agreed future date, based upon the interest rate differential between the two currencies involved.
Forward Contract
- A forward contract fixes the exchange rate for future delivery at a date to be agreed by both participants. A deposit (or a minimum margin) is usually required in forward transactions. For example, if I want to lock in today's rate to buy $10,000 USD at 1.5820 Canadian for the next 4 months, I will have the ability to purchase up to $10,000 USD at this rate.
Forward Rates (Swaps)
- A Forward Rate refers to a cash price of 2 currencies interest difference for a fixed term. Forward rates can be calculated easily given the fixed term interest rates of each currency and the current spot rate
Forward Trading
- Forward trading is making the opposite trade of a spot trade in a given period of time. Often investors will swap their trades forward for anywhere from a week or two up to several months depending on the time frame of the investment. Even though a forward trade is on a future date, the position can be closed out at any time. The closing part of the position is then swapped forward to the same future value date Forward points - The pips added to or subtracted from the current exchange rate to calculate a forward price. Fundamental Analysis - focuses on the economic forces of supply and demand that causes price movement. The Fundamentalist studies the causes of market movement, whereas the Technician studies the effects. Futures Contract- An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts – ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.
G
Gearing
- Also known as margin trading. A term used to in the relationship of actual equity versus controlling equity.
Group of Five (G5)
- are five leading industrial nations (France, Japan, Germany, the UK and US), which meet from time-to-time to discuss common economic problems.
Group of Seven (7)
are 7 leading non-communist industrial nations composed of G5 plus Canada and Italy. Group of Ten (G10) is also known as The Paris Club which includes Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, UK and US. These nations signed an accord in 1962 to increase the fund available to the IMF and aid member countries with balance-of-payments difficulties.
Goldilocks Economy
was a term coined back in the mid-1902 to describe an economy that was not too hot and not too cold. This typically describes an economy that enjoyed steady growth with nominal rate of inflation