Glossary of Terms

Search common forex trading terms and definitions from A to Z.

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Below is a glossary of terms that are used in the online trading industry. Select the first letter of the word you are seeking from the list above to jump to the appropriate section of the glossary.

Fiat Money

What is fiat money?

Fiat money is the term given to most currencies that are established as legal tender by governments, without being rooted in a physical commodity, such as gold or silver.

How does one use fiat money?

The very basis of online trading, specifically forex trading, whether major currency pairs, minor pairs or exotics, is centered around the strength of fiat currencies to one another. Each currency’s value can be affected by a plethora of external factors, but the most consistent factor may be the faith that the general public has in the strength of that particular currency. For example, if the various economic realities in the United Kingdom make investors question the strength of the British pound, then the GBP value against other currencies – specifically the euro and the USD will drop, as investors shy away from relying on what they see as a weak fiat currency. Gone are the days when that value would be linked to the price of gold, so the less faith the public has in a currency – and the higher the inflation rate of that currency – the lower its intrinsic value may fall.

Links related to Fiat Money
Commodity
EUR (Euro)
Exotic Currency Pairs
GBP (British pound)
Major Currency Pairs
Minor Currency Pairs
USD (U.S. dollar)

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