GLOSSARY OF TERMS

In the forex world there are various terms and definitions so that often some of them are forgotten. Because forex education would not be complete without a glossary of forex terms, we compiled a glossary of terms with the aim of explaining the definition of important terms as easily as possible. This way, you don’t need to be confused anymore!

A

Aggregate Risk

Aggregate risk, when a bank or financial institution is bound in a forex contract with a single customer.

Ask

The price agreed by the trader to buy a financial asset.

Asset

One item or resource that has value

B

Bank Rate

Bank interest rates, the interest rates used by a country’s central bank when lending money to domestic banks in that country.

Base Currency

The base currency, in a currency pair, the first currency in the pair is called the base currency. For example, in the USD / JPY pair, USD is the base currency.

Bear Market

Sluggish market, when prices of certain financial instruments, assets, or markets are declining.

Bid

The price that a trader is targeting to sell a financial asset.

Bull Market

Market Rises, when prices of certain financial instruments, assets, or markets are rising

Buy Limit Order

An order to make a transaction at or lower than a certain price, the word ‘limit’ indicates that particular price.

C

Carry Trade

When investors borrow at low interest rates so they can buy assets that might result in higher interest rates.

Closed Position

When a trading position is closed, it means that the transaction has been completed – either a long or short position or a transaction that gives a profit or causes a loss.

Closing Market Rate

The market closing price, also known as the closing price, is the last price when a financial asset is traded on a certain day or time period.

Currency Appreciation

Currency appreciation, when a currency increases in value compared to other currencies

Currency Basket

A certain group of currencies that form a weighted average value that can serve as a measure to assess an obligation.

Currency Futures

A contract that determines the price of a currency so that it can be bought or sold on a certain date in the future. Future contracts are often used by investors as a hedge against risk instruments.

Currency Pair

A pair formed by two different currencies that are traded in forex transactions. Example: EUR / USD.

D

Daily Chart

Daily chart, a graph that illustrates the daily movement of a financial asset.

Day Trade

Trade (trade) whose position is opened and closed in one day

Demo Account

Demo accounts, trading accounts funded with virtual (pseudo) money, give traders the opportunity to get to know the market and test the trading platforms they use before investing real money into a live trading or real account.

Depth of Market

Market depth, the number of open orders to buy and sell a financial asset at various prices.

Drawdown

When the value of an investment falls, the distance or difference between the highest peak value and the lowest base is called a drawdown

E

ECN Broker

Brokers who use Electronic Communications Networks (ECN) to provide direct access to clients to liquidity providers.

Exchange Rate

The exchange rate or exchange rate at which a currency can be exchanged with another.

Execution

Execution, when a trade transaction is carried out and completed.

Exposure

Exposure, this shows the amount of investment in a financial asset that is vulnerable to market risk.

F

Fill

Completion or execution of a transaction order.

Fill or Kill

When an investor wants to make a transaction at a very specific price, they give a Fill or Kill order – meaning that if the order cannot be filled at the desired price, the order is killed.

Fill Price

The price at which a transaction order has been fulfilled or carried out.

Floating Exchange Rate

Floating Exchange Rates, when the value of an exchange rate is not set, but adjusted depending on supply (demand) and demand (demand) of a particular currency relative to other currencies.

Forex Chart

Forex charts are digital charts that illustrate the price movements of currency pairs to assist investors in making the right decision

Forex Scalping

Trading strategies that are based on the assumption that if you buy and sell (or sell and then buy) a currency in a very short period of time, you will most likely benefit from it if you wait for large price movements.

Forex Signal System

Forex signal system, a system that signals traders to help them decide when to buy or sell a currency pair.

Forex Spot Rate

The current exchange rate at which a currency pair can be bought or sold.

Forex Trading Robot

This is an automatic trading software designed to help make decisions when it is appropriate to buy or sell a currency pair at a particular time.

Fundamental Analysis – Analisis Fundamental

Effect of economic or political events on prices in the financial markets (announcement of interest rates, unemployment amounts, etc.)

H

Hedge

Hedge Value, investors use hedging to protect themselves by reducing the risks that may be caused by adverse market movements. Hedging means making two opposite and mutually balancing investments, so as to minimize losses that may occur due to price fluctuations.

I

Interbank Rate

Interbank interest rate, the interest rate charged for short-term interbank loans.

L

Leverage

.Levers are offered by brokers to maximize traders’ purchasing power by giving them the opportunity to deposit funds in small amounts so they can trade in large volumes. Leverage is expressed in the form of a ratio, so if for example leverage is 1: 100, the trader’s purchasing power is increased 100 times

Limit Order

Perintah untuk melakukan transaksi pada harga tertentu atau yang lebih baik.

Limit Price

The price specified in the Limit Order

Liquidity – Likuiditas

The volume of trade transactions that occur on the market for certain currency pairs

Long Position

Long position, taking a long position on a currency means you buy it. In a currency pair, you buy the first currency (base currency) in that pair.

Lots – Lot

One lot is a standard quantity measurement of the instrument you are trading. In forex, one lot is 100,000 units of a currency.

M

Margin

This is the amount of money needed in your account to keep a trading position open.

Margin Call

This is a notification that will warn you to deposit a certain amount of money into your trading account so that sufficient margin is available to keep your existing trading positions open.

Mark-to-Market

The value of an open position if the trade position were closed at the current market price.

Market Order

A transaction order to be immediately executed or executed at the best available price.

Market Rate

Current quotes on a currency pair.

Micro Lot – Lot mikro

Micro lots are 1000 units of the base currency in the currency pair.

Middle Rate

Middle rate, the price is exactly halfway between the bid and ask prices.

N

No Dealing Desk

.When a trader has direct access to the interbank market and there is no dealing desk involved in their transaction

O

Open Position

Position taken on a currency pair that can bring profit or loss.

Over the Counter

The traditional way of trading forex is ‘over the counter’, which is a trader doing forex transactions via telephone or electronic devices.

Overnight Position

Overnight Position, when a trader’s position remains open and resumed trading the next day.

P

Pip

Pip is Percentage in Point (percentage in points) and is the smallest price change that can be seen at the exchange rate. Generally the currency pair is specified in 4 decimal points and the smallest change that can be seen in the last number.

Profit Taking

.Take Profits, close a trading position to take profit

Q

Quote Currency

The second currency of the currency pair is referred to as the quote currency. For example EUR / USD, USD is the quote currency.

R

Regulated Market

A regulated market is a market regulated by legislative and existing regulations that function to protect investors.

Resistance

.Resistance, the price level at which a stock or currency is difficult to penetrate to a higher level and eventually starts to turn back down

Risk Management

Risk Management, tools and strategies for traders to limit financial risk as much as possible.

Rollover Rate

In forex, a rollover interest rate is the interest that traders must pay or earn when they leave a trading position open until it exceeds the nighttime limit.

Round Trip

Shows the total amount of funds used in opening and closing a trading position.

S

Slippage

This happens when a transaction order is executed or carried out at a price different from the price expected by the trader. This usually occurs in periods of trading with high volatility, when traders use market orders and stop loss orders.

Soft Currency

A currency that is sensitive to economic and political events so that it fluctuates highly and is generally unstable.

Speculator – Spekulator

A trader who takes high risks by choosing to trade high-risk financial instruments in the hope of obtaining a high level of profit as well.

Spike

Price movements that suddenly rise or fall sharply and occur in a very short period of time.

Spread

The difference between the Ask and Bid prices of a currency pair.

Stop Loss Order

An order to buy or sell a currency when a certain price has been reached. This order is done to limit the loss of a trading position.

T

Take Profit Order (T/P)

An order to close a trading position when it has reached a certain price with the aim of taking profits.

Technical Analysis – Analisis Teknis

Traders use technical analysis to predict price movements by studying historical market data through the use of charts and trading indicators.

v

Volatility

Volatility, this shows the level of uncertainty due to fluctuations in the price of a particular currency pair or financial asset.

Y

Yield

Yield is the rate of return on an investment and is usually expressed as a percentage