The industry’s
most important terms explained.
Discover a wealth of financial terms and definitions that every trader should know.
S
Short Position
An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.Simple Moving Average (SMA)
A simple average of a pre – defined amount of price bars. For example, a 50 period Daily chart SMA is the average closing price of the previous 50 daily closing bars. Any time interval can be applied here.Spot Market
A physical market in which foreign currencies and commodities are bought and sold for cash at the current market price, settled “on the spot” and delivered immediately.Spot Price
The current market price. Settlement of spot transactions usually occurs within two business days.Spot Trade
The purchase or sale of a foreign currency or commodity for immediate delivery (as opposed to a date in the future). Spot contracts are settled electronically.Spread
The difference between the bid and offer prices.Square
Purchase and sales are in balance and thus the dealer has no open position.Stop Loss Order
Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor’s position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.Support Levels
A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.Swap
The overnight or rollover interest (which is earned or paid) for having open positions running up to the next trading day.