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FOREX GLOSSARY

Package Deal
When a number of exchange and /or deposit orders have to be fulfilled simultaneously.

Paris
A term for USD FRF Spot Rate.

Parity
The equivalent value of one currency in terms of another; also, sometimes used as a synonym for currency pair.

Parity Grid
A term used in the context of the European Monetary System which consists of the upper, central and lower intervention points between member currencies

Payment Date
A system where a currency moves in line with another currency, some pegs are strict while others have bands of movement.

Pegged
A system where a currency moves in line with another currency. Some pegs are strict while others have bands of movement.

Pending Orders Report
The Pending Orders report will show all the pending orders that the client has entered over the user specified dates whether the Pending Order is executed or not. Any Pending Order that is cancelled by the client will still be displayed, giving the client a full audit trail of the orders.

Petrodollars
Foreign exchange reserves of oil producing nations arising from oil sales

Philadelphia Stock Exchange (PHLX)
The oldest U.S. securities exchange which offers currency futures and options on currency futures

Points, Pips
The term used in currency market to represent the smallest incremental move an exchange rate can make. Depending on context, normally one basis point (0.0001 in the case of EUR/USD, GBD/USD, USD/CHF and .01 in the case of USD/JPY).

Political Risk
Exposure to changes in governmental policy which will have an adverse effect on an investor's
position.

Portfolio Insurance
An option hedging strategy to protect long cash market positions.

Position
trading view expressed by buying or selling. It can refer to the amount of a currency either owned or owed by an investor.

Position Clerk
A clerk who assist the dealer in recording a dealers position and ensures that all deal tickets are completed and transferred to the back office or input into the books in a position keeping system.

Position Limit
The maximum position, either net long or net short, in one future or in all futures of one currency or instrument combined which may be held or controlled by one person.

Premium
In the currency markets, it is the amount of points added to the spot price to determine a forward or futures price.

Pre-Spot Dates
Quoted standard periods that fall between the transaction date and the current spot value date.

Price
The price at which the underlying currency can be bought or sold.

Price Transparency
The ability of all market participants to "see" or deal at the same price.

Prime Rate
(1) The rate from which lending rates by banks are calculated in the US.
(2) The rate of discount of prime bank bills in the UK

Primary Reserves
Gold related monetary reserves, being gold, SDR, etc.

Principal
A dealer who buys or sells stock for his/her own account.

Principal Value
The original amount invested by the client.

Producer Price Index
An economic indicator which gauges the average changes on prices received by domestic producers for their output at all stages of processing

Profit/Loss (P&L)
The actual "realized" gain or loss resulting from trading activities on Closed Positions, plus the theoretical "unrealized" gain or loss on Open Positions that have been Mark-to-Market.

Profit Graph
A graphical representation of the profits to a given options strategy for different underlying asset prices

Proxy Hedge
A term to describe when it is necessary to hedge against a currency where there is no market but it follows a major currency, the hedge is entered against the major currency.

Purchasing Power Parity
Model of exchange rate determination stating that the price of a good in one country should equal the price of the same good in another country, exchanged at the current rate. Also known as the law of one price

Put Option
A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period

Put Call Parity
The equilibrium relationship between premiums of call and put options of the same strike and expiry

Pyramiding
The use of cash generated by positive variation margins on a futures position to increase the size of the position, each reinvestment in successively smaller increments