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Foreign Currency Exchange Trading Terminology.

exchange currency

The Ask price is the price that a currency is offered for sale.

The BACS network is the electronic funds transfer system in the U.K.

Back Office:
Back office is the expression for the location where the processing of currency transactions occur.

Base Currency:
Currencies are quoted as a currency pair, such as pound against dollar. The first currency quoted in the pair is the base currency.

Base Point:
One hundredth (1/100) of one percent is a basis point. If a currency changes from 4.50% to 4.80%; it is represented as a 30 basis point move.

Bear Market:
A market is a Bear Market when market prices, in this case exchange rates, are in decline.

The Bid Price is the price at which a client is willing to pay to aquire a given currency and sell another.

Bull Market:
A Bull market is a market that is on a upward trend.

Central Bank:
A central bank is administered by a national government. A Central Bank will frequently administer monetary policy.

Same day electronic transfer.

A commission is a transaction fee charged to a client for processing a trade.

After a foreign currency transaction the Confirmation is verification of a trade that lists important details such as the exchange rate, value and contract date.

Currency is money that is issued by a national government.

Currency exchange rates:
Higher exchange rates attract foreign investors in search of good returns on their investment. The Exchange rates are determined by the supply and demand for various currencies.Exchange rates change second to second as the supply and demand changes.

Currency Fluctuation:
Currency exchange rates constantly change as economic market pressures, supply and demand, and political issues all impact currency values.

A Draft is the issuing of an international cheque for payment of goods and services in foreign currency.

EFTs are Electronic Fund Transfers between banks. EFTs are the safest, most secure, and timely method of sending or receiving payments.

Exchange Rate:
Exchange Rates are influenced by inflation, economic growth, interest rates, international trade, and investment flows between countries.

The Euro is the common currency that was adopted in January 2002 by the following countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain.

FX is industry speak that represents the international foreign exchange industry.

Federal Reserve:
The Federal Reserve is the central bank of the United States. The Fed is responsible for implementing monetary policy.

Foreign Currency Drafts:
Companies with foreign invoices can settle accounts with international drafts.

Foreign Exchange:
Foreign Exchange is the buying and selling of foreign currency

Foreign Exchange Markets:
Foreign Exchange Markets are the arena where approximately 1.5 trillion dollars are traded on a daily basis in the worldwide foreign exchange markets.

Forward Contract:
Forward contracts fix the exchange rate for the future delivery of a currency at a date that is agreed by both The exchange company and the client. A 5% deposit is usually required to secure a forward contract.

Hedging is a buying or selling of foreign currency transaction that reduces the risk of future currency price fluctuations.

Interbank rates:
Interbank rates are the exchange rates that large banks would quote similar banks to buy or sell currency.

Maturity is the date when a payment of an obligation or contract is due.

Offer is the pricing level that a seller is prepared to sell a foreign currency at.

An order is a client's instruction to buy or sell currency.

PIP's are also referred to as a point. Term used in the foreign exchange industry that represents the smallest incremental change on an exchange rate. It is one hundredth (1/100) of a percentage point.

Rate is the price that a currency can be bought or sold against another currency.

The actual physical exchange of one currency for another.

Spot is a transaction that will become due in two days. The spot market is where you buy and sell currencies for two day ahead.

Spread is the difference between bid and offer pricing levels of currencies.

A stop-loss oreder specifies that a trade should be closed at a specific rate.

Stop Order:
A Stop Order is a client's order to buy or sell a currency when the pricing level of that currency reaches an agreed price.

Value Date:
Value Date is the maturity date that both parties agree upon to exchange payments..This can be either spot or forward

Wire transfer:
A Wire Transfer is an electronic transfer of funds - an electronic money transfer.


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Foreign Currency Exchange Trading Terminology at 2005