Direct quotation

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


The depreciation of the national currency, or in other words, the rate decline in relation to foreign currencies and gold. For example, in Britain in September 1992 raising interest rates in the situation of stagnation in the economy were the reason for the devaluation of the pound. On September 16 the pound lost 2.7% against the Mark and by the evening was traded in New York at 2.703.

Deutsche Akzien Index(DAX 100)

Major German stock index. It is calculated as the average of 100 top German companies.


A fall in the value of a currency due to market forces.


A company or individual, playing in the market at their own expense and on their behalf, that is, investing their own money, selling/buying a currency or other assets on their own.

Day trading

Refers to a style or type of trading where trade positions are opened and closed during the same day.

Day trader

A trader who buys and sells on the basis of small short-term price movements.

Day trade

A trade opened and closed on the same trading day.

Currency risk

The risk that shifts in foreign exchange rates may undermine the dollar or any other foreign currency value of overseas investments.

Currency pair

A conversion operation object based on the change of one currency rate against another. The example of the currency pair is USD/JPY.

Currency Intervention

Central bank intervention in the operations on the currency market in order to raise or lower the rate of the national currency by selling/buying foreign currency. A reduced rate of the national currency can be achieved through the purchase of foreign currency; increased rate is achieved through foreign currency sales.

Currency basket

A selection of foreign currencies, which is used as a guiding line by regulative institutions when shaping a national currency rate against other currencies.


Money issued by a government. Coins and paper money. It is a form of money used as a unit of exchange within a country.


The exchange rate between 2 currencies where neither of the currencies are USD.


A participant in a financial transaction.

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.

Consumer Price Index (CPI)

US index, calculated once a month. It indicates the price dynamics of the basket purchased by an average consumer. One of the most important inflation indicators.

Closing market rate

The rate at which a position can be closed based on the market price at end of the day.

Closing a position

The process of selling or buying a foreign exchange position resulting in the liquidation (squaring up) of the position.


A person who attempts to predict prices by analyzing past price movements as recorded on a chart.

Central bank

A bank, administered by a national government, which regulates the behavior of financial institutions within its borders and carries out monetary policy.


The British pound/US Dollar exchange rate GBP/USD.

Buy on margin

The process of buying a currency pair where a client pays cash for part of the overall value of the position. The word margin refers to the portion the investor puts up rather than the portion that is borrowed.

Buy Limit order

An order to execute a transaction at a specified price (the limit) or lower.


An opening of a long and a closure of a short positions.


Central Bank of Germany.


A market participant counting on the market price increase; a market operator, a trader or an investor who speculates for the rise.

Budget deficit

A situation when the expenditures planned by government exceed the revenue.


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.

Bretton Woods Agreement

The treaty signed by the first members of the UN in 1944, which has set fixed exchange rates for major currencies giving central banks the right to intervene in foreign exchange markets as well as the price of gold at the level of 35 USD per ounce. The agreement has been in force until 1971.

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.

Big figure

The first two or three digits of a foreign exchange price or rate. Examples: USD/JPY rate of 78.05/10 the big figure is 78. USD/INR price of 46.25/30 the big figure is 46.


A market participant counting on the market price decrease; a market operator, a trader or an investor who speculates for the fall.

Basis Point

The security profit change of 0.01%. E.g. the decrease of an interest rate from 5% to 4.5%, means the loss of 50 basis points.

Base interest rate(benchmark interest rate)

A minimal interest rate set and published by commercial banks for accumulating interest on different credit types.

Base currency

In terms of foreign exchange trading, currencies are quoted in terms of a currency pair. The first currency in the pair is the base currency. The base currency is the currency against which exchange rates are generally quoted in a given country. Examples: USD/JPY, the US Dollar is the base currency; EUR/USD, the EURO is the base currency.

Bank Rate

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


The financial result of all completed transactions of a trading account.

Back office

The office location, or department, where the processing of financial transactions takes place.


The price at which a currency pair or security is offered for sale; the quoted price at which an investor can buy a currency pair. This is also known as the "offer", "ask price", and "ask rate".


The increase in the value of an asset.


A trader dealing on an existing price in the market.