A-Z Trading Glossary

Glossary

A

A Japanese candlestick pattern signaling a reversal. It consists of three candles. In a downtrend, a long black candle is followed by a Doji that gaps lower. A third candle, with a long white body gaps above the Doji’s high.

In Elliott Wave Theory, there are waves that move in the direction of the trend of one larger degree.

A technical Indicator developed by Perry Kaufman to account for market volatility.

Estimated change of US employed people, excluding the farming and the government sector. Released by Automatic Data Processing, Inc. about two days before the official NFP report.

A Japanese candlestick bullish reversal pattern. Also known as Three White Soldiers.

It consists of three long white candles with short or non-existent shadows. Each open is below the previous close. Each close is above the previous close.

A technical indicator designed by Welles Wilder to determine the presence of price trend.

A reading above 25 indicates the presence of a trend. Buy/Sell signals are provided by the crossing of +DI and -DI.

The currency of the United Arab Emirates.

The currency of Afghanistan.

Step-by-step programming instructions on how to carry out trading orders in electronic financial markets.

The currency of Albania.

The currency of Armenia.

The currency of Curaçao and Sint Maarten.

The currency of Angola.

The act of taking advantage of countervailing prices within different markets through the sale or purchase of a currency. Thus, simultaneously taking an equal and opposite position in a related market to profit from small price differentials.

The currency of Argentina. 

The Accumulative Swing Index, or ASI, is a tool developed by J. Welles Wilder to measure the breakout potential of a given market.

The ASI takes the form of a number from 100 to -100, with positive values indicating an upward trend and negative values indicating a downward trend.

Once calculated, the ASI can be charted in conjunction with a candlestick chart.

A technical analysis price pattern, where price action is contained within two upward sloping parallel lines. The basic line is drawn through the bottoms, whereas the return line is drawn through the tops.

An upward sloping line connecting two or more bottoms.

Trading activity between 11:00 pm (GMT+2) and 08:00 am (GMT+2).

“Ask” (or “ask price”) is a term used to describe the price at which a trader accepts to buy a particular currency.

“Asset” refers to an item or resource of value, such as a currency or currency pair.

An indicator developed by Welles Wilder to measure volatility.

Wilder believed that high ATR readings occur at bottoms after a strong downtrend characterized by “panic” sell-off. Low ATR readings are usually found at tops and during periods of consolidation.

Trend reversals are usually accompanied by high ATR values, whereas sideways movements or weak trends are accompanied by low values.

The True Range is the greatest of the following:

  • The difference between the current period’s high and low
  • The absolute value of the difference between the previous period’s close and current period’s high
  • The absolute value of the difference between the previous period’s close and current period’s low
  • The Average True Range is the moving average of the true range values.

The currency of Australia, Christmas Island, the Cocos (Keeling) Islands, Kiribati, Nauru, Norfolk Island and Tuvalu.

A computer program that submits orders to electronic exchanges based on a set of pre-defined instructions.

The currency of Aruba.

The currency of Azerbaijan.

B

The currency of Bosnia and Herzegovina.

The first currency listed in a currency pair is known as the “base currency”.

e.g in the pair GBP/USD, GBP is the base currency.

It is also sometimes the term used to indicate which currencies can be used to fund an account.

Previous month’s approved mortgages by the members of the British Bankers’ Association. Released monthly.

The currency of Barbados.

The currency of Bangladesh.

The opposite of a bull market, the term “bear market” is used to describe the price of an asset, currency, or security that is in decline. “Bear market” can also be shortened to simply “bear”, while the term “bearish” is also used to describe the state of the forex market when it’s in decline.

The opposite of a bear market, this term describes when the price of an asset, currency, or security is rising. Much like the term “bear market”, “bull market” is also often shortened, so you can expect to hear the terms “bull” and “bullish” used regularly.

“Bid” (or “bid price”) is the term used to describe the price at which a trader is willing to sell a particular currency.

A buy limit order is an order to push through a transaction at a specified price or lower, with the term “limit” referring to the price threshold.

The currency of Bulgaria.

The currency of Bahrain.

 The currency of Burundi.

C

Estimated change of US employed people, excluding the farming and the government sector. Released by Automatic Data Processing, Inc. about two days before the official NFP report.

Advance Directional Movement Index. It’s a technical indicator designed by Welles Wilder to determine the presence of price trend. A reading above 25 indicates the presence of a trend. Buy/Sell signals are provided by the crossing of +DI and -DI.

The currency of the United Arab Emirates (UAE Dirham).

The currency of Afghanistan (Afghani).

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