TRADING GLOSSARY

Last Update : Friday, January 27th 2012

FOREX

An over-the-counter market where buyers and sellers conduct foreign exchange transactions. The Forex market is useful because it helps enable trade and transactions between countries, and it also allows an investment opportunity for risk seeking investors who don't mind engaging in speculation. Individuals who trade in the Forex market typically look carefully at a country's economic and political situation, as these factors can influence the direction of its currency. One of the unique aspects of the Forex market is that the volume of trading is so high, partially because the units exchanged are so small. It is estimated that around $4 trillion goes through the Forex market each day. also called foreign exchange market.

MONETARY MARKET

A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is used by participants as a means for borrowing and lending in the short term, from several days to just under a year. Money market securities consist of negotiable certificates of deposit (CDs), bankers acceptances, U.S. Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements (repos).

SHORT TERM TRADING STRATEGY

A trading method that incorporates an outlook interpreting the market in anticipation of quick movements. Traders can use a variety of fundamentals, technical, and market psychology to make their decisions depending on the dominating circumstance. Short term trading strategy can be in direct contradiction of the long term trading outlook held by the same investor.