Glossary
“Conversion arbitrage operations” - transactions between the company and its counter-agent for buying or selling foreign currency of one type for foreign currency of another type due to the exchange course on the date when the transaction was performed.
“Arbitrage” – performing operations in order to gain profit due to changes of currency courses on international currency markets. This operation is a transaction that consists of two actions, selling and buying, of different kinds of currencies on the same sum.
“Current market course” – current course of performing transactions for this currency pair on interbank market.
“Bid/Ask prices” – there are two types of prices on Forex market . These are 1) the price of buying (ask) and 2) the price of selling (bid).
“Spread” – difference between Ask and Bid prices. The information flow that the client receives through the trade terminal includes both of these prices. Current spread for currency pair represents liquidity level of traded instrument.
“Base currency and quoted currency” – each currency item on Forex market includes two currencies. First currency in indication is named “base currency”, second is “quoted currency”. It is essential to understand that all the transactions are performed in base currency. Because of this, profit or loss and cost of the point are received in quoted currency. To get these figures to the balance currency the company automatically re-counts it due to the current market course. There is no commission for this type of converting.
“Point or pips” – the majority of quotations for currency pairs are written up to four figures after hitch. That is why the minimum value of the price is 0,0001 of the quoted currency, and it is called “point” or “pip”. For currency pairs with Japanese yen the value of the point is 0,01.
“Balance” – is a total finance result of all completed transactions and operations of paying in/removal of money from the trade account.
“Trade terminal” – is a program product called NetTradeX. Over this terminal, clients can receive information about trading processes on financial markets (within the capacity set by the company) on-line, perform technical analysis of the markets, perform trade operations, to put forward, modify or delete orders, and receive messages from the company. This trade terminal is available with free access on the company’s website.
“Contract’s specification” – main trade conditions (spread, minimum/maximum value of transaction, step of changing value for transaction, starting margin, margin for locked positions etc.) for each tool.
“Currency pair” – an object of trade operation at the heart of which is the price changing of one currency to another.
“Equity” – account's balance adjusted according to open positions' current result.
“Floating profit/loss” – unfixed profits/losses on the opened positions due to the current value of the currency courses.
“Marginal trading” – performing of arbitrage operations for the sum of several times greater than the value of the client’s own money (free margin). In this case, possible loss over this arbitrage due to this must be covered by the current sum of the client’s free margin.
“Necessary margin” – demanded by the Company, this is the sum of money that needs to support opened positions. For each tool this sum will be determined by credit holder and the value of the opening position.
“Free margin” – total balance of client’s trade account over the currencies in dollars, in case of reevaluation of opened positions by the current courses in online, money from this account can be used to open a new position. Free margin is calculated by the formula: Free margin = equity - margin.
“Hedged margin” – this is demanded by the company as a security for opening and supporting locked position.
“Direction” – client’s order to the company for opening or closing of the position, placement, removing or changing of the order’s level.
“Indicated quotation” – quotation which shows that the company will not accept client’s orders.
“Instrument” – traded currency pair or contract.
“Open position” – sum of bought (or sold) currency bought for another currency which is not covered by selling (or buying) of the same currency. As a result of opening position the client is able to:
- perform a reverse transaction of the same value;
- support Equity no lower then 10% of Necessary margin.
“Locked positions” – long and short positions, simultaneously opened on the same tool and on the same trade account.
“Long position” – buying of the tool hoping that its course will rise. Applied to currency pairs: buying of base currency for quoted currency.
“Short position” – selling of the tool hoping that its course will fall. Applied to currency pairs: selling of base currency for quoted currency.
“Value of the transaction” – it is the sum of transaction in base currency.
“Order” – any command of the client for performing trade operations.
“Orders level” – price, shown in the order.
“Quotation” – information about the current course of the tool shown in Bid and Ask view.
“Course” – cost of the unit of base currency shown in quoted currency.
“Request” – client’s instruction to the company to get a quotation. Request is not the same as a client’s obligation to perform this operation.
“Nonmarket quotation” – quotation that meets the conditions of:
- existing of large price difference.
- the return of the price to the starting point that leads to the price gap.
- absence of rapid price change after the release of this quotation.
- absence of any macroeconomic events or any corporate news that can seriously affect the real course of the tool, during the time when this quotation appeared.
“SWAP” – operation consists of two opposite conversion transactions for the same sum of traded currency with different dates of value date and different changing courses. Result is presented as a balance operation ‘SWAP’ on trade account.
“Value date” – date of accounting and transactions over performed operations. For operations performed with a currency within the system and for all the accounts performed with the spot date, the value date will be the second work day after the transaction was performed, excluding weekends and holidays.
“Volatility” – is the index that shows tend of market price or income to change during the time.
“Full finished transaction” – consists of two opposite trade operations with the same value (opening position and closing position): of buying and following selling or selling and following buying.
“Web-site” – company’s web-site located in the Internet can be found at this address http://www.ifcmarkets.com.
“Written notification” – hard or electronic copy of any document (including faxes, e-mails, internal client’s terminal mail etc.)
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