1. ABA

American Bankers’ Association : Organization whose routing numbers are used for transferring funds.

2. Adjustable Peg

Exchange rate regimen where a currency’s exchange rate is pegged (fixed) in relation to a stronger currency, such as the US dollar or the euro. The pegged rate is adjusted occasionally in an attempt to improve the country’s competitive position. For example, China’s yuan is sometimes pegged to the US dollar.

3. Agent Bank

A bank acting for another bank, usually a foreign one.

4. Aggregate Demand

Total demand for goods and services in the economy from within and outside its borders.

5. Aggregate Risk

A bank’s exposure to forex contracts from a single customer.

6. Agio

A fee charged to exchange money from one currency to another.

7. Algorithmic Trader

An automated trader whose system is based on complex mathematical formulas.

8. All-or-Nothing Option

See Binary Option.

9. American Option

An option that can be exercised anytime during its life. The majority of exchange-traded options are American.

10. API Trading

Trading that is conducted through an Application Programming Interface. APIs enable users to build custom trading functionality into their own software systems.

11. APIs

Application Programming Interface, used in forex to automate trading.

12. Appreciation

Increase in the value of an asset or currency.

13. Asian Option

An option that pays off according to the average prices of the underlying asset over time.

14. Ask :

The price at which sellers are willing to sell a currency pair, also known as The Offer. Orders to buy on most brokers are executed at the Ask Price.

15. Ask Price

See Ask.

16. Ask Rate

See Ask

17. Asset

An item that has value.

18. Asset Class

Dividing funds among many different markets for diversification purposes in order to reduce risk.

19. Average Option

See Asian Option.

20. Back Office

The area within a brokerage that is responsible for settlement, transfer of funds, opening accounts, and other administrative duties.

21. Balance of Payments

A term used to describe the economic transactions for a country during a given period.

22. Balance of Trade

In economics, a country’s exports minus its imports.

23. Band

In countries where the currency is pegged, the range in which the rates are permitted to fluctuate.

24. Bank Identifier Code

See Swift Code.

25. Bank Note

Central bank issued paper that is considered legal tender.

26. Bank of Japan

The central bank of Japan.

27. Bank Rate

The rate at which a central bank lends to members of its banking system.

28. Bank Treasury

The center of operations within a bank where funds (including customer deposits and bank assets) are kept, received, disbursed, and recorded.

29. Banking Day

Days of the week when commercial banks are open for business in the country of the particular currency traded.

30. Bar Charts

A popular format for studying the price action of currency pairs.

31. Barrier Option

A type of option where the payout depends on whether or not the underlying asset reaches a predetermined price.

32. Base Currency

The first currency in a currency pair. For example, in the EUR/USD pair, Euros are the base currency. The exchange rate quoted is the number of units of the second currency you will receive for one unit of the base currency.

33. Base Point

One hundredth of one percent, or 0.0001.

34. Base Rate

Synonymous with prime rate, but used in the UK to refer to the rate that banks lend to their best customers.

35. Basket of USD Shorts

A number of operations where the USD is being sold against various currencies.

36. Basket Option

An option with an underlying asset made up of a basket of securities (stocks or commodities).

37. Bear

A trader who believes prices will fall.

38. Bear Market

An extended period where prices decline for a single security or for the market in general.

39. Bear Put Spread

A type of options strategy used when an option trader expects a decline in the price of the underlying asset. This effect is achieved by purchasing put options at a specific strike price while also selling the same number of puts at a lower strike price. The maximum profit to be gained using this strategy is equal to the difference between the two strike prices, minus the net cost of the options.

40. Bear Squeeze

When traders who are in a short position have to desperately cover their positions because markets are rising rapidly. See Short Squeeze.

41. Best-Efforts Basis

An attempt to fill an order at the next available price in light of above average order flow.

42. BIC

Bank Identifier Code.

43. Bid

The price at which buyers want to buy a currency pair. Sell orders are executed at the Bid Price.

44. Bid Price

See Bid.

45. Bid Rate

See Bid.

46. Bid/Ask Spread

See Spread.

47. Big Figure

The first couple of digits of a forex rate or price which doesn’t usually fluctuate.

48. Binary Option

An option where the payout is predetermined and is not dependant on the price move of the underlying asset. Also known as a Digital option, and All-or-Nothing option.

49. Blocks

A large amount of securities, typically at least 10,000 shares or $200,000 in bonds.

50. BOJ

See Bank of Japan.

51. Bollinger Bands

A technical analysis overlay that plots three bands onto the underlying price curve. One is the moving average while the other two are bands of volatility: two standard deviations above and below the moving average. Bollinger Bands are available on many trade platforms

52. Bollinger Bands

A technical analysis overlay that plots three bands onto the underlying price curve. One is the moving average while the other two are bands of volatility: two standard deviations above and below the moving average. Bollinger Bands are available on many trade platforms

53. Book

The total number of currency positions a dealer has at any given moment. Typically, the dealer aims to have a net position of zero in terms of risk. This means that for the aggregate, all customer’s long and short positions balance each other out.

54. Box Options

A proprietary OANDA product that lets clients trade options through a well-understood graphical user interface.

55. Break Out

See Break.

56. Breakaway Gap

A gap in price when a new trend forms.

57. Bretton Woods

The location of the historic conference held in 1944 to establish the first foreign exchange system which was tied to US Dollars that were, in turn, backed by gold.

58. Broker

Traditionally, an agent who works for a dealer by soliciting customer orders and earning for himself a commission in the process. Currently, the terms broker and dealer are often used interchangeably.

59. Brokerage

A company that offers trading services to the public.

60. Bull

A trader who believes that prices will rise.

61. Bull Call Spread

Buying a call option and selling another call option, both with the same expiry date. The call option sold usually has the higher strike price. The money paid buying the call option is offset with the money received for selling the other call option. Losses are capped, as are profits.

62. Bull Market

An extended period where prices rise for a single security or for the market in general.

63. Bundesbank

The central bank of Germany.

64. Business Day

See Banking Day.

65. Butterfly Spread

An option strategy combining a bull and bear spread that uses three strike prices. The lower two strike prices are used in the bull spread, and the higher strike price in the bear spread. Both puts and calls can be used. In a long Butterfly Spread, you go long one call with a high strike price, long one call with a low strike price, and short two calls with a middle strike price.

66. Buy Limit Order

An order to transact at a specific price (the limit) or lower.

67. Buy Rate

See Bid.

68. Buy Stop

A stop order to buy that is placed above the current market. A buy stop is used to close out a short position.

69. Buying on Margin

Taking a position in a currency pair when only a portion of the total value is paid for. The rest is borrowed and interest is charged. The portion paid for is called margin.

70. Cable

The exchange rate for the British Pound/US Dollar (GBP/USD) currency pair, so named in reference to how rates for the two currencies were previously communicated by transatlantic cable.

71. Calendar Spread

Holding long and short positions of the same option with different expiration dates.

72. Call

See long call.

73. Call Rate

The interest rate charged in the interbank for overnight borrowing.

74. Call Writer

The writer of a call option is another name for the seller of a call.

75. Candlestick Chart

A popular chart used for technical analysis purposes consisting of a body (the edges showing opening and closing prices) and vertical lines extending upwards and downwards from the body (showing respectively the highest and lowest ask/bid rates reached during the interval). Candlestick charts were made popular by Japanese rice merchants to track the price of rice over time.

76. Capital Account

The net of investment flowing in and out of a country.

77. Capital Risk

Risk where banks have to deal with another bank or financial institution who may not be able to uphold its side of the bargain.

78. Carry

The cost of keeping a position open overnight. Each currency has a different interest rate associated with it. You are paid interest on the currency you are long in, and must pay interest on the currency you are short. The difference is the carry, sometimes referred to as the cost of carry. This method of calculating interest rates is more fair to traders.

79. Carry Currencies

High interest rate currencies.

80. Carry Grid

A grid of positions (including open orders, take profits, and stop losses) built on a carry trading strategy.

81. Carry Positive

A carry trade where you are long the high interest currency and short the low interest currency. Excluding the volatility of the currency pair, this strategy is profitable based on the interest rate differential between the two countries.

82. Carry Trade

The carry is the cost of keeping a position open overnight. Each currency has a different interest rate associated with it. You are paid interest on the currency you are long on, and you must pay interest on the currency on which you are short. The difference is the carry, sometimes referred to as the cost of carry.

83. Cash on Deposit

Funds deposited in a trading account.

84. Cash Settlement

Spot and futures contract settlement procedure where, instead of taking physical delivery, profits or losses are settled in cash.

85. Central Bank Intervention

When the central bank enters the spot forex market to buy or sell forex in order to stabilize the country’s currency, usually when supply or demand forces are unbalanced.

86. CFTC

See Commodity Futures Trading Commission.

87. CHAPS

See Clearing House Automated Payment System.

88. Chartist

Someone who uses charts of past price movements (technical analysis) to predict future prices.

89. CHIPS

See Clearing House Interbank Payment System.

90. Choice Market

Instead of a bid and ask price where there is a definable spread, a choice market is one where all trades, whether buy or sell, go through at the same price.

91. Chooser Option

An option where the holder can choose whether the option is a call or a put during the life of the option.

92. Clean Float

A type of exchange rate mechanism where an exchange rate is determined only by market forces with no central bank intervention whatsoever.

93. Clearing

The trade settlement process.

94. Clearing House Automated Payment System

A forex settlement system used in the UK.

95. Clearing House Interbank Payment System

An international wire system used by major banks.

96. Client

See Customer

97. Close Of Business Day

See Daily Cut-Off.

98. Closed Position

A transaction that offsets the number of units in a previous open position. In the case of a long position, selling the exact number of units so that your exposure in the market is zero.

99. Closing a Position

A transaction that offsets the number of units in a previous open position. In the case of a long position, selling the exact number of units so that your exposure in the market is zero.

100. CLS

See Continuous Linked Settlement.