Trading Terminology – Vocabulary Tips

Reading economic news can be a nightmare because market participants are using a specific language that has specific meanings starting from the currencies to be traded and ending with the jargon central bankers are using.

Currencies are known by they normal name, the the GBP (Great Britain Pound) or the AUD (Australian Dollar), but they also have other names in the trading arena, like the following: GBP – cable; AUD – aussie; NZD – kiwi; CAD – loonie; CHF – swiss. These are only some examples and from now on if you read a news regarding something happened to cable, you should know the article was referring to the GBP currency.

Also, when central bankers are speaking or are signaling a message to the markets, the words can be bullish (meaning the currency should go to the upside) or bearish (meaning the currency should go to the downside).

Bullish and bearish comes from the very nature of this markets: you can have a bullish trend, or a trend to the upside (comes from the bulls horns that are always pointing to the upside) or a bearish trend, a downtrend (comes from the bear that is always walking with the head pointing to the ground, to the downside).

So you may read something like “inflation in UK was bullish for the currency” and this means positive for the currency so when trading binary options we should go and buy call options.

The same is with the hawkish and dovish terms: the first one means bullish, positive, and comes from the hawk in the sky, and the second one means bearish, negative, and comes from the dove.

Therefore, one may here that the message a central banker sent was hawkish, meaning positive for the economy/currency.