Forex Terminology. Learn the trading lingo.
Antipodean Names – market participants from Australia and New Zealand
Asian Session – the time period between 5pm EST and 2am EST. 5:00 PM – 2:00 AM EST
Bear Market – the tendency of a security or financial instrument to move in a downward trend over a period of time. The market likes to make new lows fairly frequently in these markets.
Bid – The bid, is the price at which a market participant is willing to buy a specific security or financial instrument. Typically refers to limit orders
Bid/Ask Spread – the price difference between the bid price and the ask price. In other words the difference between the highest price that the buyer is currently willing to pay and the lowest price that the seller is willing to sell the financial instrument for.
Big Figure – Every 100 pips in a currency pair. For example big figures in USD/JPY can be 80.00, 79.00, 78.00 etc. Big figures in EUR/USD can be 1.4000, 1.4100, 1.4200, etc. If someone says “5 big figs” that is just another way of saying 500 pips. If someone says “10 big figs” that is just another way of saying 1,000 pips.
Bull Market – the tendency of a security or financial instrument to move in an uptrend trend over a period of time. The market likes to make new highs fairly frequently in these markets. Investors and traders are usually optimistic on future prices
Commodity Currencies – these currencies are of countries that heavily depend on the export of commodities and raw materials for a lot of their Gross Domestic Product. The most popular commodity currencies are the Australian Dollar, New Zealand Dollar, and Canadian Dollar.
Day Trading – type of trading that involves holding positions for less than 24 hours, and closing out positions before the end of the trading day.
European Session – The time period between 2am EST and 12pm EST. 2:00 AM – 12:00 PM EST
Fibonacci Retracements – refers to the method of determining potential support and resistance using special mathematical numbers and ratios discovered by an italian mathematician
Jobber – type of short term trader that likes to capture intraday moves ranging from anywhere from 20 -200 pips. They can both scalp the market and attempt to catch the intraday swings in the market typically playing both sides aggressively if the market is ranging.
Limit Order – is a type of entry order, that only get executed when price reaches your set limit price.
London Session – time period between 3am EST and 12 pm EST. 3:00 AM – 12:00 PM EST
Long Position – another way of saying that you have bought a financial instrument. For example instead of saying that you bought eur/usd, you could say “I am long eur/usd”
Margin Call – when a broker demands that you deposit more money, in order to be able to keep the current positions that you have open. Many brokers will force liquidate your positions if you do not stay above the required maintenance margin.
Major Currency Pairs – the most liquid currency pairs in the forex market, that all include the U.S. dollar. They are the EUR/USD, USD/JPY, USD/CHF, and the GBP/USD.
Market Order – an order to buy or sell a financial instrument immediately at the best price possible. Market orders guarantee execution, but Do Not guarantee what price you will get.
New York Session – time period between 8am EST and 5pm EST. 8:00 AM – 5:00 PM EST
Offer/Ask – The offer, also called the ask, is the price at which a market participant is willing to sell a security. Typically refers to limit orders
Position Trading – type of trading that involves holding positions for many weeks or even many months.
PTJ – Nickname for Paul Tudor Jones
Real Money – Traditional asset managers with significant capital under their disposal. Includes corporate pension funds, public pension fund insurance companies, asset managers, endowments, mutual funds. They typically do not use any leverage.
Resistance – a price level where the financial instrument may find sellers, and that the price may have a difficult time breaking above.
Rollover(forex) – if you hold an open trade past the rollover time, which is typically 5pm EST, you will extend the settlement date of your open position. This will be done by your broker automatically. You will also either get paid interest into your account, or deducted interest from your account depending on if you bought a higher yielding currency by selling a lower yielding currency.
Short Position – another way of saying that you are betting on a price decline of a financial instrument. For example instead of saying that you sold usd/jpy expecting prices to fall, you could say “I am short usd/jpy”
Short Squeeze – when many people who are stuck short and betting on a price decline, are forced to buy back their short trades, increasing the demand for a financial instrument, resulting in a large price snap higher.
Stop Loss – a type of market order that is triggered when the price reaches the specified “stop loss” location. This is used to minimize losses on a potential trade or investment.
Support – a price level where the financial instrument may find buyers, and that the price may have a difficult time breaking below.
Swing Trading – type of trading that involves holding positions for more than 24 hours, or for a few days or even a few weeks.
Tokyo Session – time period between 7pm EST and 4am EST. 7:00 PM – 4:00 AM EST
Twilight Zone – Time period a few minutes before 5pm NY time and until the Tokyo open at 8pm NY time. Liquidity is usually very low and spreads increase as a result during this time period.
Yard – forex slang for one billion. If someone says 1 yard that equals $1 Billion USD.