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Forex Trading Abbreviations and Trading Terms

February 22, 2018 12:41

Source: Shutterstock

Dear traders,

To me, the Forex market is magic. But for the majority of non-traders, Forex may be a mystery. So before we delve deeper into the magic and mystery of Forex trading, let me explain in a simple way how it all began, and then outline the popular abbreviations and Forex trading terms that we, traders, use.

The Origins of Forex Market

For those unfamiliar with the term, FOREX (Foreign Exchange Market) refers to an international exchange market where currencies are bought and sold.

Foreign exchange dates back to the ancient times when traders first began exchanging coins from different countries.

However, the foreign exchange itself is a relatively new mechanism in the financial markets.

In the last hundred years, the foreign exchange has undergone some dramatic transformations.

The Bretton Woods Agreement (1944) remained intact until the early 1970s. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971. In 1971, the Bretton Woods Agreement was first tested because of uncontrollable currency rate fluctuations. By 1973, the gold standard was abandoned by president Richard Nixon, and currencies were finally allowed to float freely.

So we could assume that the early 1970s marked the inception of the Forex market and an era when free exchange rates and floating currencies were introduced. In such an environment only participants in the market determined the price of one currency against another, based upon supply and demand for that currency.

Forex is a somewhat unique market for a number of reasons. Firstly, many of the Forex currency pair markets can be said with very few qualifications that it is free of external controls and that it cannot be manipulated. The only exception to this is some currency pairs where Central Banks intervene (known as "dirty float") by buying and selling their reserve currencies to maintain a certain exchange rate against major currencies (also known as "peg").

But traders simply don't like to use full words for anything related to the Forex market.

Yet there are many different terms within the Forex trading industry that you need to be fully aware of and understand.

One of these is being able to instantly tell which currencies have been paired together, when you are planning to trade one currency against another.

You are probably already aware of the acronyms for the major worldwide currencies, such as US Dollar, Euro, and Sterling Pound. But what about a wider array of other currencies?

In Admiral Markets' Trader's Glossary, you can read the meanings, abbreviations and acronyms behind a huge number of terms whenever you choose.

But that's not all. In this post, you will find an alphabetical list of the most important abbreviations, slang, and shorthand in Forex.

Below, you will find a list of the most widely used Forex abbreviations:

  • 10 Yr – US 10-Year Note
  • 30 Yr – US 30-Year Bond
  • ADX – Average Directional Index (technical indicator)
  • ATR – Average True Range (technical indicator)
  • AUD – Australian Dollar (ISO code)
  • BB – Bollinger Bands (technical indicator)
  • BE – Breakeven
  • BoC – Bank of Canada
  • BoE – Bank of England
  • BoJ – Bank of Japan
  • BP – Basis Point
  • CAD – Canadian Dollar (ISO code)
  • CBOT – Chicago Board of Trade
  • CCI – Commodity Channel Index (technical indicator); also Consumer Confidence Index (economic indicator)
  • CFA – Chartered Financial Analyst
  • CFD – Contract For Difference
  • CFTC – Commodity Futures Trading Commission (regulatory)
  • CHF – Swiss Franc (Confederation Helvetia Franc)
  • CME – Chicago Mercantile Exchange
  • CNY – Chinese Yuan (ISO code)
  • COT – Commitments of Traders (market report)
  • CPI – Consumer Price Index (economic indicator
  • CSI – Commodity Selection Index (technical indicator)
  • CTA – Commodity Trading Advisor
  • DD – Drawdown, also Due Diligence, also Dealing Desk (see NDD)
  • DJIA – Dow Jones Industrial Average
  • EA – Expert Advisor
  • ECB – European Central Bank
  • ECN – Electronic Communication Network, also Electronic Currency Network
  • EMA – Exponential Moving Average (technical indicator)
  • ETF – Exchange Traded Fund
  • EUR – Euro (ISO code)
  • EW – Elliott Wave (theory)
  • FA – Fundamental Analysis
  • FCM – Futures Commission Merchant
  • FDM – Forex Dealer Member
  • Fed – Federal Reserve System
  • FF – Forex Factory
  • FIFO – First In, First Out
  • FOMC – Federal Open Market Committee
  • FX – Foreign Exchange
  • GBP – Great Britain Pound Sterling (ISO code)
  • GDP – Gross Domestic Product (economic indicator)
  • GMT – Greenwich Mean Time
  • HH – Higher High (chart)
  • HL – Higher Low (chart)
  • IB – Introducing Broker, also Interbank, also Interactive Brokers, also Inside Bar
  • IMF – International Monetary Fund
  • ISO – International Organization for Standardization
  • JPY – Japanese Yen (ISO code)
  • LONG – A position purchasing a particular currency against another currency
  • LH – Lower High (chart)
  • LL – Lower Low (chart)
  • LWMA – Linearly Weighted Moving Average (technical indicator)
  • MT4 – MetaTrader Version 4.00 (trading platform)
  • MA – Moving Average (technical indicator)
  • MACD – Moving Average Convergence Divergence (technical indicator)
  • MM – Market Maker, also Money Management
  • MTF – Multiple Time Frame
  • NASDAQ – National Association of Securities Dealers Automated Quotation
  • NDA – Non-Disclosure Agreement
  • NDD – Non-Dealing Desk
  • NFA – National Futures Association (regulatory)
  • NFP – Nonfarm Payroll (economic indicator)
  • NYSE – New York Stock Exchange
  • NZD – New Zealand Dollar (ISO code)
  • OCO – One-Cancels-the-Other (order type)
  • OHLC – Open, High, Low, Close (chart)
  • OTC– Over-the-Counter
  • P&F – Point and Figure (chart)
  • PA – Price Action
  • PB – Pin Bar abbreviation of Pinocchio Bar (chart)
  • PIP – Price Interest Point, also Performance Index Paper
  • PP – Pivot Point
  • PPI – Producer Price Index (economic indicator)
  • PPZ Price Pivot Zone
  • PSAR – Parabolic Stop and Reversal (technical indicator)
  • Quant – Quantitative Analysis
  • R/R – Risk/Reward (ratio)
  • RSI – Relative Strength Index (technical indicator)
  • RVI – Relative Vigor Index (technical indicator)
  • SAR – Stop and Reversal
  • SEC – Securities and Exchange Commission (regulatory)
  • SHORT – To sell a currency
  • SL – Stop-Loss (order)
  • SMA – Simple Moving Average (technical indicator)
  • SMMA – Smoothed Moving Average (technical indicator)
  • S&P – Standard & Poor's
  • S/R – Support/Resistance
  • Stoch – Stochastic Oscillator (technical indicator)
  • STP – Straight Through Processing
  • TA – Technical Analysis
  • TF Time Frame
  • TL – Trend Line
  • TP – Take Profit (order)
  • TS – Trailing Stop (order)
  • TSI – True Strength Index (technical indicator)
  • USD – United States Dollar (ISO code)
  • USDX – United States Dollar Index (ISO code)
  • UTC – Universal Time, Coordinated
  • WB – World Bank
  • XAG – Silver (ISO code)
  • XAU – Gold (ISO code)

Forex Currency Pairs Slang

Traders also often simplify currency pair names using nicknames. The use of jargon is common amongst professionals that deal with something everyday, or even every hour and minute. It's a simplification and familiarisation – like when I am talking to my friend Christopher as Chris.

  • EUR/USD – Euro, or Fiber
  • EUR/JPY – Yuppy
  • GBP/USD – Pound, or Cable
  • AUD/USD – Aussie, or Ozzie
  • EUR/GBP – Chunnel
  • USD/CAD – Caddy, Loonie, The Funds, or Beaver
  • USD/CHF – Swissy
  • USD/JPY – Yen, or Ninja
  • GBP/JPY – Geppy, Dragon, or Beast
  • NZD/USD – Kiwi

So where did all these pairs get their names from?

Check out the video below, in which I'm trying to explain the origins of the Forex slang.

Do you know any other term I've missed or simply want more explanation regarding specific Forex terms? Don't hesitate to let me know in the comments below!

free live education

Cheers and safe trading,

Nenad