When we trade financial products, the number one barrier is terminologies. In addition, even general terms we use in our lives in the financial world such as stock, forex, cryptocurrencies may have different meanings. In such a case, this site has prepared a convenient term dictionary. It’s a small thing, but please refer to it when you want to find out glossaries with one hand for all investors from beginners who have just started trading to experienced people.
- Fast Market
- Fed Fund Rate
- Federal National Mortgage Association
- Federal Reserve Board
- Federal Reserve System
- Financial Future
- Fine Rate
- Firm Quotation
- Fiscal Policy
- Fixed Dates
- Fixed Exchange Rate
- Flexible Exchange Rate
- Floating Exchange Rate
- Foreign Exchange
- Foreign Position
- Forex, FX
- Forex Deal
- Forward Contract
- Forward Cover Taking
- Forward Deal
- Forward / Forward
- Forward Margins
- Forward Maturities
- Forward Operations
- Forward Outright
- Forward Points
- Forward Rate
- Forward Rate Agreements
- Free Reserves
- Front Office
- Fundamental Analysis
- Futures Contract
- Futures Exchange-Traded Contracts
Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.
The United States Federal Reserve. Federal Deposit Insurance Corporation Membership is compulsory for Federal Reserve members. The corporation had deep involvement in the Savings and Loans crisis of the late 80s.
Cash balances held by banks with their local Federal Reserve Bank. The normal transaction with these funds is an interbank sale of a Fed fund deposit for one business day. Straight deals are where the funds are traded overnight on an unsecured basis.
Fed Fund Rate
The interest rate on Fed funds. This is a closely watched short term interest rate as it signals the Feds view as to the state of the money supply.
Foreign Exchange Dealers Association of India is an association of all dealers in foreign exchange which sets the ground rules for fixation of commissions and other charges and also determines the rules and regulations relating to day-to-day transactions in foreign exchange in India. The FEDAI has recognized 38 currencies for dealing.
Federal National Mortgage Association
A privately owned, but US government sponsored, corporation that trades in residential mortgages. Its activities are funded by the sale of instruments commonly known as Fannie Maes.
Federal Reserve Board
The board of the Federal Reserve System, appointed by the US President for 14 year terms. One member of the board is appointed chairman every four years.
Federal Reserve System
The central banking system of the US comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board. Membership in the Fed is compulsory for banks chartered by the Comptroller of Currency, and optional for state chartered banks.
A futures contract based on a financial instrument.
(1) A quote with a narrow spread.
(2) The most favorable rate charged to a high quality borrower.
The price given in response to a request for a rate at which the quoting party is willing to execute a deal for a reasonable amount, for spot settlement. Screen quotes are indicative. Quotes on matching systems are normally firm depending on the system’s requirement to reconfirm rate prior to completing matching.
Use of taxation as a tool in implementing monetary policy.
The monthly calendar dates similar to the spot. There are two exceptions. For detailed description see value dates.
Fixed Exchange Rate
Official rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates are allowed to fluctuate between definite upper and lower bands, leading to intervention by the central bank.
A method of determining rates by normally finding a rate that balances buyers to sellers. Such a process occurs either once or twice daily at defined times. Used by some currencies, particularly for establishing tourist rates . The system is also used in the London Bullion market.
Where a client has not traded in that currency, or where an earlier deal is reversed thereby creating a neutral (flat) position. For example, you bought $500,000 then sold $500,000 = FLAT.
Flexible Exchange Rate
Exchange rates with a fixed parity against one or more currencies with frequent revaluation. A form of managed float.
(1) See Floating exchange rate.
(2) Cash in hand or in the course of being transferred between banks.
(3) The Federal Reserve Float exists because checks sent to the Federal Reserve Banks are sometimes credited in advance of the depositing bank loosing the reserve.
Floating Exchange Rate
When the value of a currency is decided by the market forces dictating the supply and demand of that particular currency .
(1) An agreement with a counterparty that sets a lower limit to interest rates for the floor buyer for a stated time.
(2) A term for an exchanges trading area (cf. screen based trading), normally the trading area is referred to as a pit in the commodities and futures markets.
Federal Open Market Committee, the committee that sets money supply targets in the US, which tend to be implemented through Fed Fund interest rates etc.
The purchase or sale of a currency against the sale or purchase of another.
A position in which one party agrees to purchase from or sell to the other party an agreed amount of foreign currency .
An abbreviation of foreign exchange.
The purchase or sale of a currency against the sale or purchase of another currency. The maximum time for a deal is defined when the deal opens. The deal can be closed at any moment until the expiry date and time. For technical reasons, a deal cannot be closed in its first 3 minutes.
Sometimes used as synonym for “forward deal” or “future”. More specifically, it referes to arrangements with the same effect as a forward deal between a bank and a customer.
Forward Cover Taking
Forward contracts intended to protect against movements in the exchange rate.
A deal with a value date greater than the spot value date.
Forward / Forward
A forward / forward deal is one where both legs of the deal have value dates greater than the current spot value date.
Discounts or premiums between spot rate and the forward rate for a currency. Normally quoted in points.
Trading days on which day contracts can be transacted later than the spot date.
Foreign exchange transactions for which the fulfillment of the mutual delivery obligations is made on a date later than the second business day after the transaction was concluded.
A commitment to buy or sell a currency for delivery on a specified future date or period. The price is quoted as the spot rate minus or plus the forward points for the chosen period.
The interest rate differential between two currencies expressed in exchange rate points. The forward points are added to or subtracted from the spot rate to give the forward or outright rate, depending on whether the currency is at a forward premium or discount.
The rate at which a foreign exchange contract is struck today for settlement at a specified future date, which is decided at the time of entering into the contract. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefore the forward points are subtracted from the spot rate. Similarly, the base currency with the lower interest rate is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.
Forward Rate Agreements
The FRA is an agreement between two parties that determines the interest rate that will apply to a notional future loan or deposit of an agreement.
Total reserves held by a bank less the reserves required by the authority.
The activities carried out by the dealer, normal trading activities.
Analysis based on economic and political factors.
The macro economic factors that are accepted as forming the foundation for the relative value of a currency. These include inflation, growth, trade balance, government deficit, and interest rates.
A term for USD/CAD/Fungibles Instruments that are equivalent, substitutable and interchangeable in law. May apply to certain exchange traded currency contracts offered on a number of exchanges.
A contract traded on a futures exchange that requires the delivery of a specified quality and quantity of a commodity, currency or financial instruments within a specified future month, if not liquidated before the contract matures.
Futures Exchange-Traded Contracts
They are firm agreements to deliver (or take delivery of) a standardized amount of something on a certain date at a predetermined price. Futures exist in currencies, money market deposits, bonds, shares and commodities. They are traded on an exchange with the clearing corporation guaranteeing the contract and moreover the trade is done on a mark to market basis.
＊These glossaries are based on easyMarkets educational tools.