A
• Accumulation — a combination of two consecutive candlesticks (bars) with the second candlestick fully overlapping the first one.
• Adding — an trading approach of adding to winning positions.
• Algorithmic trader — a trader who uses algorithmic systems and computer programs to make trades.
• Algorithmic trading (algo-trading) — a trading approach that involves the use of automatic robotic programs.
• Ask — the price at which a trader can open a long position (to buy an asset).
• Aussie — a common FX slang for the Australian dollar.
B
• Bar — a vertical element of the price chart demonstrating 4 prices—opening price, high, low, and closing price—for a certain time period.
• Base currency — the currency shown first in a forex pair quotation.
• Bear — a market participant who believes that the price will drop, by analogy to bears throwing their paws downward.
• Bid — the price at which a trader can open a trade to sell the asset.
• Blue chips — expensive stocks of large, highly liquid companies with high capitalization. This name stems from a game of poker where blue chips have the highest value.
• Bounce — a situation where the price bounces off of the support or resistance levels.
• Break — a sharp increase or drop in the asset’s price.
• Breakout — a situation where the price overcomes support or resistance level.
• Breakout trading — opening positions on the assumption that the price will overcome the price level.
• Broker — an institutional intermediary between a trader and the stock exchange which is regulated by relevant authorities.
• Bull — a market participant who believes the price will rise, by analogy to bulls thrusting their horns upwards.
• Buy — a trade opened to buy an asset.
• Buy Limit Order — a pending order to purchase an asset at or below the market price.
• Buy Stop Order — a pending order to purchase an asset above the market price.
C
• Cable — slang for the exchange rate between the U.S. dollar (USD) and the British pound sterling (GBP).
• Candlestick — a vertical element of the price chart consisting of 4 prices.
• Candlestick’s body — the price range between the opening and the closing prices.
• Candlestick’s shadow — sections of a candlestick positioned higher and lower than the candlestick’s body.
• Carry trade — a trading strategy whereby traders make money off of the difference in the interest rates of two countries whose currencies are included in the relevant currency pair.
• Commission — a fee charged by brokers for their services and paid by traders.
• Consolidation — another way to refer to a flat, i.e. a situation when the stock market has made little to no movement over a period of time.
• Contract for Difference — a derivative financial instrument whose underlying asset can be stocks and stock indices, metals, crypto coins, and even currencies. When trading CFDs, traders normally take advantage of the difference between the opening and closing quotes of a position. E.g. By purchasing share CFDs, the trader does not really become the owner of them but makes money off of the difference in prices.
• Correlation — the relationship between the assets and their movement, e.g. when oil prices go up, the Canadian dollar rises as well, since Canada is a commodity country.
• Counterparty — the other party to the deal.
• Cross currency pairs — a currency pair that does not include the U.S. dollar.
• Currency — the country’s monetary unit.
• Currency pair — a financial instrument in which the value of one currency is compared to another.
D
• Day trader — a trader who typically opts for intraday strategies.
• Demo account — a type of trading account where you can test out a strategy, or indicator, and improve your skills by diving into a real-world market environment. Keep in mind that you cannot make money trading in the demo account unless you participate in the Demo Account Contest hosted by Gerchik & Co.
• Deposit — the amount available in the trader’s account.
• Derivative — a derivative financial instrument whose value is tied to an underlying financial instrument or asset. In other words, this is an agreement between market participants to do particular and/or agreed-upon acts regarding the underlying financial instrument. Derivatives include futures, options, swaps, and contracts for differences, otherwise known as CFDs.
• Direct quote — a quotation method where the U.S. dollar (USD) is in the numerator, e.g. USD/CAD, USD/JPY.
• Diversification — the distribution of risks by markets, instruments, and strategies.
• Drawdown — a loss expressed in percentage.
E
• Entry Point (EP) — a price at which the trader opens a position.
• Expert Advisor (EA) — a trading robot, or an algorithm run on the platform to perform specific trading operations based on the given program.
F
• Financial asset — a trading instrument used to make money in the financial markets; these include currency pairs, futures, stocks, share CFDs, etc.
• Flat — the state of the market when there is no pronounced trend.
• Foreign exchange intervention — purchase or sale of a national currency to regulate the exchange rate so that it serves the interests of a country.
• Fundamental analysis — an approach used to analyze price movements and make forecasts based on the release of macroeconomic data.
• Futures — a derivative financial instrument to buy or sell an asset at an agreed-upon price. Oil futures are one of the common examples. What makes futures different from options is that the contract sets out obligations under the transaction for both parties, i.e. the buyer undertakes to buy, and the seller undertakes to sell the goods.
G
• G&Co — Gerchik & Co brokerage company.
• Gap — an area on a chart where an asset's price jumps higher or lower from the previous day's close.
• Go long — slang verb for purchase of an asset.
• Go short — slang verb for sale of an asset.
• Graphical analysis — an approach used to analyze price moves and make forecasts by means of chart patterns and candlestick patterns.
H
• Hedging — insurance against risks. Essentially, it means using one instrument in order to reduce the risks for another instrument.
• High — highest price of the asset over a specific time period, and the peak of the bar.
• Homework — slang for prepping for a trading day.
I
• Indicator (Technical indicator) — is an auxiliary tool used by traders to analyze the existing market situation. It is based on a mathematical formula that factors in trading statistics such as prices, volume, etc. Typically, indicators look like a chart superimposed on or coupled with a market asset’s price chart. With indicators, traders can identify the strength and direction of the trend and points where big capital is accumulated, and therefore make an informed decision to open or close a trading position.
• Indirect quote — a quotation method where the U.S. dollar (USD) is in the denominator, e.g. EUR/USD, GBP/USD.
K
• Kitchen — a slang term for brokers that do not send trades directly to the interbank market.
• Kiwi (the terms stems from the name of the Kiwi bird, the most recognizable symbol of New Zealand) — slang for the New Zealand dollar.
L
• Leverage — the money borrowed from a broker to enter a position with a volume exceeding the available margin. It can be either 1:100 (a hundredfold increase) or 1:2 (a twofold increase).
• Limit player — a big market player that accumulates positions using pending (limit) orders.
• Liquidity — the volume of the traded asset that is currently available in the market.
• Liquidity provider — a market player who provides other market participants with liquidity.
• Long position — a trade opened to purchase an asset.
• Loonie (the terms stems from the name of the Canadian loon bird) — a slang word for the Canadian dollar.
• Lot — a volume equal to 100,000 units of the base currency. E.g. Purchasing one lot of EUR/USD is buying €100,000. You can trade 0.1 lots, and 0.01 lots.
• Low — the lowest price of the asset over a specific time period, the lowest point of the bar.
M
• Major pair — a currency pair that includes the U.S. dollar; it’s a currency that’s very popular in the financial market. These are the most liquid pairs.
• Margin — a security deposit made by the trader to the trading account.
• Margin Call — a situation when a trader does not have sufficient funds to maintain open positions.
• Market Maker — a major market player such as banks, and funds.
• Market Order — an order placed to buy or sell an asset immediately at the best currently available price.
• Mirror Level — a support or resistance level that continuously changes from being a support to resistance and vice versa. It is considered to be the strongest level.
N
• Non-Farm Payrolls — highly volatile news release.
O
• Option — an agreement (contract) for the purchase and/or sale of the underlying asset at a price previously agreed upon by the parties to the transaction. What makes it different from the futures contract is that it is a contract with unequal rights and obligations, i.e. the buyer has the right to buy and/or not to buy the goods, whereas the seller is obliged to sell it.
• Order — this is an instruction to the broker to open a position.
• Overbought market — a situation where the price hits the maximum value during the trend and all potential buyers have already entered positions. It prompts the price to move down. The reverse situation is oversold.
• Oversold market — a situation where all potential sellers are in the market, the price falls as much as possible, and then buyers start to push it up. The reverse situation is overbought.
P
• Pending Order — an instruction to a broker to open or close a position at prices that differ from the current ones.
• Pipsing — a strategy used to make money off of minimal price fluctuations.
• Position — a long-term or medium-term positional trade.
• Price Action — a method used to analyze charts of financial instruments; it is based on the search for trend continuation and reversal patterns formed by one or more bars (candlesticks), e.g. an outside bar.
• Pullback — a situation where the price returns to the previous price level after reaching a new peak (extremum).
Q
• Quote — a price of an asset.
• Quote currency — the second currency in the currency pair.
R
• Rally — a stable and strong trend.
• Requote — the difference between the price at which the trader decides to open a trade and the market price; it’s slippage that occurs during a highly volatile market.
• Resistance — a level, the upper boundary of the price range which the price bounced off of several times.
• Risk Manager — a risk management software used in trading. It is a combination of steps aimed at reducing potential risks to earn maximum profits.
S
• Scalper — a trader who uses the scalping strategy.
• Scalping — a type of short-term intraday trading strategy marked by many small trades made throughout the day.
• Sell — a sale of a financial asset; in other words, it is a trade made to sell it.
• Sell Limit Order — a pending sell order placed at or above the current market ask.
• Sell Stop Order — a pending sell order placed below market prices.
• Share — a tradable asset issued by a company. In some companies, you may receive dividends.
• Short position — a trade opened to sell an asset.
• Slippage — the absence of quotes at the indicated prices which is explained by high volatility.
• Speculation — a trading approach of making a profit off of the price difference.
• Spread — the distance between the bid and ask prices.
• Squeeze — compression, a situation where stop-loss orders get squeezed out from the market. There are two types of squeezes:
◦ Short squeeze — an intense price spike following a drop, and holders of short positions are forced to close them at any price, accelerating the bullish trend.
◦ Long squeeze — holders of long positions close them manually or by stop loss as a result of a dramatic drop in price.
• Stock exchange — a centralized financial market where financial instruments are being traded.
• Stop Loss — an order placed with a broker to buy or sell a particular asset as soon as it reaches a certain price.
• Stop out — a situation when a position gets forcibly closed when the margin level falls to a specific level.
• Support — a level, the lower boundary of the price range which the price bounced off of several times.
• Swap — an overnight interest charged for keeping the position open overnight.
• Swing Trader — a trader who uses swing trading strategies to make money.
• Swing Trading — a strategy where you make money off of the price fluctuations while holding a position from several hours to several days.
• Swissy — a slang term for the Swiss franc.
T
• Take Profit — a pending order that specifies the exact price to exit a position for a profit planned by the trader.
• Technical analysis — a method used to analyze price moves and make forecasts by means of technical indicators and chart analysis.
• Tilt — a state of emotional confusion or frustration when a trader makes ill-considered decisions driven by emotions, which ultimately results in the loss of the deposit.
• Timeframe — the time period of price movement demonstrated on the charts as a single vertical element.
• Trader — a financial market participant who aims to make money off of asset price fluctuations.
• Trading instrument — a market asset that acts as the object of a sale or purchase transaction. It can be a currency pair, stock, precious metal, raw materials, etc.
• Trading plan — a step-by-step plan used by traders on a daily basis consisting of signals for opening and closing trades, strategy signals, time for market analysis, etc. It is normally based on a strategy.
• Trading platform — a software designed for trading in the financial markets.
• Trading session — the time when a particular financial center or region is active.
• Trading strategies — a system used by traders to make trades.
• Trailing Stop — a type of stop loss that follows positive price moves automatically at a predefined distance.
• Тrend — an overall direction of a market.
V
• Volatility — a common metric used to measure price fluctuations.
• Volume — the total amount of an asset traded per unit of time.
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