EURO.uz -The Forex quick guide for beginners and private traders

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The Forex quick guide for beginners and private traders

Forex Glossary

The following offers brief explanation of the most popular terms used in the
market today.

Aggregate (Risk) Total exposure a bank has with a customer for both spot and forward contracts.

Aggregate Demand

Total demand for goods and services in the economy. Aggregate demand includes private and public sector

demand for goods and services within the country, and thedemand of consumers and firms in other countries for goods

and services.

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

Agio Difference in the value between currencies. Also used to

describe percentage charges for conversion from paper

money into cash, or from a weak into a strong currency.

American Option

An option which may be exercised on any valid business

date throughout the life of the option. A European option

can only be exercised on a specific date.

Appreciation

Describes a currency strengthening in response to market

demand as opposed to increasing in value as a result of

official action.

Arbitrage

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 between the markets.

Around Used in quoting forward "premium/discount".

Ask Price The price at which the currency or instrument is offered.

Ask is the lowest price acceptable to the buyer.

Asset

The right to receive from a counterparty an amount of

currency either in regards to a balance sheet asset (e.g. a

loan), or at a specified future date in regards to an

unmatched Forward or spot deal.

Association Cambiste

International

The international society of foreign exchange dealers

consisting of national "Forex clubs" affiliated on a worldwide

basis.

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.

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.

 

Value Definition

At-the-Money An option whose strike/exercise price is equal to or near

the current market price of the underlying instrument.

Auction

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, such as

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".

 

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