Glossary of trading terms
Factory orders are a common economic indicator, used to assess the dollar value of goods from factories. The data for factory orders are released in monthly reports by the US Census Bureau and are split into two major groupings: durable and non-durable goods. Each factory orders report includes new orders, unfilled order, shipments, and inventories.
The Federal Reserve System, referred to as the Federal Reserve or the Fed, is the United States of America’s central banking system.
On December 23, 1913, the Federal Reserve Act created the system after a series of financial shocks caused the need for central control of monetary policy to prevent future crises.
Refers to the price quotation of '00' in a price such as 00-03 (1.2600-03) and would be read as 'figure-three.' If someone sells at 1.2600, traders would say 'the figure was given' or 'the figure was hit’.
A filled order, of fill for short, is simply an executed order in the markets. It is an order that has had its parameters filled, whether it was an order to buy or sell an asset, to open or close a position. For example, if you were to create an order to buy a stock at $45, and your order is accepted, it would be said to have been ‘filled’ and $45 would be the ‘fill price’.
Fill or kill
A fill or kill (FOK) order is an instruction sent to a broker or directly to a trading venue that must be carried out immediately and in its entirety. If either of those stipulations cannot be met, the order is canceled. No partial or delayed execution of the order is allowed.
A financial analyst conducts financial analysis for external or internal clients. Their primary duty is to examine data to identify opportunities or evaluate outcomes for investment recommendations or business decisions.
In the financial services industry, analysts provide regular reports on forex, equity, commodity, and cryptocurrency markets to assist traders’ decision making.
A financial contract is a legally binding document between at least two parties that defines and governs the parties’ rights and responsibilities under the agreement.
A financial contract is legally enforceable when it meets the law’s requirements and approval. It usually involves exchanging money, goods, services, or promises to trade any of these products.
A financial liability is an obligation that a company or individual has to pay for or deliver. Examples include bank loans, leasing agreements, other payables, and interest-bearing financial liabilities.
Financial liabilities get classified into two main types based on the period they become payable: current liabilities and non-current liabilities.
Current liabilities are typically payable within 12 months from the time of receipt. Examples include salaries, monthly utilities, and rent due.
Non-current liabilities are due for payment after 12 months. For instance, if a debt is payable over 5 years, then the amount owed after one year would be classified under long-term liabilities.
First-In-First Out, also called FIFO, is an asset-management and valuation method where assets acquired or produced get used, sold, or disposed of first.
FIFO is often used for tax purposes. Assets with the oldest costs get included in the income statements for the cost of goods sold (COGS). The remaining inventory assets then become matched with assets that were recently purchased or produced.
One of approximately five times during the forex trading day when a large amount of currency must be bought or sold to fill a commercial customer’s orders. Typically, these times are associated with market volatility. The regular forex fixes are as follows (all times EST):
5:00am - Frankfurt
6:00am - London
10:00am - WMHCO (World Market House Company)
11:00am - WMHCO (World Market House Company) - more important
8:20am - IMM
8:15am - ECB
A flat market describes when the price for a certain security neither rises or falls for a significant time period. Flat markets can occur when there is low trading volume or when increasing price movements on some securities are offset by declining price movements of other securities in the same index.
In forex, a flat market occurs when a currency pair fails to move significantly up or down and does not contribute a significant loss or gain to the forex trading position.
Flat or square position
Dealer jargon used to describe a position that has been completely reversed, eg you bought $500,000 and then sold $500,000, thereby creating a neutral (flat) position.
Economic data readings matching the previous period's levels that are unchanged.
Fresh buying or selling interest after a directional break of a particular price level. The lack of follow-through usually indicates a directional move will not be sustained and may reverse.
FOMC minutes are a detailed record of the Federal Open Market Committee (FOMC) meetings and are released three weeks after every meeting. The minutes offer more concise insights on the monetary policy stances of all members of the committee and how individual members see the value of the USD and other securities.
Analysts comb through these minutes to determine if individual committee members are striking hawkish or dovish tones in their remarks, regardless of what tone the statement took weeks prior.
Forex, also known as foreign exchange or FX, is the conversion of one country's currency into another. It forms the basis of forex trading, one of the world’s most-traded asset classes.
A forward contract is a non-standardized type of derivative instrument. It’s an agreement between two parties to buy or sell an asset at a specified future time at a price agreed on at the time of the contract’s conclusion.
It differs from a futures contract, which is an agreement between parties to buy or sell the underlying financial asset at a specific rate and time in the future.
The party who agrees to buy the underlying asset at a future date assumes the long position, and the party deciding to sell the asset takes a short position. The price agreed is the delivery price, equal to the forward price when the contract is agreed.
The FRA40 is a benchmark index containing 40 of the biggest companies on the Euronext Paris exchange. It’s commonly referred to as the French 40. Most of the companies included are international, representing 35 different sectors.
The FTSE 100 is an index of the 100 companies with the highest market capitalisation on the London Stock Exchange. Although, many of the listed companies are international, making it a somewhat weak indicator of the UK economy.
A fund is an investment vehicle that enables people to pool their money together to invest in different securities like stocks, bonds, currencies, property, or commodities.
Funds might have different objectives; either to deliver a regular income or capital growth for the investor.
Fundamental analysis is involves using related economical and financial factors to determine the value of a security. Both macro and microeconomic factors are considered when performing fundamental analysis from the overall economic health of an industry or country to specific details pertaining to one company such as specific management decisions made by the company to its revenue and profit. Fundamental analysis can be used on a range of securities including indices and individual stocks, forex, and commodities.
A futures contract is a standardized legal agreement to buy or sell a product at a set price at a specified time in the future. The contracts are standardized for both quantity and quality and are traded through exchanges.