Forex glossary

Are there any forex words you do not understand the meaning of?

In our forex lexicon you find answers for difficult words that may need a short and simple explination.

A

Arbitrage
Profiting from price difference in a currency, by trading
against various currency crosses. For instance, you can trade USD against both GBP and JPY in order to take home some risk free profits.

At best (for best exchange rate)
A common term used in international forex platforms. Means that you are willing to buy or sell at the best rate in the market right now. This type of order can be an alternative when there is low volatility and no big news are about to effect the currency rates.

B

Bar Chart
Probably the most used chart in forex trading. Consists of four points; high, low, opening and closing rate.

The highest and lowest exchange rate forms the vertical bar in a intra day graph. Then we have the opening price, which are marked by a horizontal line to the left of the bar staple.

Finally, there is the closing price, marking a horizontal line to the right of the bar staple.

Base currency
The first currency in a currency pair, which show how much the base currency is worth in terms of the other currency in the pair.

Bear Market
A period of downgoing prices in a currency pair.

Broker
A forex broker or forex brokerage acts as the middle man between one purchasing currency and one selling currency.

C

Cable
Forex traders use the term ‘cable’ when talking about the currency pair
GBP/USD. The name was created because the exchange rate was originally
transferred through a trans-atlantic cable between USA and UK in the beginning of the 19th century.

Centralbank
Usually a government that create a currency and administrate fiscal policy, such as open market operations and keeping a currency reserve in other currencies.

Exempeles of central banks are the Federal Reserve (FED) in USA, Bank of England (BOE) in UK and European Central Bank (ECB) in EU.