Accumulated – The distribution of premiums and discounts on future foreign exchange transactions that relate directly to deposit swap operations (Interest Arbitrage), during the period of the operation.

Adjustment – Official action normally due to a change in the internal economic policies to correct a payment imbalance or the official exchange rate of the currency.

Analyst – An individual who studies graphs and charts of historical data to spot trends and predict investments in patterns that include observation of certain patterns and characteristics of the charts to derive resistance levels, patterns ridge and valley patterns and double bottom or double crested thought patterns indicate investments.

Agio – difference in value between currencies. It is also used to describe percentage charges for conversion of paper currency to a weak cash or another strong currency.

Appreciation – Describes a currency strengthening in response to market demand and not an official action.

Accept the bid – Acceptance of purchasing at the offer price or retail offering.

Aggressive – An investor who believes that prices will increase.

Arbitrage – The simultaneous purchase and sale in different markets, the same or equivalent financial instruments to make a profit from price differentials or coins. The exchange rate differential or Swap. It can be derived from differential in the deposit rate.

Around – Used to quote a “premium / discount” future. “About five” would mean five point on either side of the current spot value.

Active – In the context of foreign exchange is the right to receive from a counterparty an amount of currency either in respect of an asset in the balance sheet (e.g., a loan) or at a specified future date in respect of a non-comparable future or spot operation.

Associate – A system where a currency moves in line with another currency, some associations are strict while others have bands of movement.

At best – An instruction given to a trader to buy or sell at the best rate that can be obtained.

covered Arbitration – Arbitration between financial instruments denominated in different currencies, using forward cover to eliminate currency risk.

Conversion Arbitration – A transaction where the asset is purchased and acquires a placement option and sells a call option on the asset purchased, each option has the same strike price and expiration.

Interest Arbitrage – Switching into another currency by buying spot and selling futures and investment profits in order to obtain a higher interest yield. Interest arbitrage can be incoming, i.e. foreign currency to local or outgoing, i.e. of the local currency to foreign. Sometimes better results can be obtained by not selling the forward interest amount. In this case some treat it as if it were not a complete arbitrage, as if the exchange rate moved against the referee, the utility of the transaction may create a loss.


Back Office – Settlement and related processes.

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 capital movements certain long-term current account. (2) The combination of the trade balance, the current account, the capital account and invisible balance, which together make up the total of the balance of payments. Prolonged balance of payment deficits tend to lead to restrictions in capital transfers and / or decline in currency values.

Band – The range within which a currency is allowed to move. A system used in the ERM.

Base – The difference between the cash price and futures price.

Report card operation – The primary method of recording the basic information relating to a transaction.

Gap – the difference between maturities and cash flows in the book of a bank or positions of individual operators. Exposure to a gap is effectively exposure to interest rate

Bear Market – A prolonged period of generally low prices.

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 seventies 1970s. The conference resulted in the formation of the IMF. The system fixed currencies in a system of fixed exchange rate fluctuations than 1% of the currency to gold or the dollar.

Bundesbank – Germany’s Central Bank.

Good until canceled – An instruction to a broker that unlike normal practice the order does not expire at the end of the trading day, although normally terminates at the end of the month of operation.

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

Agent Bank – (1) A bank acting on behalf of a foreign bank. (2) In the Euro market – the agent bank is the one appointed by the other banks in the syndicate to handle the administration of the loan.

Central Bank – The bank’s primary regulator of a nation. Traditionally, its primary responsibility is the development and implementation of monetary policies.


Cable – A term used in the currency market exchange rate for the US Dollar / British Pound.

Channel Arbitration – The price range within which there is no possibility of arbitrage between money markets and futures.

Basket – A group of currencies normally used to manage the exchange rate of a currency. Sometimes it is known as a unit of account.

Indicative Quote – A market-price market that is not firm.

Chicoteo – term for when a trader takes a position and then must move against it by activating suspension limits of loss and liquidation of positions, taking after moving in the original direction. usually it occurs in volatile markets.

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 or withdrawn as a result of a transaction.

Collateral – A major currency that operates lightly because the main focus of the market is in another currency pair.

Quote – An indicative price. The price quoted for information purposes but not to operate.

Meet or Cancel – An order that must be entered to operate normally in a pit three times, if not met immediately canceled.

Change Control – Rules used to preserve or protect the value of the currency of a country.

Corridor – gathers buyers and sellers charging a fee which is paid by the initiator of the transaction. Brokers do not take market positions.

Two-Way Quote – When an operator quoted rates of both buying and selling for foreign exchange transactions.

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

Compensation – The closure or liquidation of a position in futures.

direct quote – quote in fixed units of foreign currency against variable amounts of local currency.

Offshore – The operations of a financial institution which although physically located in a country, has little connection with that country’s financial systems. In some countries it is not allowed a bank to do business in the domestic market but only with other foreign banks. This is known as an offshore banking unit.

Coverage – The purchase or sale of options or futures contracts as a temporary substitute for a transaction to be held at a later date. Usually it involves opposite positions in the money markets or futures or options.

Crest and Valles – A pattern in price trends an analyst believes that indicates a reversal in the price trend. The price has risen for some time, the peak of the left valley, profit taking has caused the price to drop or level off. The price then increases again evenly to the crest before an additional profit making cause the price to fall to about the same level as the valley. A modest increase or further indicate that a major fall is imminent. Rupture neck is an indication to sell.

Commission – The fee that a broker may charge clients to operate on their own.

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

Contract – An agreement to buy or sell a specified amount of a currency or option particularly during a specific month in the future (See Futures contract).

Conversion account – An account in the general ledger representing the uncovered position in a particular currency. Such accounts are known as Position Accounts.

Square – Purchase and sales are balanced and therefore the operator does not have an open position.

Box Noise – A connected to a phone often used in operating tables runners horn.

Conversion – The process by which an asset or liability denominated in one currency is exchanged for an asset or liability denominated in another currency.

Copey – Idiom for the Danish krone.

Counterparty – The other organization or party with whom the exchange operation is performed.

Counterpart – When a person buys a currency against the dollar, the value of the transaction in dollars.

Covering – (1) Make a futures contract currencies. (2) close out a short position by buying currency or securities which have been sold.

Current Account – The net balance of international payments of a country from exports and imports together with unilateral transfers such as aid and turns of immigrants. It excludes capital flows.


Deflation – difference between real and nominal Gross Domestic Product, which is equivalent to the overall inflation rate.

Slippage – Refers to the negative (or depreciation) of a pip between the time a loss stop order becomes a market order and when that order can be fulfilled market.

Asset Allocation – Dividing instrument funds among markets to achieve diversification or maximum performance.

From one day to another – An operation from today until the next business day

Dispersion – The difference between the prices of supply and demand for a currency. (2) The difference between the price of two related futures contracts.

Defensive – An investor who believes that prices will decline.

Depreciation – A fall in the value of a currency due to market forces rather than official action.

Pool – Another term for an open position.

Dollars Thursday / Friday – A technicality market US currency. If a foreign bank buys dollars a bow for delivery on Thursday. If the bank leaves the funds overnight and transfers them on Friday by a check clearinghouse then the release is not until Monday, the next business day. Thus, they are available higher rates of interest for this period.

Business Day – a day on which banks in the principal financial center of a currency are open. For FX transactions, one working day only occurs if the bank in both financial centers are open (all relevant currency centers in the case of a cross are open (

Details – All the information required to complete a transaction with foreign currencies, i.e., name, rate, dates and point of delivery.

Aggregate Demand – Total demand for goods and services in the economy. It includes the demand for goods and services in the public and private sectors within the country and demand for goods and services consumers and firms in other countries.

Devaluation – Deliberate downward of a currency against its fixed parities or bands, normally by formal announcement setting.

ECU – European Currency Unit.

EDI – Electronic Data Interchange.

Cash – normally refers to an exchange transaction contracted for settlement on the day the operation is performed. This term is used primarily in North American markets and those countries that depend on these markets for their services due to exchange preferences zone, i.e. Latin America. In Europe and Asia, cash transactions are often referred to as value same day operations.

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

EFT – Electronic Funds Transfer.

Fisher Effect – The relationship between interest rates and movements in the exchange rate, so that in an ideal situation spreads the interest rate would be offset exactly by movements in the exchange rate. See parity interest rate.

Standard – A term referring to certain normal amounts and maturities for operation.

Gold Standard – The original system for supporting the value of currency issued. When the price of gold is fixed against the currency means that the largest supply of gold does not reduce the price of gold but causes prices to rise.

Surplus – The interest cost of financing securities or other financial instruments.

Cash Delivery – Settlement same day.

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

Sterling – British pound, also known as cable.

EMS – European Monetary System.

Exotica – A coin operated with lower amplitude and frequency.

Exhibition – In the currency market, the potential for gain or loss due to movement in the exchange rate. There are three main types of exposure:

Economic: the change in purchasing power and future cash flow resulting from a change in the exchange rate. Indeed, it represents a change in the value of a company that keeps foreign currency.
Crime: A potential gain or loss derived from transactions that definitely occur in the future, which are currently underway or already may have been completed. A sales contract signed but not delivered, an account receivable or payment in foreign currency received but not converted to the local currency would be examples of transactional exposure.
Translation: the potential for changes in reported income and / or the carrying amount of the consolidated company accounts as a result of a change in exchange rates used to convert the income statements in foreign currency of the subsidiaries and subsidiaries, known as accounting exposure.


Fed Fund rate -. The interest rate on Fed funds rate This is a short-term interest to be closely observed as Fed indicates the point of view regarding the status of the supply of money.

Transaction Date – The date on which an operation is performed.

Transaction date – The date on which a transaction occurs.

Settlement Date – The date on which the contracts are settled in foreign currencies.

managed float – When the monetary authorities intervene regularly in the market to stabilize the rates or direct the exchange rate in a required direction.

Transaction date – The date on which a transaction is agreed upon.

FED The Federal Reserve Fund of the United States. Membership in the Federal Deposit Insurance Corporation is mandatory for members of the Federal Reserve. The corporation was heavily involved in the Savings and Loan Crisis of the late eighties.

FOMC – Federal Open Market Committee, the committee that sets money supply targets in the US, which are implanted through interest rates Fed Fund, etc.

Forex – A term commonly used when referring to the currency market.

Forex Club– Groups formed in the major financial centers to encourage educational and social contacts between currency traders, under the leadership of the Association Cambiste Inteernational.

Direct Future – A commitment to buy or sell a currency for delivery on a specific future date or period. The price is quoted as the Spot rate minus or plus the forward points for this period.

Future – future rates are quoted in terms of points, representing the difference between futures and spot rates. In order to get the kind of future from the current exchange tupo the forward points are added or subtracted exchange rate. The decision to add or subtract points is determined by the spread between deposit rates for both currencies involved in the conversion. The base rate higher interest currency is said to have a discount against the currency with lower interest rate in the futures market. Therefore the forward points are subtracted from the spot rate. Similarly, the base with lower interest rate currency is said to have a premium and forward points are added to the spot rate to obtain the forward rate.

Front Office – The activities carried out by the operator, normal operating activities.

Fundamentals – The macro economic factors that are recognized as the basis for the relative value of a currency and include inflation, growth, trade balance, government deficit and interest rates.

FX – Foreign Exchange Market.

Mathematical formula Golden Mean – The golden mean is an index that has fascinated many. It can be expressed succinctly in the ratio of the number “1” irrational “1.618034 …” and is used by Echelon SystemT GFC.

Value Date – For a spot transaction remittances are two banking days in the bank country supplying quotations which determine the spot value date. The only exception to this general rule is the spot day in the trading center that coincides with a bank holiday in the country (s) of the (s) Currency (s) foreign (s). The value date then moves forward one day.

free float – An exchange rate that is not materially affected by official intervention.

Delivery Date – The expiration date of the contract, when the exchange of currencies is done. This date is commonly known as the value date in the FX markets or capital.


G7 – The seven leading industrialized countries, including the United States, Germany, Japan, France, UK, Canada and Italy.

G10 – G7 plus Belgium, the Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved ..

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


Economic Indicator – A statistic that indicates current economic growth rates and trends such as retail sales and employment.

IMF – International Monetary Fund, established in 1946 to provide international liquidity in the short and medium term and encourage liberalization of exchange rates. The IMF supports countries with balance of payments problems by providing loans.

IMM – International Monetary Market of the Chicago Mercantile Exchange that lists several financial currencies and futures.

Going long – The purchase of a stock, category or currency for investment or speculation.

Going short – The selling of a currency or instrument not owned by the seller.

Inflation – Continuous increase in the general price level in conjunction with a related drop in purchasing power. Sometimes it referred to as an excessive movement in such price levels.

Internationalization – Refers to a currency that is widely used to denominate trade and credit transactions by non-residents of the country of issue. The US dollar and Swiss Franc are examples.

Intervention – Action by a central bank to affect the value of its currency by entering the market. Concerted intervention refers to action by several central banks to control exchange rates.


Kiwi – Idiom for the New Zealand dollar.


Liquidation – Any transaction that offsets or close a position previously established.

Lot mixed – An amount not standard for a transaction.

Margin call – An application for a broker or dealer for additional funds in good faith generally issued when the account of an investor suffers adverse price movements.

Book – The summary of currency positions held by an operator, or room table. Total assets and liabilities. If the average maturity is less than book assets, it said the bank is operating a short and open book. Pass the Book refers normally to transferring the operation of the positions of banks to another office at the close of the day, e.g., from London to New York.

Liquidity – The ability of a market to accept large transactions.

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

Limit overnight – net long or short position in one or more currencies that an operator can transfer the next trading day. Transfer the book to other operating rooms side in the next time zone reduces the need for dealers to maintain these unmonitored exposures.

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

Limit overnight – net long or short position in one or more currencies that an operator can transfer the next trading day. Transfer the book to other operating rooms side in the next time zone reduces the need for dealers to maintain these unmonitored exposures.


Mesa – Term referring to a group that operates with a specific currency or currencies.

Maintenance Margin – The minimum margin which an investor must keep on deposit in a margin account at all times for each open contract.

Matrix – Fixed margin within which it is allowed to fluctuate exchange rates.

Margin – The amount of money or collateral that must be provided in the first instance or stay later to insure against losses on open contracts. Initial must be placed before performing an operation. The maintenance or variation margin must be added to initial to maintain against losses on open positions. Sometimes the amount to be established or maintained subsequently known as margin necessary.

Initial Margin – The margin required by a Foreign Exchange firm to initiate the buying or selling of a certain amount of currency.

Future margins – Discounts or premiums between spot rate and the forward rate for a currency. Normally quoted in points.

Covered Margin – The margin interest rate between two instruments denominated in different currencies after taking into account the cost of future coverage.

Hard currency – Any of the major world currencies operated smoothly and easily convertible into other currencies.

Operable amount – Less acceptable size for a transaction.

Base Currency – The first currency is called base currency, and takes initial value unit and to relativize the value relative to other currencies.

Reciprocal currency – A currency that is normally quoted as dollars per unit of currency rather than the normal quote method of units of currency per dollar. The pound is the most common example.

Convertible currency – A currency that can be freely exchanged for another currency and / or gold) without special authorization from the central bank.

Brand Market – The daily adjustment of an account to reflect accrued profits and losses often required to calculate variations of margins.

Two Tier Market – A system of dual exchange rates where normally only one rate is open to market pressure, e, South Africa.

Next morning (Tom Next) – Simultaneous buying a currency for delivery the following day and selling the spot day or vice versa.

Bull Market – A prolonged period of generally rising prices.

Soft Market – More potential sellers than buyers, which creates an environment where they are likely to rapid price declines.

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

Cash Market – The market in the actual financial instrument on which a futures or options contract is based.

Thin Market – A market in which trading volume is low and in which subsequent contributions of supply and demand are spacious and operated instrument liquidity is low.

Microeconomics – The study of economic activity as it applies to individual firms or individuals or small groups of well-defined economic sectors.

Stable market – An active market which can absorb large sales or purchases of currency without major moves.

Accelerated Market – Rapid movement in a market caused by strong interest from you buyers and / or sellers. In such circumstances they could be omitted price levels and prices of supply and demand may occur too rapidly to be fully reported.


Support levels – When an exchange rate depreciates or appreciates to a level where (1) Technical analysis techniques suggest that the currency will rebound or fall below it; (2) the monetary authorities intervene to stop any further downward movement. See resistance point.


Offer – The price at which a seller is willing to sell. The best deal is the lower of the two prices available.

Aggregate Supply – Total supply of goods and services in the economy from domestic sources (including imports) available to meet aggregate demand.

Operator – A person unlike a broker, acts as principal in all transactions, buying and selling on your own.

Licensed operator – A financial institution or authorized to trade currencies bank.

To stop loss order – An order to buy or sell at the best price available when it has reached a given threshold prices.

sound operation – A matched operation that does not produce a profit or a loss.

Day Trader – Speculators who take positions in categories that then settled before the end of the day of operation.

Futures transactions – transactions with currencies in which the fulfillment of mutual obligations delivery is made at a later than the second business day after concluding the transaction date.

Operation Cross – A currency trading involving two currencies, neither of which is the base currency.

based operation – Taking opposite positions in the money markets and futures with the intent to profit from favorable movements in the basis.

Limit Order – An application to operate as a buyer or seller for a transaction in foreign currency at a specified price or at a better price if it can be obtained.

Market Order – An order to buy or sell a financial instrument immediately in the best possible price.


Parity – (1) Idiom of currency traders for the price is the correct market price. (2) Official rates in terms of SDR or other currency associated.

Average price or average rate – The price between the two prices or average prices for both buying and selling offered by market makers.

Moving Average – One way to rationalize a set of data, widely used in price time series.

Price / spot rate – The price at which the currency is currently operating in the spot market.

Parities – The value of one currency in terms of another.

Pip – A unit of price change in the price of supply / demand for a currency. For most currencies, denotes the fourth decimal place in an exchange rate and represents 1/100 of one percent (.01%).

Resistance Point or Level – A price recognized by technical analysts as a price that will likely result in a rebound but if it breaks down is likely to result in a significant price movement.

basis points – For most currencies, denotes the fourth decimal place in the exchange rate and represents 1/100 of one percent (.01%). For other currencies like the Japanese Yen, a base point is the second decimal place when quoted in terms of currency and the sixth and seventh decimal places, respectively, when quoted in reciprocal terms.

Interest Parity – One currency is in interest parity with another when the difference in interest rates is matched by the forward exchange margins. For example, if the operative interest rate in Japan is 3% and in GB UK 6%, a premium of 3% future for the Japanese Yen against the pound should produce a parity of interest.

Paying and Carry – The buying of an asset today and selling a future contract on the asset. You can perform this operation in reverse selling an asset and buying a future.

Posture – The price at which the currency or instrument is offered.

Leading Indicators – Statistics that are considered forerunners of change in economic growth rates and total business activity, e, factory orders.

Gross Domestic Product – Total value of the product, income or expenditure produced within a country’s physical borders thereof.

Gross National Product – Gross domestic product plus “factor income from abroad” – income earned from investment or work abroad.

Position – The total net commitments in a given currency. A position can be either flat or square (no exposure), long, (more currency sold than bought) or short (more currency than they bought are sold).

Closed position – A transaction that leaves the operation without commitment to the market for a particular currency.

Hedged position – One open buy position and an open position for sale in the same currency.

Risk Position – An asset or liability exposed to fluctuations in value through changes in exchange rates or interest rates.

Exchange price – A price as a differential between two dates of the exchange.


Liability – In terms of foreign exchange, the obligation to deliver to a counterparty either a monetary amount with respect to a balance at a specific date in the future or about a future without winning or spot transaction.

Rally – A recovery in price after a period of decline.

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

Reaction – A decline in prices following an advance.

Retrospective – A term referring to the amount by which the spot price exceeds the futures price.

Settlement Risk – Where a payment is made to a counterparty before the payment of the value is made. The risk is that the counterparty payment is not received.

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

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

Delivery Risk – A term to describe that a counterparty will not fulfill its part of the bargain even if it is willing to do so.

Added risk – Magnitude of exposure of a bank to a single customer for both spot contracts and futures.

Credit Risk – Risk of loss that may arise in contracts in force in case of breach of the obligations of the counterparty.

Equity Risk – The risk arising from the fact that a bank has to pay to the counterparty if such counterparty without knowing comply or may fulfill its part of the bargain. See Herstatt.


Spot – (1) The most common foreign exchange transaction. (2) Spot or Spot date refers to the date the value of the spot transaction requiring settled in two business days, subject to the calculation of the value date.

Sub-valuation – An exchange rate is normally considered to be undervalued when it is below the purchasing power parity.

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

Stocky – Idiom market for Swedish krona.

Swap – The simultaneous purchase and sale of the same amount of a given currency on two different dates, against the sale and purchase of another. A swap can be a swap against a future. In essence, the exchange is similar to request a 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.

Swissy – Idiom market for the Swiss franc.

Interest Rate Swaps – An agreement to exchange interest rate exposures from floating to fixed and vice versa. No exchange of principal. In cash flows are payments or receipts that are exchanged.

Federal Reserve System – The central banking system in the United States.

European Monetary System – A system designed to stabilize or even eliminate currency risk between member states of the EMS as part of the policy of economic convergence in the EU. It allows the coins to move in a measured (divergence indicator) within agreed bands (parity matrix) with respect to the ECU and consequently between them.


Tic – A minimum change in price, up or down.

Tic up – A executed at a higher price than the previous transaction transaction.

Transaction – The buying or selling of currencies resulting from the execution of an order.

Taking Utilities – The liquidation of a position to profit.

Interest rates on short-term – usually the rate at 90 days.

Same Day Transaction – A transaction that matures on the day the transaction.

Selling rate – rate at which a bank is willing to sell foreign currency.

Transfer – A swap overnight, specifically for the next business day against the following business day (also called Tomorrow Next to, abbreviated as Tom-Next).

Rate (1) The price of one currency in terms of another, typically USD. (2) Evaluation of the creditworthiness of an institution.

Upper stop – A method of exchange rate adjustment, the rate is fixed / bumps, but is adjusted at certain intervals in line with certain economic or market indicators.

Tope Adjustable – term for a system of exchange in which the exchange rate of a country is “bumped” (ie, is fixed) in relation to another currency, often the dollar or French franc, but wherein said type can be changed from time to time. This was the basis of the Bretton Woods system. See top and sliding stop.

Revaluation rate – The rate for any period or currency which is used to revalue a position or book.

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

Cross rates – rates between two currencies, neither of which is the US dollar.

Central Type – Exchange rates against the ECU adopted for each currency within the EMS. The coins are limited from the central rate depending on the relevant side movements.

Buying Rate – The rate at which the market and generator market in particular are willing to buy the currency. Sometimes it is known as rate offer.

Fixed exchange rate – Official rate set by monetary authorities. Often the fixed exchange rate allows fluctuation within a band.

Flexible Exchange Rate – Exchange rates with a fixed parity against one or more currencies with frequent revaluations. One way managed float.

Floating exchange rate – An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a managed float.

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

Interbank rates – The rates of supply and demand which international banks place deposits in each. The basis of the interbank market.

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


Value Spot – Normally settlement within two business days from today. See value date.

Volatility – A measure of the amount expected to fluctuate the price of an asset over a certain period.

Implied volatility – a measure of the range of expected market prices for the underlying currency futures based on options premiums operated.

Short selling – Sale of a specific amount of foreign currency that are not owned by the seller at the time of operation. Short sales are usually made in expectation of a decline in the price.

Round trip – Buying and selling of a specified amount of currency.