Forex Terms Explained
Anyone who wishes to become a forex trader will need some understanding of the many terms and expressions commonly used in the industry, for which the following provide a brief explanation.
Nickel is the expression used in the United States to refer to five basis points.
Narrow market is a market which is experiencing only light trading, also sometimes referred to as a ‘thin market’.
Off shore refers to a business which operates under regulations outside of a country, even when sometimes it has physical locations within it.
Old Lady is the slang term used for England’s Central Bank.
Par refers to the official value of a particular currency, while Parities refers to the value of a currency in reference to that of another.
Pegged refers to a situation where two countries’ currencies are tied together (albeit with some minor wiggle room), e.g. the US dollar and the Chinese Yuan.
Quantitative Analysis refers to the method of using mathematical and statistical modelling, research and measurement to analyse the behaviour of the market.
Quantitative Easing is a method by which the central banks of a particular nation can encourage spending within their own economy.
A Rainbow Option refers to an option that has a minimum of two – and possibly more – core assets. These options only pay when all the core assets perform as expected.
Rally refers to a period on the forex market when prices are rising upwards.
Short Put refers to an option in which the buyer is obliged to purchase the core asset from the seller.
