Pips
- Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points. Political Risk - Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.
Point & Figure charts
- The Point & Figure Chart disregards Time and focuses entirely on price activity. Position - The netted total holdings of a given currency. Premium - In the currency markets, describes the amount by which the forward or futures price exceed the spot price. Price Transparency - Describes quotes to which every market participant has equal access.
Q
Quote
- An indicative market price, normally used for information purposes only.
R
Rate
- The price of one currency in terms of another, typically used for dealing purposes. Resistance - A term used in technical analysis indicating a specific price level at which analysis concludes people will sell. Revaluation - An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation. Revaluation Rates - The revaluation rates are the market rates used when a trader runs an end-of-day to establish profit and loss for the day. Risk - Exposure to uncertain change, the variability of returns significantly the likelihood of less-than-expected returns. Risk Capital- The amount of money that an individual can afford to invest, which, if lost would not affect their lifestyle. Risk Management - To hedge one’s risk they will employ financial analysis and trading techniques Roll-Over - Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies.
Rollover Rate -
The daily rollover interest rate is the amount a trader either pays or earns, depending on the established margin and position in the market. To avoid rollovers simply make sure positions are closed at the established end of the market day.
S
Settlement
– The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the