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Opposite of Devaluation.
Risk - Exposure to uncertain change, most often used with a negative connotation of adverse
change.
Risk Management - The employment of financial analysis and trading techniques to reduce and/or
control exposure to various types of risk.
Roll-Over - Process whereby the settlement of a deal is rolled forward to another value date. The
cost of this process is based on the interest rate differential of the two currencies.
Round trip - Buying and selling of a specified amount of currency.
S
Settlement - The process by which a trade is entered into the books and records of the counterparts
to a transaction. The settlement of currency trades may or may not involve the actual physical
exchange of one currency for another.
Short Position - An investment position that benefits from a decline in market price. When the base
currency in the pair is sold, the position is said to be short.
Spot Price - The current market price. Settlement of spot transactions usually occurs within two
business days.
Spread - The difference between the bid and offer prices.
Square - Purchase and sales are in balance and thus the dealer has no open position.
Sterling - Slang for British Pound.
Stop Loss Order - Order type whereby an open position is automatically liquidated at a specific
price. Often used to minimize exposure to losses if the market moves against an investor s position.
As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for
155.49, which would limit losses should the dollar depreciate, possibly below 155.49?
Support Levels - A technique used in technical analysis that indicates a specific price ceiling and
floor at which a given exchange rate will automatically correct itself. Opposite of resistance.
Swap - A currency swap is the simultaneous sale and purchase of the same amount of a given
currency at a forward exchange rate.
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Glossary
Swissy - Market slang for Swiss Franc.
T
Technical Analysis - An effort to forecast prices by analyzing market data, i.e. historical price
trends and averages, volumes, open interest, etc.
Tick - A minimum change in price, up or down.
Tomorrow Next (Tom/Next) - Simultaneous buying and selling of a currency for delivery the
following day.
Transaction Cost - The cost of buying or selling a financial instrument.
Transaction Date - The date on which a trade occurs.
Turnover - The total money value of all executed transactions in a given time period; volume.
Two-Way Price - When both a bid and offer rate is quoted for a FX transaction.
U
Unrealized Gain/Loss - The theoretical gain or loss on Open Positions valued at current market
rates, as determined by the broker in its sole discretion. Unrealized Gains Losses become Profits/
Losses when position is closed.
Uptick - A new price quote at a price higher than the preceding quote.
Uptick Rule - In the US, a regulation whereby a security may not be sold short unless the last trade
prior to the short sale was at a price lower than the price at which the short sale is executed.
US Prime Rate - The interest rate at which US banks will lend to their prime corporate
customers.
V
Value Date - The date on which counterparts to a financial transaction agree to settle their respective
obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally
two business days forward. Also known as maturity date.
Variation Margin - Funds a broker must request from the client to have the required margin
deposited. The term usually refers to additional funds that must be deposited as a result of
unfavorable price movements.
Volatility (Vol) - A statistical measure of a market s price movements over time.
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W
Whipsaw - Slang for a condition of a highly volatile market where a sharp price movement is
quickly followed by a sharp reversal.
Y
Yard - Slang for a billion.
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FAQ
FAQ
What is a Limit order?
A limit order is an order with restrictions on the maximum price to be paid or the minimum price
to be received. As an example, if the current price of USD/YEN is 117.00/05, then a limit order
to buy USD would be at a price below 102. (i.e. 116.50).
What is a Stop Loss order?
A stop loss order is an order type whereby an open position is automatically liquidated at a specific
price. Often used to minimize exposure to losses if the market moves against an investor s position.
As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for
155.49, which would limit losses should the dollar depreciate, possibly below 155.49?
What is a Position order?
Position orders are directly related to individual positions. These orders are only active for as long
as the position remains open and can be a stop loss or limit order.
What is Foreign Exchange?
The Foreign Exchange market, also referred to as the «Forex» market, is the largest financial market
in the world, with a daily average turnover of approximately US$1.2 trillion. Foreign Exchange is
the simultaneous buying of one currency and selling of another. The world s currencies are on a
floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.
Where is the central location of the FX Market?
FX Trading is not centralized on an exchange, as with the stock and futures markets. The FX market [ Pobierz całość w formacie PDF ]