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Day Order - Buy or sell order that will terminate automatically at the end of the trading day on which it is entered.

Day Trade - Trade opened and closed on the same trading daylight.

Day trader - Speculators who take positions in commodities which are then liquidated prior to the close of the same trading day.

Day Trading - Refers to the positions which are opened and closed on the same trading daylight.

Deal date - The date on which a transaction is agreed upon.

Deal Ticket - The primary method of recording the basic information relating to a transaction.

Dealer - One who, as opposed to a broker, acts as a principle in all transactions, buying and selling for its own accounts.

Deficit - It is the negative balance of trade or payments.

Delivery - An FX trade where both sides make and take genuine delivery of the currencies traded.

Delivery date - The date of maturity of the contract, when the exchange of the currencies is made This date is more commonly known as the value date in the FX or Money markets.

Delivery Risk - A term to describe when a counterparty will not be able to complete his side of the deal, although willing to do so.

Department of Communities and Local Government (DCLG) UK House Prices - A monthly survey formed by the DCLG that uses a very huge sample of all completed house sales to calculate the price trends in the UK real estate market.

Depreciation - A fall in the value of a currency due to market forces rather than due to official action.

Derivative - A contract that changes in value for the price movements of a associated or underlying security, future or other physical instrument. An alternative is the most common derivative instrument.

Desk - Term referring to a group dealing with a specific currency or currencies.

Details - All the information required to finalize a foreign exchange transaction, i.e. name, rate, dates, and point of delivery.

Devaluation - Deliberate downward adjustment of a currency against its fixed parities or bands, normally by formal announcement.

Direct quotation - Quoting in fixed units of foreign currency against variable amounts of the domestic currency.

Discount Rate - It is an interest rate that qualified depository institution is charged to borrow short-term funds straightforwardly from the Federal Reserve Bank.

Discretionary Account - An account in which the customer allows trading institution to act on the customer's behalf in buying and selling currency pairs. The institution has discretion as to the option of currency pairs, prices, and timing-subject to any limits specified in the agreement.

Easing - Modest decline in price.

Economic Indicator - A statistics which indicates current economic growth rates and trends such as retail sales and employment.

ECU - European Currency Unit.

EDI - Electronic Data Interchange.

Effective Exchange Rate - An attempt to summarize the effects on a country's trade balance of its currency's changes against other currencies.

EFT - Electronic Fund Transfer.

EMS - European Monetary System.

End Of Day Order (EOD) - An order to buy or sell at a particular price. This order remains open until the end of the trading day which is normally 5PM ET.

Euro - The single currency of the European Economic and Monetary Union (EMU) established in January 1999. This is the combination of the following currencies, after Jan. 1, 2002 these currencies will be judged legacy currencies. The Germany Deutsche Marks, Italy Lira, Greece Drachmas, Ireland Punt, Austria Schillings, Netherlands (Dutch) Guilders, France Franc, Belgium Francs, Finland Markka, Portugal Escudo, Luxembourg Francs, Spanish Pesetas.

European Central Bank (ECB) - It is the Central Bank for the new European Monetary Union.

European Monetary System - A system designed to stabilize if not eliminate exchange risk between member states of the EMS as part of the economic convergence policy of the EU. It permits currencies to move in a measured fashion (divergence indicator) within agreed bands (the parity grid) with respect to the ECU and consequently with each other.

Eurozone Labor Cost Index - Measures the annualized rate of inflation in the reimbursement and benefit paid to civilian workers and is seen as a primary driver of overall price rises.

Eurozone Organization for Economic Co-operation and Development (OECD) Leading Indicator - A monthly index formed by the OECD. It measures taken as a whole economic health by combining ten leading indicators together with: average weekly hours, consumer expectations, housing permits, new orders, stock prices, and interest rate spreads.

Execution: The Process of finishing an order or deal.

Exotic - A less broadly traded currency.

Exposure - In foreign exchange, a potential for gain or loss because of movement in foreign exchange rate. There are three primary types of exposure:

Economic: The change in future earning power and cash flow arising from a change in exchange rates. In effect, it represents a change in the value of a company holding foreign currency.
Transnational: A potential gain or loss arising from transactions that will definitely occur in the future, are currently in progress, or could have already been completed. A signed but not shipped sales contract, a receivable or foreign currency payment collected but not converted to local currency would all be examples of transaction exposure.
Translation: The potential for change in reported earnings and/or the book value of the consolidated company equity accounts, as the result of a change in foreign exchange rates used to translate the foreign currency statements of subsidiaries and affiliates known as accounting exposure.

Factory Orders - The dollar level of the latest orders for both durable and nondurable goods. This report is more in detail than the durable goods report which is released prior in the month.

Fast market - Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.

Fed Fund Rate - The interest rate on Fed funds. This is a closely watched short term interest rate as it signals the Feds view as to the state of the money supply.

Fed - The United States Federal Reserve. Federal Deposit Insurance Corporation Membership is compulsory for Federal Reserve members. The corporation had deep involvement in the Savings and Loans crisis of the late 80s.

Federal Reserve System - The central banking system in the United States.

Fill or Kill - An order which must be entered for trading, normally in a pit three times, if not filled is immediately canceled.

Fill Price - The charge at which a buy or sell order was carried out.

Financial Risk - It is the risk that a firm will be not capable to meet its financial obligations.

First In First Out (FIFO) - Open positions are closed in accordance with the FIFO accounting rule. All positions opened within an exacting currency pair are liquidated in the order in which they were initially opened.

Fisher Effect - The relationship that exists between interest rates and exchange rate movements, so that in an ideal situation interest rate differentials would be exactly off set by exchange rate movements. See interest rate parity.

Fixed exchange rate - Official rate set by monetary authorities. Often the fixed exchange rate permits fluctuation within a band.

Flat - Term describing a trading book with no market experience or exposure.

Flat/square - Dealer jargon used to explain a position that has been entirely reversed, e.g. you bought $500,000 then sold $500,000, thus creating a neutral (flat) position.

Flexible exchange rate - Exchange rates with a fixed parity against one or more currencies with frequent revaluation's. A form of managed float.

Floating exchange rate - An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a dirty float.

FOMC - Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates etc.

Foreign Exchange - The purchase or sale of a currency against sale or purchase of another.

Forex - Term commonly used when referring to the foreign exchange market.

Forex Club - Groups formed in the major financial centers to encourage educational and social contacts between foreign exchange dealers, under the umbrella of Association Cambiste International.

Forward - The pre-specified exchange rate for a foreign exchange contract or the agreement settling at some agreed future date, based upon the interest rate disparity between the two currencies involved.

Forward margins - Discounts or premiums between spot rate and the forward rate for a currency. Normally quoted in points.

Forward Operations - Foreign exchange transactions, on which the fulfillment of the mutual delivery obligations is made on a date later than the second business day after the transaction was concluded.

Forward Outright - A commitment to buy or sell a currency for delivery on a specified future date or period. The price is quoted as the Spot rate minus or plus the forward points for the chosen period.

Forward Rate - Forward rates are quoted in terms of forward points , which represents the difference between the forward and spot rates. In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange rate. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefor the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.

Free Reserves - Total reserves held by a bank less the reserves required by the authority.

French Central Government Balance - It is the difference between the central government's monthly takings and expenses.

Front Office - The activities carried out by the dealer , normal trading activities.

Fundamentals - The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.

Fundamental Analysis - Analysis of economic or the financial and political information with the idea of determining future movements in a financial market.

Futures Contract - It is an obligation to exchange a good or instrument at a set value on a future date. The most important difference concerning Future and Forward is that Futures are characteristically traded over an exchange (Exchange- Traded Contacts - ETC), versus forwards, which are deemed Over the Counter (OTC) contracts. An OTC is any contract or agreement NOT traded on an exchange.

FX - Foreign Exchange.

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