Account - A record of transactions of goods and services owed to one person by another.
Accreting Swap (see also Interest Rate Swap) - An exchange of interest rate payments at regular intervals based upon pre-set indices and notional amounts in which the notional amounts decrease over time.
Actuals (see also Cash; Physicals; Underlying) - Financial instruments that exist in one of the four main asset classes: interest rates, foreign exchange, equities or commodities. Typically, derivatives are used to hedge actual exposure or to take positions in actual markets.
ADX (Average Directional Index) - Unlike most oscillators, ADX does not attempt to gauge the direction of the trend; instead, it works to gauge the strength of the trend. ADX operates on a scale of 0 to 100; the higher the oscillator, the stronger the trend.
Agent - An intermediary or person hired to carry out transactions on behalf of another person.
Aggregate - RiskTotal amount of exposure a bank has with a customer for both spot and forward contracts.
Aggregate Demand - Total demand in an economy, consisting of government spending, private/consumer and business investment.
All or None - Refers to requests for a broker to fill an order completely at a predetermined price or not at all. Refers to both buy and sell orders.
American-style options - Options that permit exercise at any time on or before the expiration date.
Anonymous trading - Visible bids and offers on the market without the identity of the bidder and seller being revealed. Anonymous trades allow the high profile investors to execute transactions without the scrutiny and speculation of the market.
Appreciation - An increase in the value of a currency in response to market demand.
Arbitrage - When a price differential arises, creating an opportunity to profit through buying and selling. Arbitrage is a "riskless" opportunity to profit, as there is no uncertainty involved. In regards to the foreign exchange market, arbitrage arises when a profit can be made through differentials in exchange rates. Arbitrage opportunities in the foreign exchange market are rare.
Around - Used in quoting forward "premium / discount".
Ascending Triangles - A bullish continuation pattern that is shaped like a right triangle consisting of two or more equal highs forming a horizontal line at the top.
Asian Option - An option whose payoff depends on the average price of the underlying asset over a certain period of time. These types of option contracts are attractive because they tend to cost less than regular American options.
Ask - Also called "offer." Indicates a willingness to sell a futures contract at a given price. See Bid.
Ask Rate - The lowest price that shares will be offered for sale, such as the bid/ask spread in the foreign exchange market.
Ask Size - The number of shares a seller is willing to sell at his/her ask rate.
Asset Allocation - The diversification of one's assets into different sectors, such as real estate, stocks, bonds, and forex, to optimize growth potential and minimize risk.
Asset-Liability Management - Closing out exposure to fluctuations in interest rates by matching the timing of cashflows associated with assets and liabilities. This is a technique commonly used by financial institutions and large corporations.
Asset Swap - An interest rate swap used to alter the cash flow characteristics of an institution's assets in order to provide a better match with its liabilities.
Assignment - Notice to the seller of an option that has been exercised by the buyer.
Associated person (AP) - A person, commonly called a commodity broker, associated with and solici ting customers and orders for a futures commission merchant or introducing broker. The AP must pass a Series 3 examination, be licensed by the CFTC and be a member of the NFA.
At Best - An instruction given to a dealer to buy or sell at the best rate that is currently available in the market.
At or Better - An order to deal at a specific rate or better.
At-the-Market (see also Market Order) - A type of financial transaction in which the order to buy or sell is executed at the current prevailing market price.
At-the-money - An option with a strike price equal to the underlying futures price.
At-the-Money Spot - An option whose strike price is equal to the current, prevailing price in the underlying cash spot market.
At-the-Money Forward - An option whose strike price is equal to the current, prevailing price in the underlying forward market.
At Par Forward Spread - When the forward price is equivalent to the spot price.
At the Price Stop-Loss Order - A stop-loss order that must be executed at the requested level regardless of market conditions.
Attorney in Fact - A person given the right or authority to act on behalf of another to carryout business transactions and implement documents.
Auction - Sale of an item to the highest bidder. (1) A method commonly used in exchange control regimes for the allocation of foreign exchange. (2) A method for allocating government paper, such as US Treasury Bills. Small investors are given preferential access to the bills. The average issuing price is then computed on the basis of the competitive bids accepted. In some circumstances for government auctions it is the yield rather than the price which is bid.
Authorized Dealer - A financial institution or bank authorized to deal in foreign exchange.
Automatic Exercise - A procedure implemented to protect an option holder where the Option Clearing Corporation will automatically exercise an "in the money" option for the holder.
Average Rate Option - A contract where the exercise price is based on the difference between the strike price and the average spot rate over the contract period. Sometimes called an "Asian option".
Away From the Market - When the bid on an order is lower (or the ask price is higher) than the current market price for the security.