Forex Glossary (A)

Commonly used forex terms and their definitions.

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Accrual - The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitrage) deals, over the period of each deal.

Adjustment - Is normally an official action to either change the internal economic policies to correct a payment imbalance or the official currency rate.

Agent Bank - Usually bank acting for a foreign bank.

Aggregate Demand - Total demand for goods and services in the economy. It includes private and public sector demand for goods and services within the country and the demand of consumers and firms in other countries for good and services.

Aggregate Risk - Size of exposure of a bank to a single customer for both spot and forward contracts.

Aggregate Supply - Total supply of goods and services in the economy from domestic sources (including imports) available to meet aggregate demand.

American-Style Option - An option contract that may be exercised at any time before it expires.

Appreciation - The strengthening of a currency relative to another.

Arbitrage - The purchase or sale of an instrument and the simultaneous taking of an equal and opposite position in a related market, in order to take advantage of a price differential of the instrument between markets.

Aroon - A technical indicator system that can be used to determine whether or not an instrument is trending and the strength of its trend. The Aroon Oscillator signals an upward trend when it rises above zero and a downward trend when it falls below zero. The farther away the oscillator is from the zero line, the stronger the trend.

Aroon Oscillator - A technical indicator called the roon Oscillator can be constructed by subtracting Aroon (down) from Aroon (up). Since Aroon (up) and Aroon (down) oscillate between 0 and +100, the Aroon Oscillator oscillate between -100 and +100 with zero as the center crossover line.

Ascending Trend Channel - An ascending line that connects the bottoms of the down waves and is parallel to a trend-line. The ascending channel line and the trend-line form borders on an uptrend. This is a bullish pattern.

Ascending Triangle - A sideways price pattern between two converging trend-lines in which the lower line is rising while the upper line is flat. This is generally a bullish pattern.

Ask - The quoted price at which a customer can buy a currency pair. Also referred to as the 'offer,' 'ask price,' or 'ask rate.'

Asset - Either a positive balance or in the context of foreign exchange the right to receive a specific currency from a counterparty (broker) as brought about from an outstanding forward or spot deal.

Asset Allocation - Dividing funds amongst different instruments in order to reduce risk.

At Best - An instruction given to a dealer to buy or sell at the best rate that can be obtained.

At or Better - An order to deal at a specific rate or better.

Aussie - Slang for the Australian Dollar.

Authorized Dealer - A financial institution that is authorized to deal in foreign exchange.

Average Directional Index (ADX) - A technical indicator and part of the Directional Movement Indicator system developed by J. Welles Wilder, the ADX line is based on the spread between the +DI and -DI lines from that same system.

Average True Range (ATR - A technical indicator that measures an instrument's volatility. High ATR values indicate high volatility and may be an indication of panic selling or panic buying. Low ATR readings indicate sideways movement by the instrument.


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