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Glossary of Forex (Foreign Exchange) Terminology  R – T




Rate – The price of one currency in terms of another, typically used for dealing purposes.


Resistance – A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.


Revaluation – An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.


Revaluation Rates – The revaluation rates are the market rates used when a trader runs an end-of-day to establish profit and loss for the day.


Risk – Exposure to uncertain change, the variability of returns significantly the likelihood of lessthan-expected returns.


Risk Capital– The amount of money that an individual can afford to invest, which, if lost would not affect their lifestyle.


Risk Management – It is the practice of identifying potential risk in advance, analyzing them and taking precautionary steps to reduce/curb the risk.


Roll-Over – Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies.


Rollover Rate -The daily rollover interest rate is the net amount a trader either pays or earns, depending on the established margin and position in the market. It converts net currency interest rates, which are given as a percentage, into a cash return for the position. To avoid rollovers simply make sure positions are closed at the established end of the market day.




Settlement – The process by which securities or interests in securities are delivered, usually against payment of money, to fulfill contractual obligations, such as those arising under securities trades. It occurs when a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.


Short Position – An investment position that benefits from a decline in market price. When one sells a currency their position is short.


Spot/Next – A currency deposit transaction or the simultaneous purchase and sale of currency, or vice versa by means of swap for spot value day against the next working day.


Spot Price – The current market price. Settlement of spot transactions usually occurs within two business days.


Spot (Rate) – In FX Markets, Spot refers to the cash price without interest factored in.


Spot Trade – When you trade foreign exchange you are always quoted a spot price 2 business days in advance. This is under normal conditions where there are no bank holidays in the traded currencies countries or is not over a weekend.


Spread – The difference between the bid (buy) and offer (ask, sell) prices; in other words the spread is the commission that the brokerage house makes on each trade. This can vary widely between currencies and between brokerage firms. For example, USD/JPY may bid at 131.40 and ask at 131.45, this five-pip spread defines the trader’s cost, which can be recovered with a favorable currency move in the market.


Sterling – slang for British Pound.


Stop Loss Order – Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor’s position. EX) If an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.


Stochastics Oscillator – This technical analysis indicator is based on the premise that during an upward trading market, prices tend to close near their high, and during a downward trading market, prices tend to close near their low.



Support Levels – A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross below. Recurring failure for the price to move below that point produces a pattern that can usually be shaped by a straight line. It is the opposite of Resistance levels.


Swap – A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.


Swift – Society of Worldwide Interbank Financial Telecommunications. It is a dedicated computer network that is set up to upkeep fund transfer messages between member banks worldwide.




Technical Analysis – An effort to forecast prices by analyzing market action through chart study, volume, trends, moving averages, patterns, formations and many other technical indicators.


Tick – It is a measure of the minimum upward or downward movement in the price of a security. It also refers to the chance of a security from trade to trade. Since 2001, with the advent of decimalization, the minimum tick size for stocks trading above $1 is 1cent.


Ticker – A stock ticker is a report of the price for certain securities, updated continuously throughout the trading session by the various stock exchanges. It shows current and/or recent history of a currency either in the format of a graph or table.


Tomorrow Next (Tom/Next) – Simultaneous buying and selling of a currency for delivery the following day.


Trading – Buying or selling of goods and services among countries called commerce. Forex Trading is the trading of Foreign Currencies.


Transaction Cost – It is the expenses incurred when buying or selling a good or service. It represents the labor required to bring a good or service, giving rise to entire industries dedicated to facilitating exchanges. It includes brokers’ commissions and spreads, which are the difference between the price the dealer paid for a security and the price the buyer pays.


Transaction Date – The date on which a trade occurs. It represents the time at which ownership officially transfers.


Trend – The direction of the market, usually broken down to three categories: major, intermediate and short-term trends. Three directions are also associated


Trend Line   – This is a Technical Analysis indicator also called linear regression, which is a statistical tool used to uncover trends. It is calculated by using the “Least Squares” method. There are two ways to use the linear regression line:   a. Trade in the direction of the Trend line.   b. Construct a parallel trend channel above and below the Trend line to be used as support and resistance levels.


Turnover – it is a calculation of how quickly a business collects cash from accounts receivable or how fast the company sells its inventory. It is defined as the percentage of a portfolio that is solid in a particular month or year.


Two-Way Price – It is a type of quote that gives both the bid and the ask price of a security, informing would-be traders of the current price at which they could buy or sell the security.



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