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margin call A request from a broker or dealer for additional
funds or other collateral to guarantee
performance on a position that has moved against the customer.
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.
mark-to-market Process of revaluating all open positions with
the current market prices. These
new values then determine margin requirements.
maturity The date for settlement or expiry of a financial
instrument.
offer The rate at which a dealer is willing to sell a currency.
offsetting transaction A trade that serves to cancel or offset
some or all of the market risk of an
open position.
one cancels the other (OCO) order A designation for two orders
whereby when one of the two
orders is executed the other is automatically canceled.
open order An order that will be executed when a market moves to
its designated price. Normally
associated with good till canceled (GTC) 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.
PCI Percentage change indicator.
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 that
can 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
exceeds 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.
RCU/RCD An acronym for River Channel Up/River Channel Down. A
copyrighted and proprietary
software program for CFG signature trades that determines
channels in the market.
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.
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.
river channel (RC) The area enclosed by the red (fast) line and
blue (slow) line on a chart.
River Oscillator Indicator (ROI) A proprietary momentum device
used for measuring historical
data and calibrated closely to historical Fibonacci ratios that
are derived from mathematical equations
for the purpose of predicting market moves, either up or down.
river trader One who trades in the direction of an established
river using channel indicators that
are in agreement with the overall trend. This group of forex
traders follows the rules of trend
trading, trusting signals, ignoring fundamentals, and always
trading with protection.
rollover 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 counterparties
to a transaction. The settlement of currency trades may or may
not involve the actual physical
exchange of one currency for another.
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short position An investment position that benefits from a
decline in market price.
sideways trading day A trading session in which the market opens
and closes at approximately
the same price and may move only 20 to 80 pips.
S90/Crossover A system that predicts targets for profit and
market invasions or reversals after a
target strike.
sore thumb (ST) Nickname for a candlewick that extends far
beyond the surrounding candles
on a chart. It is identified usually during a moment of high
volume followed by a pullback by the
opposing bear or bull market, so that at the end of the
compression time a very obvious candlewick
is all that remains. Nicknamed by a mentor in Switzerland who
was an instructor of the author.
speculator A trader who buys or sells expecting to make a profit
from market fluctuations.
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 Refers to the British pound.
Stochastic model A tool for estimating potential outcomes in one
or more inputs over time. As
applied here, a model based on the belief that as prices
increase or decrease, closing prices tend
to accumulate ever more closely to the highs or lows for a given
period of time.
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, an investor who is long USD at 156.27 might wish
to put in a stop-loss order at
156.01, which would limit losses should the dollar depreciate
below 156.01.
support A term used in technical analysis that indicates a
specific price floor at which a given
exchange rate will typically 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.
trending day A trading session in which the market moves 80 to
300 pips upward or downward.
turnover The total money value of all executed transactions in a
given time period; volume.
two-way price When both a bid and an offer rate are quoted for a forex transaction.
uptick A new price quote at a price higher than the preceding
quote.
uptick rule In the United States, 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.
U.S. prime rate The interest rate at which U.S. banks will lend
to their prime corporate customers.
value date The date on which counterparties to a financial
transaction agree to settle their respective
obligations (i.e., exchange payments). For spot currency
transactions, the value date is
normally two business days forward. Also known as maturity date.
volatility (vol) A statistical measure of a market’s price
movements over time.
whipsaw A condition of a highly volatile market where a sharp
price movement is quickly followed
by a sharp reversal.
world’s money A term coined in 1998 by the author and used by
professional traders denoting
a stop order that has been moved into a profit area, in which
case, should the market suddenly
reverse, the personal margin is not at risk and profit is locked
in place to avoid a loss.
WW A quick communication for traders in chat rooms, meaning wait
and watch.
yard Slang for a billion. |
