The currency markets can be complicated and intimidating when you are new to them. With the exchange rates changing by the second, and the technical language that the brokers use we have put together a handy guide on the technical language used in the foreign exchange industry.
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Often used when sending payments to America, and is sometimes referred to as a Fed wire. It is a digital code used by the American Bankers Association to define a bank.
Bankers Automated Clearing Service – a process of making Sterling payments between UK bank accounts. Usually free but take three days to credit the beneficiary account. The scheme is operated and managed by Bacs Payment Schemes Limited.
Currency which other currencies are quoted against. e.g. if Sterling was quoted against the Euro, then Sterling would be the base currency.
Basis Point (BP)
A common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01% and is used to indicate percentage change in a financial instrument.
Known fully as Bank Identifier Code. This is used with an IBAN number when sending payments to the Eurozone. Also known as a Swift Code.
The price a market maker is willing to pay to buy a currency.
Clearing House Automated Payment System – fast way of making sterling payments between UK bank accounts. Usually same day payments. Banks usually charge £20 – £45 for these. At Foremost Currency Group we charge £10 for payments under £50,000 and payments over £50,000 are free.
We have a dedicated in-house team who ensure that every trade at Foremost Currency Group complies with FCA regulations.
Calculates how much your funds are worth with direct access to accurate, up-to-the-minute exchange rates. At Foremost Currency Group we have a quick on-line tool using live mid-market rates to view 20 currencies.
Foremost Currency Groups provides daily in-depth commentary on a range of currency markets.
Authorised by the FCA (Financial Conduct Authority) as an electronic money institution. To be an e-money issuer Foremost Currency Group complies with the rules on how we conduct our business, treat our customers and we ensure that we protect customer funds at all stages throughout the conversion (transaction) process.
Amount of money which is at risk due to foreign exchange market movement. We can help clients reduce their exposure through a wide range of contract types, such as Forward Contracts.
Foreign Exchange, Forex or FX
Exchange of foreign currency on the foreign exchange market using spot contracts or forward contracts.
Contract that lets you set the price you will pay on a transaction up to 2 years in the future.
This helps you protect your money against market movements and manage your currency exposure.
Perfect for businesses who are trying to manage their budgets or for those who are buying or selling a property overseas.
Secure this contract by paying a margin of 10% of the total value of your transaction, within two working days. Then settle the balance before the contract expires. Once secured, the exchange rate agreed will apply for the duration of your contract.
Protecting against future fluctuations in the currency market (see Forward Contract).
International Bank Account Number – an international code for identifying bank accounts globally. It is made up of the country code, account number and banking information relevant to the beneficiary’s account.
Foreign exchange rates which large international banks trade currency at between themselves in very large amounts. This is the most commonly used indicative rate.
Specify the exchange rate you hope to achieve and your currency will automatically be purchased if your rate of exchange becomes available as a trading level.
Deposit made by a client to lock in a Forward Contract rate.
Monetary Policy Committee
The nine member committee of the Bank of England, who set the UK interest rates in order to maintain inflation at target levels. They meet eight times per year.
You can place a ‘stop loss’ or ‘limit’ order, so that we automatically trade on your behalf once a particular rate is achieved.
Pip or Point
Acronym for percentage in point. Represents 0.0001% move in an exchange rate, e.g. if a currency moves from 1.1000 to 1.1001, it has moved 1 pip.
Quantitative Easing – monetary policy used by central banks to stimulate economic growth. Implemented by purchasing financial assets from banks and businesses in the private sector.
Final stage of a transaction. The date by which payment on a contract is due.
Six digit number that identifies your bank and branch in the UK where your account is held.
Quickest and easiest contract type. Send your funds within two working days to receive your currency.
Stop Loss Order
This tells your broker to buy your currency if the exchange rate drops to a pre-determined rate. It is designed to restrict you from losses.
Combine this with a limit order and you can hold out for a better rate whilst protecting yourself from a sudden fall in the market – perfect for budgeting.
Society of Worldwide Interbank Financial Telecommunications. This is the standard format for BIC and is unique to each bank. Swift codes are used when transferring money between banks, particularly for international transfers, as it allows the banks to talk to each other.
Analysis based on market activity through chart study, volume, trends, moving averages, patterns, formations and other technical indicators.
Direction of the market movement. Often split into three categories: major, intermediate and short term trends and three directions: uptrend, downtrend and sideways trend.
The date that the contract is due, and the date the onward transfer will take place.
Measure of price fluctuations.