Glossary Of Terms
A Silicon Markets dictionary on what we are discussing.
- Account Valuation
– Cash balance together with your open position P/L will give you the value of your account should you close your open positions.
– A process to be followed in calculation or problem-solving encounters. Also to be used to execute on orders. Algorithms can perform calculations, data processing , automated reasoning and other tasks.
- Annual general meeting (AGM)
– An annual general meeting (AGM) is a yearly gathering between the shareholders of a company and its board of directors.
– Aroon is an indicator system that determines whether a currency is trending or not and how strong the trend is. The Aroon indicators measure the number of periods since price recorded an x-day high or low. There are two separate indicators: Aroon-Up and Aroon-Down.
· The ask refers to the price at which you can buy a currency from a seller.
- Automated trading
– Automated trading, also known as Algorith Trading, is the use of algorithms to trade currencies by placing trade orders.
- Average directional index (ADX)
– The Average Directional Index. is a technical indicator that measures the strength of a trend. While the indicator itself doesn’t give an insight into the direction of the trend, the Directional Movement lines can be used to determine if the market moves up or down. The ADX can return a value between 0 and 100. The usual threshold for a market to be considered as trending by the ADX is a value of 25 or above. Values between 25 and 50 signal a trending market, between 50 and 75 very strong trends and between 75 and 100 extremely strong trends.
- Back test
· With Silicon Markets you can back test your strategy up to 10 years to see how it would have performed historically.
- Base currency
– The base currency is the currency against which exchange rates are generally quoted in a given country. The base currency is the first currency appearing in a currency pair quotation.
- Base rate
– This is the interest rate that a central bank (Bank of England for example) will charge to lend money to commercial banks.
- Basis point
– A basis point is a unit used in trading to describe movements in interest rates or other percentages. It is equal to one hundredth of one percent, or 0.01%.
– A bear is trader who believes that a particular market is heading in a downward trajectory. Bearish traders have a pessimistic view of the markets.
– The bid is the price which the buyer is willing to pay to make a purchase of a financial instrument.
– BoE is the shortened term for Bank Of England.
- Bollinger bands
– Bollinger bands comprise a market’s moving average, with an upper and lower price channel either side of it. Each price channel or band represents the standard deviation away from the moving average of the market.
- Bottom line
– A company’s bottom line is an important factor in share trading. Variously, it can be used to refer to the net earnings or earnings per share of a business.
- Build a strategy
– Using Silicon Markets Trading platform you are able to use our build a strategy to build condition met statements
– A bull is a trader who believes that a market is heading in an upward trajectory. A bullish trader has an optimistic view of the markets.
– Buy refers to taking ownership of a financial instrument form someone else.
– Cable refers to the currency pair GBP/USD and gets its name because in the 19th century the exchange rate used to be transmitted across the Atlantic between the USA and UK by a submarine communications cable.
– A candlestick is a type of price chart used that displays the high, low, open and closing prices of a security for a specific period.
- Cash balance
– Cash balance refers the amount of money you have available in your trading account.
- Closing price
– The closing price is the last level at which a currency pair traded on any given day.
– Commission is the charge levied by an investment broker for making trades on a trader’s behalf.
- Commodity currencies
– A commodity currency is the name given to a currency that co-moves with the world prices of primary commodity products, this is because the country that the currency belongs to has a strong dependency on the export of certain raw materials for income.
- Contracts for difference (CFD)
– A Contract for Difference is a trading instrument that allows financial speculation on currencies, stocks, commodities, and other instruments without actually buying or selling those assets.
- Cost of carry
– The cost of maintaining a position is often referred to as the cost of carry or carrying charge. It can come in many forms, including interest on margins and interest costs.
- Currency hedge
– A forex hedge is a transaction implemented by a forex trader or investor to protect an existing or anticipated position from an unwanted move in exchange rates.
- Currency peg
– A currency peg is a governmental policy where it fixes the exchange rate of its currency to that of another currency. It can sometimes also be referred to as a fixed exchange rate or pegging.
- Day order
– An order to a broker to buy or sell a security that expires at the end of the trading day if not filled
- Day trading
– Day trading is a trading strategy that involves opening and closing positions within the same day. Day traders tend to have no positions held overnight.
– A trade which was done at the current market price.
– A derivative’s delta is defined as its price movement in relation to the change in price of its underlying asset.
– A derivative is a contract between two or more parties, and its payoff is determined by the foreign exchange rates of two or more currencies.
– Dovish describes an expansive fiscal policy. Low interest rates make credits cheap and savings unprofitable, an increasing government debt creates new money. Both effects combine to flood the market with money.
– ECB is the shortened term for European Central Bank.
- Emerging markets
– Emerging markets are economies that show some similar traits to developed economies but aren’t classified as being developed yet.
– Equity refers to the value of the trader’s account.
– An exchange is a marketplace where forex is traded along with other financial instruments.
– Execution is the completion of a buy or sell order from a trader.
- Expiry date
– Refers to the specific date and time when a trade will expire.
– Refers to the risk associated with the value of a traders open trades against currency fluctuations.
– FCA is the shortened term for Financial Conduct Authority.
– FED is the shortened term for Federal reserve, the FED is the central bank of the United States of America.
- Fiat currency
– Fiat money refers to currencies that have minimal or no intrinsic value themselves but are defined as legal tender by the government, such as banknotes and coins.
- Fibonacci retracement
– Fibonacci retracement is a technical analysis tool used to identify possible areas of support and resistance
– A fill is the action of completing or satisfying an order for a currency.
- Financial instrument
– Financial instruments are assets that can be traded.
- Financial market
– A financial market is the overall term used to describe any market place where the trading of financial instruments takes place.
– FOMC is the shortened term for The Federal Open Market Committee. The FOMC is the monetary policymaking body of the Federal Reserve.
- Forex broker
– A forex broker is a firm that provides currency traders with access to a trading platform that allows them to buy and sell foreign currencies.
– Forex is the shortened term for foreign exchange, the global currency exchange market.
- Forex trading
– Forex trading is when you take part in the buying and selling of currencies.
– GDP is the shortened term for Gross Domestic Product. GDP is the total value of everything produced in the country.
· Hawkish describes a restrictive fiscal policy. Higher interest rates make credits expensive and savings profitable, reduced government debt reduced the amount of available money. Both effects combined take money out of the market.
– Foreign exchange hedging is when you use a strategy to mitigate foreign exchange rate risk
- Helicopter money
– Helicopter money is a tool used in monetary policy which involves the printing of large sums of money to be distributed into an economy to help during times of deflationary periods.
- High frequency trading
– High frequency trading uses a type of algorithmic trading strategy in which large volumes of currencies are bought and sold automatically at very high speeds.
– These are calculations which take volume and the price of a certain financial instrument into account to forecast price changes on the currency market.
– Inflation is the increase in the cost of goods and services in an economy.
- Interbank rates
– The foreign exchange rates which large international banks quote to each other.
– Adjustments in cash to reflect the effect of owing or receiving the notional amount of equity of a CFD position.
- Interest rates
– The amount that a lender charges to a borrower for the loan of an asset, usually expressed as a percentage of the amount borrowed.
- Introducing broker
– A person or corporate entity which introduces accounts to a broker in return for a fee.
– Also known as margin, this is the percentage or fractional increase you can trade from the amount of capital you have available. With Silicon Markets you have access to 30:1 on major currency pairs and 20:1 on minor currency pairs.
- Leveraged products
– Leveraged products are financial instruments that enable traders to gain greater exposure to the market without increasing their capital investment.
– The London Inter-Bank Offered Rate. Banks use LIBOR as a base rate for international lending.
- Limit order
– An order that seeks to buy at lower levels than the current market or sell at higher levels than the current market
– Liquidity is the degree to which a currency can be quickly bought and sold in the market without causing a change in the exchange rate.
- Long position
– A position that appreciates in value if market price increases. When the base currency in the pair is bought, the position is said to be long.
– Lot is a measure of the amount of the deal. One lot is equal to 100,000 of the base currency.
- Maintenance margin
– Maintenance margin is the amount that must be available in funds in order to keep a margin trade open. It is also known as the variation margin.
- Margin call
– A margin call is a request from a broker for additional funds to hold a position that has moved against the customer.
– Margin is the amount of money required in your account to maintain your market positions or open new trades using leverage.
- Margin deposit
– A margin deposit is the amount a trader needs to have in order to open a leveraged trading position.
- Market data
– Market data refers to data that is reported on currency markets.
- Market order
– A market order is a tool used by a trader or broker to execute a trade immediately at the best available price.
- Moving average convergence/divergence (MACD)
– Moving Average Convergence Divergence (MACD) is an indicator that shows the relationship between two moving averages of a currency pair.
- Moving average
– Moving average is indicator helps determine the trend direction. There are two types of moving averages SMA and EMA.
- Negative balance protection
– Negative balance protection ensures that traders with losing positions don’t end up with a negative balance in their trading account
- Net change
– Net change is the difference in a currencies’ closing price from one day to the next.
- Notional value
– The notional value is the total amount of a security’s underlying asset at its spot price.
- Open positions
– Open positions are the trades that a trader has made but has not yet closed.
– A derivative which gives the right, but not the obligation, to buy or sell a product at a specific price before a specified date.
– An instruction to execute a trade.
- OTC trading
– OTC is the shortened term for over-the-counter. It is used to describe any transaction that is not conducted via an exchange.
– Parity is when two currencies are equal to each other, the exchange rate is equal to 1.
– A pip, short for percentage in point or price interest point, is known to be the smallest numerical price move in the exchange market.
– Position refers to a trade that is either currently able to incur a profit or a loss (an open position) or has recently been cancelled (a closed position).
- Position stop loss
– A stop loss is an order that trader puts in place to sell or buy currency when it reaches a particular price to stop a trade making further losses.
- Position take profit
– A take profit order is used by currency traders to automatically close their position once a certain profit has been made.
- Profit and loss
– Profit and loss are the actual gains or losses made while trading currency markets.
- Quote currency
– A quote currency is the second currency quoted in a currency pair in forex.
– The quote is the price at which a currency can currently be bought or sold.
– A recovery in price after a period of decline.
– When a price is trading between a defined high and low, moving within these two boundaries without breaking out from them.
- Relative Strength Index (RSI)
– Relative strength index is a technical indicator that is used to indicate when a market is overbought and oversold by measuring the velocity and magnitude of directional price movement. The markets standard for setting parameters is usually to have a 14-day period and have 70 to represent an overbought market and 30 to represent an oversold market.
- Resistance level
– A price that may act as a ceiling.
– A reversal is a change in the price direction of a currency pair.
– Exposure to uncertain change, most often used with a negative connotation of adverse change.
- Risk management
– The employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.
– A rollover is the simultaneous closing of an open position for today’s value date and the opening of the same position for the next day’s value date at a price reflecting the interest rate differential between the two currencies.
– Forex scalping is a trading strategy used by traders to buy or sell a currency pair and only hold it for a short period of time in an attempt to make a profit.
- Sharpe Ratio
– This is used to help investors understand the return on investment compared to its risk. The ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
– A short is a trade that will make profit from the fall in price of a currency.
– The difference between the price that was requested and the price obtained typically due to changing market conditions.
– The spread is the difference between the bid and offer prices of a currency pair.
- Strategy stop loss
– When building your strategy with Silicon Markets, in manage money strategy stop loss refers to the overall loss you are willing to make on your strategy.
- Strategy take profit
– When building your strategy with Silicon Markets, in manage money strategy take profit refers to the overall profit you want to make on your strategy.
- Support level
– Is a technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself.
- Technical analysis
– The process by which charts of past price patterns are studied for clues as to the direction of future price movements.
- Trade amount
– The number of units of currency in a contract or lot that you want to trade.
- Trade ticket
– Trade ticket or position ticket is a receipt assigned to each trade on the Silicon Markets trading system.
- Trading resources
– Is cash balance less margin in use which will give you the amount available to you to trade.
- Trailing stop
– A trailing stop allows a trade to continue to gain in value when the market price moves in a favourable direction, but automatically closes the trade if the market price suddenly moves in an unfavourable direction by a specified distance. Placing contingent orders may not necessarily limit your losses.
– Price movement that produces a net change in value. An uptrend is identified by higher highs and higher lows. A downtrend is identified by lower highs and lower lows.
– How much a price fluctuates over a period of time. A market with a high and erratic price range is said to have high volatility.
- Working order
– Where a limit order has been requested but not yet filled.
– The percentage return from an investment.