FX Alphabet
Unsure of an FX-related term or just want to brush up your knowledge? Check out our handy glossary that covers all the FX words and phrases you need to know.
A
Appreciation
An increase in the value of a currency relative to another currency.
Arbitrage trading
Trading that exploits price differences of identical or similar financial instruments on different markets.
Ask price
The price at which a seller is willing to sell a currency.
At-the-money
When the strike price of an option is the same as the current market price of the underlying asset.
B
Base currency
The first currency quoted in a currency pair.
Basis point
A unit of measure equal to 1/100th of 1% (0.0001).
Bear market
A market characterized by declining prices.
Bid price
The price at which a buyer is willing to buy a currency.
C
Cable
Market term for the GBP/USD exchange rate.
Call option
An option contract giving the owner the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.
Carry trade
A strategy in which an investor borrows money in a currency with a low-interest rate and invests in a currency with a higher interest rate, profiting from the interest rate differential.
Central bank
A national bank that provides financial and banking services for a country's government and commercial banking system.