Glossary
Short, plain definitions of the terms you'll see in Vettro. They explain what things are and why traders pay attention to them, not what any market will do.
- base currency
- The first currency in a pair, such as the euro in EUR/USD. The price shows how much one unit of it costs in the second currency.
- benchmark
- A widely used reference price for a commodity, such as WTI for US crude oil or Brent for North Sea crude.
- central bankalso: central banks
- The institution that sets a country's or currency area's main interest rate and aims to keep inflation in check, such as the Federal Reserve or the European Central Bank.
- consensus forecastalso: forecast, expectations
- The middle of economists' or analysts' forecasts for a figure, which a result is compared with.
- core CPIalso: core inflation
- Inflation without food and energy prices, which change a lot from month to month. Central banks watch it as a sign of lasting price pressure.
- CPIalso: consumer price index
- The Consumer Price Index: a monthly measure of how much the prices of everyday goods and services have changed, and the most watched measure of inflation.
- currency pairalso: pair, pairs
- Two currencies quoted against each other, such as EUR/USD: the price of one euro (the first, or base, currency) in US dollars (the second, or quote, currency).
- dot plot
- A chart the Federal Reserve publishes four times a year showing where each member expects interest rates to be at the end of the coming years.
- dovish
- Describes a central bank, or one of its officials, leaning towards lower interest rates or keeping them low, usually to support growth or jobs. Vettro's tone label shows how the source reports it.
- earningsalso: results
- A company's results for the past three months: sales, profit and what it expects next, published four times a year.
- guidancealso: outlook
- What a company says it expects for the coming quarter or year, such as sales or profit.
- hawkish
- Describes a central bank, or one of its officials, leaning towards higher interest rates or keeping them high, usually to bring inflation down. Vettro's tone label shows how the source reports it.
- high impactalso: high-impact
- Vettro's label for scheduled releases that are widely followed by traders, such as inflation reports, jobs reports and central bank decisions. It describes how closely an event is watched, not which way any market will move.
- indexalso: stock index, indices
- A single number that tracks the shares of a group of companies, such as US500 for 500 large US companies.
- inflation
- How fast prices for everyday goods and services are rising. Most central banks aim to keep it at about 2% a year.
- interest ratealso: interest rates
- The cost of borrowing money, and the return on saving it. Each central bank sets the main interest rate for its currency.
- leverage
- Trading a larger position than the money in the account, using borrowed funds. It makes both gains and losses larger.
- medium impact
- Vettro's label for scheduled releases that are followed, but usually less closely than high-impact ones.
- non-farm payrollsalso: NFP, jobs report
- The monthly US jobs report: how many jobs were added or lost outside farming, with the unemployment rate and wage growth.
- OPEC+also: OPEC
- A group of large oil-producing countries and partners such as Russia that agree how much oil each will produce.
- pipalso: pips
- The smallest standard step in a currency price: the fourth decimal place for most pairs (0.0001), and the second for pairs priced in Japanese yen (0.01). Spreads and price moves in forex are usually counted in pips.
- PMIalso: purchasing managers' index
- A monthly survey of business managers. Above 50 means activity (such as output and orders) is growing; below 50, shrinking.
- quote currency
- The second currency in a pair, such as the US dollar in EUR/USD. The pair's price is given in this currency.
- rate decisionalso: rate decisions, interest rate decision
- A central bank's announcement of whether it is raising, lowering or keeping its main interest rate, made on dates it publishes in advance.
- real yieldalso: real yields, real interest rate
- A bond's interest rate after taking off expected inflation: what lending money really earns.
- sessionalso: sessions, trading session
- The hours when a major financial centre is open for business. Vettro uses three: Asia (Tokyo), London and New York.
- slippage
- The difference between the price you expected and the price your order was actually filled at, which can happen when prices change quickly.
- spreadalso: spreads
- The difference between the price you can buy at and the price you can sell at, at the same moment. It's a cost of every trade, and it can be wider at quiet or busy times.
- stockpilesalso: inventories, storage
- How much of a commodity, such as crude oil or natural gas, is held in storage. Reported weekly in the US.
- stop loss
- An order you set that closes a trade if the price reaches a level you chose, to limit how much that trade can lose.
- take profitalso: target
- An order you set that closes a trade if the price reaches a level you chose in its favour.
- timeframealso: timeframes
- The length of time each candle or bar on a chart covers, such as 1 hour or 1 day.
- volatility
- How much and how quickly a price moves. It describes the size of moves, not their direction.