• Appreciation

    Describes a currency strengthening in response to market demand rather than by official action.

  • Ask Price

    Ask is the lowest price acceptable to the buyer.

  • Base Currency

    The currency in which the operating results of the bank or institution are reported.

  • Basis Point

    One per cent of one per cent.

  • Bear

    A person who believes that prices will decline.

  • Bear Market

    A market in which prices decline sharply against a background of widespread pessimism (opposite of Bull Market).

  • Bid Price

    Bid is the highest price that the seller is offering for the particular currency at the moment; the difference between the ask and the bid price is the spread. Together, the two prices constitute a quotation; the difference between the two is the spread. The bid-ask spread is stated as a percentage cost of transacting in foreign exchange.

  • Bull

    A person who believes that prices will rise.

  • Bull Market

    A market characterized by rising prices.

  • Closed Position

    A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.

  • Currency

    The type of money that a country uses. It can be traded for other currencies on the foreign exchange market, so each currency has a value relative to another.

  • Devaluation

    Deliberate downward adjustment of a currency against its fixed parities or bands which is normally accompanied by formal announcement.

  • Exposure

    The total amount of money loaned to a borrower or country. Banks set rules to prevent overexposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.

  • Fiscal Policy

    Use of taxation as a tool in implementing monetary policy.

  • Foreign Exchange

    The purchase or sale of a currency against sale or purchase of another.

  • Fundamental Analysis

    Analysis based on economic and political factors.

  • FX

    Foreign Exchange.

  • Initial Margin

    The deposit required by the Broker before a client can trade/transact a deal to have some cushion in the event of default by the party.

  • Intra Day Position

    Open positions run within the day. Usually squared by the close.

  • Liquidity

    The ability of a market to accept large transactions without having any major impact on the interest rates.

  • Long

    A market position where the Client has bought a currency they previously did not own. For example: long Dollars.

  • Margin

    "Collateral that the holder of a position in securities, options, Forex or futures contracts, has to deposit to cover the credit risk of his counterparty. Other definitions to MARGIN, used in other areas are: ""-Difference between the buying and selling rates, also used to indicate the discount or premium between spot or forward. ""-For options, the sum required as collateral from the writer of an option. ""-For futures, a deposit made to the clearing house on establishing a futures position account. ""-The percentage reserve required by the US Federal Reserve to make an initial credit transaction."

  • Margin Call

    demand for additional funds to cover positions.

  • Market Value

    Market value of a forex position at any time is the amount of the domestic currency that could be purchased at the then market rate in exchange for the amount of foreign currency to be delivered under the forex Contract.

  • Open Position

    Any deal which has not been settled by physical payment or reversed by an equal and opposite deal for the same value date. It can be termed as a high risk, high return proposition.

  • Pip

    For currency pairs displayed to four decimal places, one pip is equal to 0.0001. Yen-based currency pairs are an exception and are displayed to only two decimal places (0.01).

  • Profit taking

    The unwinding of a position to realize profits.

  • Quote

    An indicative price. The price quoted for information purposes but not to deal.

  • Rate

    The price of one currency in terms of another. It has the same meaning as the term parities.

  • Resistance

    A price level at which the selling is expected to take place.

  • Risk Management

    The identification and acceptance or offsetting of the risks threatening the profitability or existence of an organisation. With respect to foreign exchange involves, among others, consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.

  • Risks

    There are risks associated with any market. It means variance of the returns and the possibility that the actual return might not be in line with the expected returns. The risks associated with trading foreign currencies are: market, exchange, Interest rate, yield curve, volatility, liquidity, forced sale, counter party, credit, and country risk.

  • Rolling over

    The substituting of a far option for a near option of the same underlying stock at the same strike/exercise price.

  • Rollover

    Where the settlement of a deal is carried forward to another value date based on the interest rate differential of the two currencies example: next day.

  • Selling Rate

    Rate at which a bank is willing to sell foreign currency.

  • Short

    A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms.

  • Spot

    """-The most common foreign exchange transaction. ""=Spot refers to the buying and selling of the currency where the settlement date is two business days forward."

  • Spot Price/Rate

    he price at which the currency is currently trading in the spot market.

  • Spread

    """-The difference between the bid and ask price of a currency. ""-The difference between the price of two related futures contracts. ""-For options, transactions involving two or more option series on the same underlying currency."

  • Stop Loss Order

    Order given to ensure that, should a currency weaken by a certain percentage, a short position will be covered even though this involves taking a loss. Realize profit orders are less common.

  • Stop Out Price

    US term for the lowest accepted price for Treasury Bills at auction.

  • Support Levels

    A price level at which the buying is expected to take place.

  • Technical Analysis

    The study of the price that reflects the supply and demand factors of a currency. Common methods are flags, trend-lines spikes, bottoms, tops, pennants, patterns and gaps.

  • Trade Balance

    The study of the price that reflects the supply and demand factors of a currency. Common methods are flags, trend-lines spikes, bottoms, tops, pennants, patterns and gaps.