Education

Forex Terms


There are many terms that are used in forex and they should be known in order to properly understand what is going on.

Forex / FX Market :

It is the international currency market. This market, which is open 24 hours a day, is a money market with a wide range of participants from central banks to private banks and very small investors.

Open Position:

The open position concept indicates that the investor in the forex market is in the expectation of profit and carries risk. For example, if the investor is buying or selling in the GBPUSD, it can be called "open position".

Analyst:

Expert who performs market assessment with indicators and forecasts.

Arbitrage:

If the price of a financial instrument differs at different markets, it is the process of taking it from cheap market without risk and selling it in high price market.

Ask:

It is the sale price of a security.

The European Central Bank:

The central bank of the Eurozone. The institution that determines the monetary policy of the euro is the pioneer in determining the value of the euro. For this reason, forex traders closely monitor their decisions and disclosures.

Bear Market:

It is a market where sales are strong and prices are rapidly depreciating.

Bear Trap:

As a false sell signal, in a rising trend, prices continue their rising trend after breaking the support level.

Interbank Money Markets:

Markets where short-term funds are bought and sold between banks.

Initial Margin:

is the amount required to enter the positions.

Base Currency:

It can be defined as the first currency in a currency pair.

Bid:

The purchase price of an instrument.

Bullish Market:

It is a market where purchases are strong and prices are rapidly appreciated.

Broker:

It refers to the person or institutions that combine the buyer and the seller in the Forex market and obtain an intermediary income from it.

Buy Limit:

Buy orders that are made at a price level below the market price.

Buy Stop:

Buy orders that are made at a price level above the market price.

Cable:

is the name of the forex jargon of the British Sterling-American Dollar parity . It is not a technical term but anonymous.

Cross Currency:

All currencies are converted into dollars. For example, a currency pair such as Euro / Yen, which is not in the dollar, will have the Dollar values first, then these values will be compared to each other and the parity value will be written. Currencies that do not include dollars are called cross currencies

Turnover:

The total value of the transactions performed at the unit time.

Floating Exchange Rate System:

It is a system in which the national currency value is determined freely according to foreign exchange supply and demand on the market.

Dealer:

The name given to persons and institutions acting on their behalf and account in trading.

Deflation:

In general, the situation that prices in the market are constantly falling over a certain period of time.

Day Trading:

Investors close their positions the same day regardless of whether the positions are in profit or loss.

Demo Account:

is the type of account that works with instant market data and you can trade with virtual amounts without any risk.

Devaluation:

The depreciation of the currency of a country.

Resistance Level:

The price level that has been experienced several times in the past, when price increases are difficult or stop.

Dovish:

The pigeon approach is used to express relatively moderate approaches.

Currency Pair:

Two currency pairs are purchased or sold simultaneously in a transaction.

World Bank:

It is an international organization provide long term project loans to developing countries. In recent years, the definitions of duty have also included the developing countries' foreign debt and the concepts of fighting poverty.

Exotic Pairs:

Pair traded by investors in countries where they are usually owned.

Inflation:

Total demand in an economy exceeds total supply. The realization of this naturally raises the general price level of goods and services.

Volume:

The sum of the values obtained by multiplying the transaction price by the number of financial instruments involved in each order in the transactions performed in the financial instruments subject to transaction.

Hedge:

In order to avoid risk, the investor or the institution trades the same amount in the opposite direction of the foreign currency risk.

Interbank Rates:

The quotations given by large banks to large foreign exchange transactions.

Jobber:

Trader who trades very short term.

Leverage:

A certain amount that can be taken more position than this amount.

Take Profit Level:

It is the process of automatically making a profit if an open position reaches a predetermined favorable price.

Short Position:

The position is the sales position, the trader in this position will profit from the price drop.

Killer:

Used for sudden movements that run the stop-loss level.

Commission:

The fee is the requested per transaction, unlike the spread by intermediaries. Generally, there is no such application in the forex market.

Knocking:

The price touches the support and resistance levels twice.

Exchange Rate Risk:

The risk of loss arising from the uncertainty created by exchange rate changes in international transactions.

LIBOR (London Interbank Overnight Rate):

London interbank interest rate. The interest rate, which the 16 largest banks of the world declared at 11 o'clock every morning, and which is regarded as a reference for other financial institutions of the world. Contrary to popular belief, many of these banks are not of British descent, but they have been placed in such a way as an old term for the finance jargon.

Libre:

The unit of measure, also known as pound, is 454 gr.

Liquidity:

Liquidity can be defined as the rate of cash conversion of a market or instrument.

Limit Buying:

A buy order sent from a level below the market price.

Limit Sales:

A sales order sent from a level above the market price.

Long:

Long position refers to the buy position.

Lot:

The size of 100,000 units of base currency in a currency pair.

Macro Economy:

It is the subdivision that examines the total magnitudes of the economy such as consumption, production, saving, investment, income (national income) and employment and makes analyzes and conclusions about them.

Margin Call:

If an investor who trades using the entire margin loses money, In this case, the broker calls the investor to complete the margin.

Meta Trader:

A trading platform often used on the Forex market.

Microeconomics:

The discipline that examines the economy at the level of consumers, companies and industries.

Mini Lot:

The size of 10,000 units of base currency in a currency pair.

Ounce:

An English weight measure used to measure the weights of gold, silver, platinum and precious stones in international markets. One ounce is about 31,103 grams.

Parity:

The ratio between two different currencies.

Pip (price interest point):

In the financial markets, the smallest range in which the value of an instrument can change is called the price step. This concept is called pip for the forex market.

Pivot Point:

It is a technical analysis tool used to determine the resistance and support points that the parity will face in the short vault.

Recotation:

Sudden price change

Recession:

In the macro economy, traditionally real Gross Domestic Product (GDP) grows consecutively negative in two or more quarterly periods.

Risk - Return Ratio:

The amount of capital risked for each unit of earnings.

Selling Signal:

Indicators used for technical analysis are signals about the downward movement of prices.

Scalping:

To take a very short time position for small profit.

Sell Limit:

Sell above the market price.

Sell Stop:

Sales order below the market price.

Slipage:

Very sharp movements and jumps in the price quotation.

Speculation:

Taking more risk and predicting the future in a specific way with higher return expectation than market average and the idea of protection from loss.

Spread:

it refers to the difference between the purchase price and the selling price of a foreign exchange.

Stop Loss:

When the price reaches a certain level, it becomes active order and the position is closed at a loss level determined by the trader.

Swap:

The cost of overnight transportation reflected in the account plus or minus according to the interest differential between different currency pairs invested.

Technical Analysis:

It is a quantitative analysis made by taking the price as the main variable.

Basic analysis:

To interpret and predict economic data that affect a financial instrument.

Trend:

The general direction of movement on the any price, index, indicator or data.

Derivative Instruments:

The derivative financial instruments that its value directly attribute to value of the another financial asset or property.

Derivative Markets:

These are the markets where derivative instruments such as futures contracts and options are bought and sold.

Long Position:

To buy an instrument. The investor in the long position aims to profit from the rise in price.

Volatility:

It is the variance of the price of an asset. It is usually measured by standard deviation. High volatility is an indication of increasing uncertainty.

Yard:

Used for a size of 1 Billion.