EURUSD 1.1736 USDJPY 112.01 USDCAD 1.2787 EURCZK 25.547 USDCZK 21.763 EURPLN 4.2293 USDPLN 3.6034
EURUSD 1.1736 USDJPY 112.01 USDCAD 1.2787 EURCZK 25.547 USDCZK 21.763 EURPLN 4.2293 USDPLN 3.6034

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Learn the basics of financial markets

Our glossary explains the basic terms related with financial markets

Short disclaimer

This glossary can be used for informational purposes only  - it is not a definition in the legal sense

 

The binding definitions of the terms used in relation with the investment services provided by HighSky Brokers, a.s. are included in the valid Terms and Regulations available on our website

Appreciation  - An increase in the value of a currency.

Ask - Also known as the offer price, it is the price available for purchase of a financial instrument.

Aussie - Slang (traders jargon) for the Australian dollar (AUD).

 

Bar Chart - It is a type of chart showing the opening, minimum, maximum and closing price for a certain period.

Base Currency - This is the first currency in a currency pair, eg. euro (EUR) in EURUSD or British Pound (GBP) in GBPUSD.

Basket - This is a group of currencies, and different weights assigned to each currency reflect their relative importance.

Bid - This is the price of a financial instrument for a trader if he is willing to sell.

BoJ - Bank of Japan.

 

Cable - Slang (traders jargon) for the British Pound (GBP).

Candle Chart - Candle charts are similar to bar charts, but they include a graphical representation of a price increase or price decrease for a certain period.

Carry Trade - Carry trade is a strategy used by long-term investors seeking profits from the interest rates difference between currencies. An investor pursuing such a strategy looks for opportunities to buy a currency that offers a high interest rate, and simultaneously sell a currency with a low interest rate.

CBOE - Chicago Board Options Exchange.

CBOT - Chicago Board of Trade.

CFD - Contract for Difference is a financial instrument traded on the Over the Counter market, allowing for returns both from price increase and decrease without actually possessing assets.

CFTC - Commodity Futures Trading Commission. It is the US regulatory agency for futures traded on commodity markets.

Chartist - Is referred to an investor or trader that bases his strategy on technical analysis, i.e. uses charts to try to forecast prices.

CME - Chicago Mercantile Exchange.

Correction - This is a price movement in the opposite direction than the main trend.

 

Day trade/ Day trading - Day trading is a type of investor that opens and closes positions within the same business day.

Depreciation - A decrease in the value of a currency.

 

EA - Expert Advisors - EA is a tool offered on our trading platform that allows one to automatise the trading process, using predefined formulas for placing orders and other operations on the trading platform.

Easing, monetary policy - Refers to a situation when the central bank lowers its interest rates.

ECB - European Central Bank.

EONIA - Euro OverNight Index Average.

ERM - Exchange Rate Mechanism.

 

FED - Federal Reserve Bank.

Fill - Completing an order to buy off purchase or sell off financial instruments.

Flat - To be flat - a situation when a trader has all positions closed.

 

Gap - Gap is the difference between the closing price and the opening price of the next period. This is most often observed during the closing prices on Fridays and the opening prices on Sundays.

Good Till Cancelled (GTC) - Good Until Cancelled is an order to buy or sell a financial instrument at a specified price. Only when the price is reached will the order be filled, or when the client cancels this order.

 

Hard Currency - This is a currency, the price of which is expected to remain stable in the long term.

 

IMF - International Monetary Fund.

Intervention - This is an operation conducted by a central bank, where foreign bonds (i.e. currencies) are bought or sold.

Introducing broker - On the OTC forex market it refers to an individual or a company that introduces customers to market makers or other brokers, in return for a commission.

 

Kiwi - Slang (traders jargon) for the New Zealand dollar (NZD).

 

Leverage - Leverage allows one to conclude transactions on financial instruments with a nominal value higher than the actual deposited funds. In practice, a leverage of 1:100 means that in order to open a position with a nominal value of 10 000 EUR, it is necessary to deposit only 100 EUR, that is 1% of the nominal value of a transaction.

LIBOR - London Inter Bank Offer Rates.

Liquidity - A term that describes a characteristic of a market or financial instrument, where it is possible to conclude a transaction of a significant size without influencing the price of the financial instrument.

Long Position - Formally speaking, it is acquiring of legal rights and obligations related to purchase of a given Financial Instrument. An investor who has a long position on a given market, is interested in the rise of a market price.

Lot - Lot is another word for “contract” – meaning a standard unit of transaction on the CFD market. In the case of currencies it has a nominal value of 100 000 units of the base currency.

 

Margin - Margin is a deposit (collateral) required in order to open a position in a given financial instrument.

 

OTC (Over The Counter) - Relates to any transaction that is not settled in a regulated exchange, but it is settled directly between counterparties.

 

Pip - A pip is the lowest change in the price of a financial instrument. It also may be called a point.

Position - A trader has a “position” on the market, when he/she has purchased or sold a given financial instrument and has an interest in the development of a situation on a market.

 

Quote - Typically it is understood as the market price of a given instrument, provided by a financial institution or news agency for informational or transactional purposes.

 

Rally - A rally is a price recovery from a previous decrease during a significant amount of time.

Range Trading - It is a type of strategy that involves using resistance and support levels for making transactions on a market remaining in a horizontal trend. A trader will open short positions (sell) when prices reach resistance levels, and will open long positions (buy) when prices reach support levels.

Resistance - A term used in technical analysis designating a price level higher than a market price at a given moment, at which the higher activity of supply of a given asset is expected.

Rollover - Rollover is the procedure of change of the underlying futures series for the CFD instrument. It occurs, as some of the CFD instruments are typically based on the most liquid futures contracts series, that expire from time to time. The procedure is neutral for the clients, as it does not change the financial result of the whole transaction.

 

Scalping - Scalping is an aggressive strategy that is based on concluding transactions in an ultra-short term.

Short Position - Opposite to a long position. Formally speaking, it is the acquiring of legal rights and obligations related with the sale of a given financial instrument. An investor who has a short position on a given market, is interested in the fall of a market price.

Spot Price - This is the price of an asset for an immediate settlement – payment and optional delivery.

Spread - Spread is the difference between the bid and offer price of an instrument.

Sterling - Slang (also traders jargon) for the British Pound (GBP).

Stop Loss - Stop loss is an order that automatically closes a position at an predefined level when the market moves in a direction unfavourable for the trader. It is aimed at limiting potential losses or decrease of the profit from an open position. In the case of long positions, it is set at a level lower than a current market, and in the case of a short position, the stop loss can be set at a price higher than the current market price.

Support - A term used in technical analysis designating a price level lower than a market price at a given moment, at which the higher activity of demand for a given asset is expected.

Swap point - Swap points are the value charged or credited in respect to open positions on CFD instruments held overnight. They reflect the difference between interest rates and other costs associated between a pair of currencies or other assets.

Swissy - Slang (traders jargon) for the Swiss franc (CHF).

 

T-Bill - US Treasury Bill.

Take Profit - Take profit is an order that automatically closes a position at a predefined level when the market moves in a direction favourable for the trader. In the case of long positions, it is set at a level higher than a current market, and in the case of a short position, it is possible to set the take profit order at a price lower than the current market price.

Tick - A minimum change in the price of given financial instrument in any direction. Either an increase or decrease.

Tightening, monetary policy - Refers to a situation when the central bank increases interest rates.

Trader - Typically it is understood to be a person that concludes transactions on financial markets. A trader may act on his/her own account, or on account of a third person – such as a bank or another financial institution.

Trailing Stop - This is an order similar to a stop loss, however it is adjusted automatically in accordance with predefined settings, as the market moves in a direction favourable for the trader. From a technical point of view, it works on the side of the client terminal.

Trend - In relation to financial markets it is understood as a general tendency of market prices to go in a certain direction.

 

Volatility - It is a measurement of dynamics of market prices during a given period. Usually this is measured using standard deviation.

 

Yield - It is the return on an investment measured in percentage terms,

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