education & tool

Glossary

A

Appreciation – when a currency gets stronger in price in response to the market demand, it is called an appreciation

Arbitrage – The sale or purchase of equipment and simultaneous taking of equivalent and contradictory position in the related market, to obtain the benefit of small price discrepancies between markets

Around- The dealer verbiage utilized in quoting while forwarding discount/forward is around parity. Such as, “two-two around” would convert into 2 points to any side of the existing spot.

Ask Rate- It is the rate at which financial instrument is provided for sale

Asset Allocation- Investment practice which divides funds amongst diverse markets in order to obtain divergence for the purpose of risk management and expected returns reliable with objectives of investors.

B

Back office- The processes and departments associated with the management of financial transactions

Base Currency- the currency in which an issuer or investor maintains its books of accounts. In the Forex Trade, USD is generally considered the base currency for quotes such as “$2 USD” per other currency quoted in the pair.

Bear Market- The market renowned by declining prices.

Balance- of Trade the Difference between the value of exports and imports in a country

Base Currency – The base currency is the money in which a financial issuer or investor keeps up its book of records. In the FX markets, the US Dollar is ordinarily considered the ‘base’ money for quotes, implying that quotes are stated as a unit of $1 USD per the other cash quoted in the pair.

Bear Market- The market differentiated by decreasing rates.

Bid Rate- The rate at which a broker become ready to purchase a currency.

Big Figure- It refers to the first few digits of exchange rate. These digits hardly vary in general market variations hence are mislaid in trader quotes. Such as: a Yen/USD rate might be 107.35/107.30 but quoted vocally without initial three digits 35/30.

Book- In practical terms, a book is considered the summary of desk’s or trader’s total positions.

Broker- A firm or individual that functions as an intermediate, putting together sellers and purchasers for the commission or fee.

Bull Market- A marketplace differentiated by increasing rates.

Bundesbank- The Central Bank of Germany

C

Cable – Trader terminology refers to the Sterling/US Dollar conversion scale.

Candle Chart – The chart which demonstrates the trading range for the day just as the starting and ending cost. In case the open cost is greater than the closing value, the rectangle between the opening and closing cost is shaded. On contrary to this,  if the closing cost greater than the opening value, that section of the graph isn’t shaded.

Central Bank– An administration or semi legislative association that deals with a nation’s money related policy. For instance, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.

Chartist – A person who utilizes outlines and diagrams and translates historical information to discover drifts and anticipate future fluctuations.

Choice Market – A marketplace without spreads. Every trades sells and purchases happen at that single cost

Clearing – The procedure of settling an exchange or trade.

Collateral– Something offered as a guarantee or to secure a loan of performance.  

Commission – An exchange or transaction fee charged by a trader.

Confirmation – A document traded or exchanged by partners to an exchange that expresses the terms of said transaction.

Contagion – The propensity of a financial emergency to spread from one marketplace to another.  

Contract – It is the standard unit of exchange or trading.

Counterparty – One of the members or participants in an financial exchange.

Country Risk – Risk related to a cross-border exchange/transaction, including however not constrained to legitimate and political conditions.

Cross Rate – It is the exchange rate between any two monetary standards/currencies that are considered non-standard in the nation where the money pair is quoted. For instance, in the US, a GBP/JPY quote would be viewed as a cross rate, though in Japan or UK it would be one of the key money sets exchanged.

Currency– Any type of cash/money issued by the central bank or government and utilized as legitimate tender and a base for exchange.

Currency Risk – The possibility of an unfavorable variation in trade rates.

D

Day Trading – It refers to positions that are closed and opened on a similar trade day.

Dealer – A person who functions as a partner to an exchange. Principals take one side of a position, dreaming to gain benefit by finishing off the  position in a successive exchange with another party. Conversely, a trader is an individual or firm that works as a middleman, putting together purchasers and merchants for a commission or fee.

Deficit – An adverse balance of payments or trade.

Delivery– A Forex exchange where the two sides make and take genuine delivery of the monetary terms exchanged.

Depreciation – A decrease in the worht of currency because of market powers.

Derivative – An agreement that varies in worth in relation to the value changes of an associated or fundamental security, future or other physical instrument. An Option is the most widely recognized subsidiary instrument.

Devaluation – The purposeful descending adjustment of money’s cost, ordinarily by official declaration.

E

Economic Indicator – An officially sanctioned statistic which shows current financial stability and growth. Normal pointers incorporate Gross Domestic Product (GDP), employment rates, retail sales, inflation etc.

End Of Day Order (EOD) – An order to purchase or sell at a predetermined cost. This order stays open until the finish of the trading day which is regularly 5PM ET.

EURO – The currency/money of the European Monetary Union (EMU). A trade for the European Currency Unit (ECU).

European Central Bank (ECB) – The Central Bank for the new European Monetary Union.

European Monetary Union (EMU) – The chief objective of the EMU is to build up a solitary European money called the Euro, which will authoritatively supplant the national monetary standards of the part EU nations in 2002. On Janaury1, 1999 the transitional stage to present the Euro started. The Euro currently exists as a managing an account cash and paper money related exchanges and outside trade are made in Euros. This progress period will keep going for a long time, at which time Euro takes note of a coins will enter dissemination. On July 1,2002, just Euros will be legitimate delicate for EMU members, the national monetary standards of the part nations will stop to exist. The present individuals from the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Spain and Portugal.

F

Federal Deposit Insurance Corporation (FDIC) – The administrative organization in charge of managing bank depository insurance in the US.

Federal Reserve(Fed) – The Central Bank for the United States.

Flat/square – Dealer terminology used to depict a position that has been totally reversed, for example you purchased $500,000 then sold $500,000, along these lines making an impartial (level) position.

Foreign Exchange – (Forex, FX) – The concurrent purchasing of one money and selling of another.

Forward – The pre-indicated trade rate for a foreign trade contract settling at some concurred future date, in view of the interest rate differential between the two monetary standards included.

Forward points – The pips added to or deducted from the present conversion rate to figure a forward cost.

Fundamental analysis– Analysis of political and monetary information with the goal of deciding future variations in a money related market.

Future Contract – A commitment to trade an instrument or good at a set cost on a future date. The essential difference between a Future and a Forward is that Futures are normally exchanged over a trade (Exchange-Traded Contacts – ETC), versus forwards that are considered Over The Counter (OTC) contracts. An OTC is any agreement NOT exchanged on a trade.

G

Good ‘Til off Order (GTC) – AN order to sell or purchase at a specified worth. This order remains open till crammed or till the consumer cancels.

H

Hedge – a particular position or group of positions that minimizes the danger of your key position.

I

Inflation – A financial condition whereby costs for commodity rise, corroding buying power.

Initial margin – The first deposit of collateral needed to come in into a position as a assurance on future performance.

Interbank rates –
The exchange rates at which big international banks quote alternative big international banks.

L

 

Leading Indicators – Statistics which are measured to predict the future financial activity.

LIBOR – The London Inter-Bank given Rate. Banks use this term while borrowing from another bank.

Limit order – AN order with constraints on the most worth to be paid or the minimum worth to be received. For example, if the present worth of USD/YEN is 102.00/05, then a bound order to purchase for USD would be at a worth below 102. (i.e. 101.50)

Liquidation – The end of the current position through the completion of AN antagonistic exchange.

Liquidity – the flexibility of a market to just accept big dealing with slight to no influence on worth stability.

Long position – A position which appreciates in worth, in case of market costs rise.

M

Margin – The desired equity which an trader/investor should deposit to pledge a position.

Margin call – The needed equity which an investor should deposit to pledge a position.

Marked-to-Market – A method of re-evaluating every open position with the running market rates. These latest values then confirm margin necessities.

Market Maker – A dealer that frequently quotes each bid and raise costs and is prepared to create a two-sided marketplace for any monetary instrument.

Market Risk – Exposure to changes in market costs.

Maturity – method of re-evaluating every open positios with the existing market costs. These latest values then confirm margin necessities.

O

Offer – the speed at which a trader is ready to sell a currency.

Offsetting transaction – A trade that acts to offset or cancel certain or all of the market risks associated with an open position.

One Cancels the Other Order (OCO) – A designation used for two orders where one a part of the two orders is completed the opposite is automatically cancelled out.

Open order – AN order which will be executed once a marketplace changes to its selected worth. Generally related to “Good ’til Cancelled Orders”.

Open position – A deal not so far settled or reversed with a physical payment.

Overnight – A trade that continues to be open till following business day.

Over the Counter (OTC) – Accustomed to define any dealing that’s not conducted over a trade.

P

Pips – Digits included or deducted from the fourth decimal place, i.e. 0.0001. Also known as Points.

Political Risk – Exposure to variations in governmental policy which is able to have AN adverse result on the position of an investor.

Position – The procured aggregate holdings of a provided currency.

Premium – within the currency marketplaces, it defines the sum by which the futures or forward worth exceed the price.

Price Transparency – It defines quotes to which all marketplace participants have equivalent access.

Q

Quote – An indicative marketplace cost, generally used just for data or information purposes.

R

Rate – The worth of one currency in terms of another, usually used for dealings.

Resistance – A term employed in technical analysis representing a selected index at that analysis settles people will sell.

Revaluation – a rise within the rate for an exchange as an outcome of central bank intervention. Antonym of Devaluation.

Risk – Exposure to unsure fluctuation, most frequently used with a bad implication of negative variation.

Risk Management – The utilization of monetary analysis and exchange techniques to control or reduce the exposure to different sorts of risks.


Roll-Over – A method whereby the clearance of a deal is rolled forward to a different worth date. the rate of this method relies on the rate differential of the two currencies.

S

Settlement – the method by which an exchange entered into the  records and books of the corresponding persons to a dealing. The settlement of currency trades might or might not include the real physical trade of one currency for an additional.

Short Position – AN speculation position which advantages from a reduction in marketplace rate.

Spot Price – The present market rate. Settlement of spot dealings/transactions generally appears within two business days. 

Spread – The difference between the bid and provide costs.

Sterling – Slang used for British Pound

Stop Loss Order – Order sort that involves the automatic liquidation of open position open position at a selected worth.  Accustomed to reduce exposure to losses when the market changes against the position of an investor.

Support Levels – a method employed in technical analysis which specifies a selected worth floor and ceiling at which a provided trade rate will automatically right itself.

Swap – A currency swap is the concurrent buy and sale of the similar amount of a currency, at a forward exchange price.

T

Technical Analysis – a trial to forecast costs by examining marketplace information, i.e. historical worth trends volumes, and averages and open interest, etc.

Tomorrow Next (Tom/Next) – Synchronal selling and purchasing of a currency for delivery the subsequent day.

Transaction value – the price of selling or purchasing a monetary instrument.

Transaction Date – The date of trading.

Turnover – the whole cash worth of every completed transactions during a specified time period; volume.

Two-Way worth – once each a bid and provide rate is quoted for a FX dealing.

U

Uptick –  A latest worth quote at a cost greater than the preceding quote.

Uptick Rule – In the U.S., a parameter whereby a security might not be sold-out petite lest the latter exchange before the little trade was at a worth under the value at which the small trading is execeuted.


US Prime Rate – The interest rate at which US banks lend to the key company customers

V

Value Date – The date on which the counterparts to a monetary dealing conform to settle their several transactions, i.e., exchanging payments. For spot currency transactions, the worth date is generally two business days forward. Also referred to as due date.

Variation Margin – Funds a trader should request from the consumer to possess the desired margin deposited. The term sometimes used to refer extra Funds that has got to be deposited as an outcome of unfavorable rate changes.

Volatility (Vol) – A statistical amount of worth variations in the marketplace over time.

W

Whipsaw – Slang used for a condition of a extremely volatile market wherever a pointy worth movement is speedily trailed by a pointy reversal.

Y

Yard – Slang used for a billion.

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