Brokerage Slang – Understand Your Broker Easily
When you start investing, there are certain investment terms you should learn and know. Different markets have a language of their own, and within that language, forex has its particular dialect.
As you start engaging in the futures markets, you will find that brokers, traders, and entities in the futures/commodities business have certain “speak.”
It is similar to the military, where interesting and specific terms for everything are the standard. On the other side, the stock market for beginners also has its own language that could confuse a novice.
Specific market terms are difficult to understand at first, but we need them to interconnect with other traders.
In terms of understanding the long and short of financing, most beginning investors must pick up what seems like a new language.
In fact, the phrase “the long and the short of it” started in financial markets.
How to Cope with The Brokerage Lingo
In this article, we will discuss several key terms that will help you improve your comprehension to communicate well with other market participants.
The terms you will see are used in the equities, derivatives, futures, commodities, and mostly forex (or currency) markets.
You will determine what buying, selling, and shorting really signifies to investors. We will also explain how they serve certain terms interchangeably with more confusing words like bullish and bearish.
Options traders add-in are other limited terms such as “writing a contract” or “selling a contract.”
When you start to communicate about the markets more easily, you will be well-versed and can make insightful investment decisions.
Understanding Forex Exchange
First of all, what is forex trading?
The foreign exchange (also known as FX or forex) market is a global marketplace for exchanging national currencies. It is also the conversion of one currency into another. Lastly, it is one of the most active trading markets in the world.
Forex Trading Jargon
It’s important to educate yourself before you recognize any type of investment or investment approach.
This forex for beginner’s guide will let you have a starting point and will walk you through several developments.
Below are some of the comprehensive commonly used in forex terminology listed in alphabetical order:
The main Australian stock index.
The Australian Dollar – (or a person that speaks with an interesting accent)
A buy order to be found at or below the market.
The French stock index, the CAC 40.
- Candle / Candlestick
A technique of monitoring price action.
- Custody Bank
A bank that grips securities in custody for other financial institutions organizes their bookkeeping and settles their trading activity.
German stock index, the DAX 30.
An account related to monetary policy which suggests looser policy (lower rates).
The European Central Bank.
An Exchange Traded Fund (the BOJ has bought ETFs as part of its APP easing program).
A Eurodollar denotes to a US dollar on deposit at banks outside the US. Similarly, Eurodollar futures are a very well-known interest-rate futures contract.
The Federal Reserve Bank, the central bank for the United States.
- Fibonacci retracements
A convenient tool for traders as markets need to be accurate during trends. Technicians look for provision on pullbacks at 38.2% of the uptrend or rebounds in a downtrend, 50% and 61.8%.
To manage a contract on the bid price, i.e., to sell at the bid price, to whoever is bidding.
Interbank dealing usually refers to the direct production between banks with no broker intervening.
The New Zealand dollar, from the flightless kiwi bird, found only in New Zealand.
Nickname for the Canadian dollar. Derives from the picture of a Loon on the $1 coin.
The main Japanese stock index.
An order placed at or above the market price.
To handle a deal on the offered price, i.e., to buy at the offered price, to whoever is offering.
Reserve Bank of Australia.
The Reserve Bank of New Zealand, New Zealand’s central bank.
- Spot Market
In interbank, FX, the spot market, is the market for currencies to be distributed within a two-day period (or one day in the case of the USD/CAD and some others).
It is the space between a bid and an offer.
- Stop Loss
An order which closes out a market position once a confident price level trades in the market.
Always remember it is vital to understand forex jargon. This is for you to know what traders are thinking.
In addition, it will help you take advantage of fluctuations in the forex trading sentiment. You need to comprehend “trader talk” quickly to understand what FX traders may be doing.
Think of this, the next step a trader does is based on what they are saying and the language they are using most often.
By overcoming the language barrier, you also reached one of the vital keys to success. This happens in many cases, and not just in the financial industry.