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Account Balance The sum of all deposits, interest income and realised gains minus all withdrawals, realised losses, and incidental fees.
Adjustable Peg Term for an exchange rate regime where a country's exchange rate is "pegged" (i.e. fixed) in relation to another currency, often the US dollar or euro, but where the rate may be changed from time to time. This was the basis of the Bretton Woods system.
Adjustment Official action, normally either by a change in the internal economic policies to correct a payment imbalance or the official currency rate.
Aggregate Demand Total demand for goods and services in the economy. Includes private and public sector demand for goods and services within the country and also the demand by consumers and firms in other countries for goods and services
Aggregate Risk Size of exposure of a bank or a financial institution to a single client or counterparty for both spot and forward contracts.
Aggregate Supply Total supply of goods and services in the economy from domestic sources (including imports) available to meet aggregate demand.
Arbitrage The simultaneous purchase and sale of a certain financial instrument on related markets in order to take advantage of small price differentials between markets.
Ask (Sell) Price This is the price at which a trader can buy a certain asset. It is shown on the right-hand side of the quote.
Assets An asset is a resource (financial or other) owned by an individual, company or country that has economic value or is expected to provide value in the future.
Balance In Forex & CFD trading, the amount held in a client’s account calculated for closed transactions (currently opened positions are not included). If there are no open positions, the balance and equity will be equal.
Balance of Payments A systematic record of the economic transactions between a country’s residents and non-residents during a certain period of time. The current account balance determines the exposure of a given economy to the rest of the world, while the capital and financial accounts explain how the economy is being financed.
The balance of payments shows the inflow and outflow of foreign currency to and from a country’s banking system. In cases of a negative balance of payments, or a deficit, there is a currency shortage and a reduction in the national money supply. This may result in high inflation, interest rate rise, currency exchange rate rise, etc. In cases of a positive balance of payments, there is a currency surplus and an increase in the local money supply, which may stimulate economic development, employment and so on
Base Currency The first currency in a currency pair. A currency against which the exchange rate is applied. It shows how much the base currency is worth as measured against the second currency. For instance, if the USD/CHF rate equals 1.6215, then one USD is worth 1.6215 CHF.
Basis Point A basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001.
Basket A group of currencies normally used to manage the exchange rate of a currency. Sometimes referred to as a unit of account.
Bear Someone who believes that the prices/market will decline.
Bear Market A market in which prices decline sharply against a background of widespread pessimism (opposite of Bull Market).
Bid (Buy) Price Bid is the market buying price, the price at which the market is prepared to buy a certain asset. At this price, the trader can sell the asset. It is shown at the left-hand side of the quote, for example: 1.4527-1.4532.
Bretton Woods Accord of 1944 An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and set the price of gold at 35 USD per ounce. The agreement lasted until 1971.
Broker An agent who handles investors' trades. Usually a commission is charged for the service, which, depending on the broker and the amount of the transaction, may or may not be negotiated.
Bull Someone who believes that the prices/market will rise.
Bull Market A market characterized by rising prices.
Cable Dealers' slang for the GBP/USD exchange rate.
Candlestick Chart A chart that indicates the trading range for a certain period. It is comprised of a so called candle body (the wider part) and shadows (the lines on top and bottom of the body). The body displays the opening and closing prices for the period. If the opening price is higher than the closing price, the body is red (or black). If the closing price is higher than the opening price, the body is green (or red). The shadows are located at the top and bottom of the body and display the highest and lowest price levels for the period.
Cash Market The market for the purchase and sale of physical currencies.
Cash Settled The closing out of contracts in financial instruments by exchanging cash funds, based on the difference in the position’s opening and closing values, rather than the delivery of the asset.
Central Bank A government or quasi-governmental organization that manages a country’s monetary policy. The US central bank is the Federal Reserve, and the German central bank is the Bundesbank.
Central Rate The interest rate set by each of the European member states using the euro as a currency. Because the economies of the member states influence the value of the euro, the central rate for each member must fall within a set range..
Cleared Funds Funds that are freely available for withdrawal or trading.
Clearing The process of settling a trade.
Closed Position Exposures in a financial instrument that no longer exist. The process of closing a position is the selling or buying of a certain amount of financial instruments to offset an equal amount of open positions. This will "square" the open position.
Commission The fee levied by an institution to undertake a trade.
Collateral An asset pledged as security to ensure payment or performance of an obligation.
Contract for Difference (CFD) An agreement between two parties to exchange the difference between the current value of an asset and its value at the buy/sell time. It is a product which allows you realise profit or loss from the price movements of financial instruments, without actually owning them
Convertible Currency Currency which can be freely exchanged for other currencies or gold without special authorization from the appropriate central bank.
Cross Currency Pairs Currency crosses, also known as cross currency pairs or "crosses," are pairs of currencies traded on the Forex market, which don't include the US dollar.
Cross rate An exchange rate between two non-US currencies.
Currency Option A contract which gives the right, but not the obligation, to buy or sell a certain currency at a specified exchange rate during a specified period.
Currency Pair The two currencies that make up a foreign exchange rate, i.e. USD/CHF.
Currency Swap A contract which commits two counter-parties to exchange streams of interest payments in different currencies for an agreed period of time and to exchange principal amounts in different currencies at a pre-agreed exchange rate at maturity.
Day Trader A speculator who takes positions that are then liquidated prior to the close of the same trading day.
Day Trading Refers to opening and closing the same position or positions within one day's trading.
Dealer An individual or a company that acts as a principal or counterparty to a transaction. By contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or a commission.
Demo Trading System Free interactive online demonstration sub-system of an actual trading system.
Derivative A contract whose value depends upon or is derived from the price of one or more underlying assets, such as securities, futures or other physical instruments.
Easing A modest decline in price.
Economic Indicator A statistical benchmark that measures the current economic conditions in order to forecast the growth rates of certain economic sector or the economy of a country as a whole. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.
EMS Abbreviation for European Monetary System, an agreement between EU member states to maintain an alignment between the exchange rates of their respective currencies
Equity The amount currently held in a client’s account calculated as if all open positions were closed at the current market quotes. The account is comprised of unrealised gains, minus unrealised losses and plus/minus storage
Euro The official currency of the European Union's (EU) member states. It was introduced in 1999 and physical euro coins and paper notes were introduced in 2002.
Eurozone The group of 19 of the 28 EU member states that have combined their currencies into a single currency (euro). They still have separate sovereignties, but also have a combined central bank (ECB) which handles economic policy issues for them as one group.
Execution In trading: the fulfillment by a broker of a Buy or Sell order on behalf of a trader
Exotic Currency Pair A less broadly traded currency pair.
Expiry (Expiration) Date Date on which a contract will be expired and will no longer be tradable. In CFD trading, most often used for futures contracts.
Exposure Any claim, liability or financial asset that is considered as bearer of market risk.
Extended Hours Trading Trading that takes place outside of the regular trading hours of an exchange: either before (Pre-Market) or after (After-Hours). Usually such trading is limited in its volume compared to regular trading hours.
Fair Market Value The price for a financial instrument that is determined in an open market environment between a willing buyer and seller.
Fast Market Rapid movement in a market caused by strong interest from buyers and/or sellers. In such circumstances, price levels may be omitted and bid and offer quotes may occur too rapidly to be fully reported.
Fed Funds Rate The interest rate at which a depository institution (i.e. a bank) lends funds maintained at the Federal Reserve to another depository institution overnight. This is a closely watched short-term interest rate as it signals the Fed's view about the state of the money supply.
Federal Open Market Committee (FOMC) The branch of the Fed that determines the direction of US monetary policy: adjusting the discount rate, setting bank reserve requirements, money supply targets, etc.
Federal Reserve (Fed) The Central Bank of the United States.
Fill or Kill (FOK) An order which must be executed immediately and completely, or it must be cancelled
Filled Trade A trade that is fully executed on behalf and on the account of a client’s pursuant to an order placed by the client. Once filled, an order cannot be cancelled, amended or waived by the client.
Fixed Exchange Rate A term describing the exchange rate regime under which the exchange rate of a country’s currency is not determined by supply and demand but is ‘pegged’ (fixed) by authorities to another currency or basket of currencies.
Flat/Square A foreign exchange term describing a situation when you are neither long nor short in a given currency. To be flat, or square, would mean that you have no open positions or all the positions “net” each other out
Floating Exchange Rate An exchange rate where the value of the currency is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent, the float is known as a dirty float.
Floating Interest Rate An interest rate that fluctuates in-line with market conditions over the duration of the loan term. One example of a floating interest rate would be a standard mortgage interest rate, as opposed to a fixed interest rate, which remains constant for the duration of the obligation.
Floating Profit/loss See Unrealised Profit/loss
Foreign Currency The legal tender (money) of another country. A foreign currency account is an account in the currency of another country (e.g. a US dollar account in the UK).
Foreign Exchange (Forex or FX) The simultaneous buying of one currency and selling of another in an Over-the-Counter market.
Foreign Exchange (Forex) Contract A spot contract for the purchase or sale of a foreign currency.
Foreign Exchange Rate The price relationship between two currencies that is freely determined by the forces of supply and demand.
Foreign Exchange Swap A transaction between two parties, where future cash flows denominated in different currencies are exchanged with one another. The first party to the transaction simultaneously borrows one currency and lends another currency to a second party.
Forward A contract to buy or sell a certain amount of foreign currency on a future date, or after a certain period of time, at a predetermined exchange rate. Delivery of the currency is made on the contract maturity date.
Free Margin Available funds in the client’s account that are not currently used to support existing open positions, which can be used to open new positions
Fundamental Analysis Analysis based on economic and political data with the goal of determining future movements in a financial market.
Fundamentals The macroeconomic factors that are accepted as forming the foundation for the relative value of a currency; these include inflation, growth, trade balance, trade deficit, and interest rates.
Futures Contract An obligation to buy or sell a commodity or a financial instrument at a set price on a future date. The primary difference between a futures and a forward contract is that futures are typically traded over an exchange (Exchange-Traded Contracts – ETC), while forward are considered Over-the-Counter (OTC) contracts – i.e. they are NOT traded on an exchange. Futures, unlike forwards, have standardised parameters, such as volume and term of the contract, type of settlement etc
Gold Standard A fixed monetary regime where the national currency is fixed to the price of gold and can be freely converted into it.
Gross Basis Open positions, calculated without the benefit of any netting between long and short positions.
GTC (Good Till Cancelled) Order An order to buy or sell a financial asset at a fixed price. The order remains in place until it is cancelled by the client.
Hard currency A currency whose value is expected to remain stable or increase in terms of other currencies.
Hedging The practice of undertaking one investment activity in order to protect against loss in another investment activity, e.g. short-selling to nullify a previous purchase, or buying long to offset a previous short sale. While hedging reduces potential losses, it also tends to reduce potential profits.
High/Low Usually the highest and the lowest traded prices of the underlying instrument over a predefined time period.
Initial Margin Requirement, or Opening Margin Requirement The percentage of the price of a financial instrument that the client has to cover with their own money in order to open a position in that instrument.
Interbank Rates The interest rates which large international banks charge other large international banks on short-term loans.
Interest Rate Swap An agreement between two parties under which one party makes floating interest rate payments to the other party, for which it receives fixed interest rate payments, calculated on a predetermined principal. The principal on which the cash flows are calculated is not exchanged between the parties.
Intervention Action by a central bank to affect the value of its national currency. Concerted intervention refers to action by a number of central banks to control exchange rates
IPO (Initial Public Offering) When a private company first offers shares to the public on a stock exchange. Also known as ‘floating’ or ‘going public’.
Kiwi Slang for the New Zealand dollar.
Leverage The ratio of the amount used in a transaction to the amount of the required security deposit (margin).
Liability A financial debt, obligation, or a potential loss.
LIBOR The London Interbank Offered Rate is the average of interest rates that some of the world’s leading banks charge each other for short-term loans
Limit Order A Limit order is pending order that is executed as a Market order once a predetermined price level is reached. A Limit order can open a new position (Limit entry order) or close an existing one – at a predetermined price or better (Limit-Take Profit order). Limit buy levels are set below the market price, while sell levels are set above it. So Limit entry orders are usually placed if one anticipates that the market price, having risen or fallen to a certain level, will reverse its direction and decrease or, respectively, increase. When attached to an open position, a Limit-Take Profit can be used to lock in profits if the price starts moving in a favourable direction: the trade will be automatically closed if the instrument’s price reaches or breaks through the predetermined level.
Liquidity The ability of a market to accept large transaction with minimal to no impact on price stability.
Long Position A long position is the buying of a certain financial instrument with the expectation that its value will rise.
Lot A standardised quantity of financial instruments. It usually represents the minimum order size. In Forex trading, a standard lot is equal to 100,000 units of the base currency (the first currency in an FX pair). In the Delta Trading platform, 1 lot equals 1,000 units of the base currency – microlot.
Maintenance Margin Requirement The minimum margin balance necessary to maintain the client’s open positions.
Margin "Margin" literally means a difference, or reserve. In this sense, margin trading is trading using a security deposit of money (which serves as collateral and is held in the client’s trading account). The margin is defined as a percentage of the total value of the trade; for example, a 1% margin of a $1,000 position is $10.
Margin Call A demand by the broker to the client for the deposit of additional funds in their account in order to maintain the minimum margin requirements set by the broker. A client will receive a Margin call when the funds in their account fall below the value set by the broker.
Market Maker A dealer or a brokerage that supplies prices and is prepared to buy or sell at those stated prices.
Market Order An order to buy or sell financial instruments at the current market prices. An order to buy is executed at the ask price; an order to sell is executed at the bid price.
Market Rate/Quote The current price of a financial instrument.
Market Value The value of a financial asset determined at the current market prices that the client would receive if the position were immediately closed.
Maturity The date on which payment of a financial obligation is due.
Net Position The total value of all open positions combined.
Offer (Sell) See Ask Price
One Cancels the Other Order (OCO) Order Two pending orders, a Limit and Stop, that are submitted simultaneously. The execution of either one of them automatically cancels the other.
Open position Any deal that has not been closed with an equal and opposite deal.
Opening Trade The initial trade to enter the market, which involves the buying (long position) or selling (short position) of a financial asset.
Order An instruction by a client to their broker to buy or sell a financial asset. Typically, orders are placed online or over the phone.
Overnight Position An open position that is not closed by the end of a trading day and is held overnight.
Overnight Trading The purchase or sale of financial assets between the hours of 9:00 p.m. and 8:00 a.m. on the following day.
Over-the-Counter (OTC) Market An off-exchange market, without a physical location, where market participants, such as Deltastock and the client, enter into trades directly with one another through various electronic trading systems.
Parity When 1 unit of the base currency in a currency pair is equal to 1 unit of the quote currency.
Pip The smallest move in the quote of a currency pair. One pip equals 0.0001 of the quote currency, with the exception of currency pairs, featuring the Japanese yen, such as USD/JPY, where one pip equals 0.01 Japanese yen.
Political Risk The uncertainty in return on an investment due to the possibility that a government might take actions that are detrimental to the investor's interests.
Profit Taking The closing of a position in order to realise profits.
Price Transparency Information on the order flow, various price levels and the quantities being offered for a certain financial instrument, to which every market participant has equal access.
Quote The last price at which a financial asset was traded; or the most recent price on which a buyer and a seller have agreed to transact the asset. The bid or ask quotes are the most current prices at which an asset could be bought or sold.
Quote (Counter) Currency The second currency in a currency pair.
Realised Profit/Loss The result from all positions that have already been closed. The realised profit/loss is deposited into the client’s trading account.
Required Margin A sum equal to or greater than the Initial Margin Requirement minus unrealised losses, plus unrealised profits, provided the sum is not less than 30% of the initial margin required.
Resistance Level A price level above which it is supposedly difficult for a market price to rise.
Resistance/Support Levels Resistance and support levels are distinguished for their ability to limit the appreciation/depreciation of a certain asset. The most-commonly used technical tools for determining resistance/support levels include: prior tops/bottoms, trend lines and trend channels, Moving Averages and Fibonacci Retracements.
Risk Capital The amount of money that an individual could afford to invest, which, if lost, would not affect their lifestyle.
Risk Management The identification, analysis and acceptance or offsetting of the risks threatening profitability. With respect to foreign exchange, it involves, among other considerations, market, sovereign, country, transfer, delivery, credit, and counterparty risk.
Risk Position An asset or liability that is exposed to fluctuations in value through changes in exchange rates or interest rates.
Settlement Actual physical exchange of one currency for another.
Settlement date The date by which an executed order must be settled by the physical transfer of financial instruments or currencies and funds between buyer and seller.
Short Position A short position is the selling of a certain financial instrument with the expectation its value will fall.
Slippage When the price at which an order is executed is different to the price at which it was placed.
Spot Contract A contract where settlement is in two business days.
Spot Rate The spot rate, also called “spot price,” is the value of an asset at the moment of the quote.
Spread The difference between the buy and sell prices in a market quote.
Stop/Loss Order A Stop order is pending order that is executed as a Market order once a predetermined price level is reached. A Stop order can open a new position (Stop entry order) or close an existing one – at a predetermined price or worse (Stop-Loss order). Stop buy levels are set above the market price, while sell levels are set below it. So Stop entry orders are usually placed if one anticipates that the market price will keep its direction after reaching a certain level. When attached to an open position, a Stop-Loss can be used for restricting your losses: if the market starts moving against you, the trade will be automatically closed at your predetermined level.
Support levels When an exchange rate depreciates or appreciates to a level where (1) Technical analysis techniques suggest that the currency will rebound, or not go below; (2) the monetary authorities intervene to stop any further downward movement.
Swap Price A price as a differential between two dates of the swap.
Swap See Currency Swap
Swissy Slang for the Swiss franc.
Technical Analysis Analysis of market price action. Technical analysis studies historical price changes with the aim to forecast their future movements. By studying price charts and a host of supporting technical indicators, technical analysts in effect let the market tell them how it is most likely to behave. The whole purpose of charting the price action of a market is to identify trends in the early stages of their development and then trade in the direction of those trends.
Two-Way Quote A quote that gives both bid and ask prices.
Unrealised Profit/Loss The result from all currently open positions. This is the profit/loss that would be made if the client were to close all their open positions.
US Prime Rate The rate at which US banks will lend to their prime corporate clients.
Used Margin The amount of the client’s funds that is used to support their open position and unrealised losses.
Value Date With respect to any contract, the applicable settlement date specified in the confirmation that relates to the particular contract. A Value Date must fall on a business day in the countries of the traded assets.
Variation Margin An additional margin requirement that a broker will need from a client due to market fluctuation.
Volatility A statistical measure of a market or a security's price movements over time, calculated by using standard deviation. High volatility is associated with a high degree of risk.
Yard Slang for a billion.