Forex Terms

Forex terms D:

Day Order: A buy or sell order that will expire automatically at the end of the trading day on which it is entered.

Day Trade: A trade opened and closed on the same trading day.

Day Trader: A trader who buys and sells on the basis of small short-term price movements.

Day Trading: Refers to a style or type of trading where trade positions are opened and closed during the same day.

Dealer: An individual or firm that buys and sells assets from their portfolio, acting as a principal or counterpart to a transaction.

Depreciation: A fall in the value of a currency due to market forces.

Desk: Term referring to a group dealing with a specific currency or currencies.

Devaluation: The act by a government to reduce the external value of its currency.

Direct quotation: Quoting in fixed units of foreign currency against variable amounts of the domestic currency.

Discretionary Account: An account in which the customer permits a trading institution to act on the customer's behalf in buying and selling currency pairs. The institution has discretion as to the choice of currency pairs, prices, and timing-subject to any limitations specified in the agreement.

Forex Terms E:

Euro: The single currency of the European Economic and Monetary Union (EMU) introduced in January 1999. This is the amalgamation of the following currencies, after Jan. 1, 2002 these currencies will be considered legacy currencies. Germany Deutsche Marks, Italy Lira, Austria Schillings, France Franc, Belgium Francs, Netherlands (Dutch) Guilders, Finland Markka, Portugal Escudo, Greece Drachmas, Ireland Punt, Luxembourg Francs, Spanish Pesetas.

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

Execution: The Process of completing an order or deal.

Forex Terms F:

Fast Market Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.

Federal Deposit Insurance Corporation (FDIC): The regulatory agency responsible for administering bank depository insurance in the United States.

Federal Reserve (Fed): The Central Bank of the United States.

Federal Reserve System The central banking system in the United States.

Fill: The process of completing a customer's order to buy or sell a currency pair.

Fill Price: The price at which a buy or sell order was executed.

Financial Risk: The risk that a firm will be unable to meet its financial obligations.

Flat: Term describing a trading book with no market exposure.

FOMC Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates etc.

Foreign Exchange: The purchase or sale of a currency against sale or purchase of another.

Forex: Term commonly used when referring to the foreign exchange market.

Forex Club:Groups formed in the major financial centers to encourage educational and social contacts between foreign exchange dealers, under the umbrella of Association Cambiste International.

Forward: A transaction that settles at a future date.

Forward Points: The points that are added to or subtracted from the spot rate to calculate the forward rates for a forward foreign exchange transaction. These points are based on the differential between the interest rates of the two currency pairs.

Forward Price: (See forward rates).

Forward Rates: The net price resulting from calculating the forward points and subtracting them from the existing spot rate. This is the rate at which a currency can be purchased or sold for delivery in the future.

Fundamental Analysis: Analysis of economic and political information with the objective of determining future movements in a financial market.

FX: Foreign Exchange.

Forex Trading Terms

Terms A-C

A: Forex Trading Terms

Aggressor: A trader dealing on an existing price in the market.
Appreciation: The increase in the value of an asset.
Arbitrage: Profiting from differences in the price of a single currency pair that is traded on more than one market.
Ask: The price at which a currency pair or security is offered for sale; the quoted price at which an investor can buy a currency pair. This is also known as the 'offer', 'ask price', and 'ask rate'.
Ask Price: See 'ask'.
Ask Rate: See 'ask'.
Asset: An item having commercial or exchange value.

B: Forex trading Terms

Back Office: The office location, or department, where the processing of financial transactions takes place.
Base Currency: In terms of foreign exchange trading, currencies are quoted in terms of a currency pair. The first currency in the pair is the base currency. The base currency is the currency against which exchange rates are generally quoted in a given country. Examples: USD/JPY, the US Dollar is the base currency; EUR/USD, the EURO is the base currency.
Bear Market: An extended period of general price decline in an individual security, an asset, or a market.
Bid: The price at which an investor can place an order to buy a currency pair; the quoted price where an investor can sell a currency pair. This is also known as the 'bid price' and 'bid rate'.
Bid/Ask Spread: The point difference between the bid and offer (ask) price.
Big Figure: The first two or three digits of a foreign exchange price or rate. Examples: USD/JPY rate of 108.05/10 the big figure is 108. EUR/USD price of .8325/28 the big figure is .83
Bull Market: A market which is on a consistent upward trend.
Buy Limit Order: An order to execute a transaction at a specified price (the limit) or lower.
Buy On Margin: The process of buying a currency pair where a client pays cash for part of the overall value of the position. The word margin refers to the portion the investor puts up rather than the portion that is borrowed.

C: forex trading Tems

Cable: The British pound/US Dollar exchange rate GBP/USD.
Candlestick Chart: A chart that displays the daily trading price range (open, high, low and close).
Carry (Interest-Rate Carry): The income or cost associated with keeping a foreign exchange position overnight. This is derived when the currency pairs in the position have different interest rates for the same period of time.
Central Bank: A bank, administered by a national government, which regulates the behavior of financial institutions within its borders and carries out monetary policy.
Chartist: A person who attempts to predict prices by analyzing past price movements as recorded on a chart.
Closing a Position: The process of selling or buying a foreign exchange position resulting in the liquidation (squaring up) of the position.
Closing Market Rate: The rate at which a position can be closed based on the market price at end of the day.
Commission: The fee levied by an institution to undertake a trade on behalf of a customer.
Confirmation: Written acknowledgment of a trade, listing important details such as the date, the size of the transaction, the price, the commission, and the amount of money involved.
Counterpart: A participant in a financial transaction.
Cross-Rate: The exchange rate between 2 currencies where neither of the currencies are USD.
Currency: Money issued by a government.
Currency Pair: The two currencies that make up a foreign exchange rate. IE: USD/YEN.
Currency Risk: The possibility of an unfavorable change in exchange rates.