Glossary

Glossary

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AppreciationThe increase in value of one currency when compared to another
Ask PriceThe lowest price a potential seller is willing to accept
Back OfficeOperations department in a financial services company 
Bank RateThe rate at which the central bank loans money to its banks 
Base Currency The first currency appearing in a currency pair quotation
Base RateThe base rate is the interest rate that a central bank will charge to provide money banks
Basis PointBasis point (BPS) is a common unit of measure for interest rates and other percentages in finance
Bear Bears know as (sellers) think things are going to get worse 
Bear MarketA currency that has experienced a prolonged period of declining prices
Bid FigureFirst 3 figures in an exchange rate 
BISThe Bank for International Settlements located in, Switzerland, is the central bank for central banks
Bretton Woods1994 international monetary arrangement to establish a currency exchange rate system for economically developed nations  (which is no longer in use)
BrokerA broker is an person or firm that charges a fee or commission for executing buy and sell orders submitted by an investor
BullA bull is an investor who thinks the market is going to rise
Bull Market"bull market" is when a financial instrument is trending in an ascending manner
CableCable (or the cable) is a foreign exchange expression used for the GBP/USD currency pair rate (British pound priced in US dollars)
Central BankThe bank which is responsible for a country's monetary policy  
Counter currency The currency used as the reference or second currency in a currency pair 
CounterpartyA counterparty is the other party that partakes in a financial transaction
Cross RateAny currency pair that does not include the US dollar (USD)
CurrencyBanknotes and coins issued by a country/government which makes up it's physical monetary supply
Currency matrixBy using multiple currency pairs to analise the strengths and weaknesses of a currency 
Currency BasketA currency basket is a nominated group of currencies in which the weighted average is used as a measurement of the value or the amount of an obligation
Deal DateA settlement date is defined as the exact date a trade is settled
Deal Ticket A deal ticket is a recorded evidence of all the terms, conditions, and necessary information of a trade agreement
DealerA firm or individual that buys foreign exchange from one group and then sells it to another group
DeficitWhen a nation imports more goods, services, and capital than it exports
DeliveryDelivery is the action of transferring a currency that is the subject of a sales agreement
Delivery DateThe final date by which the principal commodity for a futures or forward contract must be delivered for the terms of the contract to be fulfilled
EFTElectronic fund transfer 
EMSEuropean Monetary System 
European UnionThe European Union is a political and economic union of 28 member states that are located primarily in Europe
Exchange risk The financial risk of an investment's value changing due to the alterations in currency exchange rates
ExoticA currency that is a sparsely traded and highly illiquid 
Expiry DateThe final day on which the holder of an option can exercise their right to buy or sell
FEDUS Federal Reserve 
Fixed exchange rateThis occurs when the government seeks to keep the value of a currency secured against another currency
Flat/SquareA situation where a trader or portfolio has no market exposure
FOMCThe Federal Open Market Committee 
Foreign ExchangeThe process to buy/sell currency 
ForexAbbreviation of above term 
Forward contractForward contracts are agreements between two parties to exchange two designated currencies at a explicit time in the future
Forward PointsForward points are the basis points that are subtracted from, or added to, the current spot rate to determine exactly what the forward rate will be on the delivery date
Forward RateThe exchange rate at which a bank agrees to exchange one currency for another at a future planned date 
Front OfficeThe trading activities carried out by the dealer
Fundamental AnalysisFundamental analysis is a way of identifying the changes in market valuation by analyzing economic, social, and political forces that affects the supply and demand of an asset
FXShorthand for Foreign exchange
GTCGoods till cancelled
Indicative QuoteA forex quote that is informative only - the quoted price may not be available to trade for
InflationThe rise of overall prices of goods and services which is over a certain period in time
Interbank RatesThe interbank rate refers to the price at which banks manages wholesale foreign exchange transactions in both the spot and forward market
Interest Rate RiskRisk that an investment's value will alter due to a change in the absolute level of interest rates
InterventionOccurs when a central bank buys or sells the country's own currency in the foreign exchange market to influence its value
KiwiDealer slang for the New Zealand Dollar
Lagging IndicatorThe analises of previous trading periods to interpret current patterns 
Leading IndicatorA leading indicator is a sign to which direction the market is headed
Liability To be able to deliver on future contracts
LiborThe London Inter-bank Offered Rate is the average of interest rates estimated by each of the prominent banks in London 
Limit OrderIt is a take-profit order assigned with a bank or brokerage to purchase or sell a set amount of a financial instrument at a specified price or better
LongRefers to a trading style in which the trader will keep hold of to a position for an extended period of time
LoonieDealer slang for the Canadian Dollar 
MarginMargin is a good faith deposit that a trader puts up for collateral to hold open a certain position
Margin CallA request from your broker to put more money in your account if you want to continue to trade
MaturityThe expiration or settlement date of a security financial instrument
OfferThe selling rate of currency by the dealer 
OCOOne-cancels-the-other order
Open PositionOpen position refers to the state of affairs where the trade is still not closed but active
OTCOver-the-counter (OTC) or off-exchange trading is conducted directly between two parties
Outright ForwardA forward outright foreign exchange transaction is a trade agreed today that will be settled at an agreed date in the future
OverboughtOverbought means an prolonged price move to the upside
OversoldSimilar to overbought Oversold to the downside
PipThe smallest amount by which a currency quote can altered
PointPoint is the minimum possible price change on the left side of a decimal point
RangeA range-bound market is one in which price moves around in between a specific high price and low price
RatePrice of one currency with relation to another
Reserve CurrencyThe reserve currency is frequently used in international transactions, international investments and all aspects of the global economy
ResistanceThe level of price which the sale is projected to take place 
RevaluationRevaluation rates are market currency rates from a specific timeframe that are used as a base value by currency traders to assess whether a profit or a loss has been achieved for the day
RolloverRollover is the interest paid or earned for retaining a currency spot position overnight
Selling Rate The rate at which corporations will sell that currency
Settlement The exchange of currency for another
Settlement DateThe standard settlement timeframe for foreign exchange spot transactions
ShortWhen a currency is sold the seller is, hoping for a decline in the market price
SlippageSlippage is when an order is executed, sometimes without a limit order, or a stop loss occurs at a less favorable rate than originally set in the order
SpotThe most common Foreign exchange transaction 
Spot Price RateThe price that is currently in the spot market 
SpreadThe difference between ASK and BID is called the spread, referred to the costs of the brokerage service
Sterling British pound 
Stop Loss OrderStop-loss orders are created to limit an investor's potential loss on a position in a security trade
Support LevelsForex traders aim to buy at or near areas of significant levels of potential support in an uptrend
SwapSimultaneous purchase and sale of equal amounts of one currency for another with two separate value dates
SwissyTrader Slang for Swiss Franc rate
Technical AnalysisTechnical analysis is the framework in which forex traders check price movement
Technical Correction A technical correction is a reduction in the market price of an asset or entire market after vast price increases
TickA tick is the lowest rising or downward movement in the price of a security
Trade DateThe day committed to the trade and when it is locked in the exchange rate
Trailing Stop LossA stop loss order that moves relative to price fluctuations
Transaction DateThe exact date when a trade occurs 
Value DateA date in the future on which the trade is established
Value SpotTrades that are settled two days from date of contract 
VolatilityVolatility indicates to the amount of uncertainty involved with the size of changes in a currency exchange rate
WhipsawA whipsaw refers to a condition of intense market volatility, when rapid growth of a price is followed by a drastic fall (or vice versa)
YardDealer slang for one billion dollars