– Overnight Position – This refers to the Forex trader’s position, either long or short, in a currency by the end of the trading day.
– Pip – smallest unit of price for all currencies. For almost all currency pairs, one pip is equivalent to 0.0001.
– Price Transparency – Refers to the market’s capability to deal or see at the same price.
– Principal Value – This refers to the original invested amount of a client.
– Quote convention – the convention in Forex markets is that the exchange rates can be expressed in the following format: base currency/quote currency; implies: bid price/ask price
– Quote currency – the second currency in any pair of currencies. Usually called “pip currency” or “counter currency.” Any profit or loss that is unrecognized is expressed in terms of quote currency
– Risk – The risk that the value of the exchange rate on a foreign currency will move against the investor’s position resulting in the reduction of the investment value. Also called “foreign exchange risk”
– Risk Management – the use of financial analysis and other trading strategies to lessen and/or control exposure to financial risk.
– Roll-Over – A term which refers to the process of moving the date of the settlement value from an open position forward to the next valid settlement value date.
– Short – In foreign exchange, this refers to the primary currency when a currency pair is sold.
– Sterling – Another term for the British Pound.
– Stop Order – order to buy or sell a currency when the currency’s given price has reached or passed a particular level to liquidate part or all of an existing position.
– Swap – Refers to a transaction, which changes the maturity date of an open position and moves it to a future date.
– Take Profit Order – A customer’s order to buy or sell a currency pair, which would result in the size of the existing position being reduced and display a profit on the said position when executed.
– Tick – refers to the smallest possible change in a price. Could either be up (called uptick) or down (called downtick).
– Tomorrow Next (Tom/Next) – Refers to the process wherein the date of an open position’s settlement value will be moved forward from one trading day after the date of the trade (referred to as “tomorrow”) to the next valid value date (referred to as “next”), which is now the spot value date. Also called T/N or T/N Roll
– Transaction cost – the bid/ask spread is also the transaction cost for a trade that is round-turn. Round-turn means both a buy trade and an offsetting sell trade or a sell trade and an offsetting buy trade of similar size in the same currency pair. Transaction cost can be calculated by the following formula: transaction cost = ask price – bid price
– Transaction Date – refers to the date on which a transaction occurs.
– Turnover – a term which describes the overall volume of all the transactions that have been carried out in a given period of time.
– Two-Way Price – a quote that indicates a bid price and an ask price.
– X – A Nasdaq stock symbol symbolizing that the said stock is a mutual fund.
– Yard – a slang term in Forex language and used in the currency industry to mean “billion.”
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