tags:Wedge ,Vostro account,Volume,V-formation,Vertical spread,Vertical bull put spread ,Vertical bear put spreadWedge ,Vostro account,Volume,V-formation,Vertical spread,Vertical bull put spread ,Vertical bear put spread,Vega,Velocity of money,Value at risk,USDX,Upside gap tasuki,Upward breakout of a bearish resistance line,Upward breakout of a bullish resistance line,Upside gap tasuki,Tunnel,TRIX Index,Triple bottom,Translation exposure,Trend,Transaction exposure,Time decay,Theory of elasticities,Synthetic call option,Swing Index (SI),Strike price,Speedlines,Shitakage,Sangu (three gaps)
S
Sangu (three gaps) A reversal candlestick signal applicable in either
a steeply rising or falling market, when the daily limits will break the
trading. The theory holds that after the third gap, the market will
reverse at least to the second gap.
Sanpei (three parallel bars) A reversal candlestick combination. It
refers to the similarity in direction and velocity of three consecutive
bars, as otherwise all the entries are parallel. They generate a
reversal formation after an extended rally. When bullish, the
formation is known as the three soldiers. When bearish, the name is
the three crows.
Sanpo (three methods) A candlestick combination that advises that
retracements are in order before the market will reach new highs
and new lows.
Sansen (three rivers) method A reversal candlestick combination. It
consists of three daily entries. The first day is a long blank bar (a
bullish move), followed by a bullish but short-range one-day island.
The third entry is a bearish long black line.
Sanzan (three mountains) A reversal candlestick combination. It
consists of a triple-top formation.
Sashikomi A bearish two-day candlestick combination. It consists of a
modified irikubi bar. The difference is that the opening of the second
day's blank bar is much lower than that of the irikubi bars. Despite
the wider gap thus formed, the blank candlestick closes only slightly
above the previous day's low.
Settlement risk A form of credit risk that may occur due to the time
zones separating the nations. Payment may be made to a party who
will declare insolvency (or be declared insolvent) immediately after
receipt, but prior to executing its own payments.
Shitakage Lower shadow of the candlestick. (See Candlestick chart.)
Short straddle A compound option that consists of a short call and a
short put on the same currency, at the same strike price, and with
the same expiration dates. The maximum profit consists of the
combined premium of the two individual options. The loss occurs
when the level of the premium is overpassed by the currency swing,
and the loss is unlimited.
Short strangle A compound option that consists of a short call and a
short put on the same currency, with the same expiration dates, but
with different strike prices. The maximum profit consists of the
combined premium of the two individual options. The loss is
unlimited.
Simple moving average or arithmetic mean An average of a
predetermined number of prices over a number of days, divided by
the number of entries.
Slow stochastics A version of the original stochastic oscillator. The new,
slow %K line consists of the original %D line. The new, slow %D line
formula is calculated from the new %K line.
Snake The nickname of the European Joint Float Agreement's 2.25
percent fluctuation band for the European currencies against each
other, derived from its curvaceous movement.
Speedlines Support or resistance lines that divide the range of the trend
into thirds on a vertical line. The two resulting speedlines are plotted
by using as coordinates the origin and the 1/3 and 2/3 prices
respectively.
Spot deal A foreign exchange deal that consists of a bilateral contract
between a party delivering a certain amount of a currency against
receiving a certain amount of another currency from a second
counterparty, based on an agreed exchange rate, within two
business days of the deal date. The exception is the Canadian dollar,
in which the spot delivery is executed within one business day.
Spot next (S/N) A foreign exchange deal that matures one business
day past the spot date, or three business days.
Sterilized intervention A central bank intervention in the foreign
exchange market that consists of a sale of government securities
that offsets the reserve injection which occurs due to the foreign
exchange intervention. The money market activity sterilizes the
impact of the foreign exchange intervention on the money supply.
Sterilized interventions have a short- to medium-term effect.
Stochastics Oscillators that consist of two lines called %K and %D.
Visualize %K as the plotted instrument and %D as its moving
average. The resulting lines are plotted on a 1 to 100 scale. Just as
in the case of the RSI, the 70 percent and 30 percent values are
used as warning signals. The buying (bullish reversal) signals occur
at under 10 percent and the selling (bearish reversal) signals come
into play at above 90 percent.
Strike price See Exercise price.
Support level The troughs representing the level at which demand
exceeds supply.
Swap deal A foreign exchange deal that consists of a spot deal and a
forward outright deal. A party simultaneously buys and sells (or sells
and buys) the same amount of a currency with another counterparty;
the two legs of the transaction mature on different dates (one of the
dates being the spot date) and are traded at different exchange rates
(one of the exchange rates being the spot rate). Exceptions may be
made with regard to the value dates (forward-forward) and amount
(different amounts).
SWIFT (Society of Worldwide Interbank Financial Telecommunications)
An automated system set up to send standardized payment
instructions for foreign currencies among international banks.
Swing Index (SI) A momentum oscillator that is plotted on a scale
of -100 to +100. The spikes reaching the extremes suggest reversal.
Symmetrical triangle A triangle continuation formation in which the
support and resistance lines are symmetrical. (See Triangle.)
Synthetic call option A combination of a long currency and a long
currency put. Synthetic put option A combination of a short currency
and a long currency call.
T
Tan Book An economic report prepared by the Federal Reserve for
FOMC meetings.
Tankan Economic Survey The Japanese equivalent of the American
Tan Book, which is released by the Federal Reserve. The survey is
released on a quarterly basis.
Technical analysis The chart study of past behavior of commodity
prices for purposes of forecasting their future performance.
Theory of elasticities A model of exchange rate determination stating
that the exchange rate is simply the price of foreign exchange that
maintains the BOP in equilibrium. The degree to which the exchange
rate responds to a change in the trade balance depends entirely on
the elasticity of demand to a change in price.
Theta (T) or time decay Occurs as the very slow or nonexistent
movement of the currency triggers losses in the option's theoretical
value.
Three Buddha top formation A reversal candlestick combination. It
consists of a head-and-shoulders formation, or three consecutive
rallies in which the first and the third are of approximately the same
height, and the second is the highest.
Threshold of divergence A safety feature for the EMS that creates
an emergency exit for currencies that become the singular focus of
various adverse forces. The threshold of divergence indicates when
the specific country with the pressured currency should take
additional steps other than simple central bank intervention in the
foreign exchange markets.
Time decay See Theta.
Time value (time premium or extrinsic value) The difference between
the option premium and its intrinsic value.
Tohbu (gravestone doji) A reversal candlestick formation.
Tomorrow/next (T/N) deal A foreign exchange deal that matures the next
business day, or one day prior to the spot date.
Tonbo (dragonfly) A reversal candlestick formation.
Traditional (Charles Dow) percentage retracements Occur at 33
percent, 50 percent, and 66 percent.
Transaction exposure Potential profit and loss generated by current
foreign exchange transactions.
Translation exposure The risk of change of the consolidated corporate
earnings as a result of past volatility in the base currency.
Trend The general direction of the market, as shown by the
significant peaks and troughs of the currency fluctuations.
Trendline A straight line connecting the significant highs (peaks) in a
downtrend, and the significant lows (troughs) in an uptrend.
Triangle A continuation formation that resembles the outline of a
pennant, but without the pole. It consists of a brief consolidation
period within a solid and steep upward trend or downward trend. The
consolidation itself tends to be sloped in the opposite direction from
the slope of the original trend, or simply flat. The consolidation is
bordered by converging support and resistance lines, making it look
like a triangle. When the currency resumes its original trend by
breaking out of the consolidation, the price objective is the height of
the triangle, measured from the breakout price level.
Triple bottom A bullish reversal pattern that consists of three bottoms of
approximately equal heights. A parallel—resistance—line is drawn
against a support line, which connects these tops. The break of the
resistance line generates a move equal in size to the price difference
between the average height of the bottoms and the resistance line.
Triple top A bearish reversal pattern that consists of three tops of
approximately equal heights. A parallel—support—line is drawn
against a resistance line, which connects these tops. The break of
the support line generates a moveequal in size to the price difference
between the average height of the topsand the support line. |
TRIX Index An oscillator that consists of a one-day ROC calculation of a
triple exponentially smoothed moving average of the closing price.
Tunnel The nickname of the European Joint Float Agreement's total
fluctuation band of the European currencies.
U
Unemployment Rate An economic indicator released as a percentage
that is calculated as the ratio of the difference between the total
labor force and the employed labor force, divided by the total labor
force.
Upside gap tasuki Bullish two-day candlestick combination. It
consists of a second-day black bar that closes an overnight gap
opened on the previous day by a blank bar.
Upward breakout of a bearish resistance line Bullish point-and-figure
chart formation that confirms the currency's breakout of a resistance
line the third time it reaches it. The resistance line is sloped
downward.
Upward breakout of a bullish resistance line Bullish point-and-figure
chart formation that confirms the currency's breakout of a resistance
line the third time it reaches it.
Upward breakout from a consolidation formation Bullish point-and-figure
chart formation that resembles the flag formation. A valid upside
breakout from the consolidation formation has a price target equal in
size to the length of the previous uptrend.
USDX Currency index that consists of the weighted average of the
prices of ten foreign currencies against the U.S. dollar: deutsche
mark, Japanese yen, French franc, British pound, Canadian dollar,
Italian lira, Dutch guilder, Belgian franc, Swedish krona, and Swiss
franc.
Uwakage Upper shadow of the candlestick. (See Candlestick chart.)
V
Value at risk The expected loss from an adverse market movement, with
a specified probability over a particular period of time.
Variation (maintenance) margin Margin paid by the trading party in
order to fully cover any unrealized loss. Any trader holding an
overnight position with a negative P&L must post it in cash. It must
be kept on deposit at all times.
Vega The sensitivity of the theoretical value of an option to a change in
volatility.
Velocity of money The rate at which money is turning over on an annual
basis to facilitate income transactions.
Vertical bear call spread A compound option strategy of buying two
options with a common expiration date; one option is a short call
with a lower strike price and the other is a long call with a higher
strike price. The seller's maximum profit is limited to the premium
paid for the two options. The break-even point is calculated as the
sum of the lower strike price and the total premium. The maximum
loss consists of the dollar difference between the two strike prices,
minus the total premium received.
Vertical bear put spread A compound option strategy of buying two
options with a common expiration date; one option is a long put with
a higher strike price and the other is a short put with a lower strike
price. The buyer's maximum profit consists of the dollar difference
between the two strike prices, minus the total premium paid. The
break-even point is calculated as the difference between the higher
strike price and the total premium. The maximum loss is limited to
the premium paid for the two options.
Vertical bear spread An option combination whose theoretical value
will decline to a predetermined maximum profit if the price of the
underlying currency declines and whose maximum loss is also
predetermined.
Vertical bull call spread A compound option strategy of buying two
options with a common expiration date; one option is a long call with
a lower strike price and the other is a short call with a higher strike
price. The buyer's maximum profit consists of the dollar difference
between the two strike prices, minus the total premium paid. The
break-even point is calculated as the sum of the lower strike price
and the total premium. The maximum loss is limited to the premium
paid for the two options.
Vertical bull put spread A compound option strategy of buying two
options with a common expiration date; one option is a long put with
a lower strike price and the other is a short put with a higher strike
price. The buyer's maximum profit consists of the net premium paid
for the two options (one paid, the other received). The break-even
point is calculated as the difference between the higher strike price
and the total premium received. The maximum loss is limited to the
dollar difference between the two strike prices, minus the total
premium received.
Vertical bull spread An option combination whose theoretical value
will rise to a predetermined maximum profit if the price of underlying
currency rises, and whose maximum loss is also predetermined.
Vertical spread A compound option that consists of two similar options
(i.e., calls or puts), one being bought and the other sold, on the
same currency and with the same expiration date, but with different
strike prices.
V-formation (spike) Reversal formation that shows sudden trend
changes and is accompanied by heavy trading volume. This pattern
may include a key reversal day, or an island reversal and an
exhaustion gap.
Volatility The degree to which the price of currency tends to fluctuate
within a certain period of time.
Volume The total amount of currency traded within a period of time,
usually one day.
Vostro account A vostro account from the point of view of the
counterparty.
W
Wedge A continuation formation that resembles the outline of a
pennant, but without the pole. It consists of a brief consolidation period
within a solid and steep upward trend or downward trend. The consolidation
is sharply angled in the opposite direction from the slope of the original trend.
The consolidation is bordered by a support line and a resistance line that
converge, making it look like a sharply angled triangle. When the currency
resumes its original trend by breaking out of the consolidation, the price
objective is the height of the wedge, measured from the breakout price level.
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