Forex, Stocks & Financial Glossary
Page 3 (N - Z)
1: A to C
2: D to M
Stock Trading and
pages will give you more insight into the money markets and online trading.
professions and interest groups have a sub-language, slang or jargon evolves
Terminology, definitions, abbreviations, acronyms,
technical words and expressions are usually made up
or taken from similarly related disciplines.
NASDAQ – The
National Association of
Securities Dealers Automated Quotation.
NASDAQ is an acronym for the
largest electronic screen-based equity securities market in the United
States. An Index of over 5,000 company listings, it trades on average more shares
per day than any other US stock market.
The UK stock market index equivalent is the FTSE.
In the latter part of 2007, the
NASDAQ began trading options. Learn how to
in ETFs - a way of buying selected stocks of one of many popular
indexes like the NASDAQ, S&P500 or FTSE.
video about NASDAQ trading in today's markets – from INO TV.
OCO (One Cancels the Other) Order
A combination of a linked limit order and a stop loss orders at
predetermined market levels, where if one is executed the other order is
automatically cancelled. It is used to encapsulate foreign exchange risk
within known parameters i.e. to try to achieve a favourable rate whilst also
giving protection against adverse market moves. It is lodged with a Bank or
Broker and offers 24 hour protection and will float until either cancelled
or hit. It is free of charge to use and provides an excellent vehicle for
companies to transact their currencies at the best point in a range, whilst
protecting themselves from negative movements.
Offer Price is the rate quoted by the broker for selling the first of a particular pair of
An order that will be executed when a market moves to its designated
price. Normally associated with Good Till Cancelled Orders.
- A deal not yet reversed or settled with a physical payment.
option is defined as the right, but not an obligation, to buy or sell
an asset (such as stock or currency) at a fixed price before a predetermined
date. However, CFDs (Contracts for Difference) are much more flexible
and easier to learn than Options or Binary Options.
Learn more here.
Over-leverage & Over-trading
This is risking too much of your money on a single trade, out of greed or
possibly fear. Risk management is the key. Never trade
without knowing how many lots you need to buy, what your risk
reward is, or without knowing the exact amount of your trade. A
tool that lets you trade correctly without emotion is the
Forex Position Allotment
Calculator. It takes all the guesswork and much of the risk out of
every trade you enter.
Over The Counter
(OTC) is used to describe transactions not conducted
over an exchange.
A trade that remains open until the next business day. Overnight Trading
is the purchase or sale of currencies between the hours of 21:00 and
08:00 EST (New York time) which can be done through using Stop Loss or Limit Orders.
Although this is not a Forex term, most traders are aware of this type of stock which is
traded at a relatively low price and market capitalization, usually on
smaller exchanges. Considered to be more highly speculative and
risky due to lack of liquidity and wide spreads, nevertheless they
are extremely popular with those who have learned how to trade this
potentially lucrative market. Learn more about penny stock trading.
Pip or PIP
The dictionary definition of 'pip' is the smallest countable part of something.
A forex pip is the fifth and final digit of
a currency. For valuation purposes it applies only to the base currency.
All currency pairs are quoted and valued against each other using 5 digits,
position of the decimal point can vary. For example, the Japanese yen may be 107.00
to 1.0000 US dollar. The GBP/USD rate might be 1.9500
(i.e. £1.0000 is worth $1.9500). As a pip is 0.0001 of a dollar, if the rate moved up
by 5 pips, it would become
Where did the term
'pip' or 'PIP' originate? Most accept it as an abbreviation or
acronym for Price In Points, Percentage In Points or Price Interest Point.
Stock and currency trading were around long before acronyms
became popular and pips are not exclusive to currency markets either.
Pip is a simple English word for the seed or smallest part of fruit (apple,
orange pips). Apart from the
US soul singer Gladys Knight had her Pips too!
However, while the origin of the
forex pip is hardly
important, the number of Pips In Profit you make is! The
change in forex rates seen in the short term, such as a day, is often very
small. It might be only 0.0001 percent. However, profit is still achievable;
a trader who buys standard 'lot' of 100,000 units of a base currency e.g.
the GBP, with a unit price of $1.5159, would be sure to make more than $100
profit if the value rose by just 0.001 percent during the day. If he held
this level of trade for a month, it would be some $3,000 or $36,000 per year
from capital of $100,000 dollars, a 36% annual return, unlikely elsewhere in
today's markets. While each investment option has its downsides, the growth potential of gold-backed IRA is not under the threat of an inflationary economy. Despite the dynamics and the pressure in the market, the price of gold remains stead. Gold IRA's provide an alternative investment option for people who want to gain protection while benefiting from the capital appreciation.
So the forex PIP: Percentage In Point is the percentage of a
single percentage point (1%) that a currency changes within a day.
The pip difference between the Bid and Ask price. Typically 3 or more pips,
varying also by currency pairs. Some brokers offer fixed spreads; others
will change the spread (variable spread) depending on market
If the USD is the base currency, one pip is worth $10 for a standard
lot ($100,000) trade and $1 for a mini lot of $10,000.
Some brokers offer even smaller lots and a pip will of course be worth less. For other base currencies such as for the GBP/USD or EUR/JPY
pairs, a pip will have a different base currency value if converted back to
dollars. See Lot Size.
A 'point' represents 100 pips. If the GBP/USD rate moves up by 100 pips
from 1.9500 to 1.9600, it has moved by one point. See Forward Points -
'points on', 'points off'.
In the currency markets, describes the amount by which the forward or
futures price exceed the spot price.
- The interest rate at which banks lend money to their prime corporate
Feeder is a private subscription service for stock swing
traders – a daily email detailing stocks likely to move significantly within
the next few days.
A term used in technical analysis, this is a forecast price level where the rate of exchange should encounter
selling pressure, which should stop the price/rate from rising any further.
Main market participants including investment funds and banks, look for
resistance and support levels to place orders and thus they become, to a
large degree, self-fulfilling prophecies. See also Support.
is the opposite of Devaluation -
an increase in the exchange rate for a currency as a result
of central bank intervention.
Anything that lacks absolute certainty (like death and taxes!)
involves a degree of risk. This can range between low, medium, high or even
forex, it's possible to limit risk of loss in various ways, including
placing predefined stops on trades. This should be part of a safer trading
strategy. You cannot avoid risk, but you can reduce it or lessen its effects.
See Spread, Scalping.
- the employment of financial analysis and trading techniques to reduce
and/or control exposure to various types of risk.
S&P - Standard & Poor's Index
Named after the 1941 merger of the Standard Statistics Bureau
and Henry Varnum Poor's publication History of Railroads and
Canals in the United States, forerunners of present-day stock
reporting and analysis. Named the Standard & Poor's Corporation, it was
acquired in 1966 by McGraw-Hill Companies. Investing in the
Spider ETF gives you shares in the S&P500.
The word used to mean cutting the hair and skin (scalp) off an adversary's
head as a trophy. Native Americans used to practice it. Nowadays scalping
refers to making quick profits from sudden small swings in the market. This
is how brokers make their money, but they call it spread. Some will
close trader's account for scalping habitually.
The process by which a trade is entered into the books and
records the details of a transaction. Settlement of currency
trades usually does not involve the actual physical exchange of one
currency for another.
- An investment position that benefits from a decline in market price.
The difference in pips between the order price approved by the client and
the price at which the order is actually executed. Slippage can occur when a
trade is not immediately available at the requested price, or when prices
are changing rapidly. Unless a range is stipulated, the broker needs to
confirm a different price for approval by the client (trader) who can accept
or refuse the new entry price.
Spot Price, Spot Rate
By definition a spot forex transaction is a
currency trade with a settlement date (liquidation) within a maximum of 2
working days following the placement.
The spot rate is the current rate – the one used for an
immediate order to buy or sell currency.
The price difference, quoted as a number of pips, between bid and
offer rates (buy and sell) for currency pairs. In forex trading, spread is
the main source of broker income. Instead of charging commission, banks and
brokers earn from the spread of every trade entered and exited, winning or
STArS Daily Signal Report is a daily stock trading subscription
service (sometimes available on a 30 day trial basis which shows open stock positions, all of them potentially profitable,
together with exit signals. You also get bonus ebooks worth $300
whether you continue to subscribe or not. Worth trying.
Sterling is slang for the British Pound
(GBP). See Currencies.
Stop Loss Order
An order to buy or sell a currency pair (or stock) when a predetermined
price is reached. It is lodged with a Bank or Broker and offers 24-hour
protection and will float until either cancelled or hit. The 'secret' is
knowing where to place
your Stop Loss to protect your purchase or sale of a currency from negative movements in the
market overnight or over a period of days/weeks. It is free of charge to use
and provides an excellent vehicle for traders to protect themselves from
negative movements while leaving the door open to benefit if
the market continues to move in its favour.
Support is a forecasted price level where the rate of exchange should
encounter buying pressure, which should stop the price/rate from falling any
further. Main market participants look for support and resistance levels to
place their orders and thus they become, to a larger degree, self-fulfilling
prophecies. See also Resistance.
Swap - In currency
trading, the simultaneous sale and purchase of the same amount
of a given currency at a forward exchange rate.
A trade made usually in stocks (but also in forex) and held for between several days and
up to a few weeks. A swing trade might be completed in less than a
week, or if the stock consolidates it might take several weeks. While a
swing trader will watch the market very closely, this
trading style does not
require constant monitoring. A swing trader will typically aim for a
10-15% average profit on trades. While the stock market is much smaller than
the forex, it is more 'physical'; predictions of price movement can be more
reliable, depending on the source of information.
This is the study of market action, primarily through the use of charts, for
the purposes of forecasting future prices and historical trends,
support and resistance levels. It can be used to further identify trends and indicate trend
reversals. Technical analysis is widely used by the main
market players (traders, mainly banks, whose large trades can influence (but
not control) price levels. Technical analysis has become
arguably the most popular form of analysis in tracking and forecasting
Shortest interval used in stock trading and forex charting. Equivalent to pips.
A ticker or tick chart, table or graph, shows current and/or
recent history of a currency's movement. Other charts show change over
longer periods: 1, 5, 10, 15 minutes, hours, days weeks, months or years.
A market 'top' is an area where the price in an upward trend encountered heavy
resistance, was unable to progress any higher, and either reversed (went into a bear trend) or traded sideways.
Losing trades are common among traders who haven't invested in knowledge
The ability to change rapidly. Instability. 'Volatile' describes rapid
changes in exchange rates. It is not easy to know where to enter a trade if a currency
pair is too volatile.
Volcone Analyzer Pro
Popular software program from the Options University which tells you if an
Option is 'cheap' or 'expensive', based on its actual historical
volatility. See a free video of how the analyzer works.
A French expression long adopted into English, usually without the
grave accent, and pronounced 'veez-ar-vee'. It means
'face-to-face'; compared with, opposing, opposite to, in relation to. Used
by forex commentators to
compare currency pair rates e.g. the dollar/yen vis-a-vis the
pound/yen. Virtually the same as Vs.
Vs. (vs vs. v. v)
Spoken as 'versus', or you can say 'against', these are all
abbreviations of the Latin word and English legal term versus (against)
referring to the opposing sides in a lawsuit e.g. Kramer vs. Kramer. Vs is used to compare two items such
as a pair of currencies: dollar vs yen, EUR vs USD; also
a match or contest between sporting participants – football teams, tennis players, boxers etc.
slang for a condition of a highly volatile market where a sharp price
movement is quickly followed by a sharp reversal.
XAG (silver) and XAU
are ISO codes. These are quoted as one ounce (Oz.) against the
US dollar and other currencies, and can be traded in pairs like XAU/USD,
XAG/GBP etc. The origin is from the Latin words and chemical symbols for these precious metals;
silver is argentum (Ag), gold aurum (Au);
also platinum XPT and palladium XPD. See also Currency
Codes. Open a
vaulted bullion account and trade in precious metals.
XTrade is the international broker of choice for trading
CFDs, forex, commodities, shares and indices.
Absolutely no trader wins all the time! Reduce your risk of loss
by education, taking advice from independent, reliable sources and keeping your
confidence high and your leverage low!
Zero Sum Game
Forex, futures and options trading are known as "zero-sum
games". Basically, for every winner or winning trade, there are losers
with matching losing trades; the amount of money involved or wealth
(excluding spread or broker costs) remains the same; it just changes hands.
Stock trading is not a zero sum game; stock values change as
prices go up or down, regardless of who actually owns it. Wealth can be
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2: D to M
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