Futures and Forex Glossary Dictionary R1By scorpion
Published: September 23, 2009
A type of option where there is more than one underlying asset. For the option to be profitable, all underlying assets must be in the money. See Also: Options
A period of trading that makes the price surge upwards.
The price of a currency against another. The rate is measured as how many units of the second currency you get with one unit of the first currency.
The difference in interest rates between two similar assets in two different countries. Interest rate differentials are used to calculate forward exchange rates.
Rate Of Return
The percentage gained or lost from a trade compared to the amount originally invested.
An option strategy of holding both long (buying call options) and short (writing call options) options. A common strategy is holding one long and two short options.
Falling prices or a downward movement after an initial rise in price.
Real Effective Exchange Rate (REER)
An exchange rate calculated as the weighted average of a currency against an index of major currencies adjusted for inflation. This is the real exchange rate that a consumer will get when importing a foreign good.
The potential profit or loss from an open position. See Also: Unrealized P/L, Take Profits
Currency pairs where one currency is the U.S. Dollar, but where another currency is the base currency quoted such as EUR/USD.
The process of changing the denomination of a currency because of inflation (hyperinflation), such as seen in Germany in the 1920's, Argentina in the late 1990's and recently in Zimbabwe.
A market where trading is overseen and regulated by a governing body, such as the futures and forex market in the United States.
Regulations (CFTC regulations)
The regulations governing trade of commodities, futures and options as set forth by the commodity exchange act.
Claims for financial loss sought by traders in accordance with CFTC regulations.
A trader's currently open positions that must be reported to the CFTC.
A currency held by governments and central banks as means to pay off debt and to influence exchange rates. The U.S. Dollar is currently the most commonly held reserve currency because of the United States position as the world's leading superpower and the fact that many commodities such as oil and precious metals are traded primarily in U.S. Dollars. See Also: Petrodollars
A price level where significant selling takes place. The price may rise to the resistance level but may not be able to break through for a period.
Forex trading done by individuals through retail forex brokers as opposed to forex trading done by banks and financial institutions.
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