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Foreign Exchange Glossary - Glossary of Foreign Exchange Terms



The rate at which a dealer is willing to purchase a currency


A middleman working between a customer and the market, who chargers a fee for their services and advice

Convertible Currency

A currency, which can be freely traded for other currencies with the authorisation of a central bank

Exchange Rate

Is the term used to describe the value given to one currency for the purpose of exchange to another

Exchange Rate Depreciation

When a currency loses value in contrast to another currency

Exchange Rate Risk

The possible loss that could be incurred if the value of a currency experiences a decrease

Fixed Exchange Rate

Set by monetary authorities it describes an official rate of exchange for one or more currencies

Floating Exchange Rate

When supply and demand dictates the value of currency


A common abbreviation for Foreign Exchange

Forward Rates

The difference in interest rates between two currencies demonstrated in exchange rate points

Forward Rates

The rate at which a Foreign Exchange is determined presently for settlement at a future date, which has usually been specified in advanced in something known as a forward contract


Is a type of transaction, which enables the protection of an asset or liability against the fluctuations that are common in the Foreign Exchange market

Initial Margin

The required deposit expected from a client when they arrange an advanced order

Interbank Rates

The rates charged by large international banks to other large international banks for Foreign Exchange. Typically businesses and the public do not have access to these rates that can be around 0.07% cheaper

Interest Rate Risks

The potential loss that can occur with the fluctuation of exchange rates


Provided by the client the margin is a cash deposit that is used as collateral to cover potential losses that may result from Foreign Exchange trades undertaken by the client


Date for settlement


The rate at which a dealer is willing to sell the base currency

Open Position

Any deal that has not been closed by a physical payment

Outright Forward

Transaction involving either the buying or selling of a currency for settlement at a date in the future


A level of pricing at which you would expect selling to take place


The physical exchange of one currency for another between a currency supplier and a client

Spot Contract

The settlement of a deal which is two trading days forward


The variance between the bid and offer prices

Stop Loss Order

An order to buy or sell when a pre agreed price is reached

Support Levels

A level of pricing at which you would expect buying to take place

Technical Analysis

Analysis based on market events through the study of charts

Value Date

Settlement date of a pot or forward deal


A measurement of price fluctuations


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