Foreign Exchange Glossary

The Cornerstone Foreign Exchange Glossary is an ever-growing guide to the words, phrases and acronyms used in the world of FX.

Ask/Offer Price

The Ask/Offer Price is the price at which a Foreign Exchange broker will sell a currency pair at to a client.


The balance is the amount of cash a trader, investor or client has in their account. This can be in either one or multiple currencies.

Base Currency

When you receive a quote for an FX transaction, the base currency is the one which is listed first.


When you trade a pair, the currency that is credited to your account is the currency that you have bought.


Foreign Exchange transactions are based on contracts to exchange the currencies, you are trading on the contract not the currency.


Cross-pairs are currency pairs that involve combinations of major currencies without the US dollar.

Exchange Rate

The rate at which one currency can be exchanged for another is called the exchange rate.

Exotic Currency

This is the term for a currency that is rarely traded. Examples of Exotic Currencies include the Albanian Lek,  Samoan Tala, Kyrgyzstani Som and the Malawi Kwacha.

Fixed Spread

Spreads that stay the same regardless of market conditions are known as Fixed Spreads. See Spread further down the page for more information.

Fractional PIPs

1/10th of a single PIP is known as a fractional PIP. See PIPS further down the page for more information.

FX Derivatives

FX Derivatives are complex FX products such as futures, options, swaps and forwards that are used for complicated transactions with set rates and execution dates

Good ‘til cancelled

This is a designation can be applied to an order that would otherwise expire after a set time period so that the broker continues to keep the order in place until it is filled or cancelled.

Good for the day

This is a designation that can be applied to a trade so that it remains active until the end of the trading day.


Greenback is an industry short-hand term for the US Dollar. It is also used by economists and journalists and is derived from the first US banknotes printed during the US Civil War.

Interbank Market

This is international currency trading that occurs between large banks.

Limit Order

This is a pending order that enables a trader to choose the price that they want their order executed at.

Liquidity Provider

Brokers that buy large blocks of currency from interbank wholesale markets and then provide liquidity to other counterparties, typically financial services providers such as Cornerstone.


Loonie is an industry shorthand term for the Canadian Dollar (CAD). It is derived from a nickname for the one CAD coin.

Market Order

This is an instruction to your broker to carry out your trade at the best available price.


This is an instruction to a broker to carry out a trade in the market. I.e. place the currency order.


This is when a currency is fixed or pegged to exchange at a certain rate with another currency. The Hong Kong Dollar is an example which is pegged to the USD at a rate of 7.76 HKD to 1 USD.


A PIP is a foreign exchange rate delimiter. It stands for ‘Point in Percentage‘ or ‘Price Interest Point‘ and is used to measure changes in currency pairs. For most major currencies, a PIP is 1/100 of a percent. So if the EUR/USD exchange rate moves from 1.2300 to 1.2350, that would be 50 PIPs of movement.

PIP Value

This is the change in the value of a currency pair based on a single PIP movement.

Quote Currency

The Quote Currency is the second currency listed in a currency quote.


When you trade a pair, the currency that you pay for the transfer in- is the currency that you have sold.

Spot Rate

A Spot Rate is the rate at which one currency can be bought by another- at that present moment, rather than a rate agreed for buying it on a future date.


A spread is a difference between what a currency broker buys a currency at and what they then sell it at to the customer.


Sterling is an industry shorthand term for the British Pound.

Stop Loss Order

A pending stop order that executes to close an open position if the market moves against you in order to limit losses

Stop Order

This executes a market order once a certain price has been reached.

Variable Spread

Variable Spreads are ones that are constantly changing with market conditions.