Forex Glossary

Settlement

The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.

Short Position

An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.

Simple Moving Average (SMA)

A simple average of a pre – defined amount of price bars. For example, a 50 period Daily chart SMA is the average closing price of the previous 50 daily closing bars. Any time interval can be applied here.

Spot Market

A physical market in which foreign currencies and commodities are bought and sold for cash at the current market price, settled \”on the spot\” and delivered immediately.

Spot Price

The current market price. Settlement of spot transactions usually occurs within two business days.

Spot Trade

The purchase or sale of a foreign currency or commodity for immediate delivery (as opposed to a date in the future). Spot contracts are settled electronically.

Spread

The difference between the bid and offer prices.

Square

Purchase and sales are in balance and thus the dealer has no open position.

Sterling

slang for British Pound.

Support Levels

A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.

Swap

A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

Swissy

Market slang for Swiss Franc.