Introduction
The Internet serves as an excellent tool for investors, allowing them to easily and inexpensively research investment opportunities. But the Internet is also an excellent tool for fraudsters. That's why you should always think twice before you invest your money in any opportunity you learn about through the Internet.
On October 28, 1998, the SEC announced charges against 44 stock promoters caught in a nationwide enforcement sweep to combat Internet fraud. These promoters failed to tell investors that more than 235 companies paid them millions of dollars in cash and shares in exchange for touting their stock on the Internet.
Not only did they lie about their own independence, some of them lied about the companies they featured, then took advantage of any quick spike in price to sell their shares for a fast and easy profit," said SEC Director of Enforcement Richard H. Walker.
This alert tells you how to spot different types of Internet fraud, what the SEC is doing to fight Internet investment scams, and how to use the Internet to invest wisely.
Navigating the Frontier: Where the Frauds Are
The Internet allows individuals or companies to communicate with a large audience without spending a lot of time, effort, or money. Anyone can reach tens of thousands of people by building an Internet web site, posting a message on an online bulletin board, entering a discussion in a live "chat" room, or sending mass e-mails. It's easy for fraudsters to make their messages look real and credible. But it's nearly impossible for investors to tell the difference between fact and fiction.
Online Investment Newsletters
Hundreds of online investment newsletters have appeared on the Internet in recent years. Many offer investors seemingly unbiased information free of charge about featured companies or recommending "stock picks of the month." While legitimate online newsletters can help investors gather valuable information, some online newsletters are tools for fraud.
Some companies pay the people who write online newsletters cash or securities to "tout" or recommend their stocks. While this isn't illegal, the federal securities laws require the newsletters to disclose who paid them, the amount, and the type of payment. But many fraudsters fail to do so. Instead, they'll lie about the payments they received, their independence, their so-called research, and their track records. Their newsletters masquerade as sources of unbiased information, when in fact they stand to profit handsomely if they convince investors to buy or sell particular stocks.
Some online newsletters falsely claim to independently research the stocks they profile. Others spread false information or promote worthless stocks. The most notorious sometimes "scalp" the stocks they hype, driving up the price of the stock with their baseless recommendations and then selling their own holdings at high prices and high profits. To learn how to separate the good from the bad, read our tips for checking out newsletters.
Bulletin Boards
Online bulletin boards – whether newsgroups, usenet, or web-based bulletin boards – have become an increasingly popular forum for investors to share information. Bulletin boards typically feature "threads" made up of numerous messages on various investment opportunities.
While some messages may be true, many turn out to be bogus – or even scams. Fraudsters often pump up a company or pretend to reveal "inside" information about upcoming announcements, new products, or lucrative contracts.
Also, you never know for certain who you're dealing with – or whether they're credible – because many bulletin boards allow users to hide their identity behind multiple aliases. People claiming to be unbiased observers who've carefully researched the company may actually be company insiders, large shareholders, or paid promoters. A single person can easily create the illusion of widespread interest in a small, thinly-traded stock by posting a series of messages under various aliases.
E-mail Spams
Because "spam" – junk e-mail – is so cheap and easy to create, fraudsters increasingly use it to find investors for bogus investment schemes or to spread false information about a company. Spam allows the unscrupulous to target many more potential investors than cold calling or mass mailing. Using a bulk e-mail program, spammers can send personalized messages to thousands and even millions of Internet users at a time.
How to Use the Internet to Invest Wisely
If you want to invest wisely and steer clear of frauds, you must get the facts. Never, ever, make an investment based solely on what you read in an online newsletter or bulletin board posting, especially if the investment involves a small, thinly-traded company that isn't well known.
Wednesday, June 2, 2010
What are investment advisers?
What is an investment adviser?
Investment advisers are in the business of giving advice about securities to clients. For instance, if they receive compensation for giving advice to a specific person on investing in stocks, bonds, or mutual funds, they are investment advisers. Some investment advisers manage portfolios of securities.
What is the difference between an investment adviser and a financial planner?
Most financial planners are investment advisers, but not all investment advisers are financial planners. Some financial planners assess every aspect of your financial life-including saving, investments, insurance, taxes, retirement, and estate planning-and help you develop a detailed strategy or financial plan for meeting all your financial goals.
Others call themselves financial planners, but they may only be able to recommend that you invest in a narrow range of products, and sometimes products that aren't securities.
Before you hire any financial professional, you should know exactly what services you need, what services the professional can deliver, any limitations on what they can recommend, what services you're paying for, how much those services cost, and how the adviser or planner gets paid.
Investment advisers are in the business of giving advice about securities to clients. For instance, if they receive compensation for giving advice to a specific person on investing in stocks, bonds, or mutual funds, they are investment advisers. Some investment advisers manage portfolios of securities.
What is the difference between an investment adviser and a financial planner?
Most financial planners are investment advisers, but not all investment advisers are financial planners. Some financial planners assess every aspect of your financial life-including saving, investments, insurance, taxes, retirement, and estate planning-and help you develop a detailed strategy or financial plan for meeting all your financial goals.
Others call themselves financial planners, but they may only be able to recommend that you invest in a narrow range of products, and sometimes products that aren't securities.
Before you hire any financial professional, you should know exactly what services you need, what services the professional can deliver, any limitations on what they can recommend, what services you're paying for, how much those services cost, and how the adviser or planner gets paid.
Monday, May 3, 2010
Trading with GFS Platform (You trade yourself)
Synopsis
GFS provides a Forex Trading Platform with unique properties to facilitate real time trading. GFS immediately offsets all client trades with a bank or institutional liquidity provider and therefore they will never trade "against" their clients, GFS offers traders a high level of execution that is unmatched in the marketplace.
The following section provides more information on the advantages and workings of the OperaFX trading platform. Once you have read through the information why not try out their live demo account?
Execution
GFS offers traders the highest possible level of price transparency using real time streaming quotes, and a speed of execution that is unmatched in the marketplace. Clients simply click on the current bid or offer, deals are confirmed instantaneously, and all trading activity is tracked on screen in real time, including current open positions, real time profit and loss, margin availability, account balances, and all historical transaction details.
One of the primary reasons GFS has captured such a large institutional client base is the reliability of our prices and our fills. Our relationships with the world’s largest FX banks and liquidity providers allow our clients to directly access the global currency markets. This deep liquidity pool attracts those who require the ability to execute institutional size deals. With straight through processing (STP) even the largest orders are almost always filled at the displayed price.
Competitive Spreads and STP
Straight Through Processing (STP) - No Dealing Desk execution combines the benefits of direct access to the interbank market with the convenience and speed of GFS’s proprietary platform, OperaFX. GFS does not trade against our clients. We offer every client, including both retail and institutional, equal access to the interbank market. GFS does not have a need to know your positions, so stop and limit orders are never targeted or “hunted”. Traders rarely receive a “requoted” price on our STP platform, with the exception of extreme market volatility. Knowing that GFS only generates revenue off of the spread of the currency pair, and never takes the other side of any trades, our clients can be confident that we share an interest in their success.
Basically, we don't have a dealing desk and we don’t trade against our clients. When you want to buy or sell, the price that you see on the screen is the price that you will get. All your orders go straight to our liquidity providers like Goldman Sachs, Bank of America and Deutsche Bank, etc.
However, when you are dealing with a dealing desk firm. You are trading against them. They're going to process the orders that are more favorable to them, because they profit from you losses and the spreads. All your losses go straight to the broker and all you profit goes to the liquidity providers. When you could have lost 50$, you might have lost 80$. When you could have won $100, you might have won $60. There is a CONFLICT OF INTEREST when your broker is trading against you.
The fact that unlike most of our competitors we use STP has resulted in us having 0 complaints in our 10 year history. To have background information on our firm and other firms I recommend you visit the NFA (National Futures Association) website at: http://www.nfa.futures.org/basicnet/
Full Back Office
GFS has a highly sophisticated yet simple to use back office system for both retail and institutional clients. GFS handles all administrative and account management responsibilities including; real time trading activity, month end reporting, order history, floating P&L, rebate accumulation, multiple account management, accepting and approving all new customer account applications, fund transfers, and account inquiries. GFS provides access to a real-time Back Office reporting system 24 hours a day. In addition, OperaFX software eliminates individual trade overhead costs including trade confirmation, account statement processing, and margin control. Customers of IBs can login to their own trading account and view all account details at any time. While GFS takes care of all of your service and back office needs, you will be able to focus your energies on the areas that will grow your business.
Client Support
With 24 hour access to our customer and technical support team, through our website, live chat, email, and telephone, you will receive immediate service and support whenever you need it. Our multilingual Customer Service Department is on hand to answer any account questions you may have. IBs can utilize our IT, Sales, Back Office and Marketing teams’ expertise at any time. GFS Forex & Futures supports its clients, Introducing Brokers, and partners through every of stage of business development which includes set up, launch, and continuous training and marketing. For partners seeking co-branding, we can package the trading platform with your own corporate image, customizing your front end setup, website integration and hosting.
OperaFX – Spot Market Trading Platform
Our unwavering commitment to technological innovation has driven us to create OperaFX Pro – one of the most advanced products on the market. A friendly and sophisticated platform that caters to beginners as well as experienced traders and professionals, OperaFX provides unrivaled electronic trading tools and 24 hour access to the Forex market with superior execution.
As a proprietary platform, GFS can customize OperaFX to meet the requirements of your specific trading style. With numerous built-in customizable options and the ability to add, remove, or create features according to your specifications, OperaFX meets the needs of every Spot market trader.
Platform Features
A. View live streaming quotes of our STP prices
B. Multiple workspaces allow you to save different configurations of your trading setup
C. Orders can be placed directly from the quote list, the advanced price display, or directly off the chart
D. Select from a wide variety of drawing tools to insert Fibonacci levels, trend lines, and more, right onto your charts
E. All open positions are labeled on the charts so that you can easily follow the progress of your trades
F. Our customizable menu allows you to choose the color, layout, and style. You can also insert onto the charts numerous studies and indicators that are pre-installed on the platform. If you have a proprietary or specific indicator that you want to trade with, GFS will add it onto the platform for your own customized version.
G. Easily adjust the size of your orders. With 100:1 leverage, the number of lots you trade at a time gives you the ability to manage your risk
H. Follow your open positions, floating P/L, and add stop or limit orders with ease
I. The real time Dow Jones news source will keep you on top of the latest information related to the Forex market
J. The Historical Trading Log helps you manage your positions and review your past performance
What do I have to know and do to trade in Forex?
To become a successful Forex Trader we recommend the following:
Maximize Your Tools
It is of the utmost importance to know your tools. The varius brokers offers an array of tools that are used for trading the Forex markets. Be sure to test any demo accounts offered and use the opportunity to "learn" the tool.
Risk Management
Every successful trader should know how much risk he is willing to take, and what profits should result from the trade. This is the basis of every realistic trading strategy.
Two Ways to Trade
There are two types of traders, technical and fundamental. Both have a radically different approach to making trading decisions.
The Basics of Technical Analysis
All technical analysis starts with a few basic building blocks. With these as a foundation, you can start to make sound trading decisions.
Fundamentals Everyone Should Know
All Traders should understand why economic releases, interest rates, and international trade are important to movements in the currency market.
Psychology of Trading
The biggest enemy to most traders is not the market, but themselves. Study and learn all you can about Forex trading.
Maximize Your Tools
It is of the utmost importance to know your tools. The varius brokers offers an array of tools that are used for trading the Forex markets. Be sure to test any demo accounts offered and use the opportunity to "learn" the tool.
Risk Management
Every successful trader should know how much risk he is willing to take, and what profits should result from the trade. This is the basis of every realistic trading strategy.
Two Ways to Trade
There are two types of traders, technical and fundamental. Both have a radically different approach to making trading decisions.
The Basics of Technical Analysis
All technical analysis starts with a few basic building blocks. With these as a foundation, you can start to make sound trading decisions.
Fundamentals Everyone Should Know
All Traders should understand why economic releases, interest rates, and international trade are important to movements in the currency market.
Psychology of Trading
The biggest enemy to most traders is not the market, but themselves. Study and learn all you can about Forex trading.
Forex Trading - Abbreviations [......3]
Point
0.0001 of a unit; for instance, if the GBP/USD is 1.5220, then 1.5219 is one point lower
Political Risk
The potential for losses arising from a change in government policy.
Premium
In options, the price of a call or a put, which the buyer initially pays to the option writer.
Price Risk (Market Risk)
The risk of a fall in the market value of a foreign investment (as measured in the domestic currency of the investor) due to an adverse change in the value of the currency of the investment.
Principal
The counterparty that sells and buys currencies for his own account as opposed to a broker who introduces a buyer to a seller and vice versa.
Purchasing Power Parity
The proposition that over the long term, changes in the exchange rate between two currencies are the result of differences in the relative rate of inflation in the two countries concerned.
Put
In options, the buyer of a put has the right to acquire a short position in the underlying contract at the strike price until the option expires; the seller (writer) of a put obligates himself to take a long position in the contract at the strike price if the buyer exercises his put.
Resistance
A price level at which you would expect selling to take place due to technical analysis. The resistance level of one currency is the support level for the other.
Risk Neutrality
An attitude that risks should neither be sought nor avoided, but should be accepted whenever they arise.
Rollover
Where the settlement of a deal is rolled forward to another value date based on the interest rate differential of the two currencies.
Settlement
Actual exchange of base currency and currency between principal and client.
Short
A market position where the client has sold a currency he does not already own. Normally expressed in base currency terms, e.g. short US dollars (long Deutsch marks).
Soft Currency
A currency which is expected to devalue or depreciate against other currencies, or whose exchange rate must be supported by central bank intervention or exchange controls.
Speculation
Buying or selling currency in expectation of an exchange rate movement, so as to make a profit, either in the same market or between two different markets, e.g. forex cash markets and derivatives markets.
Spot
Spot means that the settlement date of a deal is two business days forward.
Spread
The difference in prices between bid and offer rates.
Stop Loss Order (or Stop)
An order to buy or sell when a particular price is reached, either above or below the price that prevailed when the order was given.
Strike Price
For call options, the specified price at which the buyer has the right to purchase the underlying contract.
Structural Hedging
The process of reducing or eliminating currency exposure by matching receivables and payables in each currency or currency bloc to minimise the net exposure.
Support
Price level at which you expect buying to take place. See resistance.
Swap
An agreement between two parties to exchange a series of future payments. In a currency swap, the exchange of payments (cash flow) are in two currencies, one of which is often the US dollar.
Swift
The society for Worldwide International Fund Transfers is a multinational facility for fund transfers based in Belgium and the Netherlands.
Technical Analysis
Analysis based on market action through chart study, moving averages, volume, open interest, oscillators, formations, stochastics and other technical indicators.
Thin Trading
When the volumes of currency bought and sold are low.
Time Value
In options, the value of the premium is based on the amount of time left before the contract expires and the volatility of the underlying contract. Time value represents that portion of the premium in excess of intrinsic value. Time value diminishes as the expiration of the option draws near and/or if the underlying contract's price development becomes less volatile.
Two-Way Price
Rates for which both a bid and offer are quoted.
US Prime Rate
The rate at which US banks will lend to their prime corporate customers.
Value Date
Settlement date of a spot or forward deal.
Volatility
A measure of price fluctuation.
0.0001 of a unit; for instance, if the GBP/USD is 1.5220, then 1.5219 is one point lower
Political Risk
The potential for losses arising from a change in government policy.
Premium
In options, the price of a call or a put, which the buyer initially pays to the option writer.
Price Risk (Market Risk)
The risk of a fall in the market value of a foreign investment (as measured in the domestic currency of the investor) due to an adverse change in the value of the currency of the investment.
Principal
The counterparty that sells and buys currencies for his own account as opposed to a broker who introduces a buyer to a seller and vice versa.
Purchasing Power Parity
The proposition that over the long term, changes in the exchange rate between two currencies are the result of differences in the relative rate of inflation in the two countries concerned.
Put
In options, the buyer of a put has the right to acquire a short position in the underlying contract at the strike price until the option expires; the seller (writer) of a put obligates himself to take a long position in the contract at the strike price if the buyer exercises his put.
Resistance
A price level at which you would expect selling to take place due to technical analysis. The resistance level of one currency is the support level for the other.
Risk Neutrality
An attitude that risks should neither be sought nor avoided, but should be accepted whenever they arise.
Rollover
Where the settlement of a deal is rolled forward to another value date based on the interest rate differential of the two currencies.
Settlement
Actual exchange of base currency and currency between principal and client.
Short
A market position where the client has sold a currency he does not already own. Normally expressed in base currency terms, e.g. short US dollars (long Deutsch marks).
Soft Currency
A currency which is expected to devalue or depreciate against other currencies, or whose exchange rate must be supported by central bank intervention or exchange controls.
Speculation
Buying or selling currency in expectation of an exchange rate movement, so as to make a profit, either in the same market or between two different markets, e.g. forex cash markets and derivatives markets.
Spot
Spot means that the settlement date of a deal is two business days forward.
Spread
The difference in prices between bid and offer rates.
Stop Loss Order (or Stop)
An order to buy or sell when a particular price is reached, either above or below the price that prevailed when the order was given.
Strike Price
For call options, the specified price at which the buyer has the right to purchase the underlying contract.
Structural Hedging
The process of reducing or eliminating currency exposure by matching receivables and payables in each currency or currency bloc to minimise the net exposure.
Support
Price level at which you expect buying to take place. See resistance.
Swap
An agreement between two parties to exchange a series of future payments. In a currency swap, the exchange of payments (cash flow) are in two currencies, one of which is often the US dollar.
Swift
The society for Worldwide International Fund Transfers is a multinational facility for fund transfers based in Belgium and the Netherlands.
Technical Analysis
Analysis based on market action through chart study, moving averages, volume, open interest, oscillators, formations, stochastics and other technical indicators.
Thin Trading
When the volumes of currency bought and sold are low.
Time Value
In options, the value of the premium is based on the amount of time left before the contract expires and the volatility of the underlying contract. Time value represents that portion of the premium in excess of intrinsic value. Time value diminishes as the expiration of the option draws near and/or if the underlying contract's price development becomes less volatile.
Two-Way Price
Rates for which both a bid and offer are quoted.
US Prime Rate
The rate at which US banks will lend to their prime corporate customers.
Value Date
Settlement date of a spot or forward deal.
Volatility
A measure of price fluctuation.
Forex Trading - Abbreviations [2......continued]
Fed
Abbreviation for Federal Reserve System of the United States. In the domestic context Fed usually refers to its board of governors or to the Federal Reserve Bank of New York; in the foreign exchange context it usually refers to the latter.
Federal Open Market Committee
Key decision making committee of the Federal Reserve System. The minutes of its meeting are published about a month later, and show the current stance of US monetary policy.
Figure
Dealers' slang meaning "00" and denoting and.
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 intervention points.
Flat/Square
Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (flat) position.
Floating Exchange Rate
When the value of a currency is decided by supply and demand.
Forex
An abbreviation for foreign exchange also FX.
Forward Points
The interest rate differential between two currencies expressed in exchange rate points. These forward points are added to or subtracted from the spot rate to give the forward or outright rate.
Forward Rate
The rate at which a foreign exchange contract is struck today for settlement at a specified future date.
Fundamental Analysis
Analysis based on economic factors.
Future
A contract giving the obligation to buy or sell an asset at a set date in the future.
GTC "Good Till Cancelled"
An order left with a dealer to buy or sell at a fixed price. It holds until cancelled.
Hard Currency
A currency whose value is expected to remain stable or increase in terms of other currencies.
Hedging
A hedging transaction is one which protects an asset or liability against a fluctuation in the foreign exchange rate.
IMF
International Monetary Fund
Initial Margin
The deposit required before a client can transact a deal.
Interest Parity
The interest parity theory is if there are two financial instruments in different currencies but identical in risk and maturity (e.g. three month UK gilts and Us Treasury bills), then a difference in the interest rate on the instruments will be reflected in the premium or discount for the forward exchange rate.
In-the-Money
In call options, when the strike price is below the price of the underlying contract. In put options, when the strike price is above the price of the underlying contract. In-the-Money options are the most expensive options because the premium includes intrinsic value.
Intrinsic Value
For in-the-money call and put options, the difference between the strike price and the underlying contract price.
Leads and Lags
Process of accelerating (leads) or slowing up (lags) foreign exchange payments or receipts when a change in exchange rates is expected.
Leverage
Facility whereby a small margin deposit can control a much larger total contract value, a mechanism which determines the ability to make extraordinary profits at the same time as keeping the risk capital to a minimum.
Limit Order
An order given which has restrictions upon its execution. The client specifies a price and the order can be executed only if the market reaches that price.
Lombard Rate
German term for the rate of interest charged for loans against the security of pledged paper. Particularly used by Bundesbank, which normally maintains its Lombard rate at about 1/2% above its discount rate.
London Interbank Offered Rate (LIBOR)
The interest rate at which banks in London are prepared to lend funds to first-class banks.
Long Position
A position where the client has bought a currency he does not already own. Normally expressed in base currency terms, e.g. long US dollars (short Deutsch marks).
Margin
Cash or guarantee deposited by a client wishing to trade.
Maturity
Date for settlement
Not Held Basis Order
An order whereby the price may trade through or even better than the client's desired level, but the principal is not held responsible if the order is not executed.
Offer
The rate at which a dealer is willing to sell the base currency.
One Cancels Other (OCO) Order
Where the execution of one order automatically cancels a previous order.
Open Position
Any deal which has not been settled by physical payment or reversed by an equal and opposite deal for the same value date.
Option
The right, but not the obligation, to buy or sell an asset, such as currency, on or before a set of future date.
Out-of-the Money
Option calls with strike prices above the price of the underlying contracts, and puts with strike prices below the price of the underlying contracts.
Outright Forward
Foreign Exchange transaction involving either the purchase or the sale of a currency for settlement at a future date.
Outright Rate
The forward rate of a foreign exchange deal.
Overnight Trading
Refers to a purchase or sale between 9:00 pm and 7:00 am.
Over-the-Counter Transaction (OTC)
A transaction arranged by direct negotiation, usually by telephone, rather than on an exchange.
Abbreviation for Federal Reserve System of the United States. In the domestic context Fed usually refers to its board of governors or to the Federal Reserve Bank of New York; in the foreign exchange context it usually refers to the latter.
Federal Open Market Committee
Key decision making committee of the Federal Reserve System. The minutes of its meeting are published about a month later, and show the current stance of US monetary policy.
Figure
Dealers' slang meaning "00" and denoting and.
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 intervention points.
Flat/Square
Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (flat) position.
Floating Exchange Rate
When the value of a currency is decided by supply and demand.
Forex
An abbreviation for foreign exchange also FX.
Forward Points
The interest rate differential between two currencies expressed in exchange rate points. These forward points are added to or subtracted from the spot rate to give the forward or outright rate.
Forward Rate
The rate at which a foreign exchange contract is struck today for settlement at a specified future date.
Fundamental Analysis
Analysis based on economic factors.
Future
A contract giving the obligation to buy or sell an asset at a set date in the future.
GTC "Good Till Cancelled"
An order left with a dealer to buy or sell at a fixed price. It holds until cancelled.
Hard Currency
A currency whose value is expected to remain stable or increase in terms of other currencies.
Hedging
A hedging transaction is one which protects an asset or liability against a fluctuation in the foreign exchange rate.
IMF
International Monetary Fund
Initial Margin
The deposit required before a client can transact a deal.
Interest Parity
The interest parity theory is if there are two financial instruments in different currencies but identical in risk and maturity (e.g. three month UK gilts and Us Treasury bills), then a difference in the interest rate on the instruments will be reflected in the premium or discount for the forward exchange rate.
In-the-Money
In call options, when the strike price is below the price of the underlying contract. In put options, when the strike price is above the price of the underlying contract. In-the-Money options are the most expensive options because the premium includes intrinsic value.
Intrinsic Value
For in-the-money call and put options, the difference between the strike price and the underlying contract price.
Leads and Lags
Process of accelerating (leads) or slowing up (lags) foreign exchange payments or receipts when a change in exchange rates is expected.
Leverage
Facility whereby a small margin deposit can control a much larger total contract value, a mechanism which determines the ability to make extraordinary profits at the same time as keeping the risk capital to a minimum.
Limit Order
An order given which has restrictions upon its execution. The client specifies a price and the order can be executed only if the market reaches that price.
Lombard Rate
German term for the rate of interest charged for loans against the security of pledged paper. Particularly used by Bundesbank, which normally maintains its Lombard rate at about 1/2% above its discount rate.
London Interbank Offered Rate (LIBOR)
The interest rate at which banks in London are prepared to lend funds to first-class banks.
Long Position
A position where the client has bought a currency he does not already own. Normally expressed in base currency terms, e.g. long US dollars (short Deutsch marks).
Margin
Cash or guarantee deposited by a client wishing to trade.
Maturity
Date for settlement
Not Held Basis Order
An order whereby the price may trade through or even better than the client's desired level, but the principal is not held responsible if the order is not executed.
Offer
The rate at which a dealer is willing to sell the base currency.
One Cancels Other (OCO) Order
Where the execution of one order automatically cancels a previous order.
Open Position
Any deal which has not been settled by physical payment or reversed by an equal and opposite deal for the same value date.
Option
The right, but not the obligation, to buy or sell an asset, such as currency, on or before a set of future date.
Out-of-the Money
Option calls with strike prices above the price of the underlying contracts, and puts with strike prices below the price of the underlying contracts.
Outright Forward
Foreign Exchange transaction involving either the purchase or the sale of a currency for settlement at a future date.
Outright Rate
The forward rate of a foreign exchange deal.
Overnight Trading
Refers to a purchase or sale between 9:00 pm and 7:00 am.
Over-the-Counter Transaction (OTC)
A transaction arranged by direct negotiation, usually by telephone, rather than on an exchange.
Forex Trading - Abbreviations [1....continued]
Arbitrage
Dealing in two or more markets at the same time (or in similar products in the same market) to take advantage of temporary mispricing in order to make a profit.
At-the-Money
In options, when the strike price equals the price of the underlying contract.
Bear
A person who believes that prices will decline.
Bear Market
A market characterized by declining prices.
Bid
The rate at which a dealer is willing to buy the vase currency.
Big Figure
The first three digits of an exchange rate, e.g. USD 1.62 per pound or DEM 1.49 per dollar.
Bull
A person who believes that prices will rise.
Bull Market
A market characterized by rising prices.
Cable
Dealer's slang for the UK sterling/US dollar exchange rate.
Call
An option that gives the buyer the right to long a position in the underlying contract at a specific price; the call writer (seller) may be assigned a short position in the underlying contract if the buyer exercises his call.
Call Rate
The overnight interest rate.
Cash Market
The market for the purchase and sale of physical currencies.
Convertible Currency
Currency which can be exchanged for other currencies of gold without authorization from the central bank.
Counterparties
The parties on either side of a transaction.
Cross Rate
Exchange rate that does not involve the US dollar.
Currency Clause
A clause in an export contract in which the sum payable is denominated in the buyer's currency; but the amount payable will vary with the exchange rate for the buyer's currency against the seller's currency.
Day Trading
Refers to opening and closing the same position or positions within one day's trading.
Delta
For options, also called the neutral hedge ratio. Expresses the expected change in the option price, given a one-unit change in the price of the underlying contract.
Derivative
Financial instruments, such as futures and options, which derive their value from underlying securities including bonds, bills, currencies, and equities.
Discount
Cheaper than the spot price, e.g. forward discount.
Dollar Rate
When a variable amount of a foreign currency is quoted against one unit of the US dollar, regardless of where the dealer is located or in what currency he is requesting a quote. The major exception is the UK sterling/US dollar rate cable which is quoted as units of the US dollar to UK sterling.
EMS
European Monetary System
ERM
Exchange Rate Mechanism
Eurobond
Marketable debt security issued outside the country in whose currency the debt is denominated.
Eurodollar
A dollar deposit acquired by a person or bank not residing in the United States and held outside the United States and therefore not subject to US reserve restrictions.
European Currency Unit
The currency unit in the EMS, where the unit is defined by the sum of quantities of each of the national currencies of the members of the EMS, so the value of the ECU changes in terms of third currencies, such as e.g. the US dollar.
Exchange Control
Government regulations restricting or forbidding certain types of foreign currency transactions including purchases from abroad, payment abroad of interest or dividends, and investing abroad.
Exchange Rate Depreciation
Currency which loses in value against one or more other currencies, especially if this happens in response to natural supply rather than by an official devaluation.
Exchange Rate Risk
The potential loss that could be incurred from a movement in exchange rates.
Exposure
A financial risk facing a business, which can be categorized according to its cause or source. Currency exposures are exposures to exchange rate risk.
Dealing in two or more markets at the same time (or in similar products in the same market) to take advantage of temporary mispricing in order to make a profit.
At-the-Money
In options, when the strike price equals the price of the underlying contract.
Bear
A person who believes that prices will decline.
Bear Market
A market characterized by declining prices.
Bid
The rate at which a dealer is willing to buy the vase currency.
Big Figure
The first three digits of an exchange rate, e.g. USD 1.62 per pound or DEM 1.49 per dollar.
Bull
A person who believes that prices will rise.
Bull Market
A market characterized by rising prices.
Cable
Dealer's slang for the UK sterling/US dollar exchange rate.
Call
An option that gives the buyer the right to long a position in the underlying contract at a specific price; the call writer (seller) may be assigned a short position in the underlying contract if the buyer exercises his call.
Call Rate
The overnight interest rate.
Cash Market
The market for the purchase and sale of physical currencies.
Convertible Currency
Currency which can be exchanged for other currencies of gold without authorization from the central bank.
Counterparties
The parties on either side of a transaction.
Cross Rate
Exchange rate that does not involve the US dollar.
Currency Clause
A clause in an export contract in which the sum payable is denominated in the buyer's currency; but the amount payable will vary with the exchange rate for the buyer's currency against the seller's currency.
Day Trading
Refers to opening and closing the same position or positions within one day's trading.
Delta
For options, also called the neutral hedge ratio. Expresses the expected change in the option price, given a one-unit change in the price of the underlying contract.
Derivative
Financial instruments, such as futures and options, which derive their value from underlying securities including bonds, bills, currencies, and equities.
Discount
Cheaper than the spot price, e.g. forward discount.
Dollar Rate
When a variable amount of a foreign currency is quoted against one unit of the US dollar, regardless of where the dealer is located or in what currency he is requesting a quote. The major exception is the UK sterling/US dollar rate cable which is quoted as units of the US dollar to UK sterling.
EMS
European Monetary System
ERM
Exchange Rate Mechanism
Eurobond
Marketable debt security issued outside the country in whose currency the debt is denominated.
Eurodollar
A dollar deposit acquired by a person or bank not residing in the United States and held outside the United States and therefore not subject to US reserve restrictions.
European Currency Unit
The currency unit in the EMS, where the unit is defined by the sum of quantities of each of the national currencies of the members of the EMS, so the value of the ECU changes in terms of third currencies, such as e.g. the US dollar.
Exchange Control
Government regulations restricting or forbidding certain types of foreign currency transactions including purchases from abroad, payment abroad of interest or dividends, and investing abroad.
Exchange Rate Depreciation
Currency which loses in value against one or more other currencies, especially if this happens in response to natural supply rather than by an official devaluation.
Exchange Rate Risk
The potential loss that could be incurred from a movement in exchange rates.
Exposure
A financial risk facing a business, which can be categorized according to its cause or source. Currency exposures are exposures to exchange rate risk.
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