We have dutifully compiled a list of FAQ for your convenience.
If you can’t find your answer within the FAQ section, please contact us at firstname.lastname@example.org and we will respond to you shortly.
What is FOREX?
Forex is an inter-bank market that took shape in 1971 when global trade shifted from fixed exchange rates to floating ones. This is a set of transactions among forex market agents involving exchange of specified sums of money in a currency unit of any given nation for currency of another nation at an agreed rate as of any specified date. During exchange, the exchange rate of one currency to another currency is determined simply: by supply and demand – exchange to which both parties agree.
Account Funding (10)
You can use the method below to fund your account:
Please note that your account must be approved before you can fund it.
Assuming that all required information is entered correctly:
We’ll notify you via email as soon as your account gets funded. Please note that your account must be approved before you can fund it.
We offer USD and SGD based accounts.
There are no charges to transfer funds between your profiles.
Yes. First make sure that you close all your positions. Then email us at email@example.com. Make sure that you include your username and account number. We will be happy to change the leverage in your account within one business day.
No, because Tradesto ECN spreads is already one of the most competitive spread in the market.
We have taken exhaustive, but necessary measures to provide comfort to our clients that we treat their funds in a legal, ethical and secure manner.
We understand the concerns you have with respect to the safety of your funds. As a result, all client funds at Tradesto are held in segregated accounts. The main purpose of a Forex segregated account is to shield your investments from possible company risks by keeping such investments “unavailable” for the company to be used in the course of their business when facilitating its own risks, expenses and obligations. Should the company account become overdrawn, the company or its bank CANNOT use your funds.
Account Username and Password (5)
You have two types of username and passwords.
- You create your username and password when opening a new account. You will use this set to access the Tradesto Member Area.
- Tradesto will create an MT4 ID and password for you upon account approval. You will use these login details to access their MT4 trading platform. We will email this MT4 ID and password to you.
If you have forgotten your MT4 username, please send an email to firstname.lastname@example.org.
Click here to retrieve your lost password or username. Simply follow the instructions on the page.
For security purposes, we recommend changing your MT4 password after logging in for the first time. You can do this in your MT4 platform by choosing Tools > Options > Change.
Please send an email from your original email address to email@example.com. In the email content, you will need to include as follows:
Client Profile (3)
You will need to send an email to firstname.lastname@example.org, attach the POA document and state which client you are representing.
No, you may not use a passport as a Proof of Residence. Accepted documents have to include your name, current address and must be dated within the last 6 months. Examples of a valid Proof of Residence document include a utility bill such as water or electric bill, phone bill, cable TV bill or a bank statement or credit card statement.
Please email to email@example.com with your old and new address. Make sure to include your MT4 ID number and your username. An updated proof of residence document must also be accompanied with the email. This will again require approval from our Compliance Department.
MT4 Trading Platform (7)
The Metatrader 4 trading platform provides technical analysis, charting and Expert Advisors to help clients develop their own trading strategies. The MetaTrader 4 terminal is a perfectly equipped trader’s workplace that allows clients to trade in the financial markets (Forex, CFDs and Futures). It provides the necessary tools and resources to analyse price dynamics of financial instruments, make trade transactions as well as create and use automated trading programs (Expert Advisors). It is a convenient, all-in-one solution and is by far the most popular trading terminal platform in the world.
Forex market opens on Sunday 5pm EST (10:00 pm GMT), closes on Friday 5pm EST (10:00 pm GMT).
Please visit the Download section in your Member Area.
The time zone for MT4 Trading Platform is set to GMT+3 from March to November and GMT+2 from November to March.
The MT4 Trading Platform only allows one instance running at one time per CPU. You’ll either need to partition your CPU or run the second instance on a virtual PC.
Please remember to right click any pair on the Market Watch panel and select “Show All” to make sure you have all the currency pairs we offer.
After you register with us, we’ll provide you a link where you can download your MT4. You can also download the platform from the Download section of your Tradesto Member Area.
Performing Withdrawals (5)
Please fill out a withdrawal request in your Member Area.
There is a minimum of USD50 or equivalent for withdrawals. An exception is made for clients cashing out of an account. You may withdraw as much as you need whenever you need it.
Performing Trading (25)
Leverage is the use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. Prior to exploring leverage and how it is used in trading with Tradesto, please carefully read the following Risk Warning on Leverage:
LEVERAGE AMPLIFIES POTENTIAL LOSSES OR GAINS. WITHOUT PROPER USE OF RISK MANAGEMENT, THE HIGH DEGREE OF LEVERAGE MAY LEAD TO LARGE LOSSES.
Tradesto offers variable levels of leverage depending upon account type and account balance. The amount of leverage offered is as low as 1:1 and as high as 500:1. The following table is used in defining the different levels of margin available with Tradesto:
As noted above, the leverage available will differ depending upon account type and account balance.
The pip value does not change based on the leverage. It’s all based on the contract size.
Commission is what money managers charge on a per trade basis. Swap is the amount that is credited or debited to an account due to positions held overnight.
To check for swap rates open your MT4 platform. Then right click on the currencies in the market watch panel. Then click on Symbols. Then click the currency pair in question. Then click Properties. You will see the swap short and long rate.
Tradesto is offering an ECN spread.
The minimum trade size is 0.01 lot.
Our Tradesto ECN Spreads are the most suitable for traders of all types. These are our absolute tightest spreads available and rival many institutional level price feeds offered to traders with multi-million dollar accounts:
This is essential for customers that need to get in and out of trades quickly and don’t mind sacrificing a small fraction of a pip to do so in a fast moving market. To enjoy the benefit of such tight spreads, we charge a commission of only USD20 per standard lot round trip and USD2 for mini lot.
Our servers are set up on GMT+3 from March to November, then are on GMT+2 from November until March. Please check this link for detailed information on Forex hours: https://www.forex-internet.com/forexhours.htm
No. Tradesto is a 100% straight through processing brokerage firm with no dealer intervention whatsoever.
At Tradesto, you can trade Micro, Mini and Standard lots all under a single account. Open a Live Account or register for a FREE DEMO Account today.
You can hedge your trade by simply trading to the other side. For example, if you’re long 1 EUR/USD, you would simply get short 1 EUR/USD.
Maximum deviation is the amount of slippage you are willing to accept. For example, if the market is at 1.5000 and you put in an order to buy, if your standard deviation is set to 2, you will be willing to accept any price from 1.5000 to 1.5002. This increases your chance of getting filled at the prices you want. We recommend a standard deviation between 0-2.
Currently, we do not offer a guarantee for stop level. In normal market conditions, you would expect to get the price worst case within a pip or two. In volatile market conditions we will try our best to honour the stop at the best possible price.
Auto liquidation is 30%. We usually, but not always, close the position with the highest margin requirement first.
A market order is a commitment to the brokerage company to buy or sell a security at the current price. Execution of this order results in opening of a trade position. Securities are bought at ASK price and sold at BID price.
For example, if EUR/USD is priced at [BID] 1.3000/1.3003 [ASK]. It means in order to buy 1 unit of euro, you need to pay 1.3003 US dollar. 1.3003 is also the known as the ask price. It’s the price that dealer willing to sell. Conversely, if you would like to sell euro against US dollar, you would sell at 1.3000. It’s also known as the bid price, meaning it is the price that dealer willing to buy from you.
As you see in the example above, there’s a difference between the bid and ask price. This difference is known as spread and varies depending on the currency pair being quoted. For our fixed and variable spreads, Tradesto does not charge a commission, as we are compensated on a percentage of the bid and ask spreads. In this case, if you enter a buy euro position, you are instantly down 3 pips. Therefore, you must wait for the price to come up to [BID] 1.3003/1.3006[ASK] in order to break even.
Stop Loss and Take Profit orders can be attached to a market order. Execution mode of market orders depends on the security traded.
A Stop Loss order is used for minimising losses if the security price has started to move in an unprofitable direction. If the security price reaches this level, the position will be closed automatically. Such orders are always connected to an open position or a pending order. The brokerage company can place them only together with a market or a pending order. The client’s terminal checks long positions with BID price to meet this order provision, and the terminal uses ASK price for short positions.
For example, EUR/USD is trading at 1.3000/1.3003. You enter a market order to buy the Euro at 1.3000. To assist in risk management, you can preset a close price (Stop Loss order) where your position is automatically closed at that price. If you set your Stop Loss at 1.2950, when the EUR/USD price reaches 1.2950/1.2953, you are taken out of the market with a loss of 53 pips. 1.3003 [entry price] -1.2950 [close price] = 0.0053.
Please note: a Stop Loss price is not guaranteed, as no orders are. During volatile market times, your stop order may not be able to be honoured at the exact price desired, and you will receive the next best executable price.
To automate a Stop Loss order so that it follows the price, you can use a Trailing Stop.
As noted above, a Stop Loss is intended to minimize losses when the security price moves in an unprofitable direction. Conversely, if the position becomes profitable, a Stop Loss can be manually shifted to a break-even level. To automate this process, the Trailing Stop was created. This tool is especially useful when the price changes strongly in the same direction or when it is impossible to watch the market continuously.
A Trailing Stop is always attached to an open position and works in the client’s terminal, and not on the server like a Stop Loss. As soon as profit in points becomes equal to or greater than the specified level, the Trailing Stop automatically gives a command to place a Stop Loss order. The order level is set at the specified distance from the current price. Furthermore, if the price changes in a more profitable direction, the Trailing Stop will make the Stop Loss level follow the price automatically. However, if the profitability of the position falls, the order will not be modified any more. Thus, the profit of the trade position is fixed automatically.
Trailing Stops work similarly to how Expert Advisors (EA) operates in that these features work locally on your MT4 platform on your PC. We do not have support capabilities to run these features on our servers because these tools are not attached to our server.
A Trailing Stop is a feature that allows a trader to minimize their risk and protect their profit. This feature is very useful when you want to modify your Stop Loss order in a rapid manner. However, please bear in mind that you must closely monitor your Trailing Stops because if for any reason your MT4 terminal loses its connection (i.e., update, Internet connectivity), the Trailing Stop feature will be disabled because it is not attached to our servers. Therefore we cannot assume responsibility for Trailing Stops that fail due to connectivity or platform issues.
A Take Profit order is intended for realising a profit when the security price has reached a preset level. Execution of this order results in closing of the position. It is always connected to an open position or a pending order. The order can be requested only together with a market order or a pending order.
For example, EUR/USD is trading at 1.3000/1.3003. You enter a market order to buy the Euro at 1.3000. To assist in risk management, you can preset a limit order (Take Profit) where your position is automatically closed at that price. If you set your limit at 1.3050, when EUR/USD price reaches 1.3050/1.3053, you are taken out of the market with a profit of 50 pips. 1.3050 [close price] -1.3000 [entry price] = 0.0050.
A pending order is the client’s commitment to the brokerage company to buy or sell a security at a pre-defined price in the future. These types of orders are used for opening of a trade position provided the future quotes reach the pre-defined level.
There are four types of pending orders available:
Tradesto has instituted a Margin Call Policy to protect the customer from losing more money than he/she may have available in his/her account, whilst also protecting the interest of our company. Margin calls are executed when an account has less equity available than required to maintain the customer’s open positions. Margin calls are activated in real-time on an automatic basis, and occur when an account’s equity (liquidation value) reaches a level that is equivalent to 30% of used (open) margin. This 30% is known as the maintenance level. Using our company’s MT4 trading platform, positions are closed prior to the market having a chance to move further against a customer’s open trades.
For example, let’s assume you open an account with USD1, 000 and open five 10,000 unit lots (50,000 units) of USD/CHF using 100:1 (1%) leverage. As a result, 1% of 50,000 or USD500 will be set aside as used margin, and you will have USD500 remaining as usable margin. If the direction of the USD/CHF moves opposite your position, and your equity (liquidation value) reaches USD150 from the original USD1, 000 deposit, this would breach the 30% maintenance level. As a result, the position will be automatically closed in order to protect you from losing any more of your remaining balance, and possibly falling into negative territory.
The MetaTrader4 platform uses the following formula in calculating an account’s margin level: (Account Equity / Used Margin) x 100 = Margin Level %
In addition, two other safeguards are in place to protect both the customer and our Company alike. Once an account’s margin level falls to or below 100%, the customer will only be able to enter orders to hedge his/her current position(s). Furthermore, once an account’s margin level falls to or below 50%, the customer will not be able to enter any new positions. Instead, the customer will only be able to exit current position(s).
Our MetaTrader4 system may close any or all open positions in your account in the event that the account falls below the minimum required equity. Generally, when there are two or more open positions we reserve the right to close the position(s) first with the highest floating loss on a highly volatile market when the equity reaches 30% of used or open margin. In general, the largest positions are closed prior to the smaller positions. However, the MetaTrader4 system may close only the positions that carry the most risk. Even though the MetaTrader4 trading platform keeps track of used and free margin, it is always the customer’s responsibility to keep track of his/her account balance(s) at all times.
Our MT4 platform is designed to trigger Margin Call if your Margin Level falls to or below 30%. To prevent margin call you can fully hedge all positions in your account. Only an account that is fully hedged is 100% protected from incurring the Margin Call.
Therefore, if you are long (buy order) 1.5 lots on the EURUSD, to fully hedge this positions you would need to get short (sell order) 1.5 lots on the EURUSD.
Note in the above example, if you were to get short (sell order) 1.4 or 1.6 lots, you would not be fully hedged, but instead would be partially hedged. While partially hedged positions have less risk of triggering margin call, they are not 100% protected from it as are fully hedged positions.
Yes, you can trade oils (OILUSD), Metal (Silver, Gold, Palladium, Platinum and Copper) and major stock indices (S&P 500, Nikkei, Nasdaq and S&P/ASX).
An “Invalid Account” message usually indicates that you have logged in with incorrect MT4 credentials. Please make sure that you have entered the correct MT4 ID, password and have selected the correct server. If you are still unable to login to your MT4 platform, please kindly email to firstname.lastname@example.org from your registered email address and submit a request to reset your MT4 password.
Due to the implementation of some of our newest CFD’s, you will notice some “duplicate” greyed out symbols in your market watch window. These symbols do not affect your trading account in any way and can be disregarded. Due to the limitations of the MT4 Trading Platform, we are unable to hide these symbols from your account on your behalf. These symbols are needed for the calculation of accounts in deposit currencies other than USD. To hide these symbols from your account manually, right-click on the greyed out symbol and select hide
Tradesto Account (19)
For complete information about Tradesto account please visit Open a Live Account.
We have a few account types that you could choose from. We have Standard Account, MAM Account, Islamic Account, ECN Account, Joint Account and Corporate Account.
At this time we are currently not accepting clients from the following Countries:
Afghanistan, Belarus, Burma, Canada, Cuba, Democratic Republic of Congo, Egypt, Eritrea, Haiti, Iran, Iraq, Ivory Coast, Lebanon, Liberia, Libya, Democratic People’s Republic of Korea (North Korea), Republic of Guinea, Republic of Guinea – Bissau, Sierra Leone, Somalia, Sudan, Syria, Tunisia, USA and Zimbabwe.
All of our accounts have the same minimum funding requirement of USD100.00 or equivalent.
New account approval process usually takes about one business day, provided that the KYC (Know Your Customer) documents are in compliance.
Usernames must have 3 to 32 characters. Usernames can only accept a to z, A to Z, numbers (0 – 9), and underscore (_). No spaces. No symbols. No special characters.
The password needs to be 4-32 characters, A-Z, a-z, 0-9 and underscore (_) only and must include at least one letter and one number. Password is also case sensitive.
Username must be unique to your account. You can only have one account per username. You can have as many accounts as you want but they must be under different usernames.
Yes, hedging is allowed.
Yes, scalpers are allowed.
Each DEMO Account is valid as long as there are active trades*. Click here to open a free DEMO account.
To open a live account, click here. It is then just a few simple steps to follow:
KYC is an acronym for “Know your Customer”, a term used for customer identification process. You will need to provide two sets of documents as Proof of Identification and Proof of Residence.
They are as per below:
Once the document has been approved, you are well on your way to provide funding and start trading. Click here to upload your KYC documents.
Click here to open a DEMO account and our registration form will prompt you to enter the required information. Upon submitting your DEMO Account registration, you will receive a welcome email providing you with a link to download our trading software (MT4 Platform). Once you have downloaded the application, you will need to supply some additional information, and you will then be ready to start trading.
The spreads should be identical in both DEMO and Live Accounts. It is impossible, however, to make execution for both the DEMO and Live Accounts identical. The reason for this is that a DEMO Account assumes that all markets are 100% liquid at all times. This is not how the live market works. During volatile market periods, i.e. US Non-Farm Payrolls, etc., there are times when the interbank is illiquid. This means that if you’re trying to execute a trade at 1.3001, and there is no bank that is willing to deal at that price, you will receive the next best possible price. This is the true definition of slippage or re-quotes.
Tradesto differentiates itself from its competitors by offering superior liquidity, thus offering you the best opportunity to be executed at the price you are seeking. A Tradesto client should expect instant execution of his / her order majority of the time, but should also expect the occasional slippage or re-quote during volatile market conditions. The true litmus test of a brokerage firm’s execution, though, is not only how often the client experiences slippage, but how severe the slippage is. We cordially invite you to experience trading with us to see how we excel in both of these facets.
We host DEMO Accounts and Live Accounts on different servers so that clients can test out trading methods and EAs on DEMO servers without affecting the performance and integrity of our Live servers.
You must first contact your manager and request them to stop trading your account and to liquidate all positions. Once this is done, either you or the manager will need to contact us. It is important to remember that we can only remove your account from the manager’s Power of Attorney (POA) and turn it into a self-directed account only after the manager has liquidated all positions.
By registering for our Tradesto ECN Account you AGREE to have a USD10 commission deducted from your account in real-time for the equivalent of every standard lot traded and a mini lot (0.10) will be charged approximately USD1. This commission is deducted at the time you exit the trade and is non-refundable.
a currency is said to “appreciate” when it’s price increases against a specific currency or group of currencies in response to market demand.
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.
jargon used by dealers 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 price.
the rate at which a financial instrument if offered for sale (as in bid/ask spread).
division of funds among different markets, instruments or investments to diversify risk and/or create exposure to areas considered attractive, consistent with an investor’s objectives.
the departments and processes related to the settlement of financial transactions.
Balance of Trade
the value of a country’s exports minus its imports.
the base currency is usually the currency in which an investor or issuer maintains its book of accounts. In the Forex 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 main exceptions to this rule are the Sterling, the Euro and the Australian Dollar.
a market in which prices decline.
the rate at which a trader is willing to buy a currency.
the difference between the bid and offer price, and the most widely used measure of liquidity.
the first few digits of an exchange rate, as referred to by dealers for simplicity. These digits change relatively slowly, and are omitted in dealer quotes, especially in times of high market activity when time is tight. For example, a USD/JPY rate might be 107.30/107.35, but would be quoted verbally without the first three digits i.e. “30/35”.
in a professional trading environment, the “book” is the net positions of a dealing desk.
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
Bretton Woods Agreement of 1944
the 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.
a market in which prices rise.
trader slang referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800s.
a chart indicating the trading range for the period 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.
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.
someone who uses charts and graphs and interprets historical data to find trends to predict future movements. Also referred to as Technical Trader.
unethical practice employed by some brokers to increase their commissions by excessively trading in a client’s account. It is also referred to as “churn and burn”, “twisting” and “overtrading”.
the process of settling a trade.
the tendency of an economic situation to spread from one market to another.
something given to secure a loan or as a guarantee of performance.
a transaction fee charged by a broker.
a document exchanged by the parties to a transaction that states the terms of said transaction.
the standard unit of trading.
participant in a financial transaction.
risk associated with an international transaction, including but not limited to legal and political conditions.
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.
form of money issued by a government or central bank and used as legal tender and a basis for trade.
the likelihood of an adverse change in exchange rates.
refers to taking positions which are opened and closed on the same trading day.
someone who acts as a principal or counterparty to a transaction, hoping to earn a spread (profit) by closing out the position in a subsequent trade. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.
a Forex trade where both sides make and take actual delivery of the currencies traded.
fall in the value of a currency against another currency or group of currencies.
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.
deliberate downward adjustment of a currency’s price, normally by official announcement.
a government-issued statistic on the state of an economy, which might affect market prices. 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.
in a margin account, it’s an accounting equation, which defines the amount currently held in a customer’s account calculated as if all the opened positions will be closed at the current market quotes. It’s usually calculated as the account balance plus unrealized gains and minus unrealized losses.
European Monetary Union (EMU)
EMU created the single European currency called the Euro, which replaced the national currencies of the member EU countries in 2002. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.
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.
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.
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)
simultaneous buying of one currency and selling of another.
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.
the pips added to or subtracted from the current exchange rate to calculate a forward price.
analysis of economic and political information with the objective of determining future movements in a financial market.
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 Till Cancelled Order (GTC)
an order to buy or sell at a specified price. This order remains open until filled or until the client cancels.
a position or combination of positions that reduces the risk of your primary position.
an economic condition whereby prices for consumer goods rise, eroding purchasing power.
the initial deposit of collateral required to enter into a position as a guarantee on future performance.
the Foreign Exchange rates at which large international banks quote other large international banks.
statistics that are considered to predict future economic activity.
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/JPY is 102.00/05, then a limit order to buy USD would be at a price below 102. (i.e. 101.50)
the ability of a market to accept large transaction with minimal to no impact on price stability.
the closing of an existing position through the execution of an offsetting transaction.
a position that appreciates in value if market prices increase.
the required equity that an investor must deposit to collateralize a position.
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.
a dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.
exposure to changes in market prices.
process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.
the date for settlement or expiry of a financial instrument.
the rate at which a dealer is willing to sell a currency.
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.
an order that will be executed when a market moves to its designated price. Normally associated with Good Till Cancelled Orders.
a deal not yet reversed or settled with a physical payment.
Over the Counter (OTC)
asked to describe any transaction that is not conducted over an exchange.
a trade that remains open until the next business day.
digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.
exposure to changes in governmental policy which will have an adverse effect on an investor’s position.
the netted total holdings of a given currency.
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.
the price of one currency in terms of another, typically used for dealing purposes.
a term used in technical analysis indicating a specific price level at which analysis concludes people will sell.
an increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.
exposure to uncertain change, most often used with a negative connotation of adverse change.
the employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.
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.
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.
an investment position that benefits from a decline in market price.
the current market price. Settlement of spot transactions usually occurs within two business days.
the difference between the bid and offer prices.
slang for British Pound.
Stop Loss 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.
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.
The forex swap is an investment strategy that is a combination purchase and sale of the same amount of one currency, while purchasing a different currency that carries two different value dates. This essentially creates a situation in which the investor offsets the sale with the purchase, and also positions the investor to earn a return in both a short and a long position. A forex swap is not the same as a currency trade, which is a simple exchange of currencies based on the current performance of one currency against the other.
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.
the cost of buying or selling a financial instrument
the date on which a trade occurs.
the total money value of all executed transactions in a given time period; volume.
when both a bid and offer rate is quoted for a Forex transaction.
new price quote at a price higher than the preceding quote.
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.
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.
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.
slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.
slang for a billion.