Forex key terms in the K-O of Trading Glossary

As with any country, forex has its own language, that is, unique terminology. Prior to learning a language, one needs to start with the alphabet.

Before delving into complex forex terminology, you should master the fundamentals of currency exchange. Foreign exchange, forex or FX, is exchanging one currency for another. For example, EUR/USD, USD/JPY, and GBP/USD.

In this article, we will look at various forex terms from the letter K to O.

Popular forex terms: K-O glossary

K

Kiwi (Kiwi)

Kiwi is what the New Zealand Dollar (NZD) is called in forex slang. This is because the national bird is found on the one-dollar coin.

Know Your Customer (Conozca a su Cliente (KYC))

KYC is the procedure by which a firm involved in financial transactions identifies and verifies clients’ identities. It is a necessary component of banking regulation.

Key Currency

This is a solid currency that doesn’t change too much and serves as the foundation for international transactions’ exchange rates. Key currencies tend to establish the value of other currencies due to their widespread usage.

Knock-Ins

This refers to an options methodology in which the underlying product must trade at a specified price before an option previously purchased becomes active. Knock-ins are used to minimise the expenses of the underlying option and can cause hedging operations to be triggered whenever an option is activated.

Knock-Outs

If a product trades at a specified level, this option cancels a previously purchased option. The underlying option is no longer accessible when a knock-out level is traded. Any hedging must also be undone.

L

Liquidez

Refers to the ease with which an asset or security may be purchased or sold in the forex market without any impact on its price.

Long Position

When the market price rises, the position earns value. The position is deemed long when the pair’s base currency is purchased. If the market is anticipated to grow, this position is taken.

Leads and Lags (adelantos y retrasos)

It most usually refers to the substitution of regular payments or receipts in a forex transaction due to an anticipated alteration in exchange rates.

Leverage (Apalancamiento)

Put simply, leverage is the ratio of the amount of capital employed in a transaction to the specified deposit. It is also known as margin. Leverage (Apalancamiento) allows you to handle significantly greater financial balances in a trade with a comparatively low deposit while trading. For example, 1:100 leverage means that you can trade with an amount 100 times bigger than the amount you initially deposited.

Limit Order (Orden Limitada)

A limit order is a form of order that allows you to buy or sell a security at a certain price or lower. It can be used to limit how much profit and loss a trader is ready to accept.

Lot (Lote)

In the world of forex, a “lot” is the specified number of units of a financial asset as defined by an exchange or equivalent regulatory authority. The lot size determines the number of units.

M

Margin (Margen)

Margin is the minimum amount of funds, represented as a percentage, that you will need to initiate and maintain a position.

Margin call

A margin call occurs when a trader’s account balance goes below the broker’s minimum amount. A margin call is a request from the broker that a trader deposits extra funds in order to bring the account up to the minimum value.

Momentum (Momento)

This is a word used in technical analysis to define the pace of change in the price of an instrument. Momentum is measured by tracking the slope of a trendline; this monitors the price levels of any particular item through time.

Market Price

The market price at which a financial asset is currently traded.

Market Risk

The risk that a trader would take a loss as a result of market price fluctuations.

Market Order

An order to purchase or sell a financial asset at the best available market price.

N

Net Income (Ingreso Neto)

A company’s net income is its overall earnings. This phrase refers to revenues such as interest, taxes, depreciation, and other company costs. The net income represents the ‘health’ of a company in general.

Net Position (Posición Neta)

Net position refers to the worth of the position once the original cost of setting up the position has been deducted.

Nonfarm Payroll Employment (Empleo De Nóminas No Agrícolas)

This data, which is released on the first Friday of each month, is an estimation of the number of payroll jobs held by all nonfarm companies and government organisations. Traders utilise this information to make informed decisions about their trading portfolio based on NFP data and anticipated interest rate implications.

News Trader

A trader relies on the release of market news, breaking news, economic reports, and so on, as well as on the market’s reaction to them.

O

Oil (Petróleo)

Nowadays, oil is a commodity employed to provide electricity and energy. Oil market prices are driven by supply and demand globally. Yet, because supply sources are more limited than usual, as well as being a non-renewable resource, unusual supply situations apply. Oil is largely traded through the purchase and sale of oil futures contracts.

Open Order (Orden Abierta)

An open order is one that will be executed when a certain market price is met.

Open Position (Posición Abierta)

This is a trade that is presently open but has not yet been closed.

Order

A trader’s request to a forex broker to purchase or sell an asset on his or her behalf.

Offsetting Transaction

A trade that helps to reduce or cancel part or all of the market risk of an open position; might imply completing a transaction or entering another position in the opposite direction to cancel the consequences of the first.

Overnight Position

A trading position that remains open until the following trading day.

Option

A derivative that allows you to purchase or sell a product at a predetermined price before a given date.

Forex key terms & trading strategy

Understanding the trends and common words used in the foreign exchange market is a crucial step toward strategic and successful trading.

However, it is not always so simple and maybe pretty complicated at times. As a result, before considering trading currencies, you should become acquainted with some of the frequent words used in the field of FX. The first step in developing your own trading strategy is to understand these words.

Exención de responsabilidad:

Esta información no se considera un consejo de inversión ni una recomendación de inversión, sino una comunicación de marketing