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Welcome to The Currency Broker Glossary. Below is a list of some of the Foreign Exchange terms used throughout this site. If you need more help please contact us and we will be pleased to help.
  • A
  • Appreciation

    When a currency strengthens in price in response to market demand.

  • Ask price

    The lowest price that a dealer will sell to a buyer.

  • Asset

    A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

  • B
  • BACS

    Bank Automated Clearing System. Payments will take up to 3 business days to clear into a designated account.

  • Bank Rate

    The interest rate that a bank charges for loans.

  • Base Rate

    The interest rate set by the Bank of England for lending to other banks.

  • Bear(bearish)

    A person who expects prices to decline/a currency to depreciate.

  • Bid

    The price at which a person is willing to buy currency at.

  • Bid offer spread

    The difference between the buy (bid) and sell (offer) price of a currency.

  • Bull (Bullish)

    A person who expects prices will rise /a currency to appreciate.

  • Buying Selling FX

    Buying and selling in the foreign exchange market always happens in the currency which is quoted first. "Buy Dollar/Yen" means buy the dollar/sell the Yen. Traders buy when they expect a currency’s value to rise and sell when they expect a currency to fall.

  • C
  • Cable

    The term used for the Great British Pound/ US Dollar currency pair.

  • Central Bank

    A national bank that provides financial and banking services for its country’s government and commericial banking system, as well as implementing the governments monetary policy and issuing currency.


    Clearing House Automated Payment System. A faster way of making payments, which, assuming they are transferred in time will be received by the beneficiary the same business day.


    Clearing House Interbank Payment System. A computerised system used for foreign exchange Dollar settlements.

  • Consumer Price Index (CPI)

    A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care.

  • Contrast

    A commitment to buy or sell a specified amount of foreign currency on a fixed date in the future.

  • Cross Rate

    The exchange rate between two currencies. E.g. Euro/Yen.

  • Currency

    The State Tender of a Country.

  • Currency Pair

    The two currencies that make up a foreign exchange rate. E.g. USD/EUR.

  • Currency Risk

    The possible risk that arises when the exchange rates change.

  • D
  • Day Trader

    A US term. A stock trader who holds positions for a very short time.

  • Deal Ticket

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

  • Depreciation

    The decline in a value of a currency due to market forces.

  • Devaluation

    The formal reduction in the value of a currency against other currencies.

  • Dividend

    A portion of a company’s profit paid to common and preferred shareholders.

  • E
  • Emerging Markets

    A financial market of a developing country.

  • European Central Bank (ECB)

    The bank created to look after the financial affairs of the countries that have joined the Euro.

  • Electronic Funds Transfer (EFT)

    Also known as a wire, or telegraphic transfer (t/t), this is the process of moving money from bank to bank electronically.

  • Euro

    The Currency used in most of Europe.

  • European Monetary System

    A 1979 arrangement between several European countries which links their currencies in an attempt to stabilize the exchange rates

  • Exchange Rate

    The rate at which one currency can be exchanged for another.

  • Exchange Rate risk

    The potential risk that could be incurred from an adverse movement in exchange rates.

  • Exposure

    Money at risk due to foreign exchange movements.

  • F
  • Flat/Square

    Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (flat) position.

  • Fixed exchange rates

    An exchange rate between currencies that is set by the governments involved rather than allowed to fluctuate freely with market movements.

  • Floating Exchange Rates

    The value of a currency as decided by supply and demand.

  • Foreign Exchange

    The simultaneous buying of one currency and selling of another.

  • Foreign Exchange Market

    The international market in which one national currency can be exchanged for another

  • Forex

    Industrial term. Same a Foreign Exchange.

  • Fundamental Analysis

    The assessment of the value of a share on a company’s actual earnings, assets and dividends.

  • FX

    Foreign Exchange.

  • G
  • Greenback

    Market slang term for US paper currency (US Dollar).

  • Gross Domestic Product (GDP)

    Total value of a country’s output, income or expenditure produced within the country’s physical borders.

  • Gross National Product (GNP)

    Gross domestic product plus 'factor income from abroad' - income earned from investment or work abroad.

  • H
  • Hard Currency

    Stable, convertible currency that is not likely to depreciate suddenly or ro fluctuate greatly in value.

  • Hedging

    Use of investments to manager commercial risk, or to minimise a potential loss to an existing position or known commitment.

  • I
  • International Bank Account Number (IBAN)

    A standardised format adopted by European Union member nations to facilitate cross-border money transfers within the European Union.

  • Interbank Rates

    The foreign exchange rates at which international banks trade currencies and or lend money with eachother.

  • IMF

    International Monetary Fund.

  • Indicative Quote

    A dealer’s price which is not firm for dealing.

  • Inflation

    A general increase in price level in conjunction with a fall in the purchasing value of money.

  • Interest Rates

    The percentage of a sum of money charged for its use.

  • Interest Rate Risk

    The potential for losses from changes in interest rates.

  • J
  • K
  • L

    London Interbank Offered Rate.

  • Limit Orders

    If you only wish to exchange your funds at a specified rate, your account manager can monitor the market and buy the currency at the level agreed.

  • Liquid Market

    A market with many bid and asks offers. The market is characterised by high liquidity, low spreads, and low volatility.

  • Long

    A market position to purchase a currency that was not previously owned (e.g. long Dollars).

  • M
  • Margin

    Margin is a cash deposit provided by clients as collateral to secure a trade and cover any losses (if any) that may result from movements in exchange rates.

  • Margin Call

    A brokers demand that a client deposits enough money or securities to bring a margin account to the originally agreed margin percentage of a contract that has been affected by adverse movements in the exchange rate.

  • Maturity

    Date for settlement.

  • Maturity Date

    The date on which the foreign exchange is to be delivered or received, under a contracted agreement.

  • Market Maker

    A dealer or firm authorised to create and maintain a market in foreign exchange by supplying prices and being prepared to buy or sell at those bid and ask prices.

  • Monetary Policy

    A central banks management of a country’s money supply.

  • N
  • Non-farm Payrolls

    The official US monthly report compiled by the Bureau of Labour Statistics on employment market trends. These are closely followed by the markets.

  • O
  • Offer

    The rate at which a dealer is willing to sell currency at.

  • Option

    The right, but not the obligation to buy or sell something at some time in the future at a given price.

  • P
  • Pip

    The minimum fluctuation or smallest price change that a given exchange rate can make.

  • Producer Price Index (PPI)

    A family of indexes that measures the average changes on prices received by domestic producers for their output at all stages of processing.

  • Q
  • Quote

    An indicative price.

  • R
  • Rally

    A recovery in an exchange rate price after a period of decline.

  • Range

    The difference between the highest and lowest price of a currency recorded during a given trading period.

  • Rate

    The price of one currency in terms of another.

  • Reserve Currency

    A reserve currency, or anchor currency which is held in significant quantities by a central bank as a store of international liquidity. These are normally US Dollar, Euro and Pounds Sterling.

  • Risk

    The degree of uncertainty associated with an investment.

  • Risk Management

    Thorough financial analysis of the market and client’s position and use of appropriate.

  • Rollover

    Where a deal settlement is rolled over to another value date based on the interest rate differential of the two currencies.

  • S
  • Same Day Transaction

    A transaction that matures on the day that it takes place (Value today).

  • Selling Rate

    Rate at which the bank is willing to sell currency.

  • Settlement

    The actual physical exchange or one currency for another to complete a transaction.

  • Settlement Date

    The business day specified by which an FX contract between two parties must be settled between the buyer and the seller.

  • Short

    A market position where the client has sold a currency they do not already own.

  • Spread

    The difference between the bid and ask price of a currency.

  • Soft Market

    A market which has more potential sellers than buyers. This is often referred to as a buyer’s market, as the purchasers hold much of the power in negotiation.

  • Swap

    The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another.

  • T
  • Technical Analysis

    Analysis based on market movement chart study, past prices and volume trends to forecast future market activity such as price and trend developments.

  • Thin Market

    The old terminology for what is now called an electronic funds transfer (EFT) or wire.

  • Telegraphic Transfer (T/T)

    A market where the volume of trading is low, resulting in more volatile prices. The low number of bids and asks will also typically result in larger spread between the two quotes.

  • Transaction (deal or trade)

    The buying or selling of currencies after accepting a price from a dealer.

  • U
  • V
  • Volatility

    A measure of the amount by which the exchange rate is expected to fluctuate over a given period.

  • W
  • The buying or selling of currencies after accepting a price from a dealer.

  • A measure of the amount by which the exchange rate is expected to fluctuate over a given period.

  • The graph showing changes in interest rate yield depending on time to maturity.

  • X
  • Y
  • Yield Curve

    The graph showing changes in interest rate yield depending on time to maturity.

  • Z



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    The Currency Broker Limited makes available foreign exchange services through its business relationship with Mercury Foreign Exchange Limited where Mercury Foreign Exchange Limited facilitates the direct provision of foreign exchange services.

    Mercury Foreign Exchange Limited is registered with HM Revenue and Customs under Registration Number 12500717. Mercury Foreign Exchange Limited is registered with the Financial Conduct Authority (FCA) under the Payment Services Regulations 2009 under register reference No. 531127 for the provision of payment services.

    Please note that with the exception of forward and rolling spot transactions, foreign exchange is not regulated by the Financial Conduct Authority and therefore clients are not covered under the Financial Conduct Compensation Scheme or the Financial Ombudsman Service.

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