Forex glossary of terms
Forex glossary - S
Scalp - To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or even just a few minutes.
Selective hedger - A person who hedges only when he or she believes that prices are likely to move against him or her.
Selling climax - An extraordinarily high volume occurring suddenly in a downtrend signaling the end of the trend.
Selling Rate - Rate at which a bank is willing to sell foreign currency.
Serial options - Options for months for which there are no futures contracts. The underlying futures contract for a serial option month would be the next nearby futures contract.
Settlement - Actual physical exchange of one currency for another.
Settlement Date - It means the business day specified for delivery of the currencies bought and sold under a forex contract.
Settlement price - A figure determined by the closing range that is used to calculate gains and losses in futures market accounts, performance bond calls and invoice prices for deliveries. See Closing range.
Short - A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms.
Short cash - Describes a trader who needs and plans to buy a commodity.
Short hedge - The sale of a futures contract in anticipation of a later cash market sale. Used to eliminate or lessen the possible decline in value of ownership of an approximately equal amount of the cash financial instrument or physical commodity. See Hedge.
Short Position - A contract to sell securities, commodities or currencies at a future date and at a prearranged price. At the expiry date, if the spot price is below the contract price, the holder of the contract will make a profit and if the spot price is above the contract price, then there is the potential to make a huge loss.
Sideways trend - Seen in a bar chart when prices tend not to go above or below a certain range of levels.
SITC - Standard International Trade Classification. A system for reporting trade statistics in a common manner.
SOFFEX - Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.
Soft Market - More potential sellers than buyers, which creates an environment where rapid price falls are likely.
Speculator - One who attempts to anticipate price changes and, through buying and selling futures contracts, aims to make profits. Does not use the futures market in connection with the production, processing, marketing or handling of a product. The speculator has no interest in taking delivery.
Spike (high or low) - A significantly lower low or higher high within a data series. Points where an currency spikes often signify a potential reversal in the direction of the trend, and hence can be valuable tools in analyzing a chart.
Spot - (1) The most common foreign exchange transaction.(2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.
Spot Next - The overnight swap from the spot date to the next business day.
Spot Price/Rate - The price at which the currency is currently trading in the spot market.
Spot transactions - currency traded for immediate delivery.
Spread - (1) The difference between the bid and ask price of a currency.(2) The difference between the price of two related futures contracts. (3) For options, transactions involving two or more option series on the same underlying currency.
Spread order - An order that indicates the purchase and sale of futures contracts simultaneously.
Spread trade - The simultaneous purchase and sale of futures contracts for the same commodity or instrument for delivery in different months or in different but related markets. A spreader is not concerned with the direction in which the market moves, but only with the difference between the prices of each contract.
Stable Market - An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.
Stagflation - Recession or low growth in conjunction with high inflation rates.
Standard and Poors (S&P) - A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&&P 500.
Sterling - British pound, otherwise known as cable.
Sterilization - Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.
Stochastics - Like RSI, stochastics is a momentum indicator that indicates overbought/oversold levels. High levels (above 70 or 80) are indications to enter short orders; low levels (below 30 or 20) are indications to buy. Like all oscillators, stochastics work best A momentum indicator that measures the price of a security relative to its high/low range over a set period of time. The indicator fluctuates between 0 and 100, with readings below 20 considered overbought (bearish) and readings above 80 considered oversold (bullish).
Stop close only order - A stop order that is executed only during the closing range of the trading session.
Stop limit order - An order that becomes a limit order only when the market trades at a specified price.
Stop Loss Order - Order given to ensure that , should a currency weaken by a certain percentage, a short position will be covered even though this involves taking a loss. Realize profit orders are less common.
Stop order - An order that becomes a market order only when the market trades at a specified price.
Stop with a price limit - A stop order with a specified worst price at which the order can be filled.
Stop Out Price - US term for the lowest accepted price for Treasury Bills at auction.
Straddle - The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.
Strangle - The purchase of a put and a call, in which the options have the same expiration and the put strike is lower than the call strike, called a long strangle. Also the sale of a put and a call, in which the options have the same expiration and the put strike is lower than the call strike, call a short strangle.
Strike Price - Also called exercise price. The price at which an option holder can buy or sell the underlying instrument.
Strip - A combination of two puts and one call.
Structural Unemployment - Unemployment levels inherent in an economic structure.
Supply - The quantity of a commodity that producers are willing to provide to the market at a given price.
Support - The opposite of support; a point in a chart where a currency pair has repeatedly had trouble falling beneath. When a currency pair "tests" support but does not break it, buyers have outnumbered sellers; alternatively, sellers have gained control of momentum if support is broken and the currency pair continues to plunge downward.
Support Levels - A price level at which the buying is expected to take place.
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.
Swap Spread - The difference between the negotiated and fixed price of the swap. The size of the spread depends on market supply and participating parties' credit.
Swift - Society for Worldwide Inter-bank Financial Telecommunication is a clearing system for international trading.
Swissy - Market slang for Swiss Franc.
Symmetrical triangles - A price formation that can either signal a reversal or a continuation of price movement.
Synthetic futures - A combination of a put and a call with the same strike price, in which both are bullish, called synthetic long futures. Also, a combination of a put and a call with the same strike price, in which both are bearish, called synthetic short futures.
Synthetic call option - A combination of a long futures contract and a long put, called a synthetic long call. Also, a combination of a short futures contract and a short put, called a synthetic short call.
Synthetic option - A combination of a futures contract and an option, in which one is bullish and one is bearish.
Synthetic put option - A combination of a short futures contract and a long call, called a synthetic long put. Also, a combination of a long futures contract and a short call, called a synthetic short put.
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