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AGGREGATE DEMAND  look up translate image
The sum of government spending, personal consumptionexpenditures, and business expenditures.
ANNUALIZED  look up translate image
Extrapolates the behavior of an element (such as volatility) from a certain time period to a full year.
APPRECIATION  look up translate image
A currency is said to 'appreciate' when it strengthens in price in response to market demand.
ARBITRAGE  look up translate image
The purchase or sale of an instrument and simultaneous taking of anequal and opposite position in a related market, in order to take advantage of small price differentials between markets.
AROUND  look up translate image
Dealer jargon used in quoting when the forward premium/discount is near parity. For example, "two-two around" would translate into 2 points to either side of the present spot.
ASK  look up translate image
Price at which broker/dealer is willing to sell. Same as "Offer".
ASK RATE  look up translate image
The rate at which a financial instrument if offered for sale (as in bid/askspread).
ASSET ALLOCATION  look up translate image
Investment practice that divides funds among different marketsto achieve diversification for risk management purposes and/or expected returns consistent with an investor's objectives.
BACK OFFICE  look up translate image
The departments and processes related to the settlement of financial transactions.
BALANCE OF TRADE  look up translate image
The value of a country's exports minus its imports.
BAR CHARTS  look up translate image
Standard bar charts are commonly used to convey price activity into an easilyreadable chart. Usually four elements make up a bar chart, the Open, High, Low, and Close for the trading session/time period. A price bar can represent any time frame the user wishes, from 1 minute to 1 month. The total vertical length/height of the bar represents the entire trading range for the period. The top of the bar represents the highest price of the period, and the bottom of the bar represents the lowest price...(more)
BASE CURRENCY  look up translate image
In general terms, the base currency is the currency in which an investor orissuer maintains its book of accounts. In the FX markets, the US Dollar is normally considered the base' currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.
BEAR MARKET  look up translate image
A market distinguished by declining prices.
BID  look up translate image
Price at which broker/dealer is willing to buy.
BID RATE  look up translate image
The rate at which a trader is willing to buy a currency.
BID/ASK SPREAD  look up translate image
The difference between the bid and offer price, and the most widely usedmeasure of market liquidity.
BID/ASK SPREAD (OR "SPREAD")  look up translate image
The distance, usually in pips, between the Bid and Ask price. A tighter spread is better for the trader.
BIG FIGURE  look up translate image
Dealer expression referring to the first few digits of an exchange rate. These digitsrarely change in normal market fluctuations, and therefore are omitted in dealer quotes, especially in times of high market activity. For example, a USD/Yen rate might be 107.30/107.35, but would be quoted verbally without the first three digits i.e. "30/35".
BOOK  look up translate image
In a professional trading environment, a book' is the summary of a trader's or desk'stotal positions.
BRETTON WOODS AGREEMENT OF 1944  look up translate image
An agreement that established fixed foreign exchangerates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.
BROKER  look up translate image
An individual or firm that acts as an intermediary, putting together buyers and sellersfor a fee or commission. In contrast, a dealer' commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.
BULL MARKET  look up translate image
A market distinguished by rising prices.
BUNDESBANK  look up translate image
Germany's Central Bank.
BUYING/SELLING  look up translate image
In the forex market currencies are always priced in pairs; therefore all tradesresult in the simultaneous buying of one currency and the selling of another. The objective of currency trading is to buy the currency that increases in value relative to the one you sold. If you have bought a currency and the price appreciates in value, then you must sell the currency back in order to lock in the profit.
CABLE  look up translate image
Trader jargon referring to the Sterling/US Dollar exchange rate. So called because therate was originally transmitted via a transatlantic cable beginning in the mid 1800's.
CANDLESTICK CHART  look up translate image
A chart that indicates the trading range for the day as well as the openingand closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.
CENTRAL BANK  look up translate image
A government or quasi-governmental organization that manages a country'smonetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank. others include the ECB, BOE, BOJ.
CHARTIST  look up translate image
An individual who uses charts and graphs and interprets historical data to find trendsand predict future movements. Also referred to as Technical Trader. Choice Market- A market with no spread. All trades buys and sells occur at that one price
CLEARING  look up translate image
The process of settling a trade.
COLLATERAL  look up translate image
Something given to secure a loan or as a guarantee of performance.
COMMISSION  look up translate image
A transaction fee charged by a broker.
CONFIRMATION  look up translate image
A document exchanged by counterparts to a transaction that states the terms ofsaid transaction.
CONTAGION  look up translate image
The tendency of an economic crisis to spread from one market toanother. In 1997, financial instability in Thailand caused high volatility in its domestic currency, the Baht, which triggered a contagion into other East Asian emerging currencies, and then to Latin America. It is now referred to as the Asian Contagion
CONTRACT  look up translate image
The standard unit of trading.
CONTRACT (UNIT OR LOT)  look up translate image
The standard unit of trading on certain exchanges.
COST OF CARRY (ALSO "INTEREST" OR "PREMIUM")  look up translate image
The cost, often quoted in terms of dollars or pips per day, of holding an open position.
COUNTERPARTY  look up translate image
One of the participants in a financial transaction.
COUNTRY RISK  look up translate image
Risk associated with a cross-border transaction, including but not limited to legaland political conditions such as war etc.
CROSS RATES  look up translate image
The exchange rate between two currencies expressed as the ratio of two foreignexchange rates that are both expressed in terms of a third currency. Foreign exchange rate between two currencies other than the U.S. dollar, the currency in which most exchanges are usually quoted.
CURRENCY  look up translate image
Any form of money issued by a government or central bank and used as legaltender and a basis for trade.
CURRENCY FUTURES  look up translate image
Futures contracts traded on an exchange, most typically the Chicago Mercantile Exchange ("CME"). Always quoted in terms of the currency value with respect to the US Dollar. Parameters of the futures contract are standardized by the exchange.
CURRENCY MARKET  look up translate image
See foreign exchange market.
CURRENCY PAIR  look up translate image
Exchange rate relationship between two currencies, where one currency is expressed in terms of the other. For example, USD-EUR (US dollar against Euro) is a currency pair.
CURRENCY RISK  look up translate image
the probability of an adverse change in exchange rates.
CUSTOMIZABLE CURRENCY CONVERTER  look up translate image
A version of the 164 Currency Converter that you can customize for your personal use. The Customizable Currency Converter allows you to insert your own HTML headers and footers to change the appearance of the Currencies Converter and its results.
DAY TRADING  look up translate image
Refers to positions which are opened and closed on the same trading day.
DEALER  look up translate image
An individual who acts as a principal or counterpart to a transaction. Principals take oneside of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.
DECISION-SUPPORT TOOL  look up translate image
Any tool that provides an unbiased second opinion and reliable support throughout an investor's or trader's decision-making process. A decision-support tool enables effective risk managment, thereby increasing the profit potential (higher exposure at lower relative risk, more consistent return). It enhances overall trading performance, enabling financial institutions to improve their customer service, and increases trading volume. It reduces the complexity in the trading room and allows better use...(more)
DEFICIT  look up translate image
A negative balance of trade or payments.
DELIVERY  look up translate image
An FX trade where both sides make and take actual delivery of the currencies traded.
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Forex terms
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Created by admin
Created on 2011-05-16 05:33:10
Number of terms 186
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  • Browse BusinessDictionary.com: Currency Trading terms
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    www.investopedia.com
    Investopedia.com - The Investing Education Site. Includes the most comprehensive investing dictionary on the web as well as articles and tutorials on nearly any aspect of the market.