Clearing
- The process of settling a trade. Contagion - The tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high volatility in their domestic currency, the Rupiah. From there, the contagion spread to other Asian emerging currencies, and then to Latin America, and is now referred to as the ‘Asian Contagion’. Collateral - Something given to secure a loan or as a guarantee of performance. Commission – A transaction fee charged by a broker.
Contagion -
The tendency of an economic crisis to spread from one market to another. In 1997, financial instability in Thailand caused high volatility in its domestic currency, the Baht, which triggered a contagion into other East Asian emerging currencies, and then to Latin America. It is now referred to as the Asian Contagion Confirmation - A document exchanged by counterparts to a transaction that states the terms of said transaction. Contract - The standard unit of trading.
Contract (Unit or Lot) -
The standard unit of trading on certain exchanges. Counterparty - One of the participants in a financial transaction. Country Risk – Risk associated with a cross-border transaction, including but not limited to legal and political conditions such as war etc. Cross Rates - The exchange rate between two currencies expressed as the ratio of two foreign exchange rates that are both expressed in terms of a third currency. Foreign exchange rate between two currencies other than the U.S. dollar, the currency in which most exchanges are usually quoted.
Currency
- Any form of money issued by a government or central bank and used as legal tender and a basis for trade. Currency Risk - the probability of an adverse change in exchange rates.
D
Day Trading
- Refers to positions which are opened and closed on the same trading day. Dealer - An individual who acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. Deficit - A negative balance of trade or payments. Delivery - An FX trade where both sides make and take actual delivery of the currencies traded