Account
Account Balance
Appreciation
Arbitrage
Ask, Offer
Ausie
Back Office
Balance of Payments
Balance of Trade
Bar Chart
Base Currency
Basis Point
Bear
Bear Market
BID
Big Figure
Bonds
Bretton Woods Agreement of 1944
Broker
Buba
Bull
Bull Market
Cable
Candlestick Chart
Capital Markets
Central Bank
Chartist
Clearing
Closed Position
Commission
Confirmation
Contract
Counter party
Cross Rate
Currency
Currency Pair
Currency Risk
Account
Record of all transactions.
Account Balance
Amount of money in an account.
Appreciation
A currency is said to appreciate when price rises in
response to market demand; an increase in the value of an asset.
Arbitrage
Taking advantage of countervailing prices in different
markets by the purchase or sale of an instrument and simultaneous taking of an
equal and opposite position in a related market to profit from small price
differentials.
Ask, Offer
The price, or rate, that a willing seller is prepared to
sell at.
Ausie
The Australian Dollar
Back Office
The departments and processes related to the settlement of
financial transactions (i.e. written confirmation and settlement of trades,
record keeping).
Balance of Payments
A record of a nation�s claims of transactions with the rest
of the world over a particular time period. These include merchandise, services
and capital flows.
Balance of Trade
The value of a country's exports minus its imports.
Bar Chart
A type of chart which consists of four significant points:
the high and the low prices, which form the vertical bar, the opening price,
which is marked with a little horizontal line to the left of the bar, and the
closing price, which is marked with a little horizontal line of the right of
the bar.
Base Currency
The currency in which an investor or issuer maintains its
book of accounts; the currency that other currencies are quoted against. In the
forex market, 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.
Basis Point
One hundredth of a percent.
Bear
An investor who believes that prices/the market will
decline.
Bear Market
A market distinguished by a prolonged period of declining
prices accompanied with widespread pessimism.
BID
The price that a buyer is prepared to purchase at; the price
offered for a currency.
Big Figure
Dealer phrase referring to the first few digits of an
exchange rate. These digits rarely 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".
Bonds
Bonds are tradable instruments (debt securities) which are
issued by a borrower to raise capital. They pay either fixed or floating
interest, known as the coupon. As interest rates fall, bond prices rise and
vice versa.
Bretton Woods Agreement of 1944
An agreement that established fixed foreign exchange rates
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
An individual, or firm, that acts as an intermediary,
putting together buyers and sellers usually for 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.
Buba
Bundesbank, Central Bank of Germany
Bull
An investor who believes that prices/the market will rise.
Bull Market
A market distinguished by a prolonged period of rising
prices. (Opposite of bear market)
Cable
Trader jargon for the British Pound Sterling referring to the Sterling/US Dollar exchange rate. Term began due to the fact that the rate was originally transmitted via a transatlantic cable starting in the mid 1800`s.
Candlestick Chart
A chart that indicates the trading range for the day as well as the opening and 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.
Capital Markets
Markets for medium to long term investment (usually over 1 year). These tradable instruments are more international than the �money market� (i.e. Government Bonds and Eurobonds).
Central Bank
A government or quasi-governmental organization that
manages a country`s monetary policy a prints a nation�s currency. For example,
the US central bank is the Federal Reserve, others include the ECB, BOE, BOJ.
Chartist
An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.
Clearing
The process of settling a trade.
Closed Position
Exposures in Foreign Currencies that no longer exist. The process to close a position is to sell or buy a certain amount of currency to offset an equal amount of the open position. This will 'square' the position.
Commission
A transaction fee charged by a broker.
Confirmation
A document exchanged by counterparts to a transaction that confirms the terms of said transaction.
Contract
The standard unit of trading.
Counter Party
The participant, either a bank or customer, with whom the financial transaction is made.
Cross Rate
An exchange rate between two currencies. The cross rate is said to be
non-standard in the country where the currency pair is quoted. For example, in
the US, a GBP/CHF quote would be considered a cross rate, whereas in the UK or
Switzerland it would be one of the primary currency pairs traded.
Currency
Any form of money issued by a government or central bank and used as legal tender and a basis for trade.
Currency Pair
The two currencies that make up a foreign exchange rate. For Example, EUR/USD
Currency Risk
The risk of incurring losses resulting from an adverse change in exchange rates.