A limit price order that instructs the FCM to fill the whole order at the stated price or not at all. The use of countervailing prices in different markets to profit from small price differentials via the purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market.
This includes merchandise, services and capital flows. A trend distinguished by a prolonged period of declining prices accompanied with widespread pessimism. The difference between the bid and offer ask prices, which is used to measure market liquidity. Narrower spreads usually signify high liquidity. A 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.
Tradable instruments debt securities 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. An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets and set the price of gold at USD 35 per ounce. The agreement lasted until An individual or firm that acts as an intermediary between buyers and sellers, usually for a fee or commission.
A dealer, by contrast, performs the same service but 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. A chart that indicates the trading ranges for the day as well as the opening and closing price. If the close price is lower than the open price, the rectangle is shaded or filled. If the open price is higher than the close price, the rectangle is not filled.
An individual who interprets historical data to find trends, predict future movements and aid in technical analysis. A document exchanged by participants in a transaction that confirms the terms of said transaction.
The tendency of an economic crisis to spread from one market to another. This triggered a contagion that affected other emerging East Asian currencies and spread as far as Latin America.
The cost associated with borrowing money in order to maintain a position. It is based on the interest parity, which determines the forward price. The opposite party in a given transaction; e. This may occur during extreme political situations such as war or civil unrest.
A check performed to be sure both parties have the credit to cover the trade they wish to transact. An arrangement that maximizes free credit and speeds the dealing process by reducing the need to constantly re-check credit.
Large banks and trading institutions may have agreements to net outstanding deals. An exchange rate between two currencies. The cross rate is said to be non-standard in the country where the currency pair is quoted.
The borrowing and lending of cash. A contract between two or more parties that establishes the value of underlying assets. A statistic that measures economic growth and stability; e.
A market in which the current price reflects all available information from past prices and volumes. Any profit or loss is booked and the trader will start the next day with a net position. An official exchange rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates fluctuate between definite upper and lower bands, leading to intervention.
An interest rate that remains constant for the term of the deal, as in bonds or fixed-rate mortgages. The state of being neither short nor long. The simultaneous buying of one currency type and selling of another in an over-the-counter market. A deal that will commence at an agreed-upon date in the future. Unlike in the futures market, forward trading can be customized according to the needs of the two parties and involves more flexibility. Also, there is no centralized exchange.
A method of trading financial instruments, currencies or commodities for a specific price at a specific date in the future. Unlike options, futures entail the obligation not the option to buy or sell instruments at a later date. They can be used to both protect and speculate against the future value of the underlying product.
The GTC will remain in place until executed or cancelled. The Foreign Exchange rates at which large international banks quote other large international banks. An exchange of two debt obligations that have different payment streams. The transaction usually exchanges two parallel loans; one fixed the other floating.
Economic variables that are considered to predict future economic activity; e. Another measure of liquidity is the volume of buyers and sellers, with more players creating tighter spreads. Assets that can be easily converted into cash. A position characterized by purchasing more of an instrument than is sold in hopes that the value will appreciate. A request by a broker or dealer for additional funds or other collateral in order to guarantee performance on a position that has moved against the trader.
A dealer who supplies prices and is prepared to buy or sell at those prices. A market maker runs a trading book. Risk relating to the market in general that cannot be extinguished by hedging or holding a variety of securities.
Jargon used in buying and selling. Short-term investment opportunities e. Participants include banks and other financial institutions.
Amount of assets that exceed liabilities. For an individual, this refers to the total value of all possessions such as houses, stocks, bonds and other securities; minus all outstanding debts, such as mortgage and loans.
A contingent order in which the execution of one part of the order automatically cancels the other part. A deal, not yet reversed or settled, in which the investor is subject to exchange rate movements. An instruction from a client to a broker to trade.
An order can be placed at a specific price or at the market price. It can be good until filled or until close of business. The smallest incremental move an exchange rate can make. Depending on context, this is normally one basis point 0. A trading viewpoint expressed by buying or selling. Can also refer to the amount of a currency either owned or owed by an investor. Involves the sale of an instrument to be re-purchased at a specified time and date. Occurs in the short-term money market. A term used in technical analysis indicating a specific price level above which a currency is unable to cross.
Recurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line. The interest rate variation between the two currencies when the settlement of a deal is rolled forward to a different date.
To sell an instrument without actually owning it in hopes that the price will decline so it can be bought back in the future at a profit. A transaction that occurs immediately. The funds will usually change hands within two days after deal is struck. A term used in technical analysis indicating a specific price level below which a currency is unable to cross. Recurring failure for the price to move below that point produces a pattern that can be displayed using an approximate straight line.
The temporary holding of a security that is then exchanged after a fixed period of time. To calculate the swap, find the interest rate differential between the two currencies. The value may be used for speculative purposes to exploit anticipated movement in the interest rates.
An effort to forecast future market activity by analyzing market data such as charts, price trends, and volume. An additional margin requirement that a broker will need from a client due to market fluctuation. Associated with high volatility is a high degree of risk.
A form of traded options; rights to purchase shares or bonds issued by a company at a specific price within a specific time span. A condition in a highly volatile market characterized by a sharp price movement quickly followed by a sharp reversal. Skip to content Subscribe to Our Newsletter. A A record of all transactions. Order An order to buy or sell when the market moves to a pre-designated price.
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