Forex Patterns and Probabilities: Trading Strategies for Trending and Range-Bound Markets

Glossary

appreciation When a currency increases in value in response to market demand, it is said to “appreciate.”

 

arbitrage The simultaneous taking of equal and opposite positions in related markets, in order to take advantage of price or interest rate differentials between markets.

 

ask The quoted price at which an investor can buy a currency pair. This is also known as the “offer” or “asking price.”

 

asset Any item having commercial or exchange value.

 

asset allocation Practice that divides funds among different investments to achieve diversification for risk management purposes.

 

balance of trade The value of a country’s exports minus its imports.

 

bar chart A type of chart that consists of four major price points: the high and the low prices, which form the vertical bar; the opening price, which is marked with a small horizontal line to the left of the bar; and the closing price, which is marked with a small horizontal line of the right of the bar.

 

base currency The first member of a currency pair is the base currency. The base currency is the currency against which exchange rates are quoted. Examples: USD/CHF, the U.S. dollar is the base currency; AUD/USD, the Australian dollar is the base currency.

 

bid The quoted price at which an investor can sell a currency pair. This is also known as the “bid price” or “bid rate”.

 

bretton woods The site of conference in 1944 that led to the establishment of the postwar foreign exchange system. The conference resulted in a fixed exchange ...