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

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The Forex quick guide for beginners and private traders

ICCH

International Commodities Clearing House Limited, a

clearing house based in London operating worldwide for

many futures markets.

IFEMA International Foreign Exchange Master Agreement.

IMF

International Monetary Fund, established in 1946 to provide

international liquidity on a short and medium term, and to

encourage liberalization of exchange rates. The IMF helps

its members to tide over the balance of payments problems

by supplying the necessary loans.

IMM

International Monetary Market, part of the Chicago

Mercantile Exchange that lists a number of currency and

financial futures.

Implied Rates The interest rate determined by calculating the difference

between spot and forward rates.

Implied Volatility

A measurement of the market's expected price range of the

underlying currency futures based on the traded option

premiums.

Implied Volatility Skews The implied volatility variances for different strikes of an

option.

In the Money

A call option is in the money when the strike price is less

than the current price of the underlying instrument. A put is

when the strike price is greater.

Inconvertible Currency

Currency which cannot be exchanged for other currencies

either because it is forbidden by the foreign exchange

regulations or the currency experiences extreme volatility

that it is not perceived 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.

Inflation

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 particular deal in order 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 Floor An agreement which provides the buyer of the floor with a

minimum interest rate for future lending requirements.

Interest Rate Options An agreement permitting a party to obtain a particular

interest rate, issued both OTC and by exchanges.

page 92 of 110

Value Definition

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 receipt) are exchanged.

Intervention

Action by a central bank to affect 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.

In-the-Money

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.

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.

Intrinsic Value

The amount by which an option is "in-the-money". The

intrinsic value is the difference between the exercise/strike

price and the price of the underlying security.

IOM Index and Options Market part of the Chicago Mercantile

Exchange.

IPI

Industrial Production Index. A coincident indicator

measuring physical output of manufacturing, mining and

utilities.

ISDA (International

Securities Dealers

Association)

Organization that foreign currency exchange banks have

formed to regulate inter-bank markets and exchanges.

J Curve

A term describing the expected effect of devaluation on a

country's trade balance. It is expected that import bills will

rise before export orders and receipts increase.

Key Currency

Small countries, which are highly dependent on exports,

orient their currencies to their major trading partners, the

constituents of a currency basket.

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 to "Knock In" (see above),

although the option may permanently cease to exist.

Last Trading Day The day on which trading ceases for an expiring contract.

Lay Off To carry out a transaction in the market to offset a previous

transaction and return to a square position.

LDC Less developed countries, often used with respect to a

secondary debt market.

page 93 of 110

Value Definition

Leading Indicators

Statistics 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 devaluation. The

importers speed up the payment for the imports, and

exporters delay receiving payment for the exports.

Leverage

In options terminology, this expresses the disproportionately

large change in the premium in terms of the relative price

movement of the underlying instrument.

Liability

In terms of foreign exchange: the obligation to deliver to

counterparty an amount of currency, either in regards to a

balance sheet holding at a specified future date, or in

regards to an un-matured forward or spot transaction.

LIBID The London Interbank Bid Rate. The rate charged by one

bank to another for a deposit.

LIBOR The London Interbank Offered Rate, the rate charged by

one bank to another for lending money.

LIBOR (London Interbank

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.

LIFFE London International Financial Futures Exchange.

Limit

(1)The maximum price fluctuation permitted by an

exchange from the previous session's settlement price for a

given contract. (2) In international banking the limit a bank

is willing to lend in a country. (3) The amount that one bank

is prepared to trade with another. (4) The amount that a

dealer is permitted to trade in a given currency.

Limit Down The maximum price decline from the previous trading day's

settlement price permitted in one trading session.

Limit Order An order to buy or sell a specified amount of a security at a

specified price or better.

Limit Order - Reserved

Day Trading Deal

An order to perform a Day-Trading deal at a rate predefined

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 predefined

terms.

Limit Up The maximum price advance from the previous trading day's

settlement price permitted in one trading session.

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

foreign institutional investors have the liberty to buy and

sell shares on the stock exchange of that country.

page 94 of 110

Value Definition

Lines

An arrangement by which a bank agrees to lend to the line

holder during some specified period any amount up to the

full amount of the line.

Liquidation Any transaction that offsets or closes out a previously

established position.

Liquidity The ability of a market to accept large transactions without

having any major impact on interest rates.

Lombard Rate

One of the key commercial interest rates, normally

referring to Germany although such rates exist in France,

Belgium, and Switzerland. An interest rate for a loan

against the security of pledged paper.

Long A market position where the Client has bought a currency

not previously owned. For example: long Dollars.

Long Hedge

The purchase of futures contracts for price protection

purposes, as a defensive position against an increase in cash

prices or falling interest rates.

 


 

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