Appreciation: When it comes to forex, the term appreciation refers to an increase in the value of one currency in relationship with another.For a more in-depth explanation of exactly how appreciation works, click here.

Ask: Also referred to as the offer price, the asking price is the quoted price at which you can purchase an option.

Asset: Commonly called an underlying asset, this denotes the financial instrument on which a derivative’s price is based.

At the Money: This is a term used when the market price of an asset is presently trading at or has closed at the exact trading price.

Base Currency: The term refers to the first currency of a currency pair. It is the currency that remains fixed when determining a currency pair’s price. For more information on how currency pairs work, click here.

Bear Market: A term used to depict a circumstance in the financial markets where the prices of securities or assets are falling.

Bid: This refers to the price at which a trader is prepared and willing to sell a given security.

Bull Market: A term used to depict a circumstance in the financial markets where the prices of securities or assets are rising.

Cable: A term used in the forex market to denote the US Dollar/British Pound (USD/GBP) rate.

Call Option: This refers to an option which gives the holder the right to buy an underlying asset at a specified price during a specified period of time.

Candlestick Chart: A chart that illustrates the daily trading price range of assets.Click here for a more in-depth look at candlestick charts.

Currency: The unit of exchange of a country issued by their government or central bank. The value of a given currency is the basis for trade in the forex market.

Currency Pair: The pair formed by two distinct currencies which are traded in a forex transaction. For example, the Euro and the US Dollar in the EUR/USD currency pair. For more information on currency pairs, click here.

Day Trade: A trade which is opened and closed within a single day.

Dealer: This is a person or organization which acts as a principal, rather than agent, in the purchasing and/or selling of securities.

Delta: Also referred to as “hedge ratio,” this denotes the ratio comparing the change in price of an underlying asset to the corresponding change in the price of a derivative.

Depreciation: A circumstance where the value of a given currency falls.

Economic Indicator: This is a statistic which indicates present economic growth rates and trends such as employment rates and retail sales.

Exchange Rate: The rate at which one currency is valued against and can be changed for another. For more information on how exchange rate works.click here.

Expiry Time: The specific date and time at which an option expires.

Exotic Currency: A currency which is less traded than the major currencies like the US Dollar (USD) and the Euro (EUR). An example of an exotic currency is the Thai Baht (THB).

Fill Price: This refers to the price at which a buy or sell order is executed.

Fixed Exchange Rate: This denotes a situation where a country decides to peg the value of its currency to another country’s currency, gold or other commodity.

Fundamental Analysis: Also referred to as news trading, fundamental analysis is the study of economic factors such as Gross Domestic Product (GDP), trade balance and employment rates in order to determine how they influence prices in the financial markets. Learn more about fundamental analysis here.

FX Derivatives: AFX Derivatives is a type of financial option in which the outcome is structured upon on a fixed monetary return and pre-determined expiry time. For more information onFX Derivatives, click here.

Going Long/Short: The term “going long” refers to the purchasing of a currency pair. Conversely, the term “going short” refers to the selling of a currency pair.

Gross Domestic Product (GDP): The total value of a country’s output produced within its physical borders within a set period of time.

Head and Shoulders: This refers to a price trend pattern which has three peaks, giving it the appearance of a head with two shoulders on either side. Learn more about chart patterns here.

Hedge: This denotes the purchase or sale of options or futures contracts as a temporary replacement for a transaction to be made at a later date. Typically, this involves opposite positions in the cash, futures or options markets.

In the Money: A call option is in the money if the price of the underlying asset is greater than the strike price. Conversely, a put option is in the money if the price of the underlying asset is greater than the strike price.

Inflation: The continued rise in the general price level in conjunction with a related drop in purchasing power.

Investment Amount: The total amount of capital invested in a financial option.

Leverage: Leverage is offered by brokers to maximize traders’buying power by affording them the ability to deposit a small amount of funds and trade relatively larger volumes. Leverage is expressed as a ratio, so leverage of 1:100 means a trader’s buying power is magnified 100 times.

Liquidity: The ability of a market to accept large transactions without having any major impact on the interest rates.

Low Options: AFX Derivatives in which the trader believes the market price of an asset will expire below the present current market price at the present time.

Margin: This denotes the collateral that the holder of a position in forex, securities, options or futures contracts has to deposit to cover the credit risk of their counterparty.

Market Value: The market value of a forex position at a given time is the amount of the domestic currency that can be purchased at the present market in exchange for the amount of foreign currency to be delivered under the forex contract.

Open Position: This refers to a deal which has neither been settled by physical payment nor reversed by an equal and opposite deal for the identical value date.

Out of the Money: A put option is out of the money if the strike price is below the price of the underlying asset. Conversely, a call option is out of the money if the strike price is higher than the price of the underlying asset.

Return: This denotes the percentage of the original investment that the trader will receive if the investment is profitable.

Risk Management: The use of strategies to control or minimize financial risk. An example of risk management is a stop-loss order which reduces maximum loss.

Sell Limit Order: An order to execute a transaction only at a pre-determined price (the limit) or higher.

Short: A market position whereby the trader has sold a currency they do not already own. This is usually expressed in base currency terms.

Spread: This refers to the difference between the Ask and Bid price of a currency pair.

Stop Loss Order: An order placed to buy or sell a security or currency when a pre-determined price is reached. A stop loss order is placed to minimize loss on a position.

Take Profit Order: An order placed to close a position immediately once it hits a specified price.

Technical Analysis: Also referred to as technical trading, this refers to a trading tool employed to study securities and attempt to predict their future movement based on statistics gathered from trading activity such as total volume and price movement. Have an in-depth look at technical analysis here.