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Day Trader

Traders who take positions in the foreign exchange market that are then liquidated prior to the close of the same trading day.

Deal Ticket/Deal Slip

The primary method of recording the basic information relating to a transaction.

Dealer

One authorised to deal on the foreign exchange market, who by placing the order to buy or sell, acts as the principal or counterpart to a transaction.

Dealing Systems

Online Internet trading platforms that link the contributing banks around the world.

Devaluation

Deliberate downward adjustment of a currency's value versus the value of another currency, normally by formal announcement from the Central Bank.

Direct Currency

A currency that is normally quoted as units of currency per US Dollar rather than US Dollars per unit of currency e.g. 1 US Dollar buys 110 Yen.

Discount

In foreign exchange, the term refers to a situation where a currency can be bought more cheaply for a future date (using a forward contract) than for immediate (spot) delivery.

Discount Rate

The interest rate at which eligible depository institutions may borrow funds directly from the Federal Reserve Banks. This rate is controlled by the Federal Reserve and is not subject to trading

Durable Goods Order

An economic indicator that measures the changes in sales of products with a life span in excess of three years.

Elliot Wave Principle

A system of empirically derived rules for interpreting action in the markets. It refers to a five-wave/three-wave pattern that forms one complete bull market /bear market cycle of eight waves.

Exchange Rate Risk

See Currency Risk

Exposure

The potential for running a profit or loss from fluctuations in market prices, risk.

Factory Orders

An economic indicator that refers to the total orders of durable and non-durable goods. The non-durable goods orders consist of food, clothing, light industrial products and products designed for the maintenance of the durable goods.

FedWire

An automated communications and settlement system linking the Federal Reserve banks with other banks and with depository institutions

Flat (Square)

Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (Flat) position.

Foreign Exchange (Forex/FX)

The simultaneous buying of one currency and selling of another.

Foreign Exchange Centres

London is the largest centre of foreign exchange trading. New York, Tokyo, Singapore, Zurich, Frankfurt and Hong Kong are also important.

Forward Contract

A contract where the exchange of currencies is to be made more than two business days ahead at a fixed exchange rate. A popular hedging tool, it allows companies and individuals to fix a rate of exchange for settlement in the future.

Forward Forward

A forward / forward deal is one where both legs of the deal have value dates greater than the current spot value date.

Forward Outright

Foreign exchange deal that matures on any day past the spot delivery date. Forward Points (Forward Pips or Forward Spread) Forward price used to adjust a spot price to calculate a forward price. It is based on the current spot exchange rate, interest rate differential (see Forward Rate) and the number of days to delivery.

Forward Rate

Forward rates are quoted in terms of forward points, which represents the difference between the forward and spot rates. In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange rate. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction, known as the Interest Rate Differential.

Front Office

Usually comprises of the trading or dealing room.

Fundamental Analysis

Analysis of economic data and political factors to forecast future currency movements and values.

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