Market Glossary

from Investopedia

Aggressive trader: The trader that likes to trade heavily, using the highest possible leverage and mainly doing scalping and some intraday trades.

Ask: The price at which a market maker is willing to sell (you buy) a security. The market maker will also display a bid price, or the amount and price at�which�it is�willing to buy (you sell).

Bid: The price at which a market maker is willing to buy a security (you sell). The market maker will also display an ask price, or the amount and price at�which�it is�willing to sell (you buy).

Broker: Common name used to define, generally, firms that act as the middle-man in the financial markets. There are two types of brokers, market makers or ECNs.

ECN: Electronic Currency Network. Directs the client straight through the interbank market, usually resulting in tighter spreads. Most ECN�s have a fixed commission per roun/turn lot.

Leverage: The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.

Lot: Pack in which trading units are being sent to the market. There are 2 tyoes of lots: mini and regular. A mini lot consists of 10,000 units of the base currency, and a regular lot consists of 100,000 units of the base currency,ie, 10 times more.

Margin: The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account.

Market Maker: Middle-man between the interbank market and the retail user. The interbank liquidity provider charges the market maker a small commission for providing access to tradeable volumes. The market maker also charges commission to its clients (in the form of spread, direct commission or both) to provide them access to tradeable prices in the currencies market.

Moderate trader: The trader that likes somewhat high leverage, trades more on 1-2 day horizon and does not commit as much capital per trade as the aggressive trader does.

Pip: The smallest price change that a given exchange rate can make.

Spread: The difference between the bid and the ask price of a security or asset.



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