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FOREX GLOSSARY

Take Profit Order
A customer's instructions to buy or sell a currency pair which, when executed, will result in the reduction in the size of the existing position and show a profit on said position.

Technical Analysis
An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.

Technical Correction
An adjustment to price not based on market sentiment but on technical factors such as volume and charting.

Temporal Accounting
Method of determining accounting exposure which translates all balance sheet items at the current rate of exchange, not the one at the time the cost was incurred

Tender
(1) a formal offer to supply or purchase goods or services.
(2) In the UK the term for the weekly Treasury Bill issue.

Tenor
Maturity or number of days to maturity normally on bills of exchange

Terms of Trade
The ratio between export and import price indices

Theory of Elasticities
A model of exchange rate determination stating that the exchange rate is simply the price of the foreign exchange which maintains the BOP in equilibrium. The degree to which the exchange rate responds to a change in price

Threshold of Divergence
A safety feature for the EMS which creates an emergency exit for currencies which become the singular focus of various adverse forces. The threshold of divergence indicates when the specific country with the pressured currency should take additional steps other then simple central bank intervention in the foreign exchange markets

Theta
A measure of the sensitivity of the price of an option to a change in its time to expiry

Thin Market
A market in which trading volume is low and in which bid and ask quotes are wide and the liquidity of the instrument traded is low.

Thursday/Friday Dollars
A U.S. foreign exchange technicality. If the bank leaves the funds overnight and transfers them on Friday by means of a clearing house cheque then clearance is not until Monday, the next working day. Higher interest rates for this period are thus available

Tick
A minimum change in price, up or down.

Tier One
A measure of a banks financial strength used by the BIS being the shareholders' equity available to cover actual or potential irredeemable and non-cumulative preference shares. It excludes, hybrid forms of capital such as fixed term stock, goodwill, and revaluation reserves. BIS has a minimum requirement of 4 percent on risk-weighted assets.

Tight Money
A condition where there is a shortage of credit as a result of monetary policy restricting the supply of credit normally through raising interest rates

TIFFE
Tokyo International Financial Futures Exchange

Time Decay
(1)The decline in the time value of an option as the expiry approaches
(2) Interest bearing deposits at a savings institution that has a specific maturity

Time Value
That part of an option premium which reflects the length of time remaining in the option prior to expiration. The longer the time remaining until expiration, the higher the time value.

Today/Tomorrow
Simultaneous buying of a currency for delivery the following day and selling for the spot day, or vice versa. Also referred to as overnight

Tombstone
Colloquial term for announcement in a publication that a loan or bond has been arrange

Tomorrow Next (Tom/Next),(T/N),T/N Roll
Simultaneous buying and selling of a currency for delivery the following day.

Trade date
The date on which a trade occurs.

Trade Deficit/Surplus
The difference between the value of imports and exports. Often only reported in visible trade terms

Trade-weighted Exchange Rate
The changes in the exchange rate against a trade weighted basket including the currencies of the county's principal trading partners

Tradeable Amount
Smallest transaction size acceptable

Traded Options
Transferable options with the right to buy and sell a standardised amount of a currency at a fixed price within a specified period.

Tranche
A portion of, specifically used for borrowings from the IMF.

Transaction
The buying or selling of foreign exchange amount resulting from the execution of an order.

Transaction Cost
The cost of buying or selling a financial instrument.

Transaction Date
The date on which a trade occurs.

Transaction Exposure
(1)Potential profit and loss generated by current foreign exchange transactions
(2) The calculation of loss or profit resulting from the valuation of foreign assets and liabilities for balance sheet purposes, when consolidating into the base currency

Treasury Bills
Short-term obligations of a Government issued for periods of one year or less. Treasury bills do not carry a rate of interest and are issued at a discount on the par value. Treasury bills are repaid at par on the due date. In the UK they are normally for 91 days, and are offered at weekly tenders. In the US they are auctioned.

Turnover
The total volume of all executed transactions in a given time period.

Two-Tier Market
A dual exchange rate system where normally only one rate is open to market pressure, e.g. South Africa.

Two Way Price
Both the bid and ask rate is quoted for a Forex transaction.