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Previous: Part 1 - Learn Forex Trading: Forex Market Overview Currency pairs are financial instruments traded in forex markets. Every pair of currency traded in the forex market is considered as an individual product (or financial instrument). A set

The historical evolution of foreign exchange markets can be compartmentalized into 3 distinct phases namely the gold exchange period, followed by the Bretton Woods Agreement, to its current setting. The Gold exchange period The gold exchange

Forex is a loose acronym for Foreign Exchange Market that originated in the 1970s around the time free currency exchange rates were introduced in the world. In forex markets, market participants determine the price of one currency against the other

Easing Government Monetary policy changes designed to increase spending by lowering interest rates or a small price decline in a currency’s value. Related Term: Federal Funds Rat ECB Conferences Announcements and press conferences by representatives

Escrow Account An account held by a third party with respect to a transaction involving two parties and which is released by the third party to one of the other two parties on fulfillment of obligation to the satisfaction of the counterparty. Related

Exchange Brick and mortar location of trading activity. Example: New York Stock Exchange. Exchange Control Government controls that regulate purchase of foreign currency by resident citizens and/or foreigners buying domestic currency. Exchange for

Factory Orders An economic indicator released by the Census Bureau of the US Department of Commerce that tracks the period-to-period changes in the quantum of orders for durable and nondurable goods. Also known as Manufacturer’s shipments

Financial Bubble Trading of financial instruments at high volumes and prices far beyond its intrinsic value. Related Term: Economic Bubble Financial Risk Whether the cash flow of an Issuer is sufficient to meet its obligations. Also called Additional

Flip Forex Traders shifting from more long positions to more short positions indicating the close of a market’s bullish outlook Floating Exchange Rate Market determined foreign currency exchange rate. Related Term: Exchange Rate Floor Broker Futures

Forward (Cash) Contract Futures A contract of an asset to be delivered at a forthcoming date as per price and quantity specified in the contract. Forward Point Number of basis points either added to or deducted from the present spot rate to arrive at

Group of seven (G7) Block of countries comprising G-5 countries together with Canada and Italy. Group of Eight (G8) Block of countries comprising G-7 countries together with Russia. Gearing Financial leverage. Globex A globally functioning

Hard Currency Currencies vested with investor confidence. Example: US$; Euro. Head and shoulders A currency chart formation wherein the price of the currency shows following trends. i. Prices peak and subsequently decline ii. The prices then rise

Inconvertible currency A currency that cannot be exchanged to another currency on account of foreign exchange regulations. Example: Currency of a country that depreciates drastically on account of hyperinflation. Independent introducing broker NYSE

Interest Rate Swap Agreement entered between counter-parties in a foreign currency transaction where one party will pay periodic interest payment on a predetermined dollar principal International Fischer effect The higher the inflation rate, the

Japanese Housewives Terminology created by financial press which refers to Japanese households who became major sellers of Yen by speculating on the carry trade. Consequently, currency price levels as forecast by financial institutions turned out to

There is little known about Ralph Wanger other than the fact that he was one of the most successful investment traders in the United States. Wanger is one of the younger investors to be recognized with the likes of T. Rowe Price and Philip A Fisher

Michael Marcus is an industry whiz kid who having taken his entire fortune and investing it in commodities turned it from $30,000 to $80 million in less than 20 years. He was mentored by investor Ed Seykota while working as an analyst and has passed

Known at the ‘father of growth investing’, Thomas Rowe Price was one of the founding fathers of investing and trading as it is known today. He was not afraid of change and as an investor who grew up during the Great Depression, he was

Absolute Rate Also called an absolute swap yield. It is expressed in percentage terms. It combines the reference rate such as LIBOR with the fixed portion of an interest - rate swap. Related Terms: Absolute Swap Yield, LIBOR Adjustable Peg Fixing of

Asian option As opposed to an option whose pay off is at maturity, the payoff of an Asian option depends on the average price of that asset over a certain period of time. Therefore an Asian option precludes losses from arising due to volatility. Also