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Forex Dictionary

Term Equivalent terms Definition
Same Day Transaction A position that is opened and closed on the same day.
Scalping A fast-paced trading activity where the trader seeks 1-5 pips from each trade. Many forex brokers do not like scalpers.
SEK ISO code for the Swedish krona.
Sell Limit Order A conditional order to sell a specified price (the limit) above the current market, or higher.
Sell Stop A pending order placed below the current market price, and once triggered, becomes a market sell order. Sell stops are used to exit buy positions and start a new short position at the breakdown price.
Selling Rate Same as the Ask or Offer rate.
Selling Short Selling a currency pair, which is equivalent to being short the base currency (first currency quoted) and long the quote currency (second quoted).
Settlement The physical delivery of currencies made when a contract matures, which is two days after the trade date. However, in practice traders don't take delivery, but profits and losses are applied directly to their account balance.
Settlement Date In forex, the date when physical delivery must take place. For most currency pairs it is two days after the trade date. However, the USD/CAD currency pair settles one day after its trade date.
Settlement Risk Loss as a result of one's counter-party being unable to settle.
Short Selling a currency pair, which is equivalent to being short the base currency (first currency quoted) and long the quote currency (second quoted).
Short Covering The act of buying the exact same units of a currency pair one has previously sold short in order to close the position.
Short Position Short In FX, when a currency pair is sold, the position is said to be short. The primary currency in the pair is short, the secondary one is long.
Short Squeeze When the currency prices start to move up sharply and many traders with short positions scramble cover their positions (exit), which accelerates the upward move, further aggravating the losses of short sellers who have not covered their positions.
Sidelined When there is above ordinary interest in a currency pair, other major currency pairs that are thinly traded as a result are considered sidelined.
Sidelines Describes investors who are watching the market instead of taking a position on it.
Singapore Dollar SGD The Singapore Dollar (SGD) is the official currency of Singapore.
Slippage It is the difference between expected order fill and actual order fill due to revisions in price and spread (usually negative, or not in your favor) due to a fast market movement, illiquid market, or dishonest broker.
Soft Market Where there are more sellers than buyers resulting in the potential for a quick downtrend.
Sovereign Risk In FX, it is the risk that a foreign central bank will significantly alter is monetary policy and affect one’s currency trades. For example, if one conducts a currency trade with a country that has float, and it decides midstream it wants a peg, the decision can significantly impact the profitability of the trade. Sovereign risk is also the risk of owning a bond of a foreign government, which may stop paying interest or repudiate its debt.
Speculative The condition where there is no guarantee that money will be made and tremendous risk that you will lose all your capital. Most retail traders are speculators and the attraction is that you can you can make a great deal of money very quickly, though you can also lose it just as fast.
Spike A larger than usual price movement that just as suddenly returns to close at its previous level.
Spot Market Market where people buy and sell actual financial instruments (currencies) for two-day delivery.
Spot Price The current market price.
Spread The difference between the bid (buy) and offer (ask, sell) prices; in other words the spread is the commission that the brokerage house makes on each trade. This can vary widely between currencies and between brokerage firms. For example, USD/JPY may bid at 90.40 and ask at 90.42, this two-pip spread defines the trader’s cost, which can be recovered with a favorable currency move in the market.
Square A condition where all positions in a dealer's books are closed.
Squeeze Broadly, a period when currencies increase in price and investors who have sold short must cover their short positions to prevent larger losses. In reference to central banks, the term represents the Central bank’s attempt to reduce the money supply in order to increase the price of money.
Sterilization To weaken the domestic currency, sterilization by the central bank involves selling the domestic currency on the forex market and buying the foreign currency.
Sterling slang for British Pound (GBP). See also: British pound, GBP, Cable.
Stochastic Oscillator This technical analysis indicator of momentum is based on the premise that during an upward trading market, prices tend to close near their high, downward they close near their low. The transaction signals occur when the %K crosses a three-period moving average called the %D.
Stocky Traders' term for the Swedish Krona.
Stop Loss Order Order type whereby an open position is automatically liquidated at a specific price in order to minimize loses. For example, if a trade is long EURUSD at 1.3150, they might wish to put in a stop loss order for 1.3100 (50 pips below entry), which would limit the loss to 50 pips. Technically the same as a stop order, but carries the connotation of avoiding further losses than seeking to cashin on future gains. See Protective Stop.
Stop Losses Designed to limit an investor’s loss, it is a limit order to close a position when it reaches a certain price. When long, the stop loss order is placed x pips/x percent below the current market price. When short, the stop loss order is placed x pips /x percent above the current market price.
Stop Order Stop An order to buy or to sell a currency when the currency's price reaches or passes a specified level.
STP Straight Through Processing Straight through processing (STP) removes any manual intervention in a electronically entered transaction process. The transaction information is passed directly from one party to the other.
Straddle An option strategy involving holding an equal number of puts and calls with the same strike price and expiry date. Used when the trader believes that the market will be volatile and will undergo dramatic price changes, and it allows the investor to profit regardless of which direction the market takes so long as there is significant movement. Small movement will result in a loss.
Strangle Similar to a straddle, the strangle is a cheaper strategy since the strike prices of both the call and the put are far out of the money.
Strike Price The price at which the underlying asset can be bought or sold as specified in an option contract.
Sub-account Some broker allows users to segregate their accounts into various sub-accounts to simplify various trading and hedging strategies.
Support Levels A term used in technical analysis indicating a specific price level at which a currency will meet difficulty in crossing below due to strong buying pressure. Opposite to resistance level.
Swap A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.
SWIFT Society of Worldwide Interbank Financial Telecommunications. It is a dedicated computer network that is set up to support fund transfer messages between member banks worldwide.
Swiss Franc CHF The Swiss Franc (CHF) is the official currency of Switzerland.
Swissy Trader's nickname for the Swiss Franc. See also: CHF
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