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Friday, August 29, 2008
Forex Glossary
Uncovered position
Another term for an open position.
Under Reference (Order)
Before finalizing a transaction all the details should be submitted for approval to the order giver, who has the right to turn down the proposal
Under Valuation
An exchange rate is normally considered to be undervalued when it is below its purchasing power parity
Undo
A colloquial term for reversing a transaction, e.g., a spot sale by means of a forward purchase or if done in error a spot purchase
Unload
Term for sale of assets or unwinding positions either to limit loss or to undermine other market participants positions
Unmatched Book
If the average maturity of a banks liabilities is less than that of its assets, it is said to be running an unmatched book.
Unwind
Selling of assets and or instruments to square a position
Unrealized P/L
Unrealized P/L is the real time profit or loss on the current open position(s), given the current exchange rate(s).
Uptick
A transaction executed at a price greater than the previous transaction.
Uptick Rule
In the US a regulation whereby a security may not be sold unless the last trade prior to the short sale was at a price at which at which the short sale is executed
US Dollar
The legal tender of the United States of America.
US Prime Rate
The interest rate at which US banks will lend to their prime corporate customers.
US Treasury
The United States Department of the Treasury is the government department responsible for issuing all Treasury bonds, notes, and bills.
US Quote
Exchange rate quotation on a reciprocal basis. Also known as an American Quote
Another term for an open position.
Under Reference (Order)
Before finalizing a transaction all the details should be submitted for approval to the order giver, who has the right to turn down the proposal
Under Valuation
An exchange rate is normally considered to be undervalued when it is below its purchasing power parity
Undo
A colloquial term for reversing a transaction, e.g., a spot sale by means of a forward purchase or if done in error a spot purchase
Unload
Term for sale of assets or unwinding positions either to limit loss or to undermine other market participants positions
Unmatched Book
If the average maturity of a banks liabilities is less than that of its assets, it is said to be running an unmatched book.
Unwind
Selling of assets and or instruments to square a position
Unrealized P/L
Unrealized P/L is the real time profit or loss on the current open position(s), given the current exchange rate(s).
Uptick
A transaction executed at a price greater than the previous transaction.
Uptick Rule
In the US a regulation whereby a security may not be sold unless the last trade prior to the short sale was at a price at which at which the short sale is executed
US Dollar
The legal tender of the United States of America.
US Prime Rate
The interest rate at which US banks will lend to their prime corporate customers.
US Treasury
The United States Department of the Treasury is the government department responsible for issuing all Treasury bonds, notes, and bills.
US Quote
Exchange rate quotation on a reciprocal basis. Also known as an American Quote
Labels: Forex Glossary
FOREX GLOSSARY
Same day transaction
A transaction that matures on the day the transaction takes place.
A transaction that matures on the day the transaction takes place.
Scalping
A strategy of buying at the bid and selling at the offer as soon as possible
A strategy of buying at the bid and selling at the offer as soon as possible
SDR
Special Drawing Right. A standard basket of five major currencies in fixed amounts as defined by the IMF.
Special Drawing Right. A standard basket of five major currencies in fixed amounts as defined by the IMF.
Sell Limit
Specifies the lowest price at which the sale of Base Currency in a Currency Pair can be executed. The limit price in a Sell limit order should be above the current dealing Bid price.
Specifies the lowest price at which the sale of Base Currency in a Currency Pair can be executed. The limit price in a Sell limit order should be above the current dealing Bid price.
Sell Stop
A Sell Stop is a Stop Order that is placed below the current dealing Bid price and is not activated until the market Bid price is is at or below the stop price. The sell stop order, once triggered, becomes a market order to sell at the current market price.
A Sell Stop is a Stop Order that is placed below the current dealing Bid price and is not activated until the market Bid price is is at or below the stop price. The sell stop order, once triggered, becomes a market order to sell at the current market price.
Selling Rate
Rate at which a bank is willing to sell foreign currency.
Rate at which a bank is willing to sell foreign currency.
Settlement
The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.
The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.
Settlement Date
The date by which an executed order must be settled by the transference of instruments or currencies and funds between buyer and seller.
The date by which an executed order must be settled by the transference of instruments or currencies and funds between buyer and seller.
Settlement Risk
Risk associated with the non-settlement of the transaction by the counter party.
Risk associated with the non-settlement of the transaction by the counter party.
Short
To go short is to have sold an instrument without actually owning it, and to hold a short position with expectations that the price will decline so it can be bought back in the future at a profit.
To go short is to have sold an instrument without actually owning it, and to hold a short position with expectations that the price will decline so it can be bought back in the future at a profit.
Short Contracts
Contracts with up to six months to delivery.
Contracts with up to six months to delivery.
Short Covering
Buying to unwind a short position of a particular currency pair
Buying to unwind a short position of a particular currency pair
Short Forward Date/Rate
The term short forward refers to period up to two months, although it is more commonly used with respect to maturities of less than one month.
The term short forward refers to period up to two months, although it is more commonly used with respect to maturities of less than one month.
Short Position
An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.
An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.
Short Sale
The sale of a specified amount of currency not owned by the seller at the time of the trade. Short sales are usually made in expectation of a decline in the price.
The sale of a specified amount of currency not owned by the seller at the time of the trade. Short sales are usually made in expectation of a decline in the price.
Short Squeeze
The pressure on short sellers to cover their positions as a result of sharp price increases.
The pressure on short sellers to cover their positions as a result of sharp price increases.
Short-Term Interest Rates
Normally the 90-day rate
Normally the 90-day rate
SIMEX
Singapore International Monetary Exchange
Singapore International Monetary Exchange
SITC
Standard International Trade Classification. A system for reporting trade statistics in a common manner.
Standard International Trade Classification. A system for reporting trade statistics in a common manner.
Slippage
It's the experience of not getting filled at (or even very close to…) your expected price when you place a market order or stop loss. This can happen because either: market price is simply moving too fast, the market is not liquid or you're talking to an unmotivated broker.
It's the experience of not getting filled at (or even very close to…) your expected price when you place a market order or stop loss. This can happen because either: market price is simply moving too fast, the market is not liquid or you're talking to an unmotivated broker.
Soft Market
More potential sellers than buyers, which creates an environment where rapid price falls are likely.
More potential sellers than buyers, which creates an environment where rapid price falls are likely.
Speculative
Trading Foreign Exchange is speculative in that there is no guarantee that those who invest in Foreign Exchange will make any money. The conditions also exist that the client can lose his entire deposited margin making trading FX highly speculative. Those who trade foreign exchange should only risk that capital which is considered risk capital, defined as the amount of which if lost would not, change the Customer's lifestyle or the Customer's family's lifestyle.
Trading Foreign Exchange is speculative in that there is no guarantee that those who invest in Foreign Exchange will make any money. The conditions also exist that the client can lose his entire deposited margin making trading FX highly speculative. Those who trade foreign exchange should only risk that capital which is considered risk capital, defined as the amount of which if lost would not, change the Customer's lifestyle or the Customer's family's lifestyle.
Spot
A transaction that occurs immediately, but the funds will usually change hands within two days after deal is struck.
A transaction that occurs immediately, but the funds will usually change hands within two days after deal is struck.
Spot Market
Market where people buy and sell actual financial instruments (currencies) for two-day delivery.
Market where people buy and sell actual financial instruments (currencies) for two-day delivery.
Spot Month
The contract month closest to delivery or settlement.
The contract month closest to delivery or settlement.
Spot Next
The overnight swap from the spot date to the next business day.
The overnight swap from the spot date to the next business day.
Spot Price/Rate
The current market price. Settlement of spot transactions usually occurs within two business days.
The current market price. Settlement of spot transactions usually occurs within two business days.
Spot Week
A standard period of one week swap measured from the current value date of the currency spot rate.
A standard period of one week swap measured from the current value date of the currency spot rate.
Spot Settlement Basis
The standardized settlement procedure for foreign exchange transactions that sets the value date 2 business days forward from the Trade Date (see: Spot).
The standardized settlement procedure for foreign exchange transactions that sets the value date 2 business days forward from the Trade Date (see: Spot).
Spread
The difference between the bid and offer (ask) prices; used to measure market liquidity. Narrower spreads usually signify high liquidity.
Square
Purchase and sales are in balance and thus the dealer has no open position.
Purchase and sales are in balance and thus the dealer has no open position.
Squeeze
Action by a central bank to reduce supply in order to increase the price of money.
Action by a central bank to reduce supply in order to increase the price of money.
Stable market
An active market which can absorb large sales or purchases of currency without major moves.
An active market which can absorb large sales or purchases of currency without major moves.
Sterilization
Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the FX market.
Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the FX market.
Sterling
British pound, otherwise known as cable
British pound, otherwise known as cable
Sterling Index
A index based on the movement of sterling against the major currency.
A index based on the movement of sterling against the major currency.
Stop Loss Order
An order to buy/sell at an agreed price. One could also have a pre-arranged stop order, whereby an open position is automatically liquidated when a specified price is reached or passed.
An order to buy/sell at an agreed price. One could also have a pre-arranged stop order, whereby an open position is automatically liquidated when a specified price is reached or passed.
Stop Order
An order to buy or to sell a currency when the currency's price reaches or passes a specified level.
An order to buy or to sell a currency when the currency's price reaches or passes a specified level.
Stop Out Price
U.S. term for the lowest accepted price for Treasury Bills at auction.
U.S. term for the lowest accepted price for Treasury Bills at auction.
Stop Price Level
The client entered price that activates a stop loss order
The client entered price that activates a stop loss order
Straddle
The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.
The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.
Stagflation
Recession or low growth in conjunction with high inflation rates.
Recession or low growth in conjunction with high inflation rates.
Strap
A combination of two calls and one put
A combination of two calls and one put
Strike Price
Also called exercise price. The price at which an options holder can buy or sell the underlying instrument.
Also called exercise price. The price at which an options holder can buy or sell the underlying instrument.
Supply Side Economics
The concept is that tax cuts will boost investment leading to an increase in the supply of goods in the economy. To be compared with demand led Keynesian economics
The concept is that tax cuts will boost investment leading to an increase in the supply of goods in the economy. To be compared with demand led Keynesian economics
Support Levels
A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.
A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.
Swap Price
A price as a differential between two dates of the swap.
A price as a differential between two dates of the swap.
Swap
A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.
A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.
Swap as a Percentage
A price as a differential between two dates of the swap.
A price as a differential between two dates of the swap.
SWIFT
Society for World-wide Interbank Telecommunications is Belgian based company that provides the global electronic network for settlement of most foreign exchange transactions
Society for World-wide Interbank Telecommunications is Belgian based company that provides the global electronic network for settlement of most foreign exchange transactions
Swissy
Swiss Franc.
Swiss Franc.
Labels: Forex Glossary
FOREX GLOSSARY
Naked Intervention
A central bank type of intervention in the foreign exchange market which consist solely of the foreign exchange activity. This type of intervention has a monetary effect on the money supply and a long term effect on foreign exchange
Narrow Money
Limited definition of money to include cash or near cash
Nearby Contracts
The closest active futures contracts, i.e. those that expire the soonest
Negative Sloping Yield Curve
A yield curve where interest rates in the shorter dates are above those in the longer dates
Net Interest Rate Differential
The difference in interest rates from the countries of two different currencies. For example, if the spot next rate for the Euro is 3.25% and the spot/next rate in the US is 2.00%, the interest differential is 1.25% (3.25% - 2.00% = 1.25%).
Netting
The method of settling under which only the differences in the traded currencies are settled at the close
Net Position
The amount of currency bought or sold which have not yet been offset by opposite transactions.
Next Best Price Stop-loss
A stop-loss order which must be executed after the request level was reached
Nominal Quotation
Used in Futures markets to refer to the estimated price for a future month or date for which there is no bid, ask or trade price
Nominee Name
Name in which a security is registered and held in trust on behalf of the beneficial owner
Nostro Account
A foreign currency current account maintained with another bank. The account is used to receive and pay currency assets and liabilities denominated in the currency of the country in which the bank is resident.
Non Client Order
An order on an exchange that is made by a participant firm or on behalf of a partner, officer, director, or employee of the participant firm. Where a participant firm is a firm that is entitled to trade on the exchange, also known as a member firm. While these orders are allowed, priority must be given to client orders for the same securities.
Note
A financial instrument consisting of a promise to pay rather than an order to pay or a certificate of indebtedness
Notice Day
Any day on which notices of intent to deliver on futures contracts may be issued
A central bank type of intervention in the foreign exchange market which consist solely of the foreign exchange activity. This type of intervention has a monetary effect on the money supply and a long term effect on foreign exchange
Narrow Money
Limited definition of money to include cash or near cash
Nearby Contracts
The closest active futures contracts, i.e. those that expire the soonest
Negative Sloping Yield Curve
A yield curve where interest rates in the shorter dates are above those in the longer dates
Net Interest Rate Differential
The difference in interest rates from the countries of two different currencies. For example, if the spot next rate for the Euro is 3.25% and the spot/next rate in the US is 2.00%, the interest differential is 1.25% (3.25% - 2.00% = 1.25%).
Netting
The method of settling under which only the differences in the traded currencies are settled at the close
Net Position
The amount of currency bought or sold which have not yet been offset by opposite transactions.
Next Best Price Stop-loss
A stop-loss order which must be executed after the request level was reached
Nominal Quotation
Used in Futures markets to refer to the estimated price for a future month or date for which there is no bid, ask or trade price
Nominee Name
Name in which a security is registered and held in trust on behalf of the beneficial owner
Nostro Account
A foreign currency current account maintained with another bank. The account is used to receive and pay currency assets and liabilities denominated in the currency of the country in which the bank is resident.
Non Client Order
An order on an exchange that is made by a participant firm or on behalf of a partner, officer, director, or employee of the participant firm. Where a participant firm is a firm that is entitled to trade on the exchange, also known as a member firm. While these orders are allowed, priority must be given to client orders for the same securities.
Note
A financial instrument consisting of a promise to pay rather than an order to pay or a certificate of indebtedness
Notice Day
Any day on which notices of intent to deliver on futures contracts may be issued
Labels: Forex Glossary
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