Forex Glossary (S)

Commonly used forex terms and their definitions.

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Same Day Transaction - A transaction that matures on the day the transaction takes place.

Security Deposit - The amount of money needed to open or maintain a position. Also known as 'margin.'

Sell Signal - A condition that indicates a good time to sell An instrument. The exact circumstances of the signal will be determined by the indicator that an analyst is using. For example, it's often considered a sell signal when the RSI crosses down through the 50 level.

Selling Rate - Rate at which a financial institution or dealer is willing to sell foreign currency, also known as "ask" or "offer".

Settlement - The actual delivery of currencies made on the maturity date of a trade.

Settlement Date - The date upon which foreign exchange contracts settle.

Settlement Risk - Where a payment is made to a counter party before the counter value payment has been made. The risk is that the counter party's payment will not be received.

Short - To go "short" is to have sold an instrument without actually owning it, and to hold a short position with expectations that the price will decline so it can be bought back in the future at a profit.

Short-Term Interest Rates - Normally the 90 day rate.

Sidelined - A major currency that is lightly traded due to major market interest being in another currency pair.

Signal Line - Also known as a "trigger line", it is a moving average of another indicator that is used to generate simple buy and sell signals. Probably the most used signal line is the one that is built into the MACD Indicator display. The signal line is the exponential moving average of the MACD line. A buy signal is generated when the MACD line crosses above the signal line and a sell signal is generated when the MACD line crosses below the signal line.

Simple Average - A moving average that gives equal weight to each day's price data.

Slippage - Refers to the negative (or depreciating) pip value between where a stop loss order becomes a market order and where that market order may be filled.

Soft Market - More potential sellers than buyers, which creates an environment where rapid price falls are likely.

Spot - A transaction for the exchange of one currency against another that occurs immediately and the settlement takes place two business days after execution.

Spot Next - The overnight swap from the spot date to the next business day.

Spread - The difference between the bid and the ask. Generally speaking, more liquid (heavy volume) currency pairs usually have smaller bid/ask spreads. Less liquid currency pairs (light volume) usually have larger spreads.

Square - Purchase and sales are in balance and thus the trader or dealer has no open position.

Squawk Box - A speaker connected to a phone often used in broker trading desks.

Squeeze - Action by a central bank to reduce supply in order to increase the price of money.

Stable Market - An active market which can absorb large sale or purchases of currency without major moves.

Standard - A term referring to certain normal amounts and maturities for dealing.

Sterilization - Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the FX market.

Sterling - British pound, also known as cable.

Stochastic Oscillator - A technical momentum indicator developed by George Lane that measures the price of a security relative to the high/low range over a set period of time. The indicator oscillates between 0 and 100, with readings below 20 considered oversold and readings above 80 considered overbought. A 14-period Stochastic Oscillator reading of 30 would indicate that the current price was 30% above the lowest low of the last 14 days and 70% below the highest high. The Stochastic Oscillator can be used like any other oscillator by looking for overbought/oversold readings, positive/negative divergences and centerline crossovers.

StochRSI - An oscillator used to identify overbought and oversold readings in RSI. Because RSI can go for extended periods without becoming overbought (above 70) or oversold (below 30), StochRSI provides an alternative means to identify these extremities. StochRSI is found by applying the Stochastics formula to RSI readings -- hence its name. As an indicator of RSI, it measures the value of RSI relative to its high/low range over a set number of periods. When RSI records a new low for the set period, StochRSI will be at 0. When RSI records a new high for the set period, StochRSI will be at 100.

Stocky - Market slang for Swedish Krona.

Stop Loss Order - An instruction to the dealer to buy or sell a currency pair when it trades beyond a specified price. A buy order is at a rate that is higher then the current market rate, a sell order is at a rate that is lower then the current market rate. They serve to either protect a trader's profits or limit your losses. stops become markets orders when executed so the order may not be filled at desired price .As a result the initial risk can be estimated but not guranteed. During times of extreme volatility it can be difficult or impossible to execute orders.

Support - A price level at which there is an expectation of buying to take place, a break in the support often leads to lower prices. See resistance.

Swap Price - A price as a differential between two dates of the swap.

Swap - The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction. It is essentially made up of a spot deal and an opposite forward deal.

Swissy - Market slang for Swiss Franc.

Symmetrical Triangle - A sideways chart pattern between two converging trendlines in which the upper trendline is declining and the lower trendline is rising. This pattern represents an even balance between buyers and sellers, although the prior trend is usually resumed. The breakout through either trendline signals the direction of the price trend.


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