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Kamus Istilah

A

ASX 200

A market capitalisation weighted index of the top 200 companies listed in the Australian stock exchange. Often used as a gauge of sentiment for the Australian market.

Ask price

The rate at which you can buy the base product (eg currency) and sell the quote product.

Aussie

Slang term for the Australian dollar.

B

Balance/account balance

The total financial result of all completed transactions and deposits/withdrawals on the trading account.

Bar chart

On a daily bar chart each bar represents one day's activity. The vertical bar is drawn from the day's highest price to the day's lowest price. Closing price and opening price are represented by ticks on the bar.

Base currency

The first currency quoted in a currency pair on forex.

Base rate

The lending rate of the central bank of a given country.

Basis point

Typically one hundredth of 1% eg an interest rate cut of 50 basis points is equal to 0.5%.

Bear market

A market distinguished by declining prices, lower highs and lower lows.

Bid

A current market price is made up of a level at which you can sell and a level at which you can buy. The level at which you can sell is always the lower of the two prices and is called the bid.

Bollinger bands

A chart indicator used in technical analysis to measure market volatility, consisting of a single moving average and two standard deviation bands.

Broker

Individual or firm acting as an intermediary to bring together buyers and sellers, typically for a commission or fee.

Bull market

A market distinguished by rising prices.

Bundesbank

Central bank of Germany.

Buy limit

A conditional trading order that indicates a security may be purchased only at the designated price or lower.

Buy position

A commitment to buy a given amount of a financial instrument.

Buy stop

When you buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price.

C

Cable

A term referring to the sterling/US dollar exchange rate: the rate was originally transmitted between the London and New York exchanges via the transatlantic telegraph cable beginning in the mid 1800s.

CAC

A market capitalisation weighted index of the top 40 companies listed in the Paris stock exchange.

Candlestick chart

Identical to a bar chart in the information conveyed, but presented in a way to describe price movements. A visual representation of the prevailing trend and current market sentiment.

Carry trade

A strategy in which a trader sells a certain currency with a low interest rate and uses the funds to purchase a different currency yielding a higher interest rate, attempting to capture the difference between the rates. Common low yielding currencies include the USD and JYP and common high yielding currencies include the AUD and NZD.

Cash market

The actual, underlying market on which derivatives contracts are based.

Cash price (also see Spot rate)

The price of an asset for immediate delivery. In other words, the actual price of an instrument right now; this term is often used for stock indices, whereas the synonymous term of spot is more often applied to forex and commodity prices.

Central bank

A government or quasi-governmental organisation that manages a country's monetary policy. For example, the UK’s central bank is the Bank of England, and the US central bank is the Federal Reserve.

CFD

Contracts for difference (CFDs) are derivative products which enable you to trade on the price movement of underlying financial assets (such as indices and commodities). A CFD is an agreement to exchange the difference in the value of an asset from the time the contract is opened until the time at which it is closed. With a CFD, you never actually own the asset or instrument you’have chosen to trade, but you can still benefit if the market moves in your favour.

Channel

An upwards or downwards trend whose boundaries are marked by two straight lines. A break above/below the channel lines signals a potential change in the trend.

Closing

The process of ending an existing trade. Closing a trade results in a profit or loss being realised.

Commission

A fee charged by a broker or agent for carrying out transactions/orders.

Commodity

Financial instruments relating to the exchange of real physical substances, for example gold, crude oil or cotton.

Contract (unit or lot)

The standard trading unit on certain exchanges. For stock index, forex and commodity positions, the amount of base currency profit or loss per point movement in the market.

Controlled risk

A position which has a strictly limited maximum loss by virtue of a guaranteed stop. See also Limited risk.

CPI

Consumer price index – a measure of a country or region’s inflation rate, based on the price growth of a sample group of goods and services.

Cross currency

A pair of currencies traded in forex that does not include the US dollar, for example EURJPY.

Currency pair

The two currencies that comprise a forex rate. A forex rate is the amount that the first currency in the pair is worth expressed in terms of the second currency.

D

Daily charts

Charts that encapsulate the daily price movement, for example of a currency pair traded.

Day trading

Refers to the process of entering and closing out trades within the same day or trading session.

DAX

A market capitalisation weighted index of the top 30 companies listed in the Frankfurt stock exchange.

Dealing spread

Difference between the buying and selling price of a contract.

Deposit

The funds required to initiate and maintain an open position. It is not the total amount that can be lost on the trade.

Depreciation

A fall in the value of an asset.

Dove, dovish

The opposite of a hawk, a dove refers to an economic policy advisor supporting monetary policies with lower interest rates as a means of encouraging economic growth.

Dow Jones Industrial Average, Dow

A price-weighted index of the 30 largest blue-stock companies listed in the US. It is a widely-used indicator to reflect the US stock market.

Downtrend

A price trend characterised by a series of lower highs and lower lows.

E

Economic indicator

A government-issued statistic that indicates current economic growth and stability. Common indicators include employment rates, gross domestic product (GDP), inflation and retail sales.

Elliott Wave theory

Developed by R. N. Elliott, the Elliott Wave theory is based on the assumption of predictability by identifying certain flow and structure to the price movements of financial instruments.

ECN

Electronic Currency Network, a virtual exchange for FX transactions.

Equity

Calculated as: balance + floating profit – floating loss + credit.

Euro

The monetary unit of the eurozone, currently used by 18 European Union countries. Those countries are Germany, France, Italy, Spain, Portugal, Belgium, The Netherlands, Luxembourg, Austria, Ireland, Finland, Greece, Cyprus, Malta, Slovakia, Slovenia, Estonia and Latvia.

Execute and eliminate order

A limit order to execute at the current market price or worse. If the order is not filled in its entirety down to your specified order level any balance remaining will be cancelled.

Expert Advisor (EA)

A programme written in MetaQuotes Language (MQL4) and designed to automate trading activities on MT4 without the client being present, although the client terminal must be on.

Expiration/expiry

Some CFD markets have a fixed duration. For example futures contracts will expire at a pre-specified date and time in the future. At this point a future CFD contract is said to have expired and is awaiting settlement. Settlement is when the expired contract is closed at a level normally relating to the market at the time of expiry.

F

Fair value

The premium (or discount) of a futures contract against its underlying spot/cash instrument that is normally comprised of an interest and dividend component. The fair value represents the rational pricing of a futures contract such that no arbitrage opportunity exists between the futures and the cash.

Fibonacci

Named after mathematician Leonardo Fibonacci, they are technical analysis ratios used in trading to identify future price movements. The most popular Fibonacci tools are retracements and extensions.

Fill

The execution of an order.

Fill or kill order

A limit order that will only be executed if it can be filled entirely to your specified order level, otherwise it will be cancelled.

Flexible spread

Also known as floating spread. The difference between the bid and offer price that a broker can adjust according to market conditions.

Floating profit/loss

Current profit/loss on open positions calculated at the current prices.

Floating spreads

The difference between the rates at which you can buy or sell a currency change as the conditions of the forex market change. These moving spreads reflect true market conditions.

Foreign exchange (forex, FX, currency)

Financial market for trading international currencies, where it is used to speculate on the relative strength of one currency against another. Participants are able to buy, sell, exchange and speculate on currencies. The forex markets is made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors.

Forward

A contract which locks in the price at which an entity can buy or sell a currency on a future date.

Free margin

Funds on the trading account which may be used to open a position. It is calculated as equity less necessary margin.

FTSE 100

A market capitalisation weighted index of the top 100 companies listed in the London stock exchange. This is often used as an indicator to assess the broader UK market.

Fundamental analysis

The analysis of economic indicators and political and current events that could affect the future direction of financial markets. In the foreign exchange market, fundamental analysis is based primarily on macroeconomic events.

Futures

A future rate is notionally an agreement to conduct a transaction at some specified time in the future where the price is agreed now. A futures CFD will automatically expire at a specified time in the future, whereas a spot or cash CFD has no such expiry time. Often the price of a future contract will differ from the cash price, see Fair value. See also Expiration/expiry.

G

Gapping

The phenomenon of a market trading at a price away from the previous traded price without trades occurring at intervening prices: more usually, but not necessarily, relates to when a market resumes trading after a period of closure.

Gearing (also see Leverage)

The size of the deposit for a position compared to the overall notional value of that position. A position with high gearing or leverage stands to make or lose a large amount from a small initial outlay. The initial outlay is normally the deposit for the trade.

Good-for-day (day order)

An order type that will expire if not filled by the end of the day. See also order to open, good-till-cancelled, fill.

Good-till-cancelled (GTC)

Unlike Good-for-day orders, GTC orders remain active on the account waiting for a fill unless cancelled before being filled. See also Order to open, Good-for-day, Fill.

Greenback

A slang term for the US dollar.

Gross domestic product (GDP)

One of the measures of national income and output for a country's economy; the total value of all final goods and services produced by the economy.

Guaranteed stop

A stop-loss order that puts an absolute limit on your liability, eliminating the chance of slippage and guaranteeing an exit price for your trade.

H

Hawk, hawkish

An economic policy advisor who favours relatively higher interest rates to keep inflation under control or curb rapid economic growth. See also Dove.

Hedge

A trade or position that reduces or eliminates the risk of loss from an adverse price movement in a position already held.

I

Illiquid market

A market with relatively less aggregate volume in the order book. In an illiquid market, a small amount of business often moves prices by a disproportionate amount, and bid and offer prices can be far apart.

Instant execution

An order that is executed at the price displayed on the screen. If the price isn’t available a requote is offered at a new two-way price at which you can resubmit the order or choose to cancel it.

Intraday trading

The execution of one or more transactions in a trading session, within one trading day.

Interbank rates

FX rates quoted to each other by international banks

Interest

Cash adjustments made to reflect the economic effect of owing or receiving the notional amount of equity controlled by a CFD position.

L

Last dealing day

The last day on which you may trade in a particular market. This may or may not coincide with the settlement date for that market.

Last dealing time

The last time (on the last dealing day) you may trade in a particular market.

Leverage (also see Gearing)

Leverage is the ratio of the size of the position to the size of the deposit. For example a leverage of 1:100 means that in order to open and maintain a position the necessary margin is one hundred times less than transaction size. It allows traders to gain a large exposure with a relatively small outlay.

Libor

London InterBank Offered Rate. The interest rate charged between banks in London for short-term loans – a key benchmark that influences many other interest rate charges/products. Individual currency denominations have an associated Libor. It is produced for ten currencies with 15 maturities quoted for each, ranging from overnight to 12 months, producing 150 rates each business day.

Limit order

An order with restrictions on the maximum price to be paid or the minimum price to be received, for example to 'buy' if the price goes down to a specified level eg if the current price of USDYEN is 93.00/03, then a buy limit USD would be at a price below 93 (ie 92.50).A limit order can be attached to an existing position or used to initiate a new position (see Order to open).

Limited risk

A trade which has a strictly limited maximum loss. See also Controlled risk.

Liquid market

A liquid market has sufficient volume of two-way business for a large transaction to occur with little or no impact on price. Such a market will normally exhibit tight bid-offer spreads.

Log file

An ongoing journal of your trading activity.

Long position

A position taken in anticipation of a rising market. To go long means to buy. When trading FX it refers to buying the base currency against the quote currency.

Loonie

A slang term for the Canadian dollar.

Lot size

Also known as order volume, it’s the standardised quantity of a financial instrument, such as base currency, underlying asset or shares, per contract.

M

MACD

Moving Average Convergence Divergence – a chart indicator used in technical analysis to indicate a potential bullish or bearish trend reversal.

Major currency pair

Refers to the four most heavily traded FX pairs in the market: EURUSD, USDJPY, GBPUSD and USDCHF.

Margin

The amount required from a client – in addition to any deposit due – to cover losses when a price moves adversely. Sometimes called 'variation margin'.

Margin call

When an account is failing to meet margin requirements, more funds are required to be deposited into the account. Or, the margin required in the account needs to be reduced.

Market execution

An order that is executed at the best price available in the market, with no requotes.

Market order

An order that you use to specify the direction and size of a trade, but not the price. This ensures your order will be filled as quickly as possible, even if the price indicated on screen is not available for your requested order size.

MetaQuotes

The software company that created MT4 and MT5.

Moving average

The graphical representation of a smoothed-out price action over a set period of time, moving averages can help identify a trend, points of entry and potential target levels for stops.

MQL4/5

The programming language used by MetaQuotes for scripting Expert Advisors and indicators.

MultiTerminal

A platform used to manage multiple MetaTrader accounts.

N

NASDAQ

The NASDAQ is the second largest stock exchange in the US and traditionally lists many technology companies.

Nikkei 225

A price-weighted index of the top 225 shares listed in the Tokyo stock exchange.

Non-dealing desk (NDD)

An execution model that allows you to trade directly with numerous market liquidity providers in order to get the most competitive bid and ask prices.

Non-farm payrolls

A notable economic indicator released on the first Friday of every month by the US Department of Labor. It presents the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be excessively volatile. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).

O

Offer

A current market price is made up of a level at which you can sell and a level at which you can buy. The level at which you can buy is always the higher of the two prices and is called the offer.

Order

An instruction by a customer to a broker/trader to buy or sell should a specified price be reached. The order remains valid until executed or cancelled by the customer.

Order to open

An instruction to open a position should a specified price be reached.

Oscillator

A leading indicator in chart analysis which shows a potential trend reversal before it occurs.

Out-of-hours

Refers to trading outside of the main operating hours of the market.

Over-the-counter market (OTC)

Where there is no exchange involved in the transaction. One party trades directly with the other.

P

P&L

Abbreviation of profit and loss: an account compiled at the end of an accounting period to show gross and net profit or loss.

Parabolic SAR

Stop and reversal – a chart indicator used in technical analysis to identify trend endings and potential reversals.

Pip

Normally used in reference to forex rates, a 'Percentage In Point' is generally, though not always, the fourth decimal place, ie 0.0001. Traditionally, a pip was the smallest point by which a forex rate could move, but this is no longer the case.

Pivot points

Used in technical analysis, pivot points use the previous period’s high, low and close to calculate the current period’s support and resistance levels.

Position

An open trade that you have in the market.

Purchasing Managers Index (PMI)

An indicator of economic activity created through surveys completed by mangers in a number of manufacturing companies. It provides a picture of economic conditions, within the manufacturing sector.

Q

Quantitative easing

It is a measure adopted by a central bank to stimulate an economy, when traditional monetary policy measures (like the cutting of rates) have failed. The central bank electronically creates funds in its own bank account to purchase previously-issued government bonds, plus private sector and distressed assets (so companies can raise capital) This serves to create more tradable and liquid markets to help stimulate the economy.

Quarterly CFDs

A type of future with periodic expiries spaced three months apart. Prices are normally quoted for the next two or three quarter months. See also Rollover.

Quote

The two-way market price for a given instrument; because it is two-way, you can buy or sell, according to whether you think the price will rise or fall.

Quote currency

The second currency in a pair.

R

Range

Where the price moves within a defined boundary.

Realised profit/loss

The amount of money you have made or lost on a position once it has been closed. Realised profit or loss will add to or subtract from your account cash balance.

Requotes

Requotes are missed prices caused by the market moving in the direction that you wish to trade. A requote occurs when you request to execute an order at a specific price that is no longer available and you’re offered a different quote. This can happen during fast-moving markets.

Resistance level

A term used in technical analysis indicating a price level at which analysis suggests a predominance of selling – and hence a greater likelihood that the price will fail to break through the level.

Rollover

A charge or credit for holding a currency position overnight. The value of the process is measured by the interest rate differential between the two currencies.

RSI

Relative strength index – a chart indicator used in technical analysis which identifies when trends are coming to the end of their current direction, as well as overbought and oversold market conditions.

Running profit/loss

How your open positions are performing: the unrealised money that you would gain or lose on your open positions if they were closed at prevailing market prices.

S

Scalping

A trading strategy that involves placing short-term trades, sometimes only a minute long or less, usually to try and capture the spread.

Sell limit

A conditional trading order that indicates a security may be sold only at the designated price or higher.

Sell stop

An order to open a sell position at a price lower than the price was at the moment of placing the order.

Settlement (also see Expiry)

The process of a position closing against a specified market level once the position has gone beyond its last dealing time.

Short position

A position taken in anticipation of a falling market. To go short means to sell. When trading FX it refers to selling the base currency against the quote currency.

Slippage

The difference between the requested level of an order and the actual price at which it was executed (see also Fill). Slippage can occur during periods of higher volatility when market prices move rapidly or gap.

S&P 500

A market capitalisation weighted index of the top 500 companies listed in the New York stock exchange (NYSE) or the NASDAQ. Often used as a gauge of sentiment for the US market.

Spot (also see Cash price)

The price for a currency, index, commodity or share for immediate settlement or delivery.

Spread

The difference between the buying and selling price for a particular market.

Spread betting

Spread betting is a tax-free* way of speculating on an outcome, where your degree of accuracy determines the size of your profit (or loss). You never physically own the underlying instrument, but can make a profit (or loss) from both rising and falling prices. With financial spread betting, you're speculating on the direction in which the price of an FX pair, stock index or commodity will move.

Stochastic

A chart indicator used in technical analysis to determine potential trend reversals, indicating an overbought or oversold market condition.

Stock exchange

A market on which securities are traded.

Stock index

Stock indices are a compilation of a number of stocks into one total price, expressed against some base value from a specific date, thus allowing investors to easily follow the performance of certain groups of stocks.

Stop loss

An order placed to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor’s loss on a security position.

Stop order

An instruction to deal if the price becomes less favourable. A stop order can be attached to an existing position (known as a stop loss) or can be used to initiate a new position (see Order to open).

Support level

A technique used in technical analysis to indicate a price floor at which you would expect the price to 'bounce' off. A price point where it is anticipated buyers will enter the market and 'support' the price. The opposite of this is resistance.

Swap

The rollover charge/credit for keeping a position open overnight.

Swissie

A slang term for the Swiss Franc.

*Any profits you make from spread betting are completely free of capital gains tax, stamp duty and income tax (for residents of the UK and the Republic of Ireland). UK and Irish tax laws are subject to change and individual circumstances may vary. Financial spread betting with Alpari UK is available to residents of the UK and the Republic of Ireland only.

T

Take profit

An order to close an open position at a more profitable price compared to the price when placing the order.

Technical analysis

A technique used to try and predict future movements of a security, commodity or currency, based solely on past price movements and volume levels. It examines charts and historical performance to forecast prices by analysing market data, such as historical price trends, averages and volumes.

Tick

A single price movement which can be either positive or negative.

Tom-next charges

In foreign exchange, the cost of holding a position overnight. Short for tomorrow-next, it normally incorporates the interest considerations in simultaneously holding and owing the notional and base currencies as well as being influenced by the relative availability of the associated currencies.

Trade size

The size of the underlying position that you are trading. Governs how much you make or lose on a trade for every point of movement in the price of the market.

Trailing stop

Trailing stops are a special type of stop order that trails behind the market when the market moves in your favour.

Transaction costs

The costs that are incurred by a trader when buying or selling currencies or commodities. These costs include broker commissions or spreads.

Transaction date

The date a trade occurs.

Trend lines

A straight line drawn across a chart that indicates the overall trend. In an upward trend, the line is drawn below, and acts as a support line; the opposite holds true for a downward trend. Once the asset breaks the trend line, the trend is considered to be invalid.

Two-way price

When both a bid and offer rate is quoted for an FX transaction.

U

Underlying

The actual traded market or markets from which the price of futures is derived.

Uptick

A price quoted that is higher than the previous quote.

V

Volatility

A statistical measure of the variation in a market's price movements over time.

VPS

Virtual private server; a platform which runs on a remote server, allowing you access from any computer, tablet or smartphone connected to the internet.

W

Wall Street

An alternative, well-known term for the New York stock exchange (NYSE), the largest stock exchange in the US.

Working an order

The process of having an order that has not yet been executed.

Y

Yard

A billion units.

Yield

Percentage return on an investment.

Yuan

Base unit of currency in China.

Z

Zloty

Polish unit of currency.