Forex and Stock Market Terms
This section contains key terms related to Forex trading, which will help a novice trader quickly understand the essence of the work.
Forex terms describe key aspects of the currency market. There aren't many of them, so it's a good idea to familiarize yourself with their descriptions before you begin. This will make trading more understandable and easier. Each term is described in detail, with practical examples of its use.
What is an ETP in investments and on the stock exchange?
ETP — Exchange-Traded Product, which replicates the price of a specific asset: an index, gold, oil, an economic sector, or a basket of shares.
An investor doesn't buy the asset itself, but rather an instrument that moves with it. For example, one ETF reflects the dynamics of the entire US market, while an ETC tracks the price of gold. An ETN is another subtype of ETP.
To understand, it is enough to know only that ETPs come in different designs, although their purpose is the same - to provide easy access to the market.
The main value of ETPs is that they relieve investors of many complexities. To invest in gold physically, you need to purchase bullion and think about storage.
What is a shutdown and how does it affect markets?
The US is in a government shutdown again, with federal funding partially halted after Congress failed to pass spending bills for the new fiscal year.
As a result, some non-essential functions of government agencies are being suspended, some employees are being sent on unpaid leave, while essential services continue to operate.
This is done in accordance with the requirements of the Antideficiency Act.
The classic definition is: “A shutdown is the suspension of many federal agency operations until funding is approved” (CRS, Brookings, Committee for a Responsible Federal Budget).
As of October 13, 2025, the shutdown is ongoing, with the administration announcing emergency military pay measures, underscoring the scale of the disruption to normal government operations.
What is a financial bubble and what assets are considered financial bubbles?
You've probably often heard the warning that a financial bubble has formed in the market, and many have wondered: what is this phenomenon and why is it dangerous?
A financial bubble is a market situation where the price of an asset rises unreasonably and significantly exceeds its real value.
Typically, this is caused by widespread excitement among investors, who begin actively buying up assets, believing in endless price growth, and make purchases at greatly inflated prices.
The main signs of a financial bubble include: a sharp and inexplicable rise in prices, general optimism among investors without serious grounds, and ignoring obvious risks.
Signs that a financial bubble is about to burst include sharp price fluctuations, negative news, or a sharp drop in trading volumes.
What is exchange clearing and what is it for?
Sometimes, when looking at a brokerage company's licenses, you notice that in addition to a license to trade currencies and securities, there is also a license for clearing.
Clearing is a system of mutual settlements between participants in exchange trading that ensures guaranteed execution of transactions.
There are two main types of clearing:
Centralized clearing : In this case, all settlements for transactions are carried out through a centralized clearing house.
The clearing house acts as a buyer for every seller and as a seller for every buyer. This ensures that trades are executed even if one of the trading participants defaults.
Direct and indirect currency exchange rates explained with simple examples
A currency rate is the price of one currency in units of another currency. It reflects the relationship between two currencies and is used for currency exchange.
In this case, the first entry in the record is the currency that is being bought or sold, and the second entry is the monetary unit in which the price is indicated.
For example, a standard entry looks like this: EURUSD 1.25, the cost of the euro is currently 1.25 US dollars per 1 euro.
The price of a currency is set during trading on the Forex currency exchange or at a fixed rate by national banks of countries.
The hardest currency, its main characteristics
We often hear the phrase, “Keep your money in hard currency; this will help protect your savings from exchange rate risks.”.
And this is not without reason: over 20 years, the Ukrainian hryvnia's exchange rate has fallen eightfold against major world currencies, and a similar picture is observed for other weak currencies.
Even high interest rates on deposits cannot compensate for exchange rate losses; the only solution is to use hard currency to store savings.
But which currency is the most stable? It turns out it's not the euro, but the most popular US dollar.
What is a sideways trend in the stock or foreign exchange market?
In stock trading, a trend is the movement of an asset's price. Depending on whether the price rises or falls, the trend can be upward or downward .
But sometimes traders encounter the concept of a sideways trend, which is not always clear to newcomers to the exchange.
A sideways trend is a situation where asset prices fluctuate within a small range without a clear downward or upward direction.
On the chart, the situation looks like a horizontal or slightly sloping price movement corridor.
In this case, the price does not move up or down, but only sideways, which is what gave rise to the name of this term.
FTSE 100 stock index and features of trading using it
The FTSE 100 stock index, also known as the "Footsie", is one of the most recognized and widely used financial indicators in the world.
The index was created in 1984 by the joint efforts of the London Stock Exchange and the Financial Times as a barometer for the British economy.
It is a market capitalization weighted index of the 100 largest public companies traded on the London Stock Exchange.
Since its inception, the FTSE 100 has become a significant and influential indicator that reflects the health of not only the UK, but also the global economy.
Position trading in stock trading
Positional trading in stock exchange trading is a specific strategy that differs from other types of trading.
It is based on long-term investments and requires careful market analysis and patience on the part of the trader.
Position trading, by definition, is a strategy in which traders hold positions for an extended period of time, sometimes months or even years.
Moreover, thanks to modern technologies, this strategy can also include, along with purchase transactions, sell transactions without delivery of the asset.
What is a recession and what are its consequences for the stock and currency markets?
Lately, we have been hearing and reading more and more about the impending recession in the US economy and other countries.
But what exactly does this market condition represent, and what consequences might it have for the value of securities or the national currency?
A recession is a period of economic decline characterized by two consecutive quarters of negative growth in real gross domestic product (GDP).
Recessions are typically accompanied by rising unemployment, falling asset prices, and a contraction in economic activity.
What are fractional shares, their advantages and disadvantages?
Today, there are quite a few companies whose stock prices exceed $1,000, for example, one share of Pendrell Corp costs $150,000, and Mechanics Bank $23,000.
This significantly increases the required investment amount, especially if you want to diversify your investments and buy securities of several companies at once.
But thanks to a recently introduced opportunity, it is not necessary to buy a security in its entirety; you can buy part of it.
Fractional shares are shares of a company's stock that can be purchased for any amount, even if it is less than the full price of the share.
This allows people with small capital to invest in shares of their favorite companies.
Arbitration and assets to which it can be applied
Most stock trading strategies are based on fundamental or technical analysis , but there are also those that do not involve the use of these methods of market study.
One such strategy is arbitrage, a trading strategy that is based on exploiting the difference in prices of the same asset in different financial markets.
This trading option allows traders to profit from arbitrage opportunities that arise from temporary or structural inconsistencies in the market.
Basically, arbitrage trading is a form of profiting from the difference when you see that the price of product A is lower in this market, you buy it and sell it (product A) in another market at a higher price.
Growth stocks: what are these securities and how to identify the most promising companies
In the investment community, growth stocks are generally defined as securities with a high potential for price appreciation over the long term.
For the most part, these are fairly young companies that show good financial results and direct all net profits towards development.
Often these companies belong to promising sectors of the economy, so it can be assumed that as the market grows, the value of companies in this sector will also increase.
Growth stocks are typically inexpensive and can rise significantly in price over a short period of time, sometimes exceeding 100% per annum, and in exceptional cases, 1000%.
What is a Forex tick and how do ticks differ from points? Trading using ticks
The price of a currency pair on Forex moves in a rather peculiar way: the trend line is never straight, and the distance between two adjacent quotes is almost always different.
You probably know that the smallest value of price change on Forex is a point, or as it is also called, a pip.
A point is the minimum change of the last digit in a quote, for example, in a quote of 3.2578 7 it will be 0.0000 1 ,
In practice, a change of one point looks like this: 3.2578 7 + 0.00001 = 3.2578 8 , similarly, in three-digit quotes this is the third decimal place, and in two-digit quotes the second.
But if a point is the smallest price change, then what is a "forex tick"? We could say that a forex tick is the actual change in a forex price—that is, the distance between adjacent quotes.
Automated Forex trading
The concept of autotrading begins to interest most novice traders after several unsuccessful attempts at independent trading.
Automated Forex trading is trading using mechanical systems, specialized programs, or trader terminals that fully automate the process of opening trades, from technical analysis to opening and closing trades.
Currently, this type of trading is carried out using two options: automated trading advisors or specialized terminals that can be configured to receive signals to open trades.
Ask (price)
A currency pair quote has two indicators: the trader's purchase price and the trader's sale price. Ask is the second indicator of a currency pair's price; its value can be used to determine the trader's purchase price.
When considering Forex terms, one cannot ignore this seemingly simple term, which sometimes causes confusion among beginning traders.
Ask (price) – in other words, this is the price at which the broker sells currency to its clients; it is at this price that purchase transactions are made in the trader’s trading terminal.
This price is always higher than the value of the second Bid indicator by the difference in the brokerage company's commission, which is expressed as a spread.
Forex bar.
A bar chart is one way to display price movements and is used in
technical analysis. The chart is created using Forex bars that represent a specific time frame.
A Forex bar is a specific time period, expressed as a graphical representation, allowing you to see key price indicators on a selected time frame.
The main bar time frames are 1, 5, 15, and 30 minutes, 1 and 4 hours, daily, weekly, and monthly. By selecting the appropriate time frame, you can view between 20 and 100 bars, depending on the display scale.
High-frequency trading
Very often, a complex name conceals a simple truth. Many, upon hearing about high-frequency
trading, begin to complicate things and invent all sorts of theories.
In fact, high-frequency trading is nothing more than scalping , and the speed of opening and closing is so high that you, as an ordinary person, may not notice how an order is opened or closed, since in high-frequency trading the speed of opening and closing a deal is measured in milliseconds.
All of this became possible thanks to the development of robotic trading and software, as only a machine, not a human, can handle such speed in decision-making and trade execution. However, the speed of opening and closing isn't the whole point of high-frequency trading.
By deciphering such Forex terms, one can understand the very essence of their practical application as a strategy.
Buy limit.
Working with pending orders has always yielded a decent profit, but to use this trading tool correctly, you need to know the different types of pending orders. One such type is the buy limit order.
A buy limit is an order to buy below the current price. This means you're ordering to buy the currency after the price drops to a certain level.
Buy stop
When trading Forex, you often think that if the rate reaches a certain level, it will definitely continue to rise. Placing a buy stop pending order can help you catch this moment.
Buy stop is one of the pending orders that allows you to open a buy position at a price higher than the existing one.
Forex terms such as buy stop relate directly to trading techniques, as they help organize the exchange trading process.
Bid exchange (price) selling price
Exchange operations have two directions - buying and selling, each operation is carried out at its own price.
Bid (price) is the price at which you sell currency or another asset on the exchange; this indicator is always lower than the Ask selling price and is listed first in the currency quote.
In other words, bid is the price at which you buy an asset you previously purchased or the price at which you open a short sell position.
Sometimes it is also called the asking price, since it is the bid that more fully characterizes the level of demand for a particular financial instrument.
What is a basis point and what does 25, 50 or 100 basis points equal?
There are a multitude of forex terms we encounter even in real life.
The term "basis point" is one such concept; we hear it mentioned almost daily in financial news when discussing interest rate changes.
A basis point is one-hundredth of a percentage point, meaning 100 basis points equals 1%.
It characterizes the change in the new interest rate relative to the previous one; it's not the rate itself, but its change.
For example, if you heard that the US Federal Reserve's interest rate on the dollar changed by 0.5% and is now at 2.5%.
Binary option
Exchange trading utilizes a wide variety of instruments and methods for concluding transactions, and binary options are one such method. While options trading isn't considered a forex term, we've decided to briefly explore the concept.
A binary option is a transaction with a predetermined profit or loss, depending on the financial outcome of the transaction. It has several key parameters: reward, instrument, amount, size, forecast direction, expiration date, and compensation or insurance.
Trade amount is the amount of money you buy this option for, usually the minimum trade is $5, the minimum size of this indicator is set by the broker.
What does "Close Only" mean in stock trading?
The current crisis has become an excellent opportunity for many traders to showcase their skills and earn some good money.
However, things don't always go according to plan. Often, you'll find emails from your broker informing you that trading for a certain asset has been switched to "Close Only
" mode. Close Only means you can no longer open new trades for that asset.
For example, due to increased volatility and widening spreads, trading for XAU has been switched to Close Only mode.
After receiving this message, you can't open a new gold trade, only close existing ones. Surprisingly, this isn't such a bad option compared to trading being completely halted.
What is an ETF and how to trade it?
The number of assets used in exchange trading is growing daily, currently numbering in the tens of thousands.
A wide variety of items are traded on exchanges – metals, currencies, cryptocurrencies, futures, securities, and indices on these securities.
However, new trading instruments are emerging every year. For example, while stock indices were once common, ETFs have recently emerged.
ETFs (Exchange Traded Funds)
are essentially a type of index that reflects the value of an investment portfolio created by a specific company and listed for trading as a single share.
Base currency
When describing Forex terms, it's important to mention this concept. It's used when trading currency pairs. Each pair consists of two currencies, the first of which is the base currency of the currency pair.
For example, in the USDCHF pair, the US dollar is the base currency, and the Swiss franc is the quoted currency.
Base currency – shows the currency in relation to which a purchase or sale operation is carried out; this indicator is the most important when characterizing all Forex transactions.
This concept is quite relative, because there is absolutely no difference between selling dollars for euros or buying euros for dollars, because in both cases you will become the owner of euros.
However, for exchange trading, the correctness of the recording is important, since certain types of commissions are associated with this moment, so it is customary to fix the base currency in various types of quotes.
Currency Pair
All transactions on the Forex market are typically recorded using currency pairs. This approach significantly simplifies external perception and, at the same time, reduces the recording time.
A currency pair is an abbreviated notation for the relationship between the exchange rates of two currencies; the notation uses a special ISO code consisting of three letters.
Typically this entry is written as AUDCAD or AUD/CAD, both options are correct.
This approach shortens the quotes and is easier for a trader or banker to understand.
A pair consists of two currencies, one of which is the base currency, and the other acts as the quote currency. For example, in the USD/JPY (US dollar/Japanese yen) pair, the US dollar is the base currency, and the yen is the quote currency.
Typically, in stock trading, a lot of different indicators are used that characterize a given entry.
What is a currency basket?.
A currency basket is a method for comparing the average exchange rate against other global currencies. We've included its description in the "Forex Terms" section because it's important for assessing the real value of a given currency. 
A currency basket is a list of currencies that is fundamental for the bodies that determine the movement of the national currency in relation to other exchange rates.
It is necessary to use a currency basket due to the instability of exchange rates between various currencies.
When determining the currency basket, information about the country's share in the total national product and foreign trade turnover of a certain group of countries is used as a balance.
The currency basket is in constant flux; it is always being adjusted in response to shifts in external economic ties and changes in relations in the monetary and financial sphere.
Currency arbitrage.
A broader, economic understanding of the term arbitrage involves profiting from trading a single commodity. In fact, it's nothing more than simple speculation.
Currency arbitrage is the process of making a profit from differences in exchange rates, and it does not necessarily require a change in the exchange value of the currency chosen for the transaction.
Bear market
Very often, when trading on the Forex or stock exchange, you come across the concept of a "Bear Market" or hear the statement - today the Bears dominated the market.
The question arises: what kind of market is this and what kind of animals live there?
A bear market is a situation where most traders are working to lower the price, usually only on one or a few trading instruments.
The initiators of this trend are "Bears" - traders who are interested in a decrease in the price of a certain currency pair or other financial asset.
When the number of such trading participants begins to play a decisive role, the market becomes “Bearish”.
Typically, at such a moment, a stable downward trend forms on the exchange, and the number of sell transactions steadily increases, which further contributes to a decrease in the asset's price.
Bull market, trading features
Bull market – this concept indicates that the financial market is dominated by traders who are betting on the price increase.
Such traders are usually called bulls, figuratively meaning that bulls raise the price with their horns, stimulating growth with all their might.
This behavior is due to the fact that this category of traders has opened buy trades and requires a price increase to make money.
A bull market is characterized not only by an upward trend, but also by a general atmosphere that indicates that the price should continue to rise.
Positive news is being published on internet sites, and the bulls themselves are actively spreading rumors that the price is set to rise even further.
Soft currency.
Almost all national bank reserves are held in hard global currencies, but this term is often used interchangeably with its opposite—soft currency. Understanding this concept will help you better understand other forex terms.
A soft currency is a weak monetary unit, typically with low liquidity and virtually zero collateral.
These currencies are poorly valued on the global currency market and are only circulated within their own country.
Currency Risk.
When trading currencies, the main cause of losses is currency exchange risks, which can sometimes reach several tens of percent. And in speculative forex trading, they can reach 100% of the trader's deposit.
Currency risk is the risk of losing a certain amount as a result of an unfavorable change in exchange rates or the price of precious metals.
This term refers to such areas of activity as import-export operations, banking activities and trading on the forex market.
Forex volatility
Any trader encounters the concept of "Forex volatility" when choosing the most profitable trading instrument. This indicator helps assess the profit potential over a given period for a currency pair or other trading instrument.
Forex volatility is an indicator of price (rate) change over a certain period of time (trading session, day, week, month).
Bollinger Bands.
All work on Forex is built on the basis of just a few fundamental tactics, one of which is Bollinger Bands.
Bollinger Bands are a tool for technical analysis of the currency or stock market. They allow you to assess how the current situation differs from historical data.
Dealing center.
Dealing is a type of speculative trading, the primary goal of which is to generate excess profits from trading on currency, stock, or commodity exchanges.
A dealing center is a company specially created for dealing, providing its clients with the opportunity to trade various types of assets. Trading can be conducted either on an exchange or on the dealing center's internal platform.
Day trading.
Most textbooks divide stock trading into several main periods—short-term, medium-term, and long-term—
with day trading, or trading within a single day, being a separate category.
Day trading assumes that an open trade will be closed on the same date. This approach stems from several technical and strategic issues, which we'll discuss below.
Day trading is rightfully one of the most popular and profitable trading options, and the reasons for this are as follows.
Forex range (Range market).
Any market has a certain range of price movements, and the Forex currency market is no exception.
A Forex range is a corridor within which the price of a currency pair moves over a specific time period (day, week, or month). Typically, the corridor is based on the minimum and maximum price for a specific period.
What is a Forex gap and its positive and negative aspects?
The currency exchange doesn't operate continuously; its activity is suspended on weekends and holidays. However, exchange rates still fluctuate, resulting in a phenomenon known as a Forex gap.
A Forex gap is a break in currency quotes, in which the previous time frame closes at one price, and the next opens at a completely different value.
Is the occurrence of a price gap easily identified by looking at a currency chart? Upon closer inspection, it's immediately clear that the new candle opened at a price different from the previous one.
Typically, this phenomenon occurs during breaks in the operation of the currency market, but sometimes it can also occur in the middle of a Forex trading session .
The reason for this phenomenon is strong news that causes strong volatility and rapid trend movement in the market.
Diversification of capital.
When managing capital, there are many ways to protect it from potential risks, one of the most effective options is diversification of fund distribution.
Capital diversification is the rational distribution of available funds among various investment options. This takes into account not only the profitability of the investment but also the risk level of such investments.
Dealing Desk (Dealing Desk) stock exchange trading
There are several options for organizing currency trading. One such option is a Dealing Desk, which is primarily used by new brokerage firms or when working with small transaction volumes.
A Dealing Desk is trading on the broker's internal platform, without transmitting orders to external markets.
All transactions are concluded between clients of a given broker or directly with the participation of the company that organized the trade.
No Dealing Desk (NDD).
The very name of this term perfectly characterizes the concept of No Dealing Desk – trading without the creation of an internal platform.
No Dealing Desk (NDD) is a forex trading method that provides participants with direct access to the interbank currency market. The broker has no ability to interfere with the trading process.
Derivatives (Derivatives).
When trading on the stock exchange, there are many options for protecting yourself from price risks, one of the most common options for fixing prices is a derivative instrument.
Derivatives are contracts that fix the price of one or more specific commodities during exchange trades. Their use allows for fixing the price of an asset at a specific level and avoiding losses due to price fluctuations.
Instant Execution (Instant execution of orders).
In a fast-moving trend, how quickly your order opens is crucial; sometimes a delay of just a few seconds can cost a significant portion of your profit. This is why it's crucial that orders in the trading terminal are executed as quickly as possible. In practice, there are two order execution options: Instant Execution and Market Execution.
Instant Execution – also called instant or precise execution of orders, the second definition of this term is more accurate.
Equity (Equity).
This concept is directly related to your funds in the trader's trading terminal; it allows you to find out how much is currently available to you for opening a new position.
Equity is the remaining free funds in a trader's account. The value of this indicator constantly changes depending on the financial result of open positions: when profits increase, the value changes in the positive direction; when losses increase, the value changes in the negative direction.
Hard currency.
The properties of a currency can always be used to determine how well the country that issued it is doing. One such indicator is the currency's strength.
Hard currency , also known as "strong currency," refers in this context to global currencies that can serve as a reliable and stable means of storing capital. Monetary units with this characteristic have a stable exchange rate and purchasing power, and are in constant demand in virtually every country.
Cross Rate (cross course).
The term originated from the quotation of foreign currencies against each other, after which the US dollar became the basis for direct quotation.
A cross rate is the exchange rate between two currencies, where both currencies in the quote are not the US dollar. In this case, the country in which the exchange occurs is completely irrelevant.
Counter Currency.
A currency pair is the primary instrument used in forex trading. As its name suggests, it consists of two currencies—the base currency and the quote currency.
The counter currency is the second currency in the currency pair, used to determine the value of the base currency. It is sometimes referred to as the counter currency to the quote currency.
Why you need an ECN account on Forex, brokers, and trading features
An ECN account is one of the most convenient options for trading, as trading in this
case is conducted using the Non-Dealing Desk system.
This means that all transactions are transferred to the interbank market, where currency trading itself takes place.
This approach allows for maximum liquidity, reducing spreads to near zero.
This type of account is available through ECN brokers , whose presence in the forex market is growing daily.
Consumer Price Index (Consumer Price Index).
Inflation has always been one of the most significant indicators of the stability of a national currency. The level of inflation can be assessed through an analysis of the consumer price index.
The Consumer Price Index ( CPI) is a measure of the cost of a basket of consumer goods and essential services. The CPI is calculated based on price changes for each component of the basket, taking into account the importance of each item in the basket.
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