BroCo glossary

A

Abnormal market conditions mean «thin market» or «rapid market»;

Accrual is the proportional apportionment of premiums and discounts on forward exchange transactions directly relating to deposit swap (see Arbitrage) deals , over the period of each deal.

Advisor — trading account management algorithm existing in the specialized Meta Quotes Language 4 software sending calls and instructions to the server via customer interface;

Arbitrage is the purchase or sale of a trading instrument and simultaneous opening of an equal and opposite position for the purpose of taking advantage of small price differentials between markets.

Ask is the higher quote price. Price for which Client can buy;

Assets are Client’s assets transferred to the Company’s operating account for its further crediting Client’s trading account;

B

Balance is a summarized financial result of all completed transactions and non–trading operations in the trading account;

Bar (candle) is chart element consisting of the opening and closing prices as well as the minimum and maximum prices for a specific period (one minute, 5 minutes, 24 hours, one week etc.);

Bar chart is the chart consisting of four key prices: the high and the low prices, which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line of the right of the bar.

Base currency is the first currency in the currency pair designation; it is used for selling or purchasing the quote currency;

Bid is the lower quote price. Price for which a Client can sell;

Big figure quote is the term of dealer’s language designating the first several digits of currency rate. When a dealer states the price usually he/she omits these figures. Examples: If the USD/JPY bid/ask is 115.27/32, the big figure is 115.

Blow–off is a steep and rapid increase in price followed by a steep and rapid drop in price.

Broker is an individual or company acting as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a 'dealer' is counterparty hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party;

C

Candlestick chart indicates the trading range for the day 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;

Chart is diagrammatic representation of historical quotes;

Cleared funds are freely available funds for trading;

Client terminal is Meta Trader 4.0 software program providing a Client with real–time information about auctions at the financial markets (in the volume defined by the Company), facility to conduct technical analyses of the markets, commit transactions, place/ change/ delete orders as well as with the facility to receive messages from the Company;

Closed Position is a position consisting of equal long and short positions on the same instrument;

Contract for difference is object of trading operations based on the base asset (i.e. assets used as the basis of the contract for difference) price, which can be a share futures, commodity, precious metal, stock index etc.;

Counter currency is the second listed currency in a currency pair;

Cross currency pairs or cross rate is a pair of currencies not including the U.S. dollar. For example: EUR/JPY or GBP/CHF;

Currency pair is traded instrument based on the change of the value of one currency against another currency;

Currency symbols:

AUD — Australian Dollar

CAD — Canadian Dollar

EUR — Euro

JPY — Japanese Yen

GBP — British Pound

CHF — Swiss Franc;

D

Day trader is a speculators opening positions in commodities which are then liquidated prior to the close of the same trading day;

Dealer is an individual or company acting as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party;

Devaluation is the deliberate downward adjustment of a currency's price, normally by official announcement;

Double bottom is a charting pattern used in technical analysis describing the drop of a stock (or index), a rebound, another drop to the same (or similar) level as the original drop, and finally another rebound;

Double top is a term used in technical analysis to describe the rise of a stock, a drop, another rise to the same level as the original rise, and finally another drop;

Downtrend describes the price movement of a financial asset when the overall direction is downward. A formal downtrend occurs when each successive peak and trough is lower than the ones found earlier in the trend;

E

Equity is current account status. Determined by the formula: balance + floating profit – floating loss;

F

First In First Out – FIFO — Open positions are closed according to the FIFO accounting rule. All positions opened within a particular currency pair are liquidated in the order in which they were originally opened;

Flat/square is a word of dealer’s language describing a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.

Flag or pennant – A continuation formed when there is a large movement in a stock, the flagpole, followed by a consolidation period with converging trendlines;

Floating profits/ losses — unrecorded profit/ losses upon open positions at current rate;

Floating stock exchange spread is the information about current Bid and Ask transmitted by indicative tool;

Forward is the pre–specified exchange rate for a foreign exchange contract settling;

Forward pointsare the pips added to or subtracted from the current exchange rate to calculate a forward price.

Free margin — funds in the trading account which can be used for taking new positions. Determined by formula: equity – margin;

Fundamental analysis is a kind of analysis of economic and political information with the objective of determining future movements in a financial market;

Futures contract is 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.

G

Going long is the purchase of a stock, commodity, or currency for investment or speculation;

Going short is the selling of a currency or instrument not owned by the seller;

GTC) GTC Order (Good Till Cancelled) is an order to purchase or sell at a set price. This order remains open until filled or until a Client cancels it;

H

Hedge is a position or combination of positions reducing the risk of your primary position;

Hedged margin is BroCo margin requirements for maintaining locked positions;

Hit the bid is acceptance of purchasing at the offer or selling at the bid.

I

Initial margin is monetary security required by dealer for taking positions. Set in relevant contract specifications for each tool;

Instruction is Client’s instruction to dealer for closing/ taking a position, removing/ replacing order;

Instrument is currency pair or contract for difference;

Instrument’s specification — main trading conditions (spread, size of lot, minimal volume of trading transaction, initial margin, margin for locked positions etc.) for every trading tool;

Interbank rates are the foreign exchange rates at which large international banks quote other large international banks;

L

Leverage is transaction size/ margin ratio; for example: 1:20, 1:40, 1:50, 1:100, 1:200 etc. A 1:100 leverage means that for the execution of the transaction the balance in Dealer’s trading account can be 100 times less than the amount of the transaction. For the accounts over $70 000 the maximum leverage provided by the Company is 1:33, for the accounts from $50 000 to $70 000 the leverage is 1:100 and for the accounts under $50000 – the leverage is 1:200; leverage is the ratio of the amount used in a transaction to the required security deposit.

LIBOR (London Inter–Bank Offered Rate) — Banks use LIBOR when borrowing from another bank;

Limit order is 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/YEN is 117.00/05, then a limit order to buy USD would be at a price below 102. (ie 116.50);

Log–file is the separate daily file located in the folder Metatrader 4 and used for recording all the requests of client terminal;;

Long position is the purchasing of a trading instrument with the expectation that the asset will arise in value. As applied to currency pairs: the buying of base currency for quote currency;

Lot is a transaction size unit; abstract designation for a set of shares, commodity, currency used by the trade platform;

M

Market execution is the method of providing Customer with quotations without a request when a Client watches real–time stream of quotations and send instructions for committing transactions according to these quotations at any moment of time;

Mark–to–market is re–evaluating all open positions according to the current market prices. These new values then determine margin requirements;

Margin call is a request from a broker for additional funds to guarantee fulfilling a position moved against Customer;

Mаrgin Level is ratio between equity and necessary margin expressed as percentage. Determined by the formula: (equity/margin)*100%;

Maturity is the date for settlement or expiry of a financial instrument;

N

Necessary margin is monetary security required by the Company for maintaining open positions. Set in relevant contract specifications for each instrument;

Net position is the amount of currency bought or sold which have not yet been offset by opposite transactions;

Non–market quotation is the quotation meeting every following requirement;

Normal market conditions mean market situation meeting any and all of the following conditions:

O

OCO (One Cancels the Other Order) is a designation for two orders whereby one part of the two orders is executed the other is automatically cancelled;

Open position — a contract for buying or selling an instrument which is valid in Customer’s account; it is the first part of a complete transaction and an obligation for making an equal counter transaction afterwards. Opening positions causes following obligations for a Client: to close position; to support Margin Level over 70%;

Opening market is recommencement of trading after weekend, holidays or break between trading sessions;

Order level is the price set in the order;

Order is Client’s instruction given to a dealer to open or close a position when the price reaches the level of order;

Oscillator — as the value of the oscillator approaches the upper extreme value the asset is deemed to be overbought, and as it approaches the lower extreme it is deemed to be oversold. Oscillators are most advantageous when a clear trend cannot be easily seen in a company's stock such as when it trades horizontally or sideways. The most common oscillators are: the Stochastic oscillator, RSI,  ROC and MFI. кривая темпа, которая колеблется вокруг нулевой линии (или между 0 и 100%);

OTC — (over the counter) – Used to describe any transaction that is not conducted over an exchange;

Overnight position – a transaction remaining open until the next business day;

P

Point is a minimum of the price change;

Price gap is any of the two situations below:

Profit/Loss, or P/L or Gain/Loss is the actual "realized" gain or loss resulting from trading activities on Closed Positions, plus the theoretical "unrealized" gain or loss on Open Positions that have been Mark–to–Market;

Protective stop is a strategy aiming to limit potential losses to a desired amount with the help of a stop–loss or stop–limit order. For example, a trader or investor may execute a protective stop by setting a stop–loss order for 10% below what he or she paid for the stock, therefore limiting the loss to 10%;

Q

Quotes is the information about current rate of a trading instrument expressed in Bid and Ask;

R

Rally means a recovery in price after a period of decline;

Rapid market is the state of the market characterized with rash movements of the currency rate for a short period of time; often brings price gaps;

Range means the difference between the highest and lowest price of a future recorded during a given trading session;

Rate

  1. with reference to a currency pair — base currency value in quote currency;

  2. with reference to CFDs: base asset unit price expressed in monetary value;


Relative Strength Index (RSI) – oscillator developed by W. Wilder, it is ratio between recent gains and recent losses for a certain period of time;

Retracement is a reversal in the movement of a stock's price, countering the prevailing trend, expressed in percentage;

Roll over is moving positions to the following delivery date. Expenses or incomes from this moving are determined by the difference in interest rates between the two currencies underlying a transaction;

Round trip means purchasing and selling of a specified amount of currency;

S

Short position is the sale of trading instrument with the expectation that the asset will fall in value; the result of the second part of a complete transaction;

Spot price is the current market price. Settlement of spot transactions usually occurs within two business days;

Spread is the difference between Ask and Bid price, evaluated in points;

Square means that purchase and sales are in balance and thus the dealer has no open position;

Stochastics oscillator are designed on the basis of prices’ feature to incline to upper (lower) boundary of price range when the market moves up/ down. Stochastics oscillators indicate how “bulls” or “bears” are capable to close the market near to upper or lower boundary of the range;

Stop loss orders are often used to minimize losses if the market moves against investor. For instance, if an investor takes a long USD position at 156.27, they might wish to put in a stop loss order for 155.49;

Stop out is server–generated instruction for compulsory closing of Customer’s open positions by BroCo;

Stream of quotations is subsequence of quotes for every tool entering the trading platform;

Support levels is the term of technical analysis indicating a specific price level at which market members start purchasing;

Swap is an amount of overnight adjustments paid or charged to Customer’s account at 23.59 in the platform time zone in accordance with values specified in contract details; it is a delay settlement for margin trading services;

T

Technical analysis is a kind of prognosis based upon analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.;

Thin market is the market situation when the quotes for a relatively extended period of time enter the platform more seldom than in the normal market conditions;

Tick is a minimal stock exchange fluctuation stated by the Stock Exchange Rules (for Forex market 1 tick is one point);

Ticker is unique ID assigned in the trade platform to each open item or pending order;

Tomorrow next (Tom/Next) is simultaneous purchasing and selling of a currency for delivering on the next day;

Trading account is a unique personalized account registered and conducted in the internal system of accountancy;

Trading platform is the package of software and technical means providing real–time information about auctions at the financial markets, committing trading transactions, maintaining reciprocal obligations of a Client and the Company, and also maintaining conditions and limitations. As simplified, for purposes of the present Rules, consist of the “Server” and “Client terminal”;

Trading range means the situation when prices are between horizontal levels of support and resistance;

Trading session – trading hours for CFD;

Trading transaction is purchase or sale by a Client of any trading instrument;

Trendline is a line on the price or value chart of a security depicting the general direction in which the security is headed.  This chart shows an example of an upward trendline;

Two–way price is simultaneous indication of selling and purchasing currency at Forex market;

U

Uptick is a new price quote at a price higher than the preceding quote;

Uptick rule is a compulsory regulation in the U.S.A., prohibiting investors to sell share unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed;

Uptrend is the price upward movement when a set of each successive peaks and troughs is formed;  

V

Variation margin mean the funds a broker must request from 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 is statistical measure of market's price movements within a certain period of time;

W

Weighted moving average shows the average value of a security's price over a set period;

Whipsaw – slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal;