Forex Terms Letters G,H and I

A-C

D-F

G-I

J-L

M-O

P-S

T-Z

Forex Terms beginning with letter P

Package Deal : When a number of exchange and /or deposit orders have to be fulfilled simultaneously.
Par : (1) The nominal value of a security or instrument. (2) The official value of a currency.
Parities : The value of one currency in terms of another.
Parity : (1) Foreign exchange dealer's slang for your price is the correct market price. (2) Official rates in terms of SDR or other pegging currency.
Permitted Currency : It means a foreign currency which is freely convertible i.e a currency which is permitted by the rules and regulations of the country concerned to be converted into major reserve currencies and for which a fairly active and liquid market exists for dealing against the major currencies.
Pip: The smallest increment of change in a foreign currency price, either up or down.
Point : (1) 100th part of a per cent, normally 10,000 of any spot rate. Movement of exchange rates are usually in terms of points. (2) One percent on an interest rate e.g. from 8-9%. (3) Minimum fluctuation or smallest increment of price movement.
Political Risk : The potential for losses arising from a change in government policy or due to the risk of expropriation (nationalisation by the government ).
Position : The netted total exposure in a given currency. A position can be either flat or square (no exposure), long (more currency bought than sold), or short ( more currency sold than bought).
PPI : Producer Price Indices. See wholesale price indices.
Premium : (1) The amount by which a forward rate exceeds a spot rate. (2) The amount by which the market price of a bond exceeds its par value. (3) Options, the price a put or call buyer must pay to a put or call seller for an option contract. (4) The margin paid above the normal price level.
Price Transparency: The ability of all market participants to "see" or deal at the same price.
Price: The price at which the underlying currency can be bought or sold.
Prime Rate : (1) The rate from which lending rates by banks are calculated in the US. (2) The rate of discount of prime bank bills in the UK.
Principal : A dealer who buys or sells stock for his/her own account.
Principal Value: The original amount invested by the client.
Profit Taking : The unwinding of a position to realize profits.
Purchasing Power Parity : Model of exchange rate determination stating that the price of a good in one country should equal the price of the same good in another country after adjusting for the changes in the price due to the change in exchange rate. Also known as the law of one price.
Put Call Parity : The equilibrium relationship between premiums of call and put options of the same strike and expiry.
Put Option : A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period.

Forex Terms beginning with letter Q

Quote : An indicative price. The price quoted for information purposes but not to deal.
Quote: A simultaneous bid and offer in a currency pair.

Forex Terms beginning with letter R

Range : The difference between the highest and lowest price of a future recorded during a given trading session.
Rate : The price of one currency in terms of another. It has the same meaning as the term parities.
Recession : A decline in business activity. Often defined as two consecutive quarters with a real fall in GNP.
Reserve Currency : A currency held by a central bank on a permanent basis as a store of international liquidity, these are normally Dollar, Deutschemark, and Sterling..
Reserves : Funds held against future contingencies, normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. They are an asset in the balance of payments.
Resistance : A price level at which the selling is expected to take place.
Retail Price Index : Measurement of the monthly change in the average level of prices at retail, normally of a defined group of goods.
Reuter Dealing : A system for screen based trading that has been in operation since the early 1980s. It now has a matching optional enhancement known as Dealing 2000-2.
Revaluation : Increase in the exchange rate of a currency as a result of official action.
Revaluation: Daily calculation of potential profits or losses on open positions based on the difference between the settlement price of the previous trading day and the current trading day.
Risk (Foreign Exchange Risk): The risk that the exchange rate on a foreign currency will move against the position held by an investor such that the value of the investment is reduced.
Risk management : The identification and acceptance or offsetting of the risks threatening the profitability or existence of an organisation. With respect to foreign exchange involves, among others, consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.
Risk Premium : Additional sum payable or return to compensate a party for adopting a particular risk.
Risks : There are risks associated with any market. It means variance of the returns and the possibility that the actual return might not be in line with the expected returns. The risks associated with trading foreign currencies are: market, exchange, Interest rate, yield curve, volatility, liquidity, forced sale, counter party, credit, and country risk.
Rolling over : The substituting of a far option for a near option of the same underlying stock at the same strike/exercise price.
Rollover : Where the settlement of a deal is carried forward to another value date based on the interest rate differential of the two currencies example: next day

Forex Terms beginning with letter S

Sell Limit Order: An order to execute a transaction only at a specified price (the limit) or higher.
Selling Rate : Rate at which a bank is willing to sell foreign currency.
Selling Short: A situation where a currency has been sold with the intent of buying back the position at a lower price to make a profit.
Settlement : Actual physical exchange of one currency for another.
Settlement Date : It means the business day specified for delivery of the currencies bought and sold under a forex contract.
Short : A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms.
Short position: In foreign exchange, when a currency pair is sold, the position is said to be short. It is understood that the primary currency in the pair is 'short', and the secondary currency is 'long'.
Short Squeeze: The pressure on short sellers to cover their positions as a result of sharp price increases.
SITC : Standard International Trade Classification. A system for reporting trade statistics in a common manner.
SOFFEX : Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.
Soft Market : More potential sellers than buyers, which creates an environment where rapid price falls are likely.
Spot : (1) The most common foreign exchange transaction. (2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.
Spot Market: Market where people buy and sell actual financial instruments (currencies) for two-day delivery.
Spot Next : The overnight swap from the spot date to the next business day.
Spot Price/Rate : The price at which the currency is currently trading in the spot market.
Spot Price: The current market price of a currency that normally settles in 2 business days (1 day for Dollar/Canada).
Spread : (1) The difference between the bid and ask price of a currency. (2) The difference between the price of two related futures contracts. (3) For options, transactions involving two or more option series on the same underlying currency.
Spread: This point or pip difference between the bid and ask price of a currency pair.
Stable Market : An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.
Stagflation : Recession or low growth in conjunction with high inflation rates.
Standard and Poors (S&P) : A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&P 500.
Sterilization : Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.
Sterling : British pound, otherwise known as cable.
Sterling: Another term for the British currency, 'The Pound'.
Stop Loss Order : Order given to ensure that, should a currency weaken by a certain percentage, a short position will be covered even though this involves taking a loss. Realize profit orders are less common.
Stop Order (or stop): An order to buy or to sell a currency when the currency's price reaches or passes a specified level.
Stop Out Price : US term for the lowest accepted price for Treasury Bills at auction.
Straddle : The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.
Strike Price : Also called exercise price. The price at which an option holder can buy or sell the underlying instrument.
Strip : A combination of two puts and one call.
Structural Unemployment : Unemployment levels inherent in an economic structure.
Support Levels : A price level at which the buying is expected to take place.
Swap : The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one 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.
Swift : Society for Worldwide Inter-bank Financial Telecommunication is a clearing system for international trading.
Swissy : Market slang for Swiss Franc.

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