4 Simple Tips to choose a Forex Broker

Thursday, November 29, 2007
Finding a Forex broker for your trading needs is a difficult process for the most of us .Hence, there is a necessity of outside assistance. Trading in the unpredictable Forex market without a broker could possibly lead to disastrous results for the normal investor. Even choosing the wrong Forex broker for your needs will lead to the same disastrous results.

  • It is very important that you be sincere in researching any prospective brokerage firms to handle your financial portfolio. A good Forex broker will supply you with successful clients contact info with out any hesitation. Check out their client history and you should get a pretty good idea about them. Note that testimonials by traders should be used as a part of research in finding the right forex broker but not the deciding factor as many brokers have "special" clients who will speak just positive about them.

  • Another good way to test the reliability of any Forex broker is the amount of information, literature and tutorials that they are giving to you. Most Forex brokers out there are of a decent reputation as well as a solid background.But, there are quite a few out there that don't have a good history or no history and it is wise to avoid such forex brokers.

  • Another simple but good avenue to find out about prospective forex brokers is to ask your aquaintaces about the forex brokers they deal with. This will not only give you prospective referrals to great Forex brokers but will also equip you with decent ideas and resources that you may not have located. If you get a referral, be sure to do your own research on the broker. DO not commit to any broker until you have completely analysed them.

  • A Forex trading margin heavily influences your money and various Forex brokers offer different margins. If you find a Forex broker, who is giving you a margin of ten to one isn't a very good find so it's worthwhile to put some time in research. Remember that forex market is all about customer service and catering to the customers.

So, if your prospective Forex broker doesnt return your calls with a reasonable turn around time ,Better look for another!

You might like to read other Forex related articles in the Articles section or browse through our huge collection of forex ebooks!

Link Exchange with Other Forex Blogs


If you have a Forex related blog, forum or useful site, I would be interested in a link exchange. I am mainly looking to exchange links with currency trading sites, but anything related to financial trading will probably work too.

Just place a link on your site:
URL: http://forex-trading4you.blogspot.com
Title: Forex Trading Made Easy

The leave a comment here, stating where you've placed the link and also the details for your link to be placed on this site.

Currency Converter

Monday, November 26, 2007

Pip Calculator

Fibonacci forex video

Sunday, November 25, 2007
Hey Guys,

Here is one of the most famous Fibonacci Forex videos doing the rounds on the net. Enjoy!!

Easy Forex Trading Platform REVIEW!

Tuesday, November 20, 2007
Easy-Forex - Easy Way to Start Trading Forex

Hey there, Here is the review of Easy Forex Trading platform!

Before choosing Easy Forex trading system, or any other online forex broker/agent for that matter, we advise investors to clearly understand the possible risks of the venture. Not to mentions that, trading in the Forex market should always be undertaken with risk capital.

Whenever you are in need of choosing a good forex trading platform, the investors must look at the overall package that you gain. It is somewhat similar to choosing a bike or a school for your kids, you would want to see competitiveness in all the features , outstanding benefits and clear excellence. In this regard I would definetly recommend you the EASY FOREX TRADING PLATFORM.

Ill jot down the reasons quickly for you!

Internet Based Platform With out the Need to Download Software – It is truely online trading. Unlike most other trading systems, there is no need whatsoever to download any software. You can trade the Forex online 24hours round the clock from any net activated pc anywhere in the world.

Start Trading From As meagre as $25 with Unique Features – You can open a simple trading account for as minute as $25 and start trading within few minutes of your initial deposit. Another feature is that deposits and withdrawals can be made through PayPal or Credit Card.
Registration is free and simple.

Unique "Freeze rate" Trading Feature – You can freeze a particular rate you see on your monitor for a certain period of time and then decide if you want to make the trade or not.

Live Training and Personal Services – An Easy Forex representative will train you as soon as you register there– you will be getting your own Account Service Manager. Your account can be tailored to suit your own trading style and spreads can be tailored as well.

Competitive Spreads – The spreads are competitive and you can trade with one of the lowest margins of all the trading systems. Also, in some cases they will allow spreads to be adjusted to suit the individual forex trader.

Guaranteed Rates and Stop-Loss – and also you may set an automatic Take Profit rate if you like.

No Hidden charges and No Additional Collateral Required for Trading – and you are never ever charged for profit withdrawals or deposits for that matter.

Special Incentives provided to Frequent Traders - If you are a frequent trader and do large number of trades in short time frame, you will be offered a tailor made account to suit your exact wants/needs (the spreads, leverage ratios, sms alerts, etc…

Unhindered access to Daily Forex Outlooks and Forecasts, Live News, Rates and more…

Working with reputable business partners and leading banks world wide - Liquidity is provided by UBS.

Full Transparency in their terms , Total Control of your account, Ultimate level of Data Security and Privacy.
Special Tailor-Made Terms to Individual Forex Traders/Investors.
Refer-a-Friend awarding Programs.

And Much much More...


In summary, we believe Easy Forex Trading Platform offers the best value for money in the current crop of trading platforms. Registration is fast and easy with. The spreads they provide are very competitive and margins are one of the lowest around!

Easy Forex is a golbal organisation working with leading banks like UBS!

You can join them here - Easy-Forex

Easy-Forex - Easy Way to Start Trading Forex

20 Rules To Stop Losing Money in Forex Market!

Monday, November 19, 2007
20 Rules To Stop Losing Money in Forex Market!

1. Dont blindly trust others opinions - It's your money at stake, not theirs.Use your brains too. Do your own analysis and make decisions.

2. Don't believe in Any company - Trading is not like investment. Just concentrateon the numbers and forget the press releases.

3. Don't break your own rules - You made them up for tough situations, just like the one you are probably in right now!

4. Never try to get even - Trading is never a game of catch-up. Every position will and must stand on its merits. Take your losses with patience and analytically, and take the next trade with unhindered discipline.

5. Don't trade over your head - If your last name isn't Buffett or Cramer, don't try tp trade like them. Concentrate on playing the game with good tactics, and don't worry about making or losing money.

6. Don't seek the Holy Grail! - There is no secret trading formula that will fetch you unlimited profits, other than good risk management. So stop searching for it.

7. Don't forget your discipline - Learning the basics is pity easy. Most newbie traders will fail in due course as a result of lack of discipline, not a lack of knowledge.

8. Don't try tochase the crowd - Listen to the beat of your heart . By the time the crowd acts, you might be too late…..or too early.

9. Don't trade the obvious pattern - The prettiest patterns can set you up the most painful losses. "If it looks too good to be true, it probably is".

10. Don't ignore the warning signs at any trustable sources -Major losses rarely come without any warning. Do keep a look out for warnings!

11. Don't count your chickens - Profits aren't booked until the trade is closed. The forex market gives and the market takes away with great fury with out a damn for any one.

12. Don't forget your plan - Always Remember the reasons why you took the trade in the first place, and don't get blinded unnecessarily by volatility.

13. Don't have a shrewd paycheck mentality - The market only pays off big time when you're right, and your timing is really, really ON TIME ;).

14. Don't join groups - Trading is not a team sport requiring unity . Avoid stock boards, chatrooms and financial news on TV. You dont wanna repent later and will end up cursing the group!

15. Don't ignore your intuition - Respect the little voice that tells you what to do, and what to avoid. That could be the voice of the winner trying to get into your thick head.

16. Don't hate losing in the market- Expect to win and lose with great regularity. Expect the losing to teach you more about winning, than the winning itself. Thats FX market for you.

17. Don't fall into the complexity hole - A well-trained eye is much more effective than a stack of automated indicators. Common sense is more valuable than a backtested system. AS they say common sense is very uncommon.

18. Don't confuse execution with opportunity - Overpriced software which promise you results won't help you trade like a pro. Pretty colors and flashing lights make you a faster trader, not a better one.

19. Don't project your personal life in trading forex- Trading gives you the perfect opportunity to discover sometimes just how screwed up your life really is.

20. Don't think its entertainment - Trading should be boring most of the time, just like the real job you have right now. But never look for entertainment in there. You wont get it!

You might like to read other Forex related articles in the Articles section or browse through our huge collection of forex ebooks!

Video: Top 10 mistakes Forex Traders make!

Sunday, November 18, 2007
Here is a decent video on top ten mistakes that new forex investors make when they start trading.

If these can be avoided, a successful trading career awaits!

Top 10 Biggest Mistakes Forex Traders Make - Click here for the funniest movie of the week

More forex ebooks coming soon! and forex events!

Friday, November 16, 2007
Well, in coming few days lots of Forex Ebooks are going to be added in our forex ebooks section as well as articles. Be sure to return back to us to check them out!

We are going to forex news ticker back as well. The problem we had with the forex news ticker we had on our site was that it was a java application and it aske

anotherd for permission to be played to each new visitor raising a red flag.

So, the forex events ticker is laid to rest for now and will revived soon.

Another feature that will be added is the 10 minutes chart for forex trading

And yeah. as usual we will update our site with the latest forex events as they happen.

UPDATES On the Site!

Thursday, November 15, 2007

Lots of updates and features added on the site.

  • First of all check out our EBook section, tons of ebooks there now
  • Another feauture is the current Market news which is at the bottom of the page
  • Then we have added the email subscription feature. Now you can stay in tune with whats the latest happening on our blog. We will keep updating you through our newsletter.
  • And most apparent of all the updates. The sites look- A totally revamped look.

Do let us know what you feel of the updates!

Forex Glossary!

Wednesday, November 14, 2007

RiskTotal amount of exposure a bank has with a customer for both spot and forward contracts.

American Option
An option which may be exercised at any valid business date through out the life of the option.

Describes a currency strengthening in response to market demand rather than by official action.

A risk-free type of trading where the same instrument is bought and sold simultaneously in two different markets in order to cash in on the difference in these markets.

Used in quoting forward "premium / discount".

Ask Price
Ask is the lowest price acceptable to the buyer.

In the context of foreign exchange is the right to receive from a counterparty an amount of currency either in respect of a balance sheet asset (e.g. a loan) or at a specified future date in respect of an unmatched forward Forward or spot deal.

At Best
An instruction given to a dealer to buy or sell at the best rate that is currently available in the market.

At or Better
An order to deal at a specific rate or better.

An option whose strike/exercise price is equal to or near the current market price of the underlying instrument.

At Par Forward Spread
When the forward price is equivalent to the spot price.

At the Price Stop-Loss Order
A stop-loss order that must be executed at the requested level regardless of market conditions.

Sale of an item to the highest bidder. (1) A method commonly used in exchange control regimes for the allocation of foreign exchange. (2) A method for allocating government paper, such as US Treasury Bills. Small investors are given preferential access to the bills. The average issuing price is then computed on the basis of the competitive bids accepted. In some circumstances for government auctions it is the yield rather than the price which is bid.

Average Rate Option
A contract where the exercise price is based on the difference between the strike price and the average spot rate over the contract period. Sometimes called an "Asian option".

B Back Office
Settlement and related processes.

Back to Back
(1) Transaction where all the obligations and liabilities in one transaction are mirrored in a second transaction. (2) Transaction where a loan is made in one currency in one country against a loan in another country in another currency.

Balance of Payments
A systematic record of the economic transactions during a given period for a country.(1) The term is often used to mean either: (i) balance of payments on "current account"; or (ii) the current account plus certain long term capital movements.(2) The combination of the trade balance, current balance, capital account and invisible balance, which together make up the balance of payments total. Prolonged balance of payment deficits tend to lead to restrictions in capital transfers, and or decline in currency values.

Balance of Trade
The value of exports less imports. Invisibles are normally excluded, and is otherwise referred to as mercantile or physical trade. Figures can be quoted on FoB/ FaS , customs cleared, or Fob export, FoB export.

The range in which a currency is permitted to move. A system used in the ERM.

Bank Line
Line of credit granted by a bank to a customer, also known as a " line".

Bank Notese
Bank notes are paper issued by the central or issuing bank and are legal tender, but are not usually considered to be part of the FX market. However bank notes can be converted, in some counties, into FX. Bank notes are normally priced at a premium to the current spot rate for a currency.

Bank Rate
The rate at which a central bank is prepared to lend money to its domestic banking system.

Barrier Option
A family of path dependent options whose pay-off pattern and survival to the expiration date depend not only on the final price of the underlying currency but also on whether or not the underlying currency breaks a predetermined price level at any time during the life of the option. See Down and Out call/put, Down and in call/put, Up and out call/put, Up and in call/put.

Base Currency
The currency in which the operating results of the bank or institution are reported.

Base Rate
A term used in the UK for the rate used by banks to calculate the interest rate to borrowers. Top quality borrowers will pay a small amount over base.

Basis Point
One per cent of one per cent.

Basis Price
The price expressed in terns of yield maturity or annual rate of return.

Basis Convergence
The process whereby the basis tends towards zero as the contract expiry approaches.

Basis Trading
Taking opposite positions in the cash and futures market with the intention of profiting from favorable movements in the basis.

The difference between the cash price and futures price.

A group of currencies normally used to manage the exchange rate of a currency. Sometimes referred to as a unit of account.

A person who believes that prices will decline.

Bear Market
A market in which prices decline sharply against a background of widespread pessimism (opposite of Bull Market).

Bid Price
Bid is the highest price that the seller is offering for the particular currency at the moment; the difference between the ask and the bid price is the spread. Together, the two prices constitute a quotation; the difference between the two is the spread. The bid-ask spread is stated as a percentage cost of transacting in the foreign.

Big Figure
Refers normally to the first three digits of an exchange rate that dealers treat as understood in quoting. For example a quote of "30/40" on dollar mark could indicates a price of 1.5530/40BIS: Bank of International Settlement.

Bilateral Clearing
A system used where foreign currency is limited. Payments are usually routed through the central banks, and sometimes require that the trade balance is equaled every year.

Binary Options
A binary "call" (or "step up") is like a standard European call option except that the pay off at expiry is fixed at one unit of the counter currency, if the call expires in the money.

Black-Scholes Model
An option pricing formula initially derived by Fisher Black and Myron Scholes for securities options and later refined by Black for options on futures. It is widely used in the currency markets.

The recording of a transaction outside the country where the transaction is itself negotiated.

Slang for Russian trading.

Break Even Point
The price of a financial instrument at which the option buyer recovers the premium, meaning that he makes neither a loss or gain. In the case of a call option, the break even point is the exercise price plus the premium.

Break Out
In the options market, undoing a conversion or a reversal to restore the option buyer's original position.

Bretton Woods
The site of the conference which in 1944 led to the establishment of the post war foreign exchange system that remained intact until the early 1970s. The conference resulted in the formation of the IMF. The system fixed currencies in a fixed exchange rate system with 1% fluctuations of the currency to gold or the dollar.

An agent, who executes orders to buy and sell currencies and related instruments either for a commission or on a spread. Brokers are agents working on commission and not principals or agents acting on their own account. In the foreign exchange market brokers tend to act as intermediaries between banks bringing buyers and sellers together for a commission paid by the initiator or by both parties. There are four or five major global brokers operating through subsidiaries affiliates and partners in many countries.

Commission charged by a broker.

Bundesbank, the reserve bank of Germany.

A person who believes that prices will rise.

Bull Market
A market characterized by rising prices.

Sterling bonds issued in the UK by foreign institutions.

Central Bank of Germany.

Butterfly Spread
(1) A futures butterfly spread is a spread trade in which multiple futures months are traded simultaneously at a differential. The trade basically consists of two futures spread transactions with either three or four different futures months at one differential.
(2) An options butterfly spread is a combination of a bear and bull spread trade in which multiple options months and strike prices are traded simultaneously at a differential. The trade basically consists of two options spread transactions with either three or four different options months and strikes at one differential.

C Cable Transfer
Telegraphic transfer of funds from one centre to another. Now synonymous with inter bank electronic fund transfer.

Cable Transfer
Telegraphic transfer of funds from one centre to another. Now synonymous with inter bank electronic fund transfer.

A term used in the foreign exchange market for the US Dollar/British Pound rate.

Call Option
A call option confers the right but not the obligation to buy stock, shares or futures at a specified price.

An option that gives the holder the right to buy the underlying instrument at a specified price during a fixed period.

Capital Account
Juxtaposition of the long and short term capital imports and exports of a country.

The interest cost of financing securities or other financial instruments held.

Carry-Over Charge
A finance charge associated with the storing of commodities (or foreign exchange contracts) from one delivery date to another.

normally refers to an exchange transaction contracted for settlement on the day the deal is struck. This term is mainly used in the North American markets and those countries which rely for foreign exchange services on these markets because of time zone preference i.e. Latin America. In Europe and Asia, cash transactions are often referred to as value same day deals.

Cash and Carry
The buying of an asset today and selling a future contract on the asset. A reverse cash and carry is possible by selling an asset and buying a future.

Cash Settlement
A procedure for settling futures contract where the cash difference between the future and the market price is paid instead of physical delivery

Chicago Board Options Exchange.

Chicago Board of Trade.

Certificate of Deposit.

Central Bank
A central bank provides financial and banking services for a country's government and commercial banks. It implements the government's monetary policy, as well, by changing interest rates. Reserve Bank of India is the central bank of India which performs the role of maintaining orderly conditions in the forex market by intervention through various instruments like cash reserve ratio, bank rate, open market operations and moralsuation.

Central Rate
Exchange rates against the ECU adopted for each currency within the EMS.Currencies have limited movement from the central rate according to the relevant band.

Certificate of Deposit (CD)
A negotiable certificate in bearer form issued by a commercial bank as evidence of a deposit with that bank which states the maturity value, maturity rate and interest rate payable.CDs vary in size with maturities ranging from a few weeks to several years. CDs may normally be redeemed before maturity only by sale on the secondary market but may also be redeemed back to issuing bank through payment of a penalty.

The Commodity Futures Trading Commission, the US Federal regulatory agency for futures traded on commodity markets, including financial futures.

Clearing House Automated Payment System.

An individual who studies graphs and charts of historic data to find trends and predict trend reversals which include the observance of certain patterns and characteristics of the charts to derive resistance levels, head and shoulders patterns, and double bottom or double top patterns which are thought to indicate trend reversals.

The New York clearing house clearing system. (Clearing House Interbank Payment System). Most Euro transactions are cleared and settled through this system.

Copenhagen Interbank Rate, the rate at which the banks lend the Danish Krone on an unsecured basis. The rate is calculated daily by the Danmarks Nationalbank (the Danish Central Bank), based on rules set out by the Danish Banker's Association.

Closed Position
A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.

Closing Purchase Transaction
The purchase of an option identical to one already sold to liquidate a position.

Chicago Mercantile ExchangeCock Dates (see broken dates).

Coincident Indicator
An economic indicator that generally moves in line with the general business cycle such as industrial production.

Commodity Exchange of New York.

The fee that a broker may charge clients for dealing on their behalf.

Compound Option
An option on an option, the dates and price of such option being fixed.

A memorandum to the other party describing all the relevant details of the transaction.

Consumer Price Index. Monthly measure of the change in the prices of a defined basket of consumer goods including food, clothing, and transport. Countries vary in their approach to rents and mortgages.

Contract Expiration Date
The date on which a currency must be delivered to fulfill the terms of the contract. For options, the last day on which the option holder can exercise his right to buy or sell the underlying instrument or currency.

Contract Month
The month in which a futures contract matures or becomes deliverable if not liquidated or traded out before the date specified.

An agreement to buy or sell a specified amount of a particular currency or option for a specified month in the future (See Futures contract).

Correspondent Bank
The foreign banks representative who regularly performs services for a bank which has no branch in the relevant centre, e.g. to facilitate the transfer of funds. In the US this often occurs domestically due to inter state banking restrictions.

Cost of Carry
The interest rate parity, where the forward price is determined by the cost of borrowing money in order to hold the position.

Cost of Living Index
Broadly equivalent to Retail Price Index or Consumer price.

The customer or bank with which a foreign exchange deal is executed.

Counterparty Risks
Foreign Currency Inter-bank Exchange (FOREX) instruments are Positions (Buys and/or Sell) between the Client and its Counterparty and, unlike exchange-traded foreign exchange instruments which are, in effect, guaranteed by a clearing organization affiliated with the exchange on which the instruments are traded, are not guaranteed by a clearing organization. Thus, when the Customer purchases an OTC foreign exchange instrument, it relies on the Counterparty from which it has purchased the instrument to fulfill the contract. Failure of a Counterparty to fulfill a Position could result in losses of any prior payment made pursuant to the Positions well as the loss of the expected benefit of the transaction.

Country Risk
Factors that affect currency trading unique to the specific country include political, regulatory, legal and holiday risks.

Coupon Value
The annual rate of interest of a bond.

(1) On bearer stocks, the detachable part of the hide behind nominee status. Certificate exchangeable for dividends.
(2) Denotes the rate of interest on a fixed interest security.

(1) To take out a forward foreign exchange contract.
(2) To close out a short position by buying currency or securities which have been sold.

Covered Interest Rate Arbitrage
An arbitrage approach which consists of borrowing currency A, exchanging it for currency B, investing currency B for the duration of the loan, and, after taking off the forward cover on maturity, showing a profit on the entire set of deals. It is based on the theorem of interest rate parity (one of the key theoretical economic relationship) which says that the return on a hedged foreign investment will just equal the domestic interest rate on investments of identical risk. When the covered interest rate differential between the two money market is zero, there is no arbitrage incentive to move funds from one market to another.

Committee on Payment and Settlement Systems.

Crawling Peg (Adjustable Peg)
An exchange rate system where a country's exchange rate is "pegged" (i.e. fixed) in relation to another currency. The official rate may be changed from time to time.

Credit Risk
The risk that a debtor will not repay; more specifically the risk that the counterparty does not have the currency promised to be delivered.

Cross Deal
A foreign exchange deal entered into involving two currencies, neither of which is the base currency.

Cross Hedge
A technique using financial futures to hedge different but related cash instruments based on the view that the price movements between the instruments move in concert.

Cross Rate
An exchange rate between two currencies, usually constructed from the individual exchange rates of the two currencies, as most currencies are quoted against the dollar.

A cross-trade transaction is a transaction where either the buy broker and the sell broker are the same, or the buy broker and the sell broker belong to the same firm.

The type of money that a country uses. It can be traded for other currencies on the foreign exchange market, so each currency has a value relative to another.

Currency Basket
Various weightings of other currencies grouped together in relation to a basket currency(e.g. ECU or SDR). Sometimes used by currencies to fix their rate often on a trade weighted basket.

Current Account
The net balance of a country's international payment arising from exports and imports together with unilateral transfers such as aid and migrant remittances. It excludes capital flows.

Current Balance
The value of all exports (goods plus services) less all imports of a country over a specific period of time, equal to the sum of trade and invisible balances plus net receipt of interest, profits and dividends from abroad.

The set of expiration dates applicable to different classes of option.

D Day Order
An order that if not executed on the specific day is automatically canceled.

Day Trading
A Day Trading deal is a currency exchange deal which renew automatically every night at 22:00 (GMT time) starting the day the deal was made and until it ends. The deal ends in one of the following events:
1.Termination initiated by you.
2.The day trading rate has reached the Stop-Loss rate you predefined.
3.The deal end date.

As long as the deal is open, it is charged a renewal fee every night at 22:00 (GMT time).

Deal Date
The date on which a transaction is agreed upon.

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

An individual or firm acting as a principal, rather than as an agent, in the purchase and /or sale of securities. Dealers trade for their own account and risk in contrast to the brokers who do trade only on behalf of their clients.

Declaration Date
The latest day or time by which the buyer of an option must intimate to the seller his willingness or unwillingness to exercise the option.

Shortfall in the balance of trade, balance of payments, or government budgets.

The settlement of a transaction by receipt or tender of a financial instrument or currency.

Delivery Date
The date of maturity of the contract, when the final settlement of transaction is made by exchanging the currencies. This date is more commonly known as the value date.

Delivery Risk
A term to describe when a counterparty will not be able to complete his side of the deal. This risk is very high in case of over the counter transactions where there is no exchange which can stand as a guarantee to the trade between the two parties to the contract.

The change in the value of the option premium made fully paid by the capitalisation of reserves and given relative to the instantaneous change in the value of the; underlying instrument, expressed as a coefficient.

Delta Hedging
A method used by option writers to hedge risk exposure of written options by purchase or sale of the underlying instrument in proportion to the delta.

Delta Spread
A ratio spread of options established as a neutral position by using the deltas of the options concerned to determine the hedge ratio.


A broad term relating to risk management instruments such as futures, options, swaps, etc.. The contract value moves in relation to the underlying instrument or currency. The issue of derivatives and their control following large losses by banks and corporates has been subject of much debate.

Term referring to a group dealing with a specific currency or currencies.

All the information required to finalize a foreign exchange transaction, i.e. name, rate, dates, and point of delivery.

Deliberate downward adjustment of a currency against its fixed parities or bands which is normally accompanied by formal announcement.

Direct Quotation
Quoting in fixed units of foreign currency against variable amounts of the domestic currency.

Less than the spot price example: forward discount.

Discount Rate
The rate at which a bill is discounted. Specifically it refers to the rate at which a central bank is prepared to discount certain bills for financial institutions as a means of easing their liquidity, and is more accurately referred to as the official discount rate

Domestic Rates
The interest rates applicable to deposits domiciled in the country of origin. Value and values may vary from Eurodeposits due to taxation and varying market practices.

E Economic Exposure
Reflects the impact of foreign exchange changes on the future competitive position of a company in the sense of the impact it can have on the future cash flows of the company.

Economic Indicator
A statistics which indicates current economic growth rates and trends such as retail sales and employment.

ECU - European Currency Unit
A basket of the member currencies. As a composite unit, the ECU consists of all the European Community currencies, which are individually weighted. It was created by the European Monetary System with the eventual goal of replacing the individual European member currencies.

Effective Exchange Rate
An attempt to summarize the effects on a country's trade balance of its currency's changes against other currencies.

Electronic Fund Transfer.

Either Way Market
In the Euro Interbank deposit market where both bid and offer rates for a particular period are the same.

European Monetary Union.

European Monetary System.

European Options Exchange.

The change in the price of an option associated with a 1% change in implied volatility (technically the first derivative of the option price with respect to volatility). Also referred to as eta, vega, omega and kappa.

Exchange Rate Mechanism.

Euro Clear
A computerized settlement and depository system for safe custody, delivery of, and payment for Eurobonds.

European Union
The group formerly known as the European Community.

Exchange Rate Risk
The potential loss that could be incurred from an adverse movement in exchange rates.

Exercise Price (Strike Price)
The price at which an option can be exercised.

A less broadly traded currency.

Expiry Date
The last day on which the holder of an option can exercise his right to buy or sell the underlying security.

Expiration Date
(1) Options - the last date after which the option can no longer be exercised.
(2) Bonds-the date on which a bond matures.

Expiration Month
The month in which an option expires.

Expiry Date
The last date on which an option can be bought or sold.

The total amount of money loaned to a borrower or country. Banks set rules to prevent overexposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.

F Fast Market
Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.

The United States Federal Reserve. Federal Deposit Insurance Corporation Membership is compulsory for Federal Reserve members. The corporation had deep involvement in the Savings and Loans crisis of the late 80s.

Fed Funds
Cash balances held by banks with their local Federal Reserve Bank. The normal transaction with these fund is an inter bank sale of a Fed fund deposit for one business day. Straight deals are where the funds are traded overnight on a unsecured basis.

Fed Fund Rate
The interest rate on Fed funds. This is a closely watched short term interest rate as it signals the Feds view as to the state of the money supply.

Foreign Exchange Dealers Association of India) is an association of all dealers in foreign exchange which sets the ground rules for fixation of commissions and other charges and also determines the rules and regulation relating to day-to-day transactions in foreign exchange in India. The FEDAI has commonly recognised 38 currencies for dealing.

Federal National Mortgage Association
A privately owned but US government sponsored corporation that trades in residential mortgages. Its activities are funded by the sale of instruments commonly known as Fannie Maes.

Federal Reserve Board
The board of the Federal Reserve System, appointed by the US President for 14 year terms, one of whom is appointed for four years as chairman.

Federal Reserve System
The central banking system of the US comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board. Membership of the Fed is compulsory for banks chartered by the Comptroller of Currency and optional for state chartered banks.

Fiscal Policy
Use of taxation as a tool in implementing monetary policy.

Fixed Exchange Rate
Official rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates are allowed to fluctuate between definite upper and lower bands, leading to intervention by the central bank.

A method of determining rates by normally finding a rate that balances buyers to sellers. Such a process occurs either once or twice daily at defined times. Used by some currencies particularly for establishing tourist rates . The system is also used in the London Bullion market.

Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (flat) position. example: you bought $500,000 then sold $500,000 = FLAT .

(1) see Floating exchange rate.
(2) Cash in hand or in the course of being transferred between banks
(3) Federal Reserve Float arises from the system where cheques sent to the Federal Reserve Banks are credited sometimes in advance of the depositing bank loosing the reserve.

Floating Exchange Rate
When the value of a currency is decided by the market forces dictating the demand and supply of that particular currency.

(1) An agreement with a counterparty that sets a lower limit to interest rates for the floor buyer for a stated time.
(2) A term for an exchanges trading area (cf. screen based trading), normally the trading area is referred to as a pit in the commodities and futures markets.

Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates etc.

Foreign Exchange
The purchase or sale of a currency against sale or purchase of another.

Foreign Position
It means a position under which one party hereto agrees to purchase from or sell to the other party hereto an agreed amount of foreign currency.

An abbreviation of foreign exchange

Forex Deal
The purchase or sale of a currency against sale or purchase of another currency. The maximum time for a deal is defined when the deal opens, the deal can be closed at any moment until the expiry date and time. A deal cannot be closed on its first 3 minutes, due to technical reasons.

Forward Contract
Sometimes used as synonym for "forward deal" or "future". More specifically for arrangements with the same effect as a forward deal between a bank and a customer.

Forward Cover Taking
forward contracts to protect against movements in the exchange rate.

Forward Deal
A deal with a value date greater than the spot value date.

Forward Points
The interest rate differential between two currencies expressed in exchange rate points. The forward points are added to or subtracted from the spot rate to give the forward or outright rate depending on whether the currency is at a forward premium or discount.

Forward Rate
The rate at which a foreign exchange contract is struck today for settlement at a specified future date which is decided at the time of entering into the contract. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefor the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.

Free Reserves
Total reserves held by a bank less the reserves required by the authority.

Front Office
The activities carried out by the dealer , normal trading activities.

Fundamental Analysis
Analysis based on economic and political factors

The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.

A term for USD/CAD/FungiblesInstruments that are equivalent, substitutable and interchangeable in law. May apply to certain exchange traded currency contracts offered on a number of exchanges.

Futures Contract
A contract traded on a futures exchange which requires the delivery of a specified quality and quantity of a commodity, currency or financial instruments a specified future month, if not liquidated before the contract matures.

Futures Exchange-Traded Contracts
They are firm agreements to deliver (or take delivery of) a standardized amount of something on a certain date at a predetermined price. Futures exist in currencies, money market deposits, bonds, shares and commodities. They are traded on an exchange with the clearing corporation gauranteeing the contract and moreover the trade is done on a mark to market basis.

Foreign Exchange.

G G5
The Group of Five. The five leading industrial countries, being US, Germany, Japan, France, UK.

The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy.

G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.

The rate at which a delta changes over time or for one unit change in the price of the underlying asset.

GNP Deflator
Removes inflation from the GNP figure. Usually expressed as a percentage and based on an index figure.

The difference between the actual real GNP and the potential real GNP. If the gap is negative an economy is overheated.

Gross Domestic Product
Total value of a country's output, income or expenditure produced within the country's physical borders.

Gross National Product
Gross domestic product plus " factor income from abroad" - income earned from investment or work abroad.

Gold Standard
The original system for supporting the value of currency issued. This system was in vogue before 1973 when the fixed exchange rates were prevalent.

GTC "Good Till Cancelled"
An order left with a dealer to buy or sell at a fixed price. The order remains in place until it is cancelled by the client.

H Hard Currency
A currency whose value is expected to remain stable or increase in terms of other currencies.

Head and Shoulders
A pattern in price trends which chartist consider indicates a price trend reversal. The price has risen for some time, at the peak of the left shoulder, profit taking has caused the price to drop or level. The price then rises steeply again to the head before more profit taking causes the the price to drop to around the same level as the shoulder. A further modest rise or level will indicate a that a further major fall is imminent. The breach of the neckline is the indication to sell.

The purchase or sale of options or futures contracts as a temporary substitute for a transaction to be made at a later date. Usually it involves opposite positions in the cash or futures or options market.

A hedging transaction is one whose main aim is to protect an asset or liability against a fluctuation in the foreign exchange rate rather than profit from the exchange rate fluctuations.

Very high and self sustaining inflation levels. One definition being the period while inflation exceeds 50% until it has drops below that level for 12 months.

International Commodities Clearing House Limited, a clearing house based in London operating world wide for many futures markets.

International Foreign Exchange Master Agreement.

International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. The IMF helps its members to tide over the balance of payments problems with supplying the necessary loans.

International Monetary Market part of the Chicago Mercantile Exchange that lists a number of currency and financial futures Implied volatilityA measurement of the market's expected price range of the underlying currency futures based on the traded option premiums.

Implied Rates
The interest rate determined by calculating the difference between spot and forward rates.

A call option is in-the-money if the price of the underlying instrument is higher than the exercise/strike price. A put option is in-the-money if the price of the underlying instrument is below the exercise/strike price.

Inconvertible Currency
Currency which cannot be exchanged for other currencies either because it is forbidden by the foreign exchange regulations or the currency witnesses extreme volatility that it is not percieved to be a safe haven for parking the funds.

Indicative Quote
A market-maker's price which is not firm.

Indirect quote
See reciprocal currency.

Industrial Production Index. A coincident indicator measuring physical output of manufacturing, mining and utilities.

Continued rise in the general price level in conjunction with a related drop in purchasing power. Sometimes referred to as an excessive movement in such price levels.

Info Quote
Rate given for information purposes only.

Initial Margin
The deposit required by the Broker before a client can trade/transact a deal to have some cushion in the event of default by the party.

Interbank Rates
The forex rates large international banks quote to other large international banks. Normally the public and other businesses do not have access to these rates.

Interest Rate Risk
The potential for losses arising from changes in interest rates

Interest Rate Swaps
An agreement to exchange interest rate exposures from floating to fixed or vice versa. There is no swap of the principal. The principal amount is notional as at the end of the tenure only cash flows related with the interest payments (whether payment or reciept) are exchanged.

Action by a central bank to effect the value of its currency by entering the market. In India the intervention by Reserve Bank of India is confined to the events of extreme volatility.

Intra Day Limit
Limit set by bank management on the size of each dealer's Intra Day Position.

Intra Day Position
Open positions run by a dealer within the day. Usually squared by the close.

Index and Options Market part of the Chicago Mercantile Exchange.

ISDA (International Securities Dealers Association)
Organization which foreign currency exchange banks have formed to regulate inter-bank markets and exchanges.

J J Curve
A term describing the expected effect of a devaluation on a country's trade balance. It is anticipated that import bills rise before export orders and receipts increase.

K Kiwi
Slang for the New Zealand dollar.

Knock In
A process where a barrier option (European) becomes active as the underlying spot price is in the money.

Knock Out
has a corresponding meaning although the option may permanently cease to exist.

L Lay Off
To carry out a transaction in the market to offset a previous transaction and return to a square position.

Less developed countries, often used with respect to secondary debt market.

Leading Indicators
Statistic that are considered to precede changes in economic growth rates and total business activity, e.g. factory orders.

Leads and Lags
The effect on foreign trade payments of an anticipated move in the exchange rate, normally a devaluation. The importers speeden up the payment for the imports and exporters delay recieving payment for the exports.

In terms of foreign exchange, the obligation to deliver to a counterparty an amount of currency either in respect of a balance sheet holding at a specified future date or in respect of an un-matured forward or spot transaction.

LIBOR (London Inter Bank Offer Rate)
British Bankers' Association average of interbank offered rates for dollar deposits in the London market based on quotations at 16 major banks. Effective rate for contracts entered into two days from date appearing.

London International Financial Futures Exchange.

Limit Order – Reserved Day Trading Deal
An order to perform a Day Trading deal at a rate pre-defined by the customer, when and if such rate comes up in real market time. The Limit rate is superior to the existing rate at the time of reservation. The reservation order lasts for a period defined by the customer, and is associated by the necessary collaterals to facilitate the potential Day Trading deal, when and if activated, under the pre-defined terms.

Limited Convertibility
When residents of a country are prohibited from buying other currencies even though non-residents may be completely free to buy or sell the national currency and the foreign institutional investors also have the liberty to buy and sell shares on the stock exchange of that country.

Any transaction that offsets or closes out a previously established position.

The ability of a market to accept large transactions without having any major impact on the interest rates.

A market position where the Client has bought a currency he previously did not own. For example: long Dollars.

M M0
Cash in circulation . Only used by the UK.

Cash in circulation plus demand deposits at commercial banks. There are variations between the precise definitions used by national financial authorities.

Includes demand deposits time deposits and money market mutual funds excluding large CDs.

In the UK it is M1 plus public and private sector time deposits and sight deposits held by the public sector.

In the US it is M2 plus negotiable CDs.

Make a Market
A dealer is said to make a market when he quotes both the bid and offer prices at which he stands ready to buy and sell.

Managed Float
When the monetary authorities intervene regularly in the market to stabilise the rates or to push the exchange rate in a required direction. It is also called the dirty float which we have in India.

Collateral that the holder of a position in securities, options, Forex or futures contracts, has to deposit to cover the credit risk of his counterparty. Other definitions to MARGIN, used in other areas are:
(1) Difference between the buying and selling rates, also used to indicate the discount or premium between spot or forward.
(2) For options, the sum required as collateral from the writer of an option.
(3) For futures, a deposit made to the clearing house on establishing a futures position account.
(4) The percentage reserve required by the US Federal Reserve to make an initial credit transaction.

Margin Call
A demand for additional funds to cover positions

Marginal Risk
The that a customer goes bankrupt after entering into a forward contract. In such an event the issuer must close the commitment running the risk of having to pay the marginal movement on the contract.

Mark - To - Market
The profits and/or losses are tallied at the end of the session according to the closing prices of the security and the account is "marked to the market" daily. The party will be called upon to make good the losses if there has been an adverse movement in the prices and it can book the profits in case there has been a favorable movement in the prices.

Market Value
Market value of a forex position at any time is the amount of the domestic currency that could be purchased at the then market rate in exchange for the amount of foreign currency to be delivered under the forex Contract.

Date for settlement of the transaction which is decided at the time of entering into the contract.

Japanese ministry of International Trade & Industry.

Money Markets

Money Supply
The amount of money in the economy, which can be measured in a number of ways. In India we have four measures of money supply i.e M1, M2, M3, M4.

Mutual fund
An open-end investment company. Equivalent to unit trust.

N Nickel
US term for five basis points.

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.

Not Held Basis Order
An order whereby the price may trade through or better than the client's desired level, but the principal is not held responsible if the order is not executed.

A financial instrument consisting of a promise to pay rather than an order to pay or a certificate of indebtedness.

O Offer
The rate at which a dealer is willing to sell the base currency.

Official Settlements Account
A US balance of payments measure based on movement of dollars in foreign official holdings and US reserves. Also referred to as reserve transaction account.

The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market but only with other foreign banks. This is known as an off shore banking unit.

Old Lady
Old lady of Threadneedle Street, a term for the Bank of England.

One Cancels Other Order
Where the execution of one order automatically cancels a previous order also referred to as OCO or 'One cancels the other'.

Open Market Operations
The central bank operations in the markets to influence exchange and interest rates.

Open Position
Any deal which has not been settled by physical payment or reversed by an equal and opposite deal for the same value date. It can be termed as a high risk, high return proposition.

Option Class
All options of the same type - calls or puts -listed on the same underlying instrument.

Option Series
All options of the same class having the same exercise/strike price and expiration date.

A contract conferring the right but not the obligation to buy (call) or to sell (put) a specified amount of an instrument at a specified price within a predetermined time period.

Over The Counter (OTC)
A market conducted directly between dealers and principals via a telephone and computer network rather than a regulated exchange trading floor. These markets have not been very popular because of the risks both the parties face in case the other party fails to honour the contract. They were never part of the Stock Exchange since they were seen as "unofficial".

A put option is out-of-the-money if the exercise/strike price is below the price of the underlying instrument. A call option is out-of-the money if the exercise/strike price is higher than the price of the underlying instrument.

Outright Deal
A forward deal that is not part of a swap operation.

Outright Forward
Foreign exchange transaction involving either the purchase or the sale of a currency for settlement at a future date.

Outright Rate
The forward rate of a foreign exchange deal based on spot price plus forward discount/premium.

Overheated (Economy)
Is an economy on a high growth rate trajectory placing pressure on the production capacity resulting in increased inflationary pressures and higher interest rates.

Overnight Limit
Net long or short position in one or more currencies that a dealer can carry over into the next dealing day. Passing the book to other bank dealing rooms in the next trading time zone reduces the need for dealers to maintain these unmonitored exposures.

P Package Deal
When a number of exchange and /or deposit orders have to be fulfilled simultaneously.

(1) The nominal value of a security or instrument.
(2) The official value of a currency.

The value of one currency in terms of another.

(1) Foreign exchange dealer's slang for your price is the correct market price.
(2) Official rates in terms of SDR or other pegging currency.

Permitted Currency
It means a foreign currency which is freely convertible i.e a currency which is permitted by the rules and regulations of the country concerned to be converted into major reserve currencies and for which a fairly active and liquid market exists for dealing against the major currencies.

See point. (0.0001 of a unit).

(1) 100th part of a per cent, normally 10,000 of any spot rate. Movement of exchange rates are usually in terms of points.
(2) One percent on an interest rate e.g. from 8-9%.
(3) Minimum fluctuation or smallest increment of price movement.

Political Risk
The potential for losses arising from a change in government policy or due to the risk of expropriation (nationalisation by the government ).

The netted total exposure in a given currency. A position can be either flat or square ( no exposure), long, (more currency bought than sold), or short ( more currency sold than bought).

Producer Price Indices. See wholesale price indices.

(1) The amount by which a forward rate exceeds a spot rate.
(2) The amount by which the market price of a bond exceeds its par value.
(3) Options, the price a put or call buyer must pay to a put or call seller for an option contract.
(4) The margin paid above the normal price level.

Prime Rate
(1) The rate from which lending rates by banks are calculated in the US.
(2) The rate of discount of prime bank bills in the UK.

A dealer who buys or sells stock for his/her own account.

Profit Taking
The unwinding of a position to realize profits.

Purchasing Power Parity
Model of exchange rate determination stating that the price of a good in one country should equal the price of the same good in another country after adjusting for the changes in the price due to the change in exchange rate. Also known as the law of one price.

Put Call Parity
The equilibrium relationship between premiums of call and put options of the same strike and expiry.

Put Option
A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period.

Q Quote
An indicative price. The price quoted for information purposes but not to deal.

R Range
The difference between the highest and lowest price of a future recorded during a given trading session.

The price of one currency in terms of another. It has the same meaning as the term parities.

A decline in business activity. Often defined as two consecutive quarters with a real fall in GNP.

Reserve Currency
A currency held by a central bank on a permanent basis as a store of international liquidity, these are normally Dollar , Deutschemark, and sterling.

Funds held against future contingencies, normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. They are an asset in the balance of payments.

A price level at which the selling is expected to take place.

Retail Price Index
Measurement of the monthly change in the average level of prices at retail, normally of a defined group of goods.

Increase in the exchange rate of a currency as a result of official action.

Reuter Dealing
A system for screen based trading that has been in operation since the early 1980s now has a matching optional enhancement known as Dealing 2000-2.

Risk management
The identification and acceptance or offsetting of the risks threatening the profitability or existence of an organisation. With respect to foreign exchange involves among others consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.

Risk Premium
Additional sum payable or return to compensate a party for adopting a particular risk.

There are risks associated with any market. It means variance of the returns and the possibility that the actual return might not be in line with the expected returns. The risks associated with trading foreign currencies are: market, exchange, Interest rate, yield curve, volatility, liquidity, forced sale, counter party, credit, and country risk.

Rolling over
The substituting of a far option for a near option of the same underlying stock at the same strike/exercise price.

Where the settlement of a deal is carried forward to another value date based on the interest rate differential of the two currencies example: next day.

S Selling Rate
Rate at which a bank is willing to sell foreign currency.

Actual physical exchange of one currency for another.

Settlement Date
It means the business day specified for delivery of the currencies bought and sold under a forex contract.

A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms.

Standard International Trade Classification. A system for reporting trade statistics in a common manner.

Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.

Soft Market
More potential sellers than buyers, which creates an environment where rapid price falls are likely.

(1) The most common foreign exchange transaction.
(2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.

Spot Next
The overnight swap from the spot date to the next business day.

Spot Price/Rate
The price at which the currency is currently trading in the spot market.

(1) The difference between the bid and ask price of a currency.
(2) The difference between the price of two related futures contracts.
(3) For options, transactions involving two or more option series on the same underlying currency.

Stable Market
An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.

Standard and Poors (S&P)
A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&&P 500.

British pound, otherwise known as cable.

Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.

Stop Loss Order
Order given to ensure that , should a currency weaken by a certain percentage, a short position will be covered even though this involves taking a loss. Realize profit orders are less common.

Stop Out Price
US term for the lowest accepted price for Treasury Bills at auction.

The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.

Recession or low growth in conjunction with high inflation rates.

Strike Price
Also called exercise price. The price at which an option holder can buy or sell the underlying instrument.

A combination of two puts and one call.

Structural Unemployment
Unemployment levels inherent in an economic structure.

Support Levels
A price level at which the buying is expected to take place.

The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction.

Society for Worldwide Inter-bank Financial Telecommunication is a clearing system for international trading.

Market slang for Swiss Franc.

T T-Bill
Treasury Bill.

Technical Analysis
The study of the price that reflects the supply and demand factors of a currency. Common methods are flags, trend-lines spikes, bottoms, tops, pennants, patterns and gaps.

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

Terms of Trade
The ratio between export and import price indices.

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 consequently bid and ask quotes are wide and the liquidity of the instrument traded is low.

Tokyo Inter-bank Offered Rate.

A minimum change in price, up or down.

Tokio International Financial Futures Exchange.

Tomorrow Next (Tom next)
Simultaneous buying and selling of a currency for delivery the following day and selling for the next day or vice versa.

Trade Date
The date on which a trade occurs.

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

The buying or selling of securities resulting from the execution of an order.

Transaction Date
The date on which a trade occurs.

Transaction Exposure
Potential profit and loss generated by current foreign exchange transactions.

U Under-Valuation
An exchange rate is normally considered to be undervalued when it is below its purchasing power parity.

V Value Date
For exchange contracts it is the day on which the two contracting parties exchange the currencies which are being bought or sold. For complete description see the chapter on trading. For a spot transaction it is two business banking days forward in the country of the bank providing quotations which determine the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day. The enquirer is the party who must make sure that his spot day coincides with the one applied by the respondent. The forward months maturity must fall on the corresponding date in the relevant calendar month If the one month date falls on a non-banking day in one of the centers then the operative date would be the next business day that is common. The adjustment of the maturity for a particular month does not effect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day. Also referred to as maturity date.

Value Spot
Normally settlement for two working days from the date the contract is entered into. Value Today Transaction executed for same day settlement; sometimes also referred to as "cash transaction."

A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike. To compare with exotic options which have additional terms.

Variation Margin
Funds required to be deposited by a client when a price movement has caused funds to fall below the stipulated percentage of the value of the contract.

Expresses the price change of an option for a one per cent change in the implied volatility.

Velocity of Money
The speed with which money circulates or turnover in the economy. It is calculated as the annual national income: average money stock in the period.

A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes (historic). Can be implied from futures pricing, implied volatility.

Vostro Account
A local currency account maintained with a bank by another bank. The term is normally applied to the counterparty's account from which funds may be paid into or withdrawn, as a result of a transaction.

W Wholesale Money
Money borrowed in large amounts from banks and institutions rather than from small investors.

Wholesale Price Index
It measures changes in prices in the manufacturing and distribution sector of the economy and tends to lead the consumer price index by 60 to 90 days. The index is often quoted separately for food and industrial products.

Working day
A day on which the banks in a currency's principal financial centre are open for business. For FX transactions, a working day only occurs if the bank in both (all relevant currency centers in the case of a cross are open).

World Bank
A bank made up of members of the IMF whose aim is to assist in the development of member states by making loans where private capital is not available.

The seller of a position. Also known as the grantor of the trade. "Writing an Currency" is to sell it.


Y Yield Curve
The graph showing changes in yield on instruments depending on time to maturity. A system originally developed in the bond markets is now broadly applied to various financial futures. A positive sloping curve has lower interest rates at the shorter maturities and higher at the longer maturities. A negative sloping curve has higher interest rates at the shorter maturities.

Z Z-Certificate
Certificate issued by the Bank of England to "discount houses" in lieu of stock certificates to facilitate their dealing in the short dated gilt edge securities.

Zero Coupon Bond
A bond that pays no interest. The bond is initially offered at a discount to its redemption value.

Increase Your Forex Profits 100% in 10 minutes!

How To Increase Forex Profits 100% in 10 Minutes

Hey all,

In this article of mine, I am gonna show you guys how to increase your Forex Profits 100% i.e double.

It works for 99% of the short term FX traders. So if you are the casual amateur investor, read on!

- stop trading too much - widen out your stops - widen out your profit targets - and limit your trading in the direction of the trend indicated by 4 hour chart.

For an article on why to follow this trend check this out.


Now, moving to individual ones.

1) Stop trading so much

Yes, there are no commissions at all but the spreads you get are HUGE and believe it or not the spreads are reducing your profits by almost half!! Just follow this simple excercise and you will believe me.

2) Widen out your stops

Initial stop loss should be kept to a minimum of 23 points; I generally limit my use between 23 and 35 point stop losses for short-term trading.

3) Widen out your profit targets

Unless you think a trade can make you atleast100 points or more , dont plunge in the trade.

4) Always trade in the direction of the 4 hour chart

The real $$$ are made in the direction of the trend

Follow this Simple exercise

1) Download all your trades for the past year into an excel spreadsheet (if you don'thave an idea on how to do this, go ask your broker for instructions).

2) Determine the dollar value of the spread for each of the trades.

3) Sum up the total dollar value of all the spreads for all trades and add this value to your current account balance; this gives your spread adjusted account balance.

4) Take this spread adjusted current account balance and divide it by your opening balance at beginning of the year; the result will give you a percentage change.

5) Now, take your actual current account balance and divide it by your opening balance at beginning of year; the result again will give you a percentage change.

6) Subtract your spread adjusted year to date percentage change from your actual year to date percentage change.

7) That number will be 100% or more

8) Take the necessary steps as outlined above (1 to 4) and improve your results 100%

If you liked this article and it worked for you, i would be delighted to know so. Please do leave feed back.

You might like to read other Forex related articles in the Articles section or browse through our huge collection of forex ebooks!

Forex Articles!

Saturday, November 10, 2007

Here is a collection of all the articles with regards to Forex on this blog as of now.
Just thought would be a great idea to keep em in one place.

133 Trading Tips for Better Trading

7 Tips to better Currency Trading

20 Rules to stop losing money in the Forex Market

4 Simple Tips To Choose a Forex Broker

How to Increase your Forex Profits by 100% in 10 minutes (POPULAR)

Common Sense Guidelines for the Average Trader

Forex Basics

Forex and Automated Forex : A Beginners guide

Optimize Your Forex Trading

Stop losses at Trading Forex

Introduction To Forex trading

Investing in E-gold: Myths n Truths

Why Forex?

Forex Scalping for beginners!!!!

Most Frequently asked questions on the forex market!

How to be a successful forex trader!

Learn Forex trading!

Practical course for forex beginners!

Forex Market Snapshot

Common sense guidelines for an average trader!

Friday, November 9, 2007

Common Sense Guidelines for the Average Trader

Here, i whipped up an article outlining the basic things an average forex investor should be watching out for....

Looking for a reputable broker

  • Ability to trade effectively depends heavily on consistency in the spreads and ample liquidity
  • Anyone can establish a position quite easily.
  • The Ability to close out a position at a fair market price is more important than anything else

Live to trade another day

  • Always apply prudent money management skills
  • Avoid using excessive leverage that puts your investment capital at risk.. Refer to the leverage articles that i will be posting soon.
  • And very importantly Always trade with a stop!

Don’t trade emotionally like an emotional fool, Just stick to your plan and maintain discipline

  • Establish a trading plan or strategy before initiating a trade
  • Set reasonable risk/reward parameters
  • Don’t override your stops for emotional reasons
  • Don’t react to price action – means don’t buy just because it looks cheap or sell because it looks too high, Have reliable evidence to back up your trade

Don’t punt

  • Don't punt( Punting is trading for trading sake without a view)

Don’t leave stops at obvious levels such as “big figures” (e.g. eur/usd 1.20, usd/jpy 110)

  • i.e. JUBBS stops = stops at obvious levels and thus are more likely triggered

Don’t add to a losing position in unless it is part of a strategy to scale into a position

  • In other words, don’t double up in the hope of recouping losses unless it is part of a broader trading strategy

Trading with and against the trend

  • When trading with a trend, consider the use of trailing stops.
  • When trading against the trend, be disciplined taking profits and don’t hold out for the last pip

Treat trading as a continuum

  • Don’t base success on one trade
  • Avoid emotional highs or lows on individual trades
  • Consistency should be an objective

Forex trading is multi-currency

  • Watch crosses as they are key influences on spot trading
  • Crosses are one currency vs. another, such as eur/jpy (euro vs. jpy) or eur/gbp (eur vs. gbp)
  • Crosses can be used as clues for direction for spot currencies even if you are not trading them

Be cognizant of what news is coming out each day so you don’t get blindsided

  • Be cognizant of what news is coming out each day so you don’t get blindsided
  • Beware of trading just ahead of an economic number and be wary of volatility following key releases

Beware of illiquid markets

  • Beware of illiquid markets
  • Adjust strategies during holiday or pre-holiday periods to take into account thin liquidity
  • Beware of central bank intervention in illiquid markets

Forex Market Snapshot

Forex Market Snapshot


The facts and figures that will be denoted in this article relate to the foreign exchange market. Much of the information is drawn from the findngs of the 2007 Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2007 and released on September 25, 2007. 54 central banks and monetary authorities took part in this survey, collecting information from approximately 1280 market participants.

Summary of this survey by BIS:"The 2007 survey shows an unprecedented rise in activity in traditional foreign exchange markets compared to 2004. Average daily turnover rose to $3.2 trillion in April 2007, an increase of 71% at current exchange rates and 65% at constant exchange rates. Against the background of low levels of financial market volatility and risk aversion, market participants point to a significant expansion in the activity of investor groups including hedge funds, which was partly facilitated by substantial growth in the use of prime brokerage, and retail investors. A marked increase in the levels of technical trading – most notably algorithmic trading – is also likely to have boosted turnover in the spot market." - BIS


  • Decentralized , over-the-counter market, also known as the 'interbank' market
  • Main participants: Central Banks, commercial and investment banks, hedge funds, corporations and private speculators
  • The free-floating currency system began in the early 1970's and was ratified in 1978
  • Online trading trend started in the mid to late 1990's

Source: BIS Triennial Survey 2007

Trading Hours

  • 24 hours market . Note: not 24/7 though
  • Sunday 5pm EST through Friday 4pm EST.
  • Trading starts in New Zealand, followed by Australia, Asia, the Middle East, Europe, and America


  • Largest financial market in the world
  • $3.5 trillion average daily turnover, equivalent to:
    • More than 10 times the average daily turnover of global equity markets1
    • More than 35 times the average daily turnover of the NYSE2
    • Nearly $500 a day for every man, woman, and child on earth3
    • An annual turnover more than 10 times world GDP4

  • The spot market accounts for just under one-third of daily turnover

1. About $281 billion - World Federation of Exchanges aggregate 2006
2. About $86 billion - World Federation of Exchanges 2006
3. Based on world population of 6.6 billion - US Census Bureau
4. About $48 trillion - World Bank 2006.

Source: BIS Triennial Survey 2007

Major Markets

  • The United States & the United Kingdom markets account for just over 50% of turnover
  • Major markets: London, New York, Tokyo
  • Trading activity is the heaviest when major markets overlap5
  • Nearly two-thirds of NY activity occurs in the wee morning hours while European markets are open6

5. The Foreign Exchange Market in the United States - NY Federal Reserve
6. The Foreign Exchange Market in the United States - NY Federal Reserve

Average Daily Turnover by Geographic Location

Source: BIS Triennial Survey 2007

Technical Analysis

Commonly used technical indicators:

  • Moving averages
  • RSI
  • Fibonacci retracements
  • Stochastics
  • MACD
  • Momentum
  • Bollinger bands
  • Pivot point
  • Elliott Wave


  • The US dollar is involved in an overwhelming 80% of all foreign exchange transactions that take place daily , equivalent to over US$2.7 trillion per each single day.

Currency Codes

  • USD = US Dollar
  • EUR = Euro
  • JPY = Japanese Yen
  • GBP = British Pound
  • CHF = Swiss Franc
  • CAD = Canadian Dollar
  • AUD = Australian Dollar
  • NZD = New Zealand Dollar

Average Daily Turnover by Currency

N.B. Because two currencies are involved in each transaction, the sum of the percentage shares of individual currencies totals 200% instead of 100%.

Source: BIS Triennial Survey 2007

Currency Pairs

  • Dollar bloc: USD/CAD, AUD/USD, NZD/USD
  • Major crosses: EUR/JPY, EUR/GBP, EUR/CHF

Average Daily Turnover by Currency Pair

Source: BIS Triennial Survey 2007

Practical course for forex beginners!


I think that most of us heard such a saying as “the trend is my friend”. Many of us also had met in Internet and books different opinions as to the sensee of the above saying..

Well, what is the real meaning of it infact?

The real deep meaning and idea of this saying is a simple and clear demand: Always Trade in the direction of the current trend and ignore trading signals directed against the flow of current trend.

Friendly trend will remain friendly generally, while the trader treats him like a friend , not doing any thing against the desire and will of his friend/trend. Do you know friends who would not be disturbed or irritated by your doings against their desire, understanding and will ? Nobody likes such things.

But nevertheless, many of us starting examining charts/tickers etc absolutely forget this simple rule and try to catch the high or low peaks and/or to trade against the trend. This means, that the trader lacks the main thing - discipline. It's very interesting, that the looser, while considering and investigating his own mistakes, often does not see his actual mistake and culprit - trading against the trend.

How can we define the trend ? Very simply - with the help of combination of four Simple Moving Averages (MA). For example, let us take combination of 5/20/40/60 МА.

Usually current trend is defined by looking at Daily chart and this is right. But the traders with small cash amounts may define trend at 4-hour chart and 1-hour chart. As it often happens that in the interests of relatively quick trading the trend may be defined using only 1-hour chart. But we shouldn't forget about the Daily chart, coz if the hourly signal coincides with the daily trend, then there appears a brilliant possibility for a mighty movement along the trend.

But let us return to the above mentioned combination of MAs. So, if МА 40 is above МА60, then the trend is upward and each time when MA5 crosses MA20 upward (that is in compliance with the trend direction), we enter the market. But when MA5 crosses MA20 downward, we use this signal only for closing of previously opened positions.

And vice versa, if МА40 is under МА60, then the trend is downward and now we enter the market only when MA5 crosses MA20 downward, and we use upward crosses of MA5 and MA20 only for closing opened earlier positions. SIMPLE??

Look at the above Chart. The red dots in there at the above chart denote the crosses of MA40 and MA60. Blue and red lines show the places for openeing positions in the trend direction.

I know of traders, who, in the situation alike trying to catch the price peak, opened SELL positions near the blue lines. If the trader opens positions without minimum analysis at least for definition of the current trend, then he would better go to casino and gamble off, where one can always trying to guess right, but never can make a prognosis. There exists an opinion that MAs are lagging behind as an indicator. It’s true, sometimes, but as a trend indicator, they are very good.

Here МА5 - green, МА20 – red. Red dot - place of closing position ( MA5 crosses MA20 downward). Blue dot - place of opening position in the trend direction (MA5 crosses MA20 upwards ).

We have the same at this chart - red dots - places of closing positions, blue dot - place of opening position in the direction of the current trend.

But WHERE should we place a stop-loss ?

If we enter the market just after the cross of M40 and MA60, then the best place for stop would be 2-4 pips beyond the closest peak directed opposite to our market entrance direction. If you agree, of course, with the size of the stop-loss, or if your collateral permits such stop. But if we opened position some time after MA40 and MA60 had been crossed, then the best place would be 2-4 pips beyond MA60, then, a bit worse, but still ok, beyond MA40 and the weakest variant is beyond MA20.

It’s only natural that the combinations of meanings for MAs could be whatever the trader would want , cause nobody can prevent him from performing experiments. Here are some examples of four simple MA combinations : 10/20/60/80 or 8/12/24/48 or you may even use Fibonacci numbers like 8/13/34/55 or 13/21/55/89 etc.

The main idea in the combination of four MA is that the pair with big numbers defines the existence of the current trend and the pair with small numbers permits us to effect relatively quick trades.

Here is one more example of trading with the trend. Upward cross of MA40/60 is designated by two blue dots. Red dots are denoting the places of positions closing after MA5/20 were crossed downward. One blue dot shows the place where the position in the direction of the current trend was opened again after MA5/20 had crossed upwards.

The next chart is the same as above, but along with the aim of comparison it has another combination of four Simple Moving Averages - MA8/13/34/55.

I understand perfectly that all stated above is not a brand new concept or something. But looking at newbies I noted that disregarding the current trend is one of the most often met mistake, which can lead to potential heavy losses. Therefore, the aim of the above material is to remind and emphasise once again about the necessity for checking the trend direction before entering the market.

Good luck!