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Related Flashcards
Related Topics
Cards In This Set
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BASIC
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Background Affiliation Status Information Center
*CFTC registration
*NFA membership information
*Futures-related regulatory actions by the NFA, CFTC, and the U.S. Futures Exchanges
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American Terms
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An options contract that can be "excercised" at any time before the contract expires
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European Terms
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The forex option contract can be excercised only on or near the expiration date
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Base Currency
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The first currency in a currency pair.
The one you're buying or selling.
It is also the "notional" amount (ie total value) of the trade.
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Quote Currency (Terms Currency)
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Price quote shows how many units of the terms currency will equal 1 unit of the base currency
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Bid/Ask Spread
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The difference between the current bid and the current asked prices
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Variable Spread
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Fluctuates and relates to the interest of trades in the currency, widening during periods of higher risk and narrowing during periods of lower risk.
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Fixed Spread
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Remains constant for a certain time period and, because of the risk, the fixed spread tends to be wider than a variable spread
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Collateral
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Assets (cash, securities, or other qualifying items) that a client posts (deposits) as a guarantee of performance (on the contract being entered into)
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Security Deposit
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Margin
A percentage amount of the forex transaction value that dealers require to be deposited in an account for each transaction.
Acts as a performance bond not a down payment for the transaction.
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Margin
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The amount of money (or acceptable collateral) needed to open or maintain a position on a foreign exchange transaction.
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Counterparty
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A party in a contract which is the entity (person or business) with whom the trader forms the agreement.
It is the entity on the other side of the contract.
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Dealer
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An individual or business entity that acts as a principal and stands ready to buy and sell for its own account; it's acting as a counter party to a trade. the dealer makes money from the difference in the bid/ask spread.
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FCM
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An entity solicits or accepts orders to buy or sell futures contracts or options on futures and accepts moeny or other assets from customers to support the orders.
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RFED
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Retail Foreign Exchange Dealer
Registration category with the NFA of a firm that acts only as a counterparty to a retail off-exchange foreign exchange contract.
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