GLOSSARY

A - B - C - D - E - F - G - H- I - M- L - O - P - Q - R - S - T - U - V- W

- A -

Appreciation – growth, a currency is said to 'appreciate' when it strengthens in price in response to market demand.

Arbitrage – a purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market, in order to take advantage of small price differentials between markets.

Ask price – the rate at which a client carries out a trading operation of buying. It is shown on the right side of the quotation.

- B -

Balance – the amount in the trader’s account after the last complete transaction.

Bar chart – a type of chart which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line of the right of the bar.

Base currency – the first currency in a currency pair.

Bear – a market participant, who thinks the prices will go down.

Bear market – a market distinguished by declining prices.

Bid price – the rate at which a client carries out a trading operation of sale. It is shown on the left side of the quotation.

Bookmaker’s working time – the time during which the Bookmaker accepts bets, opens and closes positions.

Breakout – the price’s crossing of support or resistance levels.

Broker – an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

Bull – a market participant, who thinks the prices will go up.

Bull market – a market distinguished by rising prices.

- C -

Clearing – the process of settling a trade.

Close position – to sell or buy a certain amount of currency to offset an equal amount of the open position. This will 'square' the position.

Commission – a fee the broker charges for a transaction.

Confirmation – is seen when one or more indicators confirm the data of another one.

Consolidation – the same as deadlock field. Consolidation, however, assumes continuation of the preceding tendency.

Contract – the standard unit of trading on certain exchanges.

Contract for difference, CFD – is over-the-counter market trading instrument that allows to trade on the stock without a real delivery.

Counter currency – the second currency in a currency pair.

Cross currency pairs, Cross rate – a rate between two foreign currencies with the exception of USD. For example: EUR/GBP.

Currency – any official form of money.

Currency pair – the two currencies that make up a foreign exchange rate. For example, EUR/USD is a currency pair.

- D -

Day trading – opening and closing the same position or positions within the same trading session.

Deficit – a negative trading or payment balance.

Deposit – the money placed at a trading account for further operations.

Derivative – a contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.

Divergence – a discrepancy, when two or more index charts show discrepancy with the price chart.

Downtrend – a trend descending, accompanied by diminishing maximums and/or minimums.

- E -

Elliott Wave theory – a system of analysis and price forecast based on R. N. Elliott’s theory. The main point of it is that the price movement has 5 waves in one trend direction waves followed by 3 correction waves.

Euro – European Union currency.

European Central Bank, ECB – the Central Bank for the new European Monetary Union.

European Monetary Union – EMU – the principal goal of the EMU is to establish and maintain a single European currency called the Euro.

- F -

Fed, FRS, Federal reserve system – the central bank of the USA.

Forecast – attempt to predict the future tendency with the help of examination and analysis of the available data.

Fundamental analysis – analysis of economic and political information with the objective of forecasting future movements in a financial market.

Futures – a way of trading financial instruments, currencies or commodities for a specific price on a specific date in the future.

- G -

Gaming/trading dollar – a unit of trading operations by which the profit or loss is calculated.

Gap – a situation when the price of an instrument at opening of the trading session varies form the price at closure of the preceding one with formation of an unfilled price range.

Going long – buying shares, commodity or currency for investment or speculation purposes.

Going short – sale of shares, commodity or currency in anticipation of the price’s reduction and its future buying back.

- H -

Hedging – a policy of risk neutralization by means of opening a position in the opposite direction and with the same amount to the given one.

- I -

Indicator, custom/technical indicator – mathematical conversion of the price and/or financial instrument amount for prediction of the future price changes. On the basis of the technical indicators signals decisions when and how to open positions are made.

Inflation – economic condition where there is an increase in the price of consumer goods, thereby eroding purchasing power.

Interbank rates – the Foreign Exchange rates at which large international banks quote other large international banks.

Intervention – action by a central bank to effect the value of its currency by entering the market.

Intra-day – any period of time shorter than a single day.

- L -

Leverage – ratio of the transaction to the required security deposit.

Long position – a position to purchase more of an instrument than is sold, hence, an appreciation in value if market prices increase.

Lot – a unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

- M -

Margin – the required equity that an investor must deposit to collateralize a position.

Margin call – the state of a gaming account when the Client loses an opportunity to manage it. ln case of a margin call all the positions would be closed by the Bookmaker on any immediate quotation. Margin call comes, when a Margin level reaches 30% and lower.

Margin trade — operations of buying/selling securities or currencies carried out by a client by means of a special margin account by a broker. The principle of Margin trade is that the client pays only a part of the deal, the rest of the amount is provided by the broker as a credit.

Market maker – a dealer who supplies prices and is prepared to buy or sell at those stated bid and ask prices. A market maker runs a trading book.

- O -

Open position – to open a deal/transaction, i.e. to buy or sell a currency.

Order – an order is an instruction, from a client to a broker to trade. An order can be placed at a specific price or at the market price.

Oscillator – a curve of temp, which fluctuates around the zero line (or between 0 and 100%), a technical indicator that shows an overbought of oversold market.

Overbought – a condition of the market after an abrupt rise. In this situation a correction recession is possible.

Oversold – a condition of the marked after an abrupt recession. In this situation a correction rise is possible.

Over the counter market – OTC – used to describe any transaction that is not conducted over an exchange.

- P -

Pip, point, tick – the term used in currency market to represent the smallest incremental move an exchange rate can make.

Position – the netted total holdings of a given currency.

Profit – gains exceeding over losses.

- Q -

Quote, Quotation – an indicative market price; shows the highest bid and/or lowest ask price available on a security at any given time.

- R -

Rally – recovery of the rates after a fall.

Range – the difference between the highest and lowest price of a future recorded during a given trading session.

Rate – the price of one currency in terms of another.

Reaction – movement of the prices against the prevailing trend.

Rebound – a change of direction of the market prices movement after a long-term tendency of their growth or reduction led to the situation that the market participants consider the given levels too high or too low.

Resistance – a term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above. Recurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line.

Resistance level – a term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above. Recurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line.

Retracement, Correction – a reverse movement of the price or its rollback from the previous maximum or minimum expressed in percents, the most popular are 38%, 50% and 62% retracements.

Risk – exposure to uncertain change, the variability of returns significantly the likelihood of less-than-expected returns.

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.

- S -

Short position – an investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.

Spot – a transaction that occurs immediately, but the funds will usually change hands within two days after deal is struck.

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

Spread – the difference between the bid and offer prices.

Square – purchase and sales are in balance and thus the dealer has no open position.

Support level – 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.

Swap – the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate. It usually takes place during transmission of the position to the following day.

- T -

Technical analysis – an effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.

Trader – natural or legal person who sells and buys securities or currencies in the market.

Trading – buying and selling securities, goods or currencies on a short-term basis for obtaining profit.

Trading range – a situation when the prices balance between horizontal support and resistance levels.

Trading session – a continual period of time during which trading deals are made.

Trend – a prevailing price movement direction. Ascending peaks and cavities form an uptrend, descending – a downtrend.

Trendline – a line on the price chart connecting a number of descending and ascending maximums. For building up a trendline at least two points are necessary.

Turnover – the volume traded, or level of trading, over a specified period, usually daily or yearly.

- U -

Uptrend – prices rise accompanied by a number of ascending maximums and minimums.

- V -

Value date – the date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward.

Volatility – a statistical measure of a market or a security’s price movements over time and is calculated by using standard deviation. Associated with high volatility is a high degree of risk.

- W -

Weighted moving average – a sliding average, counting which every price value is given a certain weight. Usually the last one receives the bigger.

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