One of the leading causes for the failure of many businesses is their lack of planning. I think most successful people would agree that if you want to be successful in life and business you need to have a plan for how to obtain that success, set goals to meet along the way, and then work on executing your plan and meeting your goals. This is a concise currency trading tutorial, which will give you all you need to get started in currency trading and develop a trading system for triple digit annual gains…

The first point you need to keep in mind is 95% of traders lose and only 5% win. While anyone has the ability to learn currency trading and win, most lose . Discipline and Self Control:Anyone can learn a forex trading system with a currency trading tutorial but the key to success is, executing it with discipline when you are losing. It’s not easy to keep putting in your trading signals, while the market hands you losses and makes you look a fool. You need to be disciplined until you hit a home run.

There are 2 basic types of analysis you can take when approaching the forex:

Fundamental analysis : Fundamental analysis is a way of looking at the market through economic, social and political forces that affect supply and demand. In other words, you look at whose economy is doing well, and whose economy sucks. The idea behind this type of analysis is that if a country’s economy is doing well, their currency will also be doing well.
Technical analysis. : Technical analysis is the study of price movement. In one word, technical analysis = charts. The idea is that a person can look at historical price movements, and, based on the price action, can determine at some level where the price will go. By looking at charts, you can identify trends and patterns which can help you find good trading opportunities.

Source : forextradingtutorial

Fundamental analysis is a way of looking at the market through economic, social and political forces that affect supply and demand.

Hui Xian declined as much as 11 percent and ended its first day 9.4 percent lower at 4.75 yuan. The trust raised 10.5 billion yuan ($1.6 billion) selling units at 5.24 yuan each, the low end of its price range.

Backed by an office and retail development in Beijing, the trust has a forecast yield of 4.26 percent compared with an average estimated yield of 4.85 percent for Hong Kong-traded REITS. Hui Xian marked the first time in at least eight years that 82-year-old Li, the city’s richest man, had to settle for the lowest amount sought in an IPO of a property trust.

“One of the trust’s selling point was that you’re also betting on yuan appreciation, but this might’ve turned away some investors because they thought the procedure of exchanging yuan to invest is just too much trouble and complicated,” saidCastor Pang, research director at Cinda International Holdings Ltd. “This adds to the fact that it offers a slightly lower return than most other REITs out there.”

Individuals applied for about 2.2 times the stock reserved for them, according to a statement to the Hong Kong stock exchange yesterday.

The three other REITs backed by Li that sold stock in IPOs since 2003 raised the maximum targeted amount, data compiled by Bloomberg show. Prosperity REIT, Li’s last REIT IPO in Hong Kong, which started trading in December 2005, drew retail orders of 300 times the stock on offer.

Li’s REITs

Underwriters BOC International Holdings Ltd., Citic Securities and HSBC Holdings Plc (HSBA)set aside 20 percent of the total offering in Hui Xian for individuals, double the typical retail allotment in Hong Kong IPOs. The decision was driven by expectations that Hui Xian would be popular among retail investors, people familiar with the process said.

“It looks like it won’t be as successful as people thought it would be,” Alex Au, managing director of Richland Capital Management Ltd. in Hong Kong, which oversees $300 million of assets, said before the shares started trading. “Very strong response for the IPO was expected from the retail market, but it turns out it was barely oversubscribed.”

Prosperity REIT (808) now has an indicated yield of 5.91 percent, according to Bloomberg data. Suntec Real Estate Investment Trust and Fortune Real Estate Investment, the REITs Li took public in Singapore in 2003 and 2004, have yields of 6.07 percent and 6.51 percent, respectively, according to Bloomberg data.

Yuan Deposits

Li is seeking to take advantage of China’s efforts to promote international use of its currency and swelling yuan deposits in Hong Kong.

There are about 200 billion yuan of “idle” Chinese- currency deposits in Hong Kong that could flow into the IPO, according to a sales document sent by one of the underwriters before marketing for the stock sale.

“Originally, people thought that if this is successful, there will be more yuan-denominated IPOs in Hong Kong, but if this stock goes below water, then the interest for future yuan- denominated IPOs will be lower,” Au said.

Yuan deposits in Hong Kong may rise to 870 billion yuan by the end of this year, Zhang Guangping, deputy director general of the China Banking Regulatory Commission’s Shanghai branch, said today. The city’s yuan-denominated deposits reached a record $52 billion in February.

Oriental Plaza

Hui Xian, controlled by Li’s Cheung Kong (Holdings) Ltd. and Hutchison Whampoa Ltd. (13), is backed by the Oriental Plaza in Central Beijing. Covering 100,000 square meters (1.1 million square feet), Oriental Plaza consists of eight premium office towers, a shopping mall, a Grand Hyatt Hotel and serviced apartments, according to its website.

“The properties are of good quality in a prime location, but that may not make up for other risk factors,” said Katie Chan, Hong Kong-based analyst at Haitong International Securities Group Ltd. “For example, some investors may think there may be potential exchange rate gain, but the IPO prospectus actually made it clear that dividends may not be paid in yuan.”

Hui Xian’s ownership claim to the assets backing the trust expires in 2049, according to the IPO prospectus.

Li was ranked 11th in Forbes magazine’s annual global rich list last month with an estimated wealth of $26 billion.

source from: bloomberg

Robert Prechter, Jr., president of Elliott Wave International, resurrected the Wave Principle from near obscurity in 1976 when he discovered the complete body of R.N. Elliott’s work in the New York Library. Robert Prechter, Jr. and A.J. Frost published Elliott Wave Principle in 1978. The book received enthusiastic reviews and became a Wall Street bestseller. In Elliott Wave Principle, Prechter and Frost’s forecast called for a roaring bull market in the 1980s, to be followed by a record bear market. Needless to say, knowledge of the Wave Principle among private and professional investors grew dramatically in the 1980s.

When investors and traders first discover the Elliott Wave Principle, there are several reactions:

• Disbelief – that markets are patterned and largely predictable by technical analysis alone
• Joyous “irrational exuberance” – at having found a “crystal ball” to foretell the future
• And finally the correct, and useful response – “Wow, here is a valuable new tool I should learn to use.”

Just like any system or structure found in nature, the closer you look at wave patterns, the more structured complexity you see. It is structured, because nature’s patterns build on themselves, creating similar forms at progressively larger sizes. You can see these fractal patterns in botany, geography, physiology, and the things humans create, like roads, residential subdivisions… and – as recent discoveries have confirmed – in market prices.

Natural systems, including Elliott wave patterns in market charts, “grow” through time, and their forms are defined by interruptions to that growth.

Here’s what is meant by that. When your hands formed in the womb, they first looked like round paddles growing equally in all directions. Then, in the places between your fingers, cells ceased growing or died, and growth was directed to the five digits. This structured progress and regress is essential to all forms of growth. That this “punctuated growth” appears in market data is only natural – as Robert Prechter, Jr., the world’s foremost Elliott wave expert and president of Elliott Wave International, says, “Everything that thrives must have setbacks.”

The first step in Elliott wave analysis is identifying patterns in market prices. At their core, wave patterns are simple; there are only two of them: “impulse waves,” and “corrective waves.”

Impulse waves are composed of five sub-waves and move in the same direction as the trend of the next larger size (labeled as 1, 2, 3, 4, 5). Impulse waves are called so because they powerfully impel the market.

A corrective wave follows, composed of three sub-waves, and it moves against the trend of the next larger size (labeled as a, b, c). Corrective waves accomplish only a partial retracement, or “correction,” of the progress achieved by any preceding impulse wave.

As the figure to the right shows, one complete Elliott wave consists of eight waves and two phases: five-wave impulse phase, whose sub-waves are denoted by numbers, and the three-wave corrective phase, whose sub-waves are denoted by letters.

What R.N. Elliott set out to describe using the Elliott Wave Principle was how the market actually behaves. There are a number of specific variations on the underlying theme, which Elliott meticulously described and illustrated. He also noted the important fact that each pattern has identifiable requirements as well as tendencies. From these observations, he was able to formulate numerous rules and guidelines for proper wave identification. A thorough knowledge of such details is necessary to understand what the markets can do, and at least as important, what it does not do.

You have only just begun to learn the power and complexity of the Elliott Wave Principle. So, don’t let your Elliott wave education end here. Join Elliott Wave International’s free Club EWI and access the Basic Tutorial: 10 lessons on The Elliott Wave Principle and learn how to use this valuable tool in your own trading and investing.

source: onlineforextrading

Types of Orders:
Market Order
This is the most common type of order. A market order is used when you want to execute an order immediately at the market price, which is either the displayed bid or the ask price on your screen. You may use the market order to enter a new position (buy or sell) or to exit an existing position (buy or sell). (For more insight, see The Basics Of Order Entry and Understanding Order Execution.)

Stop Order
A stop order is an order that becomes a market order only once a specified price is reached. It can be used to enter a new position or to exit an existing one. A buy-stop order is an instruction to buy a currency pair at the market price once the market reaches your specified price or higher, which is higher than the current market price. A sell-stop order is an instruction to sell the currency pair at the market price once the market reaches your specified price or lower, which is lower than the current market price.

1. Stop orders are commonly used to enter a market when you trade breakouts.

   For example, suppose that USD/CHF is rallying toward a resistance level and, based on your analysis, you think that if it breaks above that resistance level, it will continue to advance higher. To trade this opinion, you can place a stop-buy order a few pips above the resistance level so that you can trade the potential upside breakout. If the price later reaches or surpasses your specified price, this will open your long position.

   An entry stop order can also be used if you want to trade a downside breakout. Place a stop-sell order a few pips below the support level so that when the price reaches your specified price or goes below it, your short position will be opened.

2. Stop orders are used to limit your losses.

   Everyone has losses from time to time, but what really affects the bottom line is the size of your losses. Before you even enter a trade, you should already have an idea of where you are going to exit your position should the market turn against it. One of the most effective ways of limiting your losses is through a predetermined stop order, which is commonly referred to as a stop-loss.

   If you have a long position on, say the USD/CHF, you will want to the pair to rise in value. In order to avoid the possibility of chalking up uncontrolled losses, you can place a stop-sell order at a certain price so that your position will automatically be closed out when that price is reached.

   A short position will have a stop-buy order instead.

3. Stop orders can be used to protect profits.

   Once your trade becomes profitable, you may shift your stop-loss order in the profitable direction so as to protect some of your profit. For a long position that has become very profitable, you may move your stop-sell order from the loss to the profit zone to safeguard against the chance of realizing a loss in case your trade does not reach your specified profit objective, and the market turns against your trade. Similarly, for a short position that has become very profitable, you may move your stop-buy order from loss to the profit zone in order to protect your gain.

   (To read more about setting stops, see Stop Hunting With The Big Players.)

Limit Order
A limit order is placed when you are only willing to enter a new position or to exit a current position at a specific price or better. The order will only be filled if the market trades at that price or better. A limit-buy order is an instruction to buy the currency pair at the market price once the market reaches your specified price or lower, and is lower than the current market price. A limit-sell order is an instruction to sell the currency pair at the market price once the market reaches your specified price or higher, and it is higher than the current market price.

1. Limit orders are commonly used to enter a market when you fade breakouts.

   You fade a breakout when you don’t expect the currency price to break successfully past a resistance or a support level. In other words, you expect that the currency price will bounce off the resistance to go lower, or bounce off the support to go higher.

   For example, suppose that based on your analysis of the market, you think that USD/CHF’s current rally move is unlikely to break past a resistance successfully. Therefore, you think that it would be a good opportunity to short when USD/CHF rallies up to near that resistance. You can then place a limit-sell order a few pips below that resistance level so that your short order will be filled when the market moves up to that specified price or higher.

   Besides using the limit order to go short near a resistance, you can also use this order to go long near a support level. For instance, if you think that there is a high probability that USD/CHF’s current decline will pause and reverse near a particular support level, you may want to take the opportunity to long when USD/CHF declines to near that support. In this case, you can place a limit-buy order a few pips above that support level so that your long order will be filled when the market moves down to that specified price or lower.

2. Limit orders are used to set your profit objective.

   Before placing your trade, you should already have an idea of where you want to take profits should the trade go your way. A limit order allows you to exit the market at your pre-set profit objective. If you long a currency pair, you will use the limit-sell order to place your profit objective. If you go short, the limit-buy order should be used to place your profit objective. Note that these orders will only accept prices in the profitable zone.

Execute the Correct Orders
Having a firm understanding of the different types of orders will enable you to use the right tools to achieve your intentions - how you want to enter the market (trade or fade), and how you are going to exit the market (profit and loss). While there may be other types of orders, market, stop and limit orders are the most common of them all. Be comfortable using them because improper execution of orders can cost you money.

source: investopedia

The CHF weakened 0.1% to 1.5131 per EUR, after depreciating to 1.5146. Against the Dollar the Franc declined 0.9% to trade around 1.0150. The Swiss franc fell even as stock markets declined, boosting demand for assets that are perceived to be safer, including the Japanese and U.S. currencies.

Analysts said that the Swiss franc seems to be less of a safe haven these days than the Yen and the Dollar, putting the currency under selling pressure. The Swiss National Bank (SNB) tends to intervene in the markets to weaken their local currency. While this intervention has proven to be short lived it may send the USD/CHF jumping upwards unexpectedly, creating an excellent opportunity for forex traders.

Nevertheless it looks like the current bearish trend for the Franc might continue, even if the SNB intervenes. The daily momentum indicators such as moving average convergence/divergence continue showing sell signals for the Swiss currency supporting a further upside for the USD/CHF with 1.0085 & 1.006 as next target prices.

source:  forexyard.com

9:00 GMT: German Ifo Business Climate

• This indicator reflects the level of a composite index based on surveyed manufacturers, builders, wholesalers, and retailers
• The release of the survey typically creates a volatile trading environment.
• If the results turn out to be lower than forecasts, then the EUR may record a fairly bearish session in today’s trading.

19:00 GMT: FOMC Meeting Minutes

• This meeting is very important as it is very likely to Impact the Dollar volatility.
• Traders are advised to watch closely, as this is likely to set the pace of the dollar going into today’s trading.
• Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow this meeting

source:  forexyard.com

Norway’s economy is growing quite well and the government continues to stimulate the economy which supports the Krone further; the reason for it being that investors expect the central bank to continue raising interest rates. This expectation has helped the Krone to be the best performer of the 16 most tracked currencies since the end of June. The Krone gained 7.8% against the EUR and 15% against the USD in that period.

The trend receives support from technical analysis as well as can be seen below

• The chart below is the 2-hour USD/NOK chart by ForexYard.

• The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI), and Williams Percent Range.

• There is a fresh bullish cross on the Slow Stochastic which suggests that a bullish movement is building.

• The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• The Williams Percent Range is testing the lower border at the -100 mark, which merely highlights some added upward pressure.

USD/NOK 2-Hour Chart

source:  forexyard.com

The greenback also climbed on speculation traders exited bets against the dollar before the U.S. Thanksgiving holiday. Analysts said that risk aversion is back in the markets supporting the greenback and putting pressure on high-yielding currencies like the EUR. In the current environment a weak U.S. Gross Domestic Product (GDP) number weighs on sentiment. Traders are a little more sensitive to sentiment changes because they want to get out of positions ahead of the long U.S. weekend.

The Commerce Department will release its second estimate of 3rd quarter GDP at 13:30 GMT today. The data may show the world’s largest economy expanded at a 2.8% annual rate, compared with the 3.5% estimated last month, according to economists. Traders will keep on eye on the advance estimates on corporate profits to be released together with the GDP report. The U.S. economic data have become more mixed and a further poor U.S. economic data and a general desire to reduce risk ahead of year-end are likely to interact to support the U.S dollar.

The Federal Reserve will also release minutes of its Nov. 3-4 meeting at 19:00 GMT, which will include economic projections for the next two years. Market players will particularly focus on the Fed’s forecasts for unemployment in the U.S.

source:  forexyard.com

• The chart below is the 4-hour Silver chart by ForexYard.

• The technical indicators that are used are the Slow Stochastic and Relative Strength Index (RSI).

• Point 1: There is a “doji” candlestick formed in the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 3: The RSI signals that the price of this pair currently floats in the over-sold territory, suggesting upward pressure.

Silver 4-Hour Chart

source:  forexyard.com

Arbitrage – The 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.

Around – Dealer jargon used in quoting when the forward premium/discount is near parity. For example, “two-two around” would translate into 2 points to either side of the present spot.

Ask Rate – The rate at which a financial instrument is offered for sale (as in bid/ask spread).

Asset Allocation – Investment practice that divides funds among different markets to achieve diversification for risk management purposes and/or expected returns consistent with an investor’s objectives.

Back Office – The departments and processes related to the settlement of financial transactions.

Balance of Trade – The value of a country’s exports minus its imports.

Base Currency – In general terms, the base currency is the currency in which an investor or issuer maintains its book of accounts. In the FX markets, the US Dollar is normally considered the ‘base’ currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.

Bear Market – A market distinguished by declining prices.

Bid / Ask Spread – The difference between the bid and offer price, and the most widely used measure of market liquidity.

Bid Rate – The rate at which a trader is willing to buy a currency.

Big Figure – Dealer expression referring to the first few digits of an exchange rate. These digits rarely change in normal market fluctuations, and therefore are omitted in dealer quotes, especially in times of high market activity. For example, a USD/Yen rate might be 107.30/107.35, but would be quoted verbally without the first three digits i.e. “30/35″.

Book – In a professional trading environment, a ‘book’ is the summary of a trader’s or desk’s total positions.

Bretton Woods Agreement of 1944 – An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.

Broker – An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a ‘dealer’ commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.

Bull Market – A market distinguished by rising prices

Bundesbank – Germany’s Central Bank.

Cable – Trader jargon referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800′s.

Candlestick Chart – A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.

Central Bank – A government or quasi-governmental organization that manages a country’s monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.

Chartist – An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.

Choice Market – a market with no spread. All trades buys and sells occur at that one price

Clearing – The process of settling a trade.

Collateral – Something given to secure a loan or as a guarantee of performance.

Commission – A transaction fee charged by a broker.

Confirmation – A document exchanged by counterparts to a transaction that states the terms of said transaction.

Contagion – The tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high volatility in their domestic currency, the Rupiah. From there, the contagion spread to other Asian emerging currencies, and then to Latin America, and is now referred to as the ‘Asian Contagion’.

Contract – The standard unit of trading.

Counterparty – One of the participants in a financial transaction.

Country Risk – Risk associated with a cross-border transaction, including but not limited to legal and political conditions.

Cross Rate – The exchange rate between any two currencies that are considered non-standard in the country where the currency pair is quoted. For example, in the US, a GBP/JPY quote would be considered a cross rate, whereas in UK or Japan it would be one of the primary currency pairs traded.

Currency – Any form of money issued by a government or central bank and used as legal tender and a basis for trade.

Currency Risk – The probability of an adverse change in exchange rates.

Day Trading – Refers to positions which are opened and closed on the same trading day.

Dealer – An individual who acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

Deficit – A negative balance of trade or payments.

Delivery – An FX trade where both sides make and take actual delivery of the currencies traded.

Depreciation – A fall in the value of a currency due to market forces.

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.

Devaluation – The deliberate downward adjustment of a currency’s price, normally by official announcement.

Economic Indicator – A government issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.

End Of Day Order (EOD) – An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.

EURO – The currency of the European Monetary Union (EMU). A replacement for the European Currency Unit (ECU).

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 a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. On Janaury1, 1999 the transitional phase to introduce the Euro began. The Euro now exists as a banking currency and paper financial transactions and foreign exchange are made in Euros. This transition period will last for three years, at which time Euro notes an coins will enter circulation. On July 1,2002, only Euros will be legal tender for EMU participants, the national currencies of the member countries will cease to exist. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Spain and Portugal.

Federal Deposit Insurance Corporation (FDIC) – The regulatory agency responsible for administering bank depository insurance in the US.

Federal Reserve (Fed) – The Central Bank for the United States.

Flat/square – Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.

Foreign Exchange – (Forex, FX) – the simultaneous buying of one currency and selling of another.

Forward – The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.

Forward points – The pips added to or subtracted from the current exchange rate to calculate a forward price.

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

Futures Contract – An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts – ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.

Good ‘Til Cancelled Order (GTC) – An order to buy or sell at a specified price. This order remains open until filled or until the client cancels.

Hedge – A position or combination of positions that reduces the risk of your primary position.

Inflation – An economic condition whereby prices for consumer goods rise, eroding purchasing power.

Initial margin – The initial deposit of collateral required to enter into a position as a guarantee on future performance.

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

Leading Indicators – Statistics that are considered to predict future economic activity.

LIBOR – The London Inter-Bank Offered Rate. Banks use LIBOR when borrowing from another bank.

Limit order – An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 102.00/05, then a limit order to buy USD would be at a price below 102. (i.e. 101.50)

Liquidation – The closing of an existing position through the execution of an offsetting transaction.

Liquidity – The ability of a market to accept large transaction with minimal to no impact on price stability.

Long position – A position that appreciates in value if market prices increase.

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

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

Marked-to-Market – Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.

Market Maker – A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.

Market Risk – Exposure to changes in market prices.

Maturity – Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.

Offer – The rate at which a dealer is willing to sell a currency.

Offsetting transaction – A trade with which serves to cancel or offset some or all of the market risk of an open position.

One Cancels the Other Order (OCO) – A designation for two orders whereby one part of the two orders is executed the other is automatically cancelled.

Open order – An order that will be executed when a market moves to its designated price. Normally associated with “Good ’til Cancelled Orders”.

Open position – A deal not yet reversed or settled with a physical payment.

Overnight – A trade that remains open until the next business day.

Over the Counter (OTC) – Used to describe any transaction that is not conducted over an exchange.

Pips – Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.

Political Risk – Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.

Position – The netted total holdings of a given currency.

Premium – In the currency markets, describes the amount by which the forward or futures price exceed the spot price.

Price Transparency – Describes quotes to which every market participant has equal access.

Quote – An indicative market price, normally used for information purposes only.

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.

Risk – 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.

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.

Settlement – The process by which 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.

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.

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. As an example, 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.

Support Levels – A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.

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

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

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

Transaction Cost – The cost of buying or selling a financial instrument.

Transaction Date – The date on which a trade occurs.

Turnover – The total money value of all executed transactions in a given time period; volume.

Two-Way Price – When both a bid and offer rate is quoted for a FX transaction.

Uptick – A new price quote at a price higher than the preceding quote.

Uptick Rule – In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

US Prime Rate – The interest rate at which US banks will lend to their prime corporate customers

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. Also known as maturity date.

Variation Margin – Funds a broker must request from the client to have the required margin deposited. the term usually refers to additional Funds that must be deposited as a result of unfavorable price movements.

Volatility (Vol) – A statistical measure of a market’s price movements over time.

Whipsaw – Slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Yard – Slang for a billion.

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