Forex Glossary (R)

Commonly used forex terms and their definitions.

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Rally - A recovery in price after a period of decline.

Range - The distance between the high price and the low price for a given time period. For example, the daily range is equal to the day's high minus the same day's low.

Rate - The price of one currency in terms of another.

Reaction - A decline in prices following an advance.

Reciprocal Currency - A currency that is normally quoted as dollars per unit of currency rather than the normal quote method of units of currency per dollar. Euro is the most common example.

Relative Strength Index (RSI) - A popular oscillator developed by Welles Wilder, Jr. and described in his self-published 1978 book "New Concepts in Technical Trading Systems". RSI is plotted on a vertical scale from 0 to 100. Values above 70 are considered overbought and values below 30, oversold. When prices are over 70 or below 30 and diverge from price action, a warning is given of a possible trend reversal.

Resistance - A price level at which you would expect selling to take place.

Reversal Pattern - A chart pattern that occurs before an existing trend reverses direction. For example, a Head and Shoulders reversal pattern marks a change in trend. A break below neckline support indicates that the H&S pattern is complete and the prior uptrend has reversed.

Resistance Point or Level - A price recognized by technical analysts as a price which is likely to result in a rebound but if broken through is likely to result in a significant price movement.

Revaluation - Increase in the exchange rate of a currency as a result of official action.

Revaluation Rate - The rate for any period or currency which is used to revalue a position or book.

RFQ (Request For Quote) - When a trader will asks for a live quote from a dealer, as opposed to streaming prices.

Risk Capital - The amount of money that an individual can afford to invest, which, if lost should not affect their lifestyle.

Risk Management - The identification of a potential loss and the handling of the risk usually under strict guidelines.

Risk Position - An asset or liability, which is exposed to fluctuations in value through changes in exchange rates or interest rates.

Risk-to-Reward Ratio - A calculation equal to the potential reward divided by the potential risk of a position. A long position entered at 100 with potential reward estimated at 120 and potential risk of 90 would have a reward-to-risk ratio of 20:10, or 2 to 1. Generally, a higher reward-to-risk ratio is a more appealing trade. For a long position, potential reward might be based on breakout projections, resistance levels or retracement estimates. Potential risk might be based on support levels, stop or loss requirements.

Rollover - Where the settlement of a deal is rolled forward to another value date based on the interest rate differential of the two currencies, the swap is also called Tomorrow Next, Tom-Next or T/N.

Round Trip - Buying and selling of a specified amount of currency.


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