| BACS |
Bankers Automated Clearing Service. |
BIC |
Bank Identifier Code (also known as SWIFT code). |
Bid price |
The rate at which a dealer will buy the base currency. |
Broker |
An intermediary between the client or company and the market. |
Cable |
A term used in the Forex market for the US Dollar / British Pound rate. |
CHAPS |
Clearing House Automated Payments System. A bank-to-bank same-day value payment made electronically within the UK in either sterling or euro. |
Currency Pair |
Involves two different currencies. The first is called the base currency and the second is called the counter currency. This allows us to know how many units of the counter currency are needed to purchase one unit of the base currency. |
Exposure |
Fluctuations in market prices can cause exchange rate exposure which means running a profit or a loss. |
Forex |
Foreign Exchange Market (Abbreviation). |
Forward Contract |
A fixed forward enables you to fix a rate for any period up to 12 months. The exchange rate does not then change, regardless of market movements. A 10% deposit is required to secure that rate.
A flexible forward involves fixing an exchange rate for the purchase or sale of currency for delivery at a later date (up to two years). Forward contracts can be used as a risk management tool and can enable companies to lock into favourable exchange rates. |
Fundamental Analysis |
Forecasting the Forex based on political, economic, environmental and other relevant factors and statistics. Fundamentalists are concerned with the cause of market movement, for example, Gross Domestic Product (GDP) and the employment rate. |
Hedging |
Limiting FX risk due to currency fluctuations. |
IBAN |
International Bank Account Number. |
Pip |
A pip is the smallest part of an exchange rate. |
Point |
A point is normally 100 pips. |
Same Day Value |
Deal and settle on a trade within 24 hours. |
Spot rate |
the most common form of FX contract involving settlement from both parties within 2 business working days. |
SWIFT |
Society for World-wide Interbank Financial Telecommunications - SWIFTidentifies the payment beneficiary’s bank (the bank designated to receive the funds transfer). It usually consists of 8 to 11 characters that add bank identification to the details provided by the Basic Bank Account Number (BBAN). Although SWIFT has been renamed Bank Identifier Code (BIC), most banks still refer to it as SWIFT |
Value Date |
Final settlement date for a spot or forward contract. |
Technical Analysis |
Analysis using charts of past market movements in order to predict future movements and trends.Technical analysts study the effect of market movement, for example, candlestick formations and Fibonacci numbers. |
