Forex Glossary

Traders, especially beginners, may not know or understand some Forex terms, so we provide our users with a list of specialized terms with their definitions.

En TermEn Description
Currency intervention

is a significant one-time and direct central bank’s intervention in the currency market and the currency rate implemented by means of buying and selling of large amount of foreign currency. Currency intervention is used to regulate the course of foreign currencies in the interest of the government

Demo account (Demonstration account)

is a virtual trading account rendered by a broker to review and test the trading systems features on financial markets without the risk of losing real funds. As a rule, the demo account interface is similar to that of a live account.

Diversification

is the distribution of invested or loanable money assets among different investments with the purpose of smoothing out potential losses.

Divergence

is the difference between two correlative instruments. For instance, intermarket divergence happens when one of the markets reaches cyclical/session/history price extremes (highs or lows) when the correlated market does not do so. Divergence quite often signifies a price reversal; (it) is used by traders as a trading signal

Double bottom

is a classic pattern of technical analysis where the price reaches two consecutive lows placed at the same level; it signifies a reversal

Double top

is a classic pattern of technical analysis used to depict two consecutive price rises placed at the same level; it signifies a reversal

False breakout

is a short-term price movement beyond a certain conventional line (physiological threshold, resistance level/support level) with further reversal and movement in the opposite direction.

Flat

is the situation on the currency market characterized by the absence of an uptrend or downtrend; also known as non-trend or sideways movement

Forex indicator

is a software-based analytical tool that can be used to receive and visualize additional information (or information transformed into more understandable format) about the price chart

Gap

is a break between prices which may happen as a result of sharp fluctuations on the market or during the weekends (between the closing price of one week and opening price of the other)

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