What is a Security?
Security
Forex Trading Glossary
Quick Answer: A security is a tradable financial asset—equity, debt, or derivative—that represents ownership, creditor claims, or contractual rights between market participants.
What is a Security?
A security is a tradable financial asset that represents ownership, debt, or contractual rights. Securities include equities, bonds, and derivatives that can be packaged, priced, and transferred between market participants.
Major Security Categories
- Equity securities: Shares of ownership in a company that can generate dividends and capital gains.
- Debt securities: Instruments like bonds or notes that promise scheduled interest and principal repayment.
- Derivative securities: Contracts such as options, futures, or CFDs whose value is tied to an underlying asset.
Why FX Traders Care
Currency pairs respond to capital flows between security markets. A rally in U.S. equities or Treasuries often sparks USD demand as global investors shift exposure.
Applying Security Analysis to Forex
- Track cross-asset performance to spot risk-on or risk-off rotations that fuel currency trends.
- Use bond yield spreads to anticipate policy divergence and potential moves in pairs like EUR/USD.
- Monitor derivative positioning data to gauge speculative sentiment around major currencies.
- Align your trade thesis with macro drivers from equity and credit markets to improve conviction.
Related Terms
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