| Deal - Execution of a trade in the Forex Markets. |
= |
Trade - Execution of a trade in the Forex Markets. |
| Leverage - The percentage of the contract value necessary to initiate a new position. |
= |
Margin or Performance Bond - Unlike Leverage performance Bonds will change from time to time depending on volaitility. |
| Pip - The smallest increment in which a can move. Value in non US based currency takrn by determining recprocal value of offsetting Deal. |
= |
Tick - Also the smallest increment a market can move but value is a constant and is determined by the Exchange for various contracts. |
| Pip Spread - Usually a fixed difference between the Bid & Offer spread offered by broker. |
= |
Pip Spread* - Does not apply because markets are determined through a competitive open auction by the various market participants. |
| Clearing House* - Nothing like this exists in the Forex OTC Markets. |
= |
Clearing House - The guarantor that insures that both parties of a given transaction "make good" on their trades and literally transfers equity to match closing prices from firm to firm. |
| CFTC - Commodity Futures Trading Commission - While Forex firms are required to register, currently the CFTC provides no oversight of market integrity. |
= |
CFTC - Commodity Futures Trading Commission, Insures the Financial integrity of the Clearing Firms and provides market oversight. |
| Notional Value - The total value of contract controlled by leverage. |
= |
Notional Value - The total value of contract controlled by margin or performance bond. |
| Rollover - The settlement of a deal is rolled forward to another value date with the cost of this process based on the interest rate differential of the two currencies. |
= |
Rollover - The CME has only 4 rollovers - once each quarter - March, June, Sept. and Dec. The bottom line is that every time an OTC position is rolled: 1. The trader will pay a spread to the executing OTC dealer 2. The interest costs of multiple short-term financings versus one three-month commitment are usually higher. |
| Orders - Stp, Stp Lmt, OCO, GTC, Etc. Orders are identical in term and placement. The only difference is that in Forex a stop can be filled outside of the days range. |
= |
Orders - Stp, Stp Lmt, OCO, GTC, Etc. Orders are identical in term and placement. The only difference is that in the Futures a stop CAN NOT be filled outside of a single days range on an individual market. |
| DOM* - Is not available in Forex. |
= |
DOM - Depth of Market provided by the CME. Shows the 5 most competitive Bids & Offers - along with total size. |
| Time & Sales* - Time & Sales data does not exist in cash FX. Transparency is not available in the cash FX markets. |
= |
Time & Sales - Time & Sales is a record of price data for each time interval of all CME futures and options on futures contracts; thus providing a complete price history for the trading day. It is evidence of a transparent marketplace and also insures that uptick and downtick rules are honored. |
| Uptick & Downtick Rules* - Do not apply to Forex - You will be filled at the brokers discretion. |
= |
Uptick & Downtick Rules - The CME has honored a long standing policy that ALL buy orders must be filled before any downticks or offers can occur. The opposite applies to sell orders. |
| Volume* - Does not exist in cash FX. Volume is assumed and cannot accurately be tracked because all transactions are not centralized. Transparency is not available in the cash FX markets. |
= |
Volume - Available trading volume is updated in real-time through the DOM - “Depth-of-Market”. You not only see the number of contracts of the last transaction, you see what’s behind the markets, both bids and offers. Remember that overall Volume also exists as a technical trading indicator and is evidence of a transparent marketplace. |
| Open Interest* - Open Interest data does not exist in cash FX. Transparency is not available in the cash FX markets. |
= |
Open Interest - Open Interest shows the number of open contracts of a given option or futures contract and is evidence of a transparent marketplace. It can also be used as a trading indicator. |
| Time & Sales* - Is not available in Forex. |
= |
Time & Sales - Gives a trader the ability to see the exact time and the number of contracts that were traded at a given price to insure that uptick and downtick rules are honored. |
| Commitment of Traders* - Commitment of Traders data does not exist in cash FX. Transparency is not available in the cash FX markets. |
= |
Commitment of Traders - Commitment of Traders (COT) reports can sometimes give traders a good idea of future significant moves in the market. The CFTC requires large speculators and commercial traders, or hedgers, to report their net positions twice each month. COT Reports are evidence of a transparent and regulated marketplace and can also be used as a trading indicator. |
