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SWAP: When
a trader exchanges one currency for another, holding it for
only a short period. Swaps are typically used to speculate
on interest rate movements. It is calculated using the
interest differentials between the two currencies.
Forex
Terms
ALL or NONE -
ARBITRAGE -
ASK -
AUTOMATIC
EXECUTION -
BASIS POINT - BID
- BROKER -
COST OF CARRY -
COUNTERPARTY -
ENTRY ORDER -
FOREX -
FOREX TRADER -
LEVERAGE -
LIMIT ENTRY
ORDER - LIMIT
ORDER - LONG
POSITION - LOT -
MANUAL
EXECUTION - MARGIN
- MARGIN CALL -
MARKET MAKER -
MARKET ORDER -
MINI ACCOUNT -
OCO ORDER -
OVERNIGHT -
PEGGING -
PIP or POINTS -
POSITION -
PREMIUM -
QUOTE BUY SELL -
ROLLOVER -
SHORT POSITION
- SLIPPAGE -
SPOT
FOREIGN EXCHANGE -
SPREAD -
STOP-ENTRY ORDER -
STOP-LOSS ORDER
- SWAP -
TICK -
VOLATILITY -
WHIPSAW -
WHISPER NUMBER
Forex:
The global
foreign exchange market is the largest, most active market in
the world. Trading in the forex markets takes place nearly
round the clock with over $1 trillion changing hands every
day. It is the main event.
If you are
interested in trading currencies online, you will find that
the Forex market offers several advantages over equities
trading.
24-Hour
Trading
Forex is a
true 24-hour market, which offers a major advantage over
equities trading. Whether it's 6pm or 6am, somewhere in the
world there are always buyers and sellers actively trading
foreign currencies. Traders can always respond to breaking
news immediately, and P&L is not affected by after hours
earning reports or analyst conference calls.
After
hours trading for U.S. equities brings with it several
limitations. ECN's (Electronic Communication Networks), also
called matching systems, exist to bring together buyers and
sellers - when possible. However, there is no guarantee that
every trade will be executed, nor at a fair market price.
Quite frequently, traders must wait until the market opens the
following day in order to receive a tighter spread.
Superior
Liquidity
With a
daily trading volume that is 50x larger than the New York
Stock Exchange, there are always broker/dealers willing to buy
or sell currencies in the FX markets. The liquidity of this
market, especially that of the major currencies, helps ensure
price stability. Traders can almost always open or close a
position at a fair market price.
Because of
the lower trade volume, investors in the stock market are more
vulnerable to liquidity risk, which results in a wider dealing
spread or larger price movements in response to any relatively
large transaction.
Profit
Potential In Both Rising And Falling Markets
In every
open FX position, an investor is long in one currency and
short the other. A short position is one in which the trader
sells a currency in anticipation that it will depreciate. This
means that potential exists in a rising as well as a falling
market.
The
ability to sell currencies without any limitations is another
distinct advantage over equity trading. In the US equity
markets, it is much more difficult to establish a short
position due to the Zero Uptick rule, which prevents investors
from shorting a stock unless the immediately preceding trade
was equal to or lower than the price of the short sale.
Foreign
Exchange (FOREX) or Currency Trading
U.S.
& International Markets: Futures and Options
| Market |
Exchange |
| |
|
| Australian
Dollar futures & options |
IMM |
| Benzene
futures |
CME |
| British
Pound futures & options |
IMM |
| British
Pound (MIDAM) futures |
MA |
| CRB
Index futures & options |
NYFE |
| Canadian
Dollar futures & options |
IMM |
| Canadian
Dollar (MIDAM) futures |
MA |
| Cattle,
Feeder futures & options |
CME |
| Cattle,
Live futures & options |
CME |
| Cattle,
Live (MIDAM) futures |
MA |
| Cocoa
(Metric) futures & options |
CSCE |
| Coffee
futures & options |
CSCE |
| Copper
futures & options |
COMEX |
| Corn
futures & Corn options |
CBOT |
| Corn
(MIDAM) futures & Corn (MIDAM) options |
MA |
| Cotton
futures & options |
NYCE |
| Crude
Oil, Light/Sweet futures & options |
NYMEX |
| Crude
Oil, Sour futures & options |
NYMEX |
| Dow
Jones & Dow Jones options |
CBOT |
| Dow
Jones Mini $5 multiplier |
CBOT |
| Dow
Jones Mini Index $2 multiplier |
CBOT |
| Euro
FX futures & options |
IMM |
| E-mini
Euro futures & options |
IMM |
| Eurodollar
futures & options |
IMM |
| Eurodollar
(MIDAM) futures |
MA |
| Euroyen
futures & options |
IMM |
| Gasoline,
Unleaded futures & options |
NYMEX |
| Gold
(Kilo) futures |
CBOT |
| Gold
(100 oz) futures & options |
COMEX |
| Gold
(MIDAM) futures & Gold (MIDAM) options |
MA |
| oldman
Sachs Comm. Index futures & options |
IOM |
| Heating
Oil futures & options |
NYMEX |
| Hogs,
Lean futures & options |
CME |
| Hogs,
Lean (MIDAM) futures |
MA |
| Japanese
Yen futures & options |
IMM |
| E-mini
Japanese Yen futures & options |
IMM |
| Japenese
Yen (MIDAM) futures |
MA |
| Lumber
futures & options |
CME |
| Mixed
Xylene Futures |
CME |
| Mexican
Peso futures & options |
IMM |
| Municipal
Bonds & Municipal Bonds options |
CBOT |
| NASDAQ
Index futures & options |
IOM |
| NASDAQ
100 E-mini futures & options |
IOM |
| Natural
Gas futures & options |
NYMEX |
| Nikkei
225 Stock Index futures & options |
IOM |
| NYSE
Index Composite futures & options |
NYFE |
| Oats
futures & Oats options |
CBOT |
| Oats
(MIDAM) futures |
MA |
| Orange
Juice futures & options |
NYCE |
| Palladium
futures & options |
NYMEX |
| Platinum
futures & options |
NYMEX |
| Pork
Bellies, Frozen futures & options |
CME |
| Rough
Rice futures & Rough Rice options |
CBOT |
| S&P
500 Index futures & options |
IOM |
| E-Mini
S&P 500 futures & options |
CME |
| S&P
MidCap 400 Index futures & options |
IOM |
| Silver
futures & options |
COMEX |
| Silver,
New futures & Silver, New options |
CBOT |
| Silver,
New York (MIDAM) futures |
MA |
| Soybean
Meal futures & Soybean Meal options |
CBOT |
| Soybean
Oil futures & Soybean Oil options |
CBOT |
| Soybeans
futures & Soybeans options |
CBOT |
| Soybeans
(MIDAM) futures & Soybeans (MIDAM) options |
MA |
| Sugar
futures & options |
CSCE |
| Swiss
Franc futures & options |
IMM |
| Swiss
Franc (MIDAM) futures |
MA |
| Treasury
Bills (90 day) futures & options |
IMM |
| Treasury
Bills (MIDAM) futures |
MA |
| Treasury
Bonds futures & Treasury Bonds options |
CBOT |
| Treasury
Bonds futures & Treasury Bonds options |
MA |
| Treasury
Notes, 10 year< & Treasury Notes, 10 year
options |
CBOT |
| Treasury
Notes, 5 year & Treasury Notes, 5 year options |
CBOT |
| US
Dollar Index futures & options |
NYCE |
| Value
Line Index futures & options |
KCBT |
| Value
Line, Mini futures & options |
KCBT |
| Wheat
futures & Wheat options |
CBOT |
| Wheat,
Hard Red Winter futures & Wheat options |
KCBT |
| Wheat,
Hard Red Spring futures & Wheat options |
MGEX |
| Wheat
(MIDAM) futures & Wheat (MIDAM) options |
MA |
International
(non U.S.) Futures and Options
| Market |
Exchange |
| |
|
| 3
Month Euribor & 3 month Euribor options |
MATIF |
| 90
Day Australian Bill & 90 Day Australian Bill
options |
SFE |
| CAC
40 Index futures |
MATIF |
| Aluminum
futures & options |
LME |
| 1
Month Euribor futures |
Eurex |
| 3
Month Euribor futures & 3 month Euribor options |
Eurex |
| Euro-Schatz
futures & Options on Euro-Schatz futures |
Eurex |
| Euro
BOBL futures & Euro BOBL options |
Eurex |
| Euro
Bund futures & Euro Bund options |
Eurex |
| Euro
BUXL (long bund) futures |
Eurex |
| Conf
Swiss Bond futures |
Eurex |
| DJ
Stoxx futures |
Eurex |
| Finland's
FOX index futures and Fox Options |
Eurex |
| Nemax
50 index futures and Nemax50 Options |
Eurex |
| Euro
Notional Bond futures & Notional Bond options |
MATIF |
| Euribor
Interest Rate futures & options |
LIFFE |
| Euroyen
futures & options |
SIMEX |
| FTSE
100 Index futures & options |
LIFFE |
| Hang
Seng futures & Hang Seng options |
HKFE |
| Italian
Bond (BTP) futures & options |
LIFFE |
| Long
Gilt futures & options |
LIFFE |
| Nickel
futures & options |
LME |
| Nikkei
Index futures & options |
SIMEX |
| All
other LME contracts |
LME |
| Sterling
futures & options |
LIFFE |
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Consulting
AR LTD
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