Dictionary

Arbitrage

The simultaneous purchase and sale of identical or equivalent financial instruments or commodity futures in order to benefit from a discrepancy in their price relationship. Almost impossible in FX nowadays.

Aussy

nickname for AUD currency. "Aussy-jen" would be AUDJPY, "aussy-swiss" is AUDCHF, while "aussy-cable" is a total nonsense from newbies.

Bear Market

Bear is the one who believes prices will move lower. Therefore Bear Market is a market in which prices are declining.

Bull Market

Bull is the one who believes prices will go higher. Therefore Bull Market is a market in which prices are rising.

Cable

Traders jargon for GBPUSD currency pair. Refers to the first transatlantic telegraph cable, which allowed significantly reduce arbitrage between New York and London stock exchanges in the middle of XIXth century.

Choppy

No real trend. Market is erratic and usually controlled by speculators.

Dead cat bounce

Well you know, that if cat is dropped from a height it always manages to land on paws, jump and ran away. Rough traders refer to a situation where cat it dropped from such a height, that even this ability doesn't help to survive. In this case it bounces and lands forever. In technical analysis simply means that rally is temporary and the down trend will resume shortly. In stocks markets traders also use "fool's rally".

Dovish

A statement related to monetary policy which implies looser policy (lower rates).

Fade

to trade counter to. For instance, to “fade a trend” is to counter the trend. To fade a rumor is to believe it to be untrue and do the opposite of what the rumor would suggest.

Fibonacci retracements

A useful tool for traders as markets correct during trends. Technicians look for support on pullbacks at 38.2% of the uptrend or rebounds in an downtrend, 50% and 61.8%. Derived from the “golden ratio” of Italian mathematician Fibonacci

Head and Shoulders pattern

Candlestick or Bar pattern with three consecutive picks. Highest middle pick is called head, followed by low turning point at the same level or below previous low. The next lower pick signifies bull weakness, it completes the pattern if the neckline is broken down. Textbooks usually suggest, that following trend down will run at least for the same distance down as the height of the head. But in more liquid, "ideal" FX market it usually first retests the neckline from below before heading much lower to previous resistance levels.

Left-hand side (LHS)

Market slang used to describe expected flows at upcoming fixings. If there is a surplus of EUR/USD sell orders, market participants might say the market is looking “at the left hand side” of the quote, the bid, in order to sell.

Liquidity

The ease with which you can open or close a trade. The greater the volume of trading in a particular asset, the higher its liquidity

Offer

A sell order places at or above the market price

Old Lady

A nickname for the Bank of England. “The Old Lady of Threadneedle St.”

Pip

The minimum price movement in an asset recognised by the market

Quantitative Ease (QE)

A strategy used by central banks once targeting short-term interest rates becomes ineffective because rates have reached zero (or close to it). The central bank buys assets, typically government bonds, in an effort to inject money into the economy.

Rally

An upward movement of prices following a decline; the opposite of a reaction.

Sell-side

General term for all financial institutions, investment advisory companies, brokers, dealers, etc, who are interested in selling financial products and providing financial services.

Stop-loss (SL)

An order which closes out a market position once a certain price level trades in the market. For example, a sell order placed below the market price to protect against accelerating losses.