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Bank Trading Glossary – Common Forex Trading Terminology

Accumulation :   The phase of the bank and large institution business model where they gather the position over time to keep the price from moving too far as they buy or sell into the market. Usually characterised by a sideways market but can be a slow trending market

ADR :   The average daily range for any given pair. Used to determine the extremes of any given days price action push by the Smart Money.

Asset Purchases :   Another term used for Quantitive Easing when a government prints money adding to the supply to buy troubled assets such as bonds, securities or other financial vehicles to stop an institution from failing or to increase credit availability

BIS or Bank of International Settlements :   A clearing bank for international transfers of cash. Often used by brokers and institutions when they want to hide what they are buying or selling in the Forex markets. Also known as the central bank of central banks

Distribution :   The phase of the banks and large institution business model where they are taking their profit. Characterized by the intraday trend with small cycles against the trend as the market moves showing they are taking their profit.

Doji :   A candle that closes very close to its open and has a push in both directions showing wicks on either side of a very small body.

Faded move :   A move in the median line in a direction on lower volume signalling lower interest in pushing price in that direction

Fundamental Analysis :   The analysis of the markets using news releases and both micro and macro economic data to form a bias on the direction of price movement

Indecision candles :   Text book candles that show the market has no clear direction. Used as a tool by the Smart Money to manipulate traders. EX. Doji, Spinning Top, Evening star, Morning star

Manipulation :   The process by which the banks and large institutions get traders to sell when they want to buy and vice versa. As they accumulate they need traders to take the other side of the position. This takes convincing traders to think price is going up so they can sell, thus they need traders to buy. A stop run and finally when the need to create the belief in direction of the position they accumulated. This is also accomplished by starting false rumors.

Ninety pip range tool :   This is a simple Andrews Pitchfork set horizontal and spread out to 90 pips top to bottom. Mainly used for setting take profit levels. Set it on a recent significant high or low on a 15min chart and you will see why it’s a good place to take profits.

Plunge Protection Team :  These guys are essentially the New York Federal Reserve Bank. What they do is when the S&P and Dow reach certain levels they buy the crap out of them to support prices and try to create optimism in the markets. You would be surprised how many investors actually fall for this only to get hurt later.

Price Action : Price action is everything that a currency pair or securities price does. This is the most basic and broad definition that includes every movement price makes. Price action also refers to nothing but price and includes no other reference or indicator.

Smart Money :   Mainly the 10 largest banks also including the large financial institutions. They are (in order) BNB Parabas, Royal bank of Scotland, Barclays, Deutsche Bank, HSBC Bank, Credit Agricole, Bank of America, Mitsubishi UFJ, JP Morgan Chase, and UBS AG. Institutions such as Goldman Sachs and bucket shop brokers also fit in there such as FXCM

Smart Money Sessions :   The SM manipulators run in 3 shifts around the clock. The first starts at 5pm EST and runs until 1am EST when the next one comes online and runs until 9am EST

Smart Money Trend :   Has nothing to do with the technical trend. The SM will push the markets in levels of 3. Once level 3 is finished they will most often reverse price. The only thing that trumps this trend is fundamentals. The SM will never be on the wrong side of those and they cannot manipulate the market long term.

Spinning Top :   A candle formation similar to a Doji but has a small body to the candle and nearly equal wicks on either side

Spread :   The distance between the high and low of any bar is called its spread using Volume Spread Analysis. Also the distance between the buy price and sell price at any given time is also known as price spread.

Stop run :   The last from of manipulation/accumulation where the Smart Money will shoot price above or below a level taking short term stop losses and/or get break out traders to enter a trade in the opposite direction as they accumulate more position size.

Tape Bomb :  Slang expression for an unexpected news event. (tape- referring to the old news tapes used for breaking news)( Bomb- The wild price action seen after such news events in the markets)

Technical analysis :   The use of patterns, lines, moving averages, support/resistance, Fibonacci, pivot points or any of the hundreds of tools provided with most all charting platforms

Tick volume :   This is the volume generated in the forex market and counts a tick every time there is a change in price up or down. Widely considered to be 80% accurate at best

Topping Formation :   Usually seen after 3 pushes to the upside. The market will make a new high then hours later test that high with either a pin or other reversal candle pattern. Whats most important is the hourly candle close. It must not close above the previous high. If it does the formation is invalid and the market will more than likely go higher.

Trade sessions :   The different sessions during the 24hr forex market. Asia, London (includes Frankfurt) and The US or New York sessions

Trap move :   When the Smart Money is trapping traders in the market in the wrong direction (will often occur at the same time as a stop run. They induce this buying or selling to turn the market against then and eventually hit their stop loss which will help push the market their intended direction

Trap formation :    A set of candle patterns used in the context of the smart money trend that indicates the trapping of traders. Signified by pin bars, indecision candles, engulfing candles or a combination of them. Usually forming an M or W in the price action.

VSA (Volume spread analysis) :   A type of technical analysis mainly developed for stocks. Uses the volume of a bar and Spread of the bar. Comparing them to the volume and spread of the other bars in the past gives clues to what the Smart Money is doing

Wick :   The part of a candle or bar that has pushed a direction and been retraced leaving what looks like a wick on a candle or bar.

QE or Quantitive Easing :   Essentially money printing on a grand scale. Done in recent times to buy distresses bonds or assets. Done usually when the credit markets are drying to artificially lower interest rates and increase the credit supply

Binary Option Glossary

Binary Asset : Stocks, Commodities, Indices and Forex offered by the broker platform.

Binary Call Options : A binary call option provides the trader a fixed profit when the underlying asset expires higher than the strike price that it was purchased at.

Binary Put Options : A binary put option provides the trader a fixed profit when the underlying asset expires lower than the strike price that it was purchased at.

Strike Price : The price at where the option was purchased.

In-The-Money : A trade expires in-the-money when the trader’s predicted direction was correct after the trade has expired.

Out-The-Money : A trade expires out-the-money when the trader’s predicted direction was incorrect after the trade has expired.

At-The-Money : A trade expires at-the-money when the trader’s strike price and market is a tie after the trade has expired.

Expiry Price : The price of the underlying asset at the time of expiry. The rate is calculated by the liquidity provider’s real time data feed. The expiry price will determine whether the option has expired in-the-money or out-of-the-money.

Expiry Time : The pre-determined time and date at which the current trade will expiry.

Investment : The amount risked and invested into a specific trade.

Live Rate : The current price of an asset.

Payout : The pre-determent profit/loss the investor will receive after the trade expires based on the trade outcome.


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