that the price changes for each unit of volume. The BW MFI (Bill Williams Market Facilitation Index) evaluates the efficiency of market price movements. Changes in the value of this index are usually compared to changes in volume in order to determine market interest in a particular price trend.
MARK-TO-MARKET – The main principle on which regulated futures bookkeeping is based. It refers to the adjustment made to trading accounts at the end of the day in order to reflect profits and losses on existing positions. Accordingly, winnings are credited to the account, while losses are debited with instant execution. The essence of mark-to-market is that trading is not allowed to participants unless there are available funds to cover the positions.
MATCHED PRINCIPLE BROKER – A license issued but the regulatory authories to deal as principle only to fulfil customer orders. A matched principle broker will never take the opposite side of a client's trade but hedge every order immediately with a another party.
METATRADER – An independent trading software platform developed for trading forex, options and futures; best known for its diverse technical analysis ability and the option to run forex robots and aexperts advisors.
MID-TERM POSITION – A position the goal of which should be reached within 1-3 weeks.
MOBILE TRADING – Controlling of trading accounts via mobile devices such a cell phone or a PDA (Personal Digital Assistant). Wireless access technologies WAP and GPRS provide access to the Internet.
MOMENTUM – An indicator for market movement and the strength of trends through time. When a trend starts, momentum is the highest, and as the trend changes, it is the lowest. When price and momentum diverge, it suggests weakness. If price extremes occur with weak momentum, it signals the end of movement in that direction. A potential change in price direction can be expected if momentum is trending strongly and prices are flat.
MONEY FLOW INDEX – The MFI is an indicator that shows the intensity and volume of money invested in and withdrawn from a commodity. It compares the value traded on up-days to the value traded on down-days, anticipating trend weakness and points of reverse shift.
MOVING AVERAGE – The Moving Average is a technical indicator that shows the mean instrument price value for a certain period of time. With its four different types of moving averages (simple, exponential, smoothed and linear), it helps calculates the moving average according to increasing and decreasing price changes.
MOVING AVERAGE CONVERGENCE/DIVERGENCE – The MACD turns two-trend following indicators (moving averages) into a momentum oscillator by subtracting the longer moving average from the shorter moving average. It is one of the most effective momentum indicators as it combines trend following and momentum; and traders can look for signal crossovers, centerline crossovers and divergences to generate signals.
MOVING AVERAGE OF OSCILLATOR – Though similar to the MACD (Moving Average Convergence/Divergence), the OsMA is a modified version of the latter. It applies more smoothing features, and helps spot out convergences and divergences that indicate market changes.