Page 179 - Ultimate Guide to Currency Trading

Fundamental analysis
A method of predicting the price movement of a currency by looking at trading partners, future
interest rates, and a country's balance sheet. Also uses the interpretation of a country's central
bank website for hints of economic policies and any future economic policy changes.

Fundamentals
The economics of a currency, relating to growth and cash flows of a country. See technical
analysis.

FX pairs
The method in which currencies are measured. A currency's value can be measured against the
value of a second currency. Also the way to quote the price of two currencies in order to buy or
sell.

Going long
A term used to state you have a trade that is set up to make money when the security or sector
is moving upward.

Gold Standard
Pegging paper currency directly to the amount of gold in the vaults of a country's central
banking vaults, thereby limiting the amount of money in circulation to the amount of gold
owned by the country.

Grow organically
When a currency trading account gains in value from trades and interest income as opposed to
adding more money from an external source such as a separate bank account.

Hedge fund
An investment vehicle that uses leverage to amplify the returns of its holdings.

Hedged-directional trade
A Forex trading method of being either long or short risky currency pairs, but using
diversification of smaller groups of different pairs within the larger trade.

Interest
When money is earned for holding a currency for a period of time. Interest can vary among
different currencies. Most Forex accounts accrue interest every second that the currency is
held in a trade.

Interest differential
The net difference between the borrowing cost of a low-yielding currency and the investment
yield of a higher-yielding currency.

Intervening in the markets
When a central bank buys or sells currency in the open market in order to force a change in the
exchange rate of its home currency.