A

Account - The record of transactions, charges, credits and debits with or by the brokerage company in respect of Customer’s Foreign Currency transactions, which Customer now has or, at any time may have with the brokerage company or its successors or assigns, including Accounts from time to time closed and then reopened. In the event Customer maintains more than one account with the brokerage company, the term "Account" usually refers, in the aggregate, to all of Customer’s accounts with the brokerage company, including the demo and contest accounts, except where context dictates otherwise.

Account Balance - The sum of all deposits, interest income and Realized Gains less all withdrawals, Realized Losses and incidental fees.

Account History - Display log of all transactions made and closed in the brokerage company's Trading system.

Agreement - The Customer Agreement, including all Annexes thereto, and all documents and authorizations executed by Customer in connection with the maintenance of Customer’s Account (regardless of when such documents and authorizations are executed), as amended from time to time.

Ask (Offer) Price - Ask is the market selling price, the price at which the broker or the market is prepared to sell a specified Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can buy the base currency. In the quotation, it is shown on the right side of the quotation, for instance 1.4527-1.4532

B

Balance - The amount held in a customer’s account calculated for closed transactions (currently opened positions are not included). If there are no open positions, the Balance and Equity will be equal.

Base currency - The first currency in a Currency Pair. A currency against which the exchange rate is applied. Usually, it stands first in the codes of currency rates. It shows how much the base currency is worth against the second one. For instance, if the USD/CHF rate equals 1.6215, then one USD is worth CHF1.6215.

Base currency The first currency in a Currency Pair. A currency against which the exchange rate is applied. Usually, it stands first in the codes of currency rates. It shows how much the base currency is worth as measured against the second currency. For instance, if the USD/CHF rate equals 1.6215, then one USD is worth CHF1.6215.

Bid Price - Bid is the market buying price, the price at which the broker or the market is prepared to buy a specified Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can sell foreign exchange. It is shown in the left side of the quotation, for example:1.4527- 1.4532

Big Figure Quote - A currency rate without the last two digits. Examples: USD/JPY rate of 122.05/122.10, the big figure is 122. EUR/USD rate of 0.9325/0.9330, the big figure is 0.93.

Business Day - Any day on which commercial banks are open for business in the principal financial centers of the countries where Currencies are traded.

C

Cash Settled - The closing out of currency contracts with the exchange of cash based upon the difference in the value of when the position was opened and the value of when it is closed, rather than the delivery of currency.

Cleared Funds - Funds unencumbered and freely available, sent in to settle a Trade.

Closed Position - Exposures in Foreign Currencies that no longer exist. The process of closing a position is the selling or buying a certain amount of currency to offset an equal amount of open positions. This will "square" the open position.

Commission - The fee levied by an institution to undertake a trade.

Collateral - An asset pledged as security to ensure payment or performance of an obligation [see also paragraph 7 of Customer Agreement].

Confirmation - A notification sent by a dealer to the Customer describing the terms of a Trade.

Contract - An Over The Counter (OTC) agreement between the broker and Customer to buy or sell Currency.

Counter Currency - The second listed Currency in a Currency Pair.

Cross Currency Pairs - A foreign exchange transaction in which one Foreign Currency is traded against a second Foreign Currency.

Cross rate - An exchange rate between two non-US currencies.

Currency symbols:
AUD - Australian Dollar
CAD - Canadian Dollar
EUR - Euro
JPY - Japanese Yen
GBP - British Pound
CHF - Swiss Franc

Currency Trading - The act of exchanging the legal tender of one country for another.

Customer - The party that executes an Agreement with the Forex brokerage company.

Customer Account Application - The brokerage company Customer Account Application, including all applicable addenda thereto. The Customer Account Application is incorporated by reference into and constitutes an integral part of the Customer Agreement.

Currency Pair - The two currencies that make up a foreign exchange rate. IE: USD/CHF.

D

Daily Cut-off - The point in time for each Business Day selected by the brokerage company to signify the End of the Business Day.

Delivery Cut-off - The point in time that signifies the end of the Trade Date. The Trade Date of any Contract entered into after the Daily Cut-off shall be the next Business Day. The Daily Cut-off will occur at 5 p.m. Eastern time (2 p.m. Pacific time).

Dollar Value - The amount of lawful currency of the United States which at any moment in time would be generated by the conversion of the relevant Foreign Currency into U.S. Dollars at the brokerage company then prevailing exchange rates for buying or selling such Foreign Currency.

E

Eligible Collateral - Collateral deemed acceptable according to the provisions of the Customer Agreement.

Eligible Foreign Currencies - Those Foreign Currencies which the brokerage company, in its sole discretion, may agree from time to time to buy from or sell to its Customers.

Equity - The amount currently held in a customer’s account calculated as if all the opened positions will be closed at the current market quotes.The account is comprised of Unrealized gains, less Unrealized Losses and plus or minus storage.

Euro Zone - The group of twelve countries that have combined their currencies into a single currency (Euro). They still have separate sovereignties, but also have a combined central bank (ECB) which handles economic policy issues for them as one group.

Excess Margin Deposit - The amount of funds or Market Value of Collateral in excess of required Margin. Excess Margin Deposit can be maintained in a segregated non-interest bearing, or non-segregated interest bearing, FDIC insured account.

F

Fair Market Value - The price for a financial instrument that is determined in an open market environment between a willing buyer and seller.

Filled Trade - A trade that is fully executed on behalf of a Customer’s Account pursuant to an Order. Once filled, an Order cannot be cancelled, amended or waived by Customer.

Floating profit (loss) - Unrealized profit (loss) in an open position.

Free margin - Available funds in the client’s account not currently being used to support existing trading positions, which can be used to open new positions.

Foreign Currency - The legal tender issued by and acceptable for the payment of obligations under the laws of one or more countries, other than the United States of America.

Foreign Exchange Contract - A Spot Contract for the purchase or sale of a Foreign Currency.

Foreign Exchange Rate - the price relationships between two currencies that are freely determined by the forces of supply and demand.

Foreign Exchange Trading - Buying and selling Foreign currencies.

Fundamental Analysis - Analysis based on economic and political factors (see Technical Analysis).

G

Gross Basis - Open Positions, calculated without the benefit of any netting between Long and Short Positions.

"GTC Order" or "Good Till Cancelled Order" - A trade Order placed for a specific amount of time to buy or sell a foreign currency.

I

Initial Margin Requirement or Opening Margin Requirement - The minimum Margin required to establish a new Open Position.

L

Leverage - The ratio of the amount used in a transaction to the required security deposit (margin).

Limit Order - An order to buy or sell Foreign Currency, or pairs of Currencies, at a specified price or exchange rate. A Limit Order to buy generally will be executed when the ask price equals or falls below the price or exchange rate specified in the Limit Order. A Limit Order to sell generally will be executed when the bid price equals or exceeds the price or exchange rate specified in the Limit Order. Customers should note, however, that market conditions may often prevent execution of an individual Customer’s Limit Order despite other dealing activity at that price level.

Liquidating Order - An Order to close out one or more Open Positions.

Long Position - In foreign exchange trading, when the base currency in the pair is bought, the position is said to be long in that currency. It is understood that when the base currency in the pair is ’long’, the second currency will be ’short’.

Loss - Loss incurred as a result of a transaction.

Lot - A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

M

Maintenance Margin Requirement - The minimum Margin Balance necessary to maintain the Open Positions in a Customer’s Account. 

Margin - The amount of cash or other Eligible Collateral that the brokerage company requires a Customer to deposit or maintain in the Customer’s Account in connection with the Customer’s trading activity.

Margin Call - A demand for the deposit of additional Margin as described in Customer Agreement.

Market Order - An order to buy or sell the identified currency, or pairs of currencies, at the current market price. An order to buy is executed at the ask price; and order to sell is executed at the bid price.

Market Rate/Quote - The current quote of a currency pair.

Market Value - The Dollar Value, determined by the current foreign exchange rates that the Customer would receive if the position were liquidated for immediate delivery in the relevant market.

Mark to Market - The process of recalculating the value of the Open Positions in a Foreign Currency trading Account, assuming all Open Positions were liquidated at current market rates.

Maturity - The date on which payment of a financial obligation is due.

MetaQuotes Software - A popular Trading Platform offered by Forex brokerage companies to their customers to execute and manage trades.

N

Notice of Withdrawal - A request by Customer to withdraw funds from Customer’s Account.

O

Offer (ask) - See Ask (Offer) Price.

"One Cancels the Other Order" or "OCO Order." - Two Orders that are linked. If one Order is executed, the other is cancelled.

Open position - Any deal that has not been offset by an equal and opposite deal.

Overnight Position - Trader’s open long or short position that is not closed by the end of a trading day.

Opening Transaction - An order that, when executed, establishes a Long Position or Short Position, or increases an existing position.

Order - Generally, an instruction by a Customer (or Customer’s authorized agent) to the brokerage company to attempt to execute a trade for Customer’s Account.

Order Form - That part of Online Trading System that permits the Customer to request two-sided quotes, and execute trades by entering the currency pair to be traded. The order form also includes the number of lots, optional Stop Loss, Take Profit and Buy/Sell limits.

Over-the-Counter or "OTC" - Off-exchange markets in which market participants, such as the broker and Customer, enter into privately negotiated Contracts or other transactions directly with each other.

Overnight Position - Trader’s open long or short position that is not closed by the end of a trading day.

P

Pip/Point - The smallest unit of price for any Foreign Currency (e.g., for USD/CHF one point (or pip) equals .0001 Swiss Francs and for USD/JPY one point (or pip) equals 0.01 Japanese Yen).

Posted Margin - That part of the Margin Balance that is posted to the broker in support of the Customer’s Open Position and Unrealized Losses.

Profit / Loss or "P/L" or Gain/Loss - The actual gain or loss in U.S. Dollars resulting from trading activities on Closed Positions, plus the theoretical gain or loss on Open Positions that have been Marked to Market.

Q

Quote - A simultaneous bid and offer in a currency pair.

R

Realized Gain/Loss - The actual gain or loss resulting from closing an Open Position.

Required Margin - A sum equal to the greater of the Initial Margin Requirement or the Initial Margin Requirement less Unrealized Losses and storage, plus Unrealized Gains, provided it is not less than 30% of the Initial Margin Required.

Rollovers - The process of extending an existing market position through one or more Spot Settlements.

S

Short Margin - The client’s account condition when Equity becomes smaller than the amount required to keep the positions open.

Short position - Selling a currency in which you have no position in anticipation of it falling in value. At that point you will be able to "cover" your short by buying back the currency at a lower price. (If physical delivery of the currency is involved, the short seller will need to borrow the currency in order to make the delivery to the buyer). In foreign exchange, when the base currency in the pair is sold, the position is said to be short in that currency. It is understood that when the base currency in the pair is ’short’, the second currency will be ’long’.

Spot Contract - A Contract where settlement is in two Business Days.

Spot Rate - The rate of exchange between two Foreign Currencies for "Spot" value (normally settlement in two Business Days), generally quoted either in "U.S. Terms" (price of one unit of Foreign Currency expressed in U.S. Dollars and Cents) or in "European Terms" (price of one U.S. Dollar expressed in units and decimals of the Foreign Currency).

Spread - The difference between the ask (offer) and bid price in a market quote. The spread is the reason why a newly opened position’s mark to market, or valuation, will likely be negative. If a trader buys a particular currency she will pay the ask (offer) price, but the current mark to market will be based upon what the marketplace is presently paying for this currency. That price would be found on the bid side of the market quote, 5 pips lower than where she just bought the currency.

Stop/Loss Order - An order to buy or sell at a specified Foreign Exchange Rate away from the current market for the purpose of liquidating an Open Position during market conditions in which the Open Position has declined in value. Execution of such an order can occur at rates below (or above) the specified Foreign Exchange Rate.

Storage - The charge or recompense associated with a rollover.

T

Technical Analysis - Analysis of market price action. Technical analysis studies historical price changes with the aim to forecast future price movements. By studying price charts and a host of supporting technical indicators, we in effect let the market tell us which way it is most likely to trend. The whole purpose of charting the price action of a market is to identify trends in the early stages of their development and then trade in the direction of those trends. One of the two types of analysis used to analyze the currency market (see Fundamental Analysis).

Trade Date - with respect to any Contract, the date on which the Contract is entered into between the broker and Customer, except in the case of any Contract entered into after the Daily Cut-off following, but before the next relevant Business Day, in which case the Trade Date shall be the next following Business Day.

U

Unrealized Gain/Loss. - The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains/losses become Profits/Losses when position is closed.

Used Margin - The amount in the client’s account required to support all the current positions.

V

Value Date - With respect to any Contract, the applicable settlement date specified in the confirmation that relates to the particular Contract. A Value Date must fall on a Business Day in the countries of the traded currencies.