Mar 29, 2011

Brief Introduction of Forex Terms for Business Students

Business students should try to take interest in forex news and trade development as well for getting better understanding about the current market and business functions. There are general Forex terms define as under:

Broker: It is Common name used to define, generally, that act as the middle-man in the financial markets. There are two types of brokers, market makers (dealing desk) or ECNs (non-dealing desk).

ECN: Stands for Electronic Currency Network. It directs the client straight through the interbank market, usually resulting in tighter spreads. Most ECN's have a fixed commission per roun/turn lot.

Lot: Pack in which trading units/merchandise being sent to the market. There are 3
types of lots: mini and regular. A micro lot consists of 1,000 units of the base currency. A mini lot consists of 10,000 units of the base currency. A regular lot consists of 100,000 units of the base currency.

Pip: The smallest price change that a given exchange rate can make.

Leverage: The use of various financial instruments such as the scope for increasing the earning capacity of an investment.

Margin: The amount of capital provided by the customer as a percentage of the current market value of securities in a margin account instead ...

Market Maker: Middle-man between the user and retail interbank market. Interbank liquidity provider charges the market maker a small commission for access to tradeable volumes. The market maker to offer charging for their customers access to tradable prices in the foreign exchange market.

Spread: The difference between the bid and the ask price of a security or asset.

STP: Straight Through Processing. This is a complete rationalization and automation of an entire transaction. or if a change request is made, there has been no manual intervention from the back and forth phone calls and faxes to confirm the approval, and it is. No manual intervention is also, of course, leaves no room for human error. This contract allows e-merchants trying to play with an agent bank occurs without interaction with a "middle man", whose job it is, the market exchange of money between customers make the room.

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