Selective Forex Trading:

Glossary

appreciation

A currency is said to appreciate when it strengthens in price in response to market demand.

arbitrage

The purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market, in order to take advantage of small price differentials between markets.

ask rate

The rate at which a financial instrument is offered for sale (as in a bid/ask spread or the sell side of the broker spread).

back office

The departments and processes related to the settlement of financial transactions.

balance of trade

The value of a country's exports minus its imports.

base currency

In general terms, the currency in which an investor or issuer maintains its book of accounts. In the forex markets, the U.S. dollar is normally considered the base currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British pound, the euro, and the Australian dollar.

bear market

A market distinguished by declining prices.

bid/ask spread

The difference between the bid and offer price, and the most widely used measure of market liquidity. Also, the spread is a fee for the broker to provide the transaction services for traders.

bid rate

The rate at which a trader is willing to buy a currency (the buy side of a broker spread).

big figure

Dealer expression referring to the first few digits of an exchange rate. These digits rarely change in normal market fluctuations, and therefore ...