Glossary

Glossary

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Appreciation The increase in value of one currency when compared to another
Ask Price The lowest price a potential seller is willing to accept
Back Office Operations department in a financial services company 
Bank Rate The rate at which the central bank loans money to its banks 
Base Currency  The first currency appearing in a currency pair quotation
Base Rate The base rate is the interest rate that a central bank will charge to provide money banks
Basis Point Basis 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 Market A currency that has experienced a prolonged period of declining prices
Bid Figure First 3 figures in an exchange rate 
BIS The Bank for International Settlements located in, Switzerland, is the central bank for central banks
Bretton Woods 1994 international monetary arrangement to establish a currency exchange rate system for economically developed nations  (which is no longer in use)
Broker A broker is an person or firm that charges a fee or commission for executing buy and sell orders submitted by an investor
Bull A 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
Cable Cable (or the cable) is a foreign exchange expression used for the GBP/USD currency pair rate (British pound priced in US dollars)
Central Bank The 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 
Counterparty A counterparty is the other party that partakes in a financial transaction
Cross Rate Any currency pair that does not include the US dollar (USD)
Currency Banknotes and coins issued by a country/government which makes up it's physical monetary supply
Currency matrix By using multiple currency pairs to analise the strengths and weaknesses of a currency 
Currency Basket A 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 Date A 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
Dealer A firm or individual that buys foreign exchange from one group and then sells it to another group
Deficit When a nation imports more goods, services, and capital than it exports
Delivery Delivery is the action of transferring a currency that is the subject of a sales agreement
Delivery Date The 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
EFT Electronic fund transfer 
EMS European Monetary System 
European Union The 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
Exotic A currency that is a sparsely traded and highly illiquid 
Expiry Date The final day on which the holder of an option can exercise their right to buy or sell
FED US Federal Reserve 
Fixed exchange rate This occurs when the government seeks to keep the value of a currency secured against another currency
Flat/Square A situation where a trader or portfolio has no market exposure
FOMC The Federal Open Market Committee 
Foreign Exchange The process to buy/sell currency 
Forex Abbreviation of above term 
Forward contract Forward contracts are agreements between two parties to exchange two designated currencies at a explicit time in the future
Forward Points Forward 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 Rate The exchange rate at which a bank agrees to exchange one currency for another at a future planned date 
Front Office The trading activities carried out by the dealer
Fundamental Analysis Fundamental 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
FX Shorthand for Foreign exchange
GTC Goods till cancelled
Indicative Quote A forex quote that is informative only - the quoted price may not be available to trade for
Inflation The rise of overall prices of goods and services which is over a certain period in time
Interbank Rates The interbank rate refers to the price at which banks manages wholesale foreign exchange transactions in both the spot and forward market
Interest Rate Risk Risk that an investment's value will alter due to a change in the absolute level of interest rates
Intervention Occurs when a central bank buys or sells the country's own currency in the foreign exchange market to influence its value
Kiwi Dealer slang for the New Zealand Dollar
Lagging Indicator The analises of previous trading periods to interpret current patterns 
Leading Indicator A leading indicator is a sign to which direction the market is headed
Liability  To be able to deliver on future contracts
Libor The London Inter-bank Offered Rate is the average of interest rates estimated by each of the prominent banks in London 
Limit Order It 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
Long Refers to a trading style in which the trader will keep hold of to a position for an extended period of time
Loonie Dealer slang for the Canadian Dollar 
Margin Margin is a good faith deposit that a trader puts up for collateral to hold open a certain position
Margin Call A request from your broker to put more money in your account if you want to continue to trade
Maturity The expiration or settlement date of a security financial instrument
Offer The selling rate of currency by the dealer 
OCO One-cancels-the-other order
Open Position Open position refers to the state of affairs where the trade is still not closed but active
OTC Over-the-counter (OTC) or off-exchange trading is conducted directly between two parties
Outright Forward A forward outright foreign exchange transaction is a trade agreed today that will be settled at an agreed date in the future
Overbought Overbought means an prolonged price move to the upside
Oversold Similar to overbought Oversold to the downside
Pip The smallest amount by which a currency quote can altered
Point Point is the minimum possible price change on the left side of a decimal point
Range A range-bound market is one in which price moves around in between a specific high price and low price
Rate Price of one currency with relation to another
Reserve Currency The reserve currency is frequently used in international transactions, international investments and all aspects of the global economy
Resistance The level of price which the sale is projected to take place 
Revaluation Revaluation 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
Rollover Rollover 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 Date The standard settlement timeframe for foreign exchange spot transactions
Short When a currency is sold the seller is, hoping for a decline in the market price
Slippage Slippage 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
Spot The most common Foreign exchange transaction 
Spot Price Rate The price that is currently in the spot market 
Spread The difference between ASK and BID is called the spread, referred to the costs of the brokerage service
Sterling  British pound 
Stop Loss Order Stop-loss orders are created to limit an investor's potential loss on a position in a security trade
Support Levels Forex traders aim to buy at or near areas of significant levels of potential support in an uptrend
Swap Simultaneous purchase and sale of equal amounts of one currency for another with two separate value dates
Swissy Trader Slang for Swiss Franc rate
Technical Analysis Technical 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
Tick A tick is the lowest rising or downward movement in the price of a security
Trade Date The day committed to the trade and when it is locked in the exchange rate
Trailing Stop Loss A stop loss order that moves relative to price fluctuations
Transaction Date The exact date when a trade occurs 
Value Date A date in the future on which the trade is established
Value Spot Trades that are settled two days from date of contract 
Volatility Volatility indicates to the amount of uncertainty involved with the size of changes in a currency exchange rate
Whipsaw A whipsaw refers to a condition of intense market volatility, when rapid growth of a price is followed by a drastic fall (or vice versa)
Yard Dealer slang for one billion dollars