Forex, Metals & Crypto Glossary | The Currency Stack

The Currency Stack Glossary defines 200+ essential terms across foreign exchange, precious metals, and cryptocurrency — from pip, spot settlement, and swap points to contango, loco London, and stablecoins. Search any term, filter by asset class, or follow the cross-links to related concepts.

Agency Trading General

Execution in which a firm acts on behalf of a client to source liquidity, rather than taking the other side as principal. It contrasts with principal trading, where the firm itself is the counterparty.

Aggregation General

Combining price streams from several liquidity providers into a single consolidated view of the best available bid and ask. Aggregation lets a client compare quotes and split or sweep orders across providers.

Algorithmic Trading General

The use of computer programs to generate, route, and execute orders automatically according to predefined rules. In FX it spans execution algorithms that minimize market impact and strategies that supply or take liquidity.

All-In Price General

A single quoted price that already incorporates the dealer’s spread and any sales and trading mark-up, rather than showing the components separately. Most principal dealer quotes are provided on an all-in basis.

Allocated Account Metals

A precious-metals account holding specific, identified bars segregated for the client, who has full legal title to them. The metal is held in custody and does not form part of the dealer’s assets, so it carries no exposure to the dealer’s solvency.

American Terms FX

A quotation convention expressing the rate as US dollars per one unit of the other currency, as in EUR/USD or GBP/USD. It is the reciprocal of European terms for the same pair.

Arbitrage General

The simultaneous purchase and sale of related instruments to profit from a price discrepancy with little or no net market risk. In FX it includes triangular arbitrage across cross rates and covered interest arbitrage between the deposit and forward markets.

Ask General

The price at which a market maker is willing to sell the base currency, also called the offer, which is the higher of the two prices in a two-way quote. A market user wishing to buy the base currency deals at the ask.

See also: Bid, Spread, Market Maker, Two-Way Price

Backwardation Metals

A market condition in which the forward price of a metal is lower than its spot price, so the forward trades at a discount. In precious metals it can occur when metal becomes scarce and the cost to borrow it exceeds the currency interest rate.

Balance of Payments General

A record of all economic transactions between a country and the rest of the world over a period, including trade and capital flows. Persistent imbalances can exert pressure on a currency’s exchange rate.

Barrier Option General

An exotic option whose existence or payoff depends on the underlying rate reaching a specified barrier level, as in knock-in and knock-out structures. It is the most commonly traded type of exotic FX option.

See also: Exotic Option, FX Option, Strike

Base Currency FX

The first currency named in a currency pair, representing the unit being priced — one unit of the base currency is worth the quoted amount of the second currency. In the rate’s arithmetic it is the denominator.

Basis Point General

One hundredth of one percent, abbreviated bp, used to express interest rates, yields, and small changes in financial quantities precisely. One hundred basis points equal one percentage point.

See also: Day-Count Convention, Spread, Yield

Bearer Asset General

An asset owned by whoever physically holds or controls it, with no register of ownership kept by an institution — cash and gold bars are the classic examples, and cryptoassets are the digital one. Possession is ownership, which makes bearer assets simple to transfer and unforgiving to lose or have stolen.

Benchmark General

A published reference rate or price calculated by an administrator from market data, used to value contracts, settle derivatives, and measure performance. FX, money-market, and metals markets each rely on recognized benchmarks.

See also: Fixing, WM/R Fix, LBMA Fix, LIBOR

Bid General

The price at which a market maker is willing to buy the base currency, which is the lower of the two prices in a two-way quote. A market user wishing to sell the base currency deals at the bid.

See also: Ask, Spread, Market Maker, Two-Way Price

Big Figure FX

The leading digits of a currency price that change slowly and are usually understood without being spoken — the “1.08” in a EUR/USD quote of 1.0805. Dealers quoting quickly often state only the final digits, the pips, because everyone already knows the big figure.

Block Crypto

A batch of validated transactions recorded together on a blockchain and linked to the preceding block. New blocks are added at intervals through the network’s consensus process.

Blockchain Crypto

A distributed ledger in which transactions are grouped into blocks and linked in a chronological, tamper-resistant chain maintained across many computers. It is the underlying record-keeping technology of most cryptocurrencies.

Bretton Woods General

The post-war monetary system established in 1944 that pegged major currencies to the US dollar and the dollar to gold at a fixed price, with narrow bands maintained by central banks. Its collapse in the early 1970s ushered in the era of floating exchange rates.

Broker General

An intermediary that arranges trades between counterparties, either by matching orders or by giving clients access to liquidity providers. Brokers may operate on an agency basis or, as principal, take the other side of client trades.

Broker Warehousing General

A broker’s practice of retaining client trades on its own book rather than passing them to an external liquidity provider, taking the opposite side as principal. Brokers may warehouse flow they expect to be profitable to internalize and hedge the rest.

Bullion Metals

Precious metal in bulk investment-grade form, such as bars and ingots, valued by weight and fineness rather than as fabricated product. Gold, silver, platinum, and palladium are traded as bullion in the wholesale market.

Capital Controls General

Government measures that limit the flow of currency or capital across a country’s borders, such as restrictions on repatriation or on access to the local FX market. They are a common reason that a currency trades offshore or as a non-deliverable forward.

Carry Trade General

A strategy of funding a position in a lower-yielding currency and investing in a higher-yielding one to earn the interest-rate differential. The position generates positive carry when the rate earned exceeds the rate paid, but it carries exchange-rate risk.

Central Bank General

A national or regional monetary authority responsible for issuing currency, setting monetary policy, and overseeing the financial system. Central banks influence exchange rates through interest-rate policy and, at times, direct intervention.

Central Bank Intervention FX

Action by a central bank to influence its currency’s exchange rate, most directly by buying or selling the currency in the market (often through partner banks). With large reserves it can briefly overwhelm other participants, but it is hard to sustain, so it is often a short-term signal rather than a lasting fix.

Central Clearing General

The process by which a central counterparty interposes itself between the two sides of a trade, becoming buyer to every seller and seller to every buyer to manage counterparty risk. Mandatory clearing was extended to many derivatives after the 2008 crisis, though most FX swaps and forwards were exempted.

CFD General

A contract for difference is an agreement to exchange the change in an instrument’s price between opening and closing the position, without owning the underlying. CFDs are leveraged products whose terms vary by provider.

See also: Leverage, Margin, Mark-to-Market

CLS General

Continuous Linked Settlement is a system that settles the two legs of an FX trade simultaneously on a payment-versus-payment basis, eliminating the risk that one currency is paid out without the other being received. It is the principal mitigant of FX settlement risk.

Co-location General

Placing trading systems physically close to an exchange or venue’s matching engine to minimize the time it takes to send and receive data. It is used to reduce latency in high-frequency and arbitrage strategies.

Cold Storage Crypto

Keeping cryptocurrency keys offline, on hardware or media not connected to the internet, to reduce the risk of theft. It is a common practice for securing long-term or large holdings.

Collateral General

Assets pledged to secure an obligation and reduce credit exposure in a trading relationship, such as cash or securities posted against derivatives positions. Its value may be reduced by a haircut to allow for price risk.

COMEX Metals

The New York futures exchange on which gold and silver futures and options are traded, part of the CME Group. It is a principal venue for exchange-traded precious-metals derivatives and price discovery.

Confirmation General

The exchange of records that verifies the agreed terms of a trade between counterparties shortly after execution. Prompt confirmation is a core operational control that limits disputes and settlement errors.

Contango Metals

A market condition in which the forward price of a metal is higher than its spot price, so the forward trades at a premium. In precious metals it typically arises when the currency interest rate exceeds the metal lease rate.

Convertibility FX

The degree to which a currency can be freely exchanged for other currencies without regulatory restriction. Fully convertible currencies trade by delivery, while restricted ones often require non-deliverable structures.

Correspondent Bank General

A bank that holds deposits for, and provides payment and related services to, another bank, often in a market or currency where the second bank has no direct presence. Correspondent banking is a primary channel for moving currencies in cross-border settlement.

Counterparty General

The other party to a financial transaction, whose ability and willingness to perform gives rise to credit and settlement risk. Identifying and managing counterparties is a basic control in the trade lifecycle.

Covered Interest Parity General

The no-arbitrage relationship stating that the forward exchange rate must reflect the interest-rate differential between two currencies, so that hedged returns are equalized across them. It is the basis on which forward and swap points are calculated.

Credit Risk General

The risk that a counterparty fails to meet its obligations, leaving the other party to bear the cost of replacing the trade. It grows with the time to settlement and is managed through limits, collateral, and netting.

Credit Support Annex General

A document, abbreviated CSA, that forms part of an ISDA Master Agreement and sets out the terms for posting collateral between derivatives counterparties. It defines eligible collateral, thresholds, and minimum transfer amounts.

Cross Rate FX

An exchange rate between two currencies that does not involve the US dollar, derived from each currency’s rate against the dollar. Because direct liquidity is thinner, cross rates and their forwards are usually computed via the two dollar legs.

Cross-Currency Basis FX

The persistent gap between the forward price implied by covered interest parity and the price actually quoted in the FX swap market. The basis reflects imbalances in demand to borrow one currency — usually US dollars — through swaps, and it widens sharply in funding stress, as it did in 2008 and March 2020.

Cross-Currency Funding FX

The practice of raising funds in one currency and converting them into another through FX swaps or currency swaps to meet liabilities or invest abroad. Demand for such funding drives the currency basis.

Currency Basis Swap FX

A cross-currency swap in which two parties exchange interest payments and principal in different currencies over the life of the contract. The basis is the spread reflecting supply and demand for cross-currency funding, which can cause deviations from covered interest parity.

Currency Pair FX

Two currencies quoted against each other as a single instrument, expressing how much of the quote currency is needed to buy one unit of the base currency. Pairs are the fundamental tradable unit of the FX market.

Custody Crypto

The safekeeping of assets on behalf of an owner, including the secure management of the private keys that control cryptocurrency holdings. Custody may be self-managed or provided by a third-party custodian.

Day-Count Convention General

The agreed rule for converting a period between two dates into a fraction of a year when calculating interest or forward values, such as actual/360, actual/365, or 30/360. Different currencies and instruments use different bases, and the choice affects the resulting amounts.

Decentralized Exchange Crypto

A trading venue that matches and settles crypto transactions directly between users through smart contracts on a blockchain, without a central operator holding funds. It contrasts with a centralized exchange that takes custody of user assets.

Deliverable Currency FX

A currency that is freely convertible and can be physically exchanged at settlement, allowing standard spot and forward trades. Currencies that are not deliverable, often due to exchange controls, are typically traded as non-deliverable forwards.

Delta General

The Greek measuring how much an option’s value changes for a small change in the underlying rate, often interpreted as a hedge ratio. It ranges from near zero for deep out-of-the-money options to near one for deep in-the-money options.

See also: The Greeks, FX Option, Risk Reversal

Direct Market Access General

An arrangement that lets a client send orders straight to a trading venue’s order book using a broker’s infrastructure, without manual intervention. It supports low-latency and algorithmic execution.

Discount FX

The condition in which a currency’s forward rate is less favorable than its spot rate, so that forward points are subtracted from spot. A base currency trades at a forward discount when its interest rate is higher than that of the quote currency.

Dodd-Frank Act General

A wide-ranging US financial reform law enacted in 2010 that reshaped derivatives regulation, including mandatory clearing, swap execution facilities, and swap-dealer rules. FX swaps and forwards received specific treatment under its framework.

Dynamic Price Replacement General

An execution feature that, when a client permits slippage, resubmits a rejected order to the next-best liquidity provider until one accepts or the slippage tolerance is exceeded. The executed price is thereby replaced step by step within the allowed range.

ECN General

An electronic communication network is a venue that matches buy and sell orders from many participants anonymously, displaying aggregated prices in a central order book. ECNs are a core component of electronic FX market structure.

Emerging Market Currency FX

The currency of a developing or transitioning economy, often characterized by lower liquidity, capital controls, and managed exchange-rate regimes. Many emerging-market currencies trade onshore and offshore and rely on non-deliverable forwards for offshore participants.

European Terms FX

A quotation convention expressing the rate as units of a currency per one US dollar, as in USD/JPY or USD/CHF. It is the reciprocal of American terms for the same pair.

Exchange for Physical Metals

A transaction that swaps a futures position into or out of physical metal held in the over-the-counter market without taking on outright price exposure. It is quoted as the differential between the spot and futures prices.

See also: COMEX, Loco London, Bullion, Contango

Exchange Rate General

The price of one currency expressed in another — how many units of the quote currency one unit of the base currency buys. Exchange rates are quoted as currency pairs, such as EUR/USD, and move constantly with supply and demand.

Exchange Rate Regime General

The framework a country uses to manage its currency’s value, ranging from a free float through managed floats and pegs to fixed rates. The regime shapes how and whether a currency’s value responds to market forces.

Exchange-Traded General

Instruments that trade on a centralized, regulated exchange with standardized contract terms and central clearing, such as currency and metals futures. They contrast with the customized, bilateral nature of over-the-counter trading.

Exotic Option General

An option with non-standard features that alter its payoff or exercise, such as barriers, digital payouts, average-rate settlement, or lookback terms. Barrier options are among the most widely used exotics in FX.

Exotic Pair FX

A currency pair combining a major currency with the currency of a smaller or emerging-market economy, characterized by lower liquidity and wider spreads. Many exotic currencies are restricted and trade as non-deliverable forwards.

Fill or Kill General

An order instruction requiring that the entire order be executed immediately or canceled, abbreviated FOK, with no partial fills. It is one of several time-in-force conditions used in electronic trading.

Fill Ratio General

The volume-weighted percentage of submitted orders that are ultimately executed, a key measure of execution quality on an electronic venue. Rejections under last look are a common reason fills fall short of one hundred percent.

Fineness Metals

The proportion of pure precious metal in a bar or coin, expressed in parts per thousand, such as 995 for Good Delivery gold or 999 for silver. It determines the fine-metal content used in pricing and settlement.

FIX Protocol General

The Financial Information eXchange protocol is a standardized electronic messaging format used to communicate orders, quotes, and trade information between market participants. It underpins much of the connectivity in electronic FX and cross-asset trading.

Fixing General

An official or market reference exchange rate published at a set time, used to settle contracts such as non-deliverable forwards and to value portfolios. Benchmark fixings are calculated from observed trading over a defined window.

See also: WM/R Fix, NDF, Benchmark, LBMA Fix

Forward Points FX

The amount added to or subtracted from the spot rate to arrive at a forward exchange rate, quoted in pips. Forward points reflect the interest rate difference between the two currencies for the period — not a forecast of where the rate is heading. Also called swap points.

Forward Rate (Metals) Metals

The price for delivery of precious metal on a future date, derived from the spot price adjusted for the difference between the currency interest rate and the metal lease rate. A positive forward produces contango and a negative forward produces backwardation.

Forward Rate Agreement General

An over-the-counter contract, abbreviated FRA, that fixes an interest rate for a future period on a notional amount, settled in cash against the prevailing rate. FRAs are used to hedge or take views on future short-term interest rates.

Forward-Forward Swap FX

An FX swap in which both legs settle on future dates beyond spot, used to bridge or adjust between two forward value dates. It is constructed from two spot-starting swaps and priced from the difference between their forward points.

Free Float General

An exchange-rate regime in which a currency’s value is determined by market supply and demand with little or no official intervention. Most major currencies have floated since the early 1970s.

Funding Rate Crypto

A periodic payment exchanged between the long and short holders of a perpetual futures contract that tethers its price to the underlying spot price. A positive rate has longs pay shorts, and a negative rate has shorts pay longs.

FX Futures FX

Standardized, exchange-traded contracts to exchange currencies at a set price on a future date, with central clearing and daily margining. They are the exchange-traded counterpart to over-the-counter forwards.

FX Global Code FX

A voluntary set of global principles of good practice for the wholesale foreign exchange market, maintained by the Global Foreign Exchange Committee. It covers areas such as ethics, governance, execution, information sharing, risk management, and settlement, and is adhered to through public statements of commitment rather than by law.

FX Option FX

A contract giving the holder the right, but not the obligation, to exchange one currency for another at a set strike rate on or before a set date, in return for a premium. A call on one currency is simultaneously a put on the other.

FX Swap FX

A transaction that buys one currency against another for spot value and simultaneously reverses the exchange for a later value date with the same counterparty. Economically it is equivalent to borrowing one currency and lending the other, so its main exposure is to interest-rate differentials rather than spot.

FX Tail FX

The small residual spot-rate exposure that remains on a forward or swap position because future cash flows fall at different times and the spot rate enters the forward calculation. It is hedged by trading the spot equivalent of the net present value of foreign-currency cash flows.

Gas Crypto

The fee paid to process and validate a transaction or smart-contract operation on certain blockchains, compensating the network for computational effort. Gas costs rise and fall with network demand.

Gold Standard General

A monetary system in which currencies were defined by and convertible into fixed weights of gold, effectively fixing exchange rates between participating nations. The classical gold standard prevailed from the 1870s until disrupted by the First World War.

Gold/Silver Ratio Metals

The number of ounces of silver equal in value to one ounce of gold, calculated by dividing the gold price by the silver price. It is a commonly cited measure of the relative pricing of the two metals.

Good Business Day General

A day on which the payment systems of all the relevant financial centers are open, so that a transaction can settle. For a currency pair, the value date must be a good business day in the home centers of both currencies.

Good Delivery Bar Metals

A bar meeting the internationally accepted standard for weight, fineness, and marking set by the relevant market association, making it acceptable for wholesale settlement. A London Good Delivery gold bar typically contains around four hundred fine ounces.

See also: LBMA, Fineness, Troy Ounce, Loco London

Good Till Cancelled General

An order instruction, abbreviated GTC, that remains active until it is executed or explicitly canceled rather than expiring at the end of a session. It is commonly used for resting limit and stop orders.

Haircut General

A percentage reduction applied to the market value of collateral when calculating how much credit it supports, allowing for the risk that its value could fall. Riskier or more volatile assets attract larger haircuts.

Hedging General

Taking an offsetting position to reduce or eliminate the risk of adverse price movements in an existing or anticipated exposure. In FX, forwards, swaps, and options are common hedging tools.

High-Frequency Trading General

A form of algorithmic trading that uses very high speeds and order volumes to capture small, short-lived opportunities, often relying on co-location and fast data feeds. HFT firms are active in electronic FX market making and arbitrage.

Immediate or Cancel General

An order instruction, abbreviated IOC, requiring that any portion that can be filled immediately is executed and the remainder canceled. Unlike fill or kill, it permits partial execution.

Implied Volatility General

The level of expected future price variability embedded in an option’s premium, derived from its market price using a pricing model. It is the key variable distinguishing option pricing from forward pricing.

In the Money General

A description of an option whose immediate exercise would produce a positive payoff, because the strike is favorable relative to the current rate. Options may instead be at the money or out of the money.

See also: Strike, FX Option, Intrinsic Value

Inflation General

A sustained rise in the general level of prices, which erodes the purchasing power of money. Differences in inflation between countries are among the long-run influences on exchange rates.

Interest Rate Differential General

The difference between the interest rates of two currencies, which determines forward and swap points through covered interest parity and underlies the carry trade. A wider differential produces larger forward premiums or discounts.

Interest Rate Swap General

An agreement to exchange one stream of interest payments for another on a notional amount over time, typically swapping a fixed rate for a floating rate. It is a core instrument for managing interest-rate exposure.

Internalisation General

A dealer’s practice of offsetting one client’s buy against another client’s sell within its own book rather than hedging in the open market. High internalisation reduces market impact and can support tighter spreads.

Intervention General

Direct action by a central bank in the FX market to influence the level of its currency, by buying or selling it against other currencies. It is most associated with managed and pegged exchange-rate regimes.

See also: Central Bank, Managed Float, USD Peg

Intrinsic Value General

The portion of an option’s value that would be realized if it were exercised immediately, equal to the favorable difference between the strike and the current rate. The remainder of the premium is time value.

Introducing Broker General

A firm that solicits and refers clients to an executing broker or dealer but does not itself hold client funds or execute trades. It typically earns a share of the spread or a commission on referred volume.

See also: Broker, White Labeling, Markup

ISDA Master Agreement General

A standardized contract published by the International Swaps and Derivatives Association that governs over-the-counter derivatives between two parties. It provides the legal framework for netting, collateral, and default across all trades under it.

Last Look FX

A liquidity provider’s option to take a final check of the market before accepting or rejecting an order at a quoted price, typically within a brief delay. It is used to manage stale-price and latency-arbitrage risk and can increase rejection rates, and its fair use is addressed by industry conduct codes.

Latency Arbitrage General

Profiting from small delays in price dissemination by acting on a stale quote before it updates, typically using fast raw data feeds and co-located systems. It is one reason liquidity providers apply last look to defend against being picked off.

LBMA Metals

The London Bullion Market Association is the body that coordinates the London over-the-counter gold and silver market, sets refining and Good Delivery standards, and oversees market benchmarks. It is the principal point of contact between the bullion market and regulators.

LBMA Fix Metals

A published benchmark price for a precious metal, set at which clients can deal and which is used for industrial contracts and cash-settled derivatives. The historic telephone fixings were replaced from 2014 to 2015 by electronic auctions such as the LBMA Gold Price.

See also: LBMA, Benchmark, Fixing, Bullion

Lease Rate Metals

The interest, expressed in percent per year, earned by lending precious metal or paid to borrow it, conventionally calculated on a 360-day basis. Lease rates interact with currency interest rates to determine metal forward prices.

Legal Tender General

Money that must, by law, be accepted if offered in payment of a debt — the notes and coins issued by a state’s monetary authority. Bank deposits, checks, and cryptoassets are not legal tender: accepting them is a choice, not an obligation. The concept anchors a currency’s baseline acceptability in law rather than custom.

Leverage General

The use of borrowed funds or margin to control a position larger than the capital committed, amplifying both gains and losses. Margined FX and derivatives trading is inherently leveraged.

LIBOR General

The London Interbank Offered Rate was a benchmark interest rate at which major banks indicated they could borrow from one another, used to price many loans and derivatives. Following reform it has been replaced in most markets by alternative reference rates.

See also: Benchmark, Money Market, Yield Curve

Limit Order General

An instruction to trade only at a specified price or better, which may rest in the market until it can be filled. It controls the execution price but does not guarantee a fill.

Liquidity General

How quickly and cheaply an asset can be bought or sold without moving its price. A liquid market has many willing buyers and sellers and tight spreads; in an illiquid one, even modest trades can shift the price. Liquidity varies by instrument, time of day, and market conditions.

Liquidity Provider General

A bank or non-bank firm that streams executable prices into the market, supplying the liquidity that brokers and clients trade against. Providers manage inventory and risk through skewing, internalisation, and tools such as last look.

Liquidity Tier General

A grouping of currencies or instruments by the depth and reliability of their trading, ranging from the deep liquidity of major pairs to the thin, costlier liquidity of exotics. Multi-tier execution models fill orders by sweeping across layers of available liquidity.

Loco London Metals

The convention under which precious metal is held and settled in London, forming the basis for international bullion trading and clearing. A credit balance on a loco London unallocated account represents a holding of metal, analogous to a foreign-currency nostro balance.

LPPM Metals

The London Platinum and Palladium Market is the body that performs for platinum and palladium the role the LBMA performs for gold and silver, maintaining Good Delivery standards. Platinum and palladium settle loco London or, principally, loco Zurich.

See also: LBMA, Good Delivery Bar, Loco London

Major Pair FX

A heavily traded currency pair that includes the US dollar against another highly liquid currency, such as EUR/USD, USD/JPY, or GBP/USD. Majors carry the deepest liquidity and tightest spreads.

Managed Float FX

An exchange-rate regime in which a currency floats but the central bank intervenes to influence its level or smooth its movements, sometimes called a dirty float. Many emerging-market currencies operate under managed floats.

Margin General

Collateral a trader must post to open and maintain a leveraged position, covering potential losses. Initial margin is required to open a position and variation margin is exchanged as its value changes.

Margin Call General

A demand for additional collateral when the value of a position moves against a trader and existing margin falls below the required level. Failure to meet it can lead to the position being closed.

Mark-to-Market General

The practice of revaluing a position at current market prices to determine its present worth and any unrealized profit or loss. Daily mark-to-market drives margin calls and position valuation.

Market Capitalization Crypto

The total value of a cryptocurrency, calculated by multiplying its current price by the number of coins in circulation. It is a common measure for comparing the relative size of digital assets.

See also: Stablecoin, Satoshi, Liquidity Tier

Market Impact General

The effect a trade has on observable market prices, caused by aggressive client execution or by a dealer hedging in lit markets. It is measured by how prices drift in the minutes after a trade and is a hidden cost of large or rapid orders.

Market Maker General

A dealer that continuously quotes both bid and ask prices and stands ready to trade, providing liquidity and earning the spread. Market makers act as principal and take the other side of client trades.

Market Taker General

A participant that trades on prices quoted by market makers rather than providing quotes itself, also called a price taker. Takers consume liquidity, paying the spread to obtain immediate execution.

Markup General

An amount a dealer or broker adds to its underlying market price when quoting to a client, forming part of the all-in price it earns. Mark-ups may be tailored per client and are not always separately disclosed.

See also: Spread, Slippage, All-In Price, Pip Value

Mining Crypto

The process of validating transactions and creating new blocks under a proof-of-work system by performing intensive computation, rewarded with newly issued coins and fees. Miners compete to secure the network.

See also: Proof of Work, Block, Gas, Satoshi

Minor Pair FX

A liquid currency pair that does not include the US dollar but combines other major currencies, such as EUR/GBP or EUR/JPY. Minors are typically derived from their respective dollar legs.

See also: Major Pair, Cross Rate, Exotic Pair

Monetary Policy General

The actions a central bank takes to influence the supply and cost of money, principally through setting interest rates, in pursuit of objectives such as price stability. Policy shifts are a major driver of exchange rates.

Money Market General

The market for short-term borrowing and lending, typically with maturities of one year or less, including deposits, certificates of deposit, treasury bills, and commercial paper. Its interest rates underpin the calculation of FX forwards and swaps.

NDF FX

A non-deliverable forward is a cash-settled forward contract used where physical delivery of a currency is restricted or not possible. At maturity the difference between the contracted rate and an agreed fixing rate is settled in a convertible currency, usually US dollars, with no exchange of the underlying.

NDO FX

A non-deliverable option is the option equivalent of a non-deliverable forward, written on a restricted currency and settled in cash against a specified fixing rather than by delivery. NDOs are used to hedge or take views on currencies subject to exchange controls.

Near Leg / Far Leg FX

The two halves of an FX swap. The near leg is the first exchange of currencies, usually at the spot date; the far leg reverses that exchange on the agreed future date. Both exchange rates are fixed when the deal is struck.

Net Open Position General

A firm’s aggregate open exposure in a currency or across currencies, reflecting the net of all long and short positions. Brokers operate under net-open-position limits set by their prime brokers, which cap how much risk they can carry.

Netting General

The offsetting of mutual obligations between counterparties so that only a net amount is owed or settled, reducing credit and settlement exposure. It is a core risk-reduction mechanism in derivatives and FX settlement.

Node Crypto

A computer that participates in a blockchain network by storing a copy of the ledger and relaying or validating transactions. The network’s decentralization depends on many independent nodes.

See also: Blockchain, Proof of Work, Mining

Nostro Account General

An account a bank holds in a foreign currency with a bank located in that currency’s home country, used to make and receive payments in that currency. The term is from the Latin for “ours” — our account held with you.

NYMEX Metals

The New York Mercantile Exchange, part of the CME Group, on which platinum and palladium futures and energy contracts are traded. It complements COMEX in exchange-traded metals markets.

See also: COMEX, Exchange-Traded, FX Futures

Offer FX

The price at which a market maker will sell the base currency to you; the higher of the two prices in a two-way quote (also called the ask). You buy at the offer, and the gap between it and the bid is the spread.

On-Chain Settlement Crypto

The recording and finalization of a transaction directly on a blockchain, where it becomes part of the shared, immutable ledger. It contrasts with off-chain transactions that are settled outside the main chain.

See also: Blockchain, Gas, Block, Stablecoin

One-Cancels-the-Other General

A pair of linked orders, abbreviated OCO, in which the execution of one automatically cancels the other. It is used to set, for example, a take-profit and a stop-loss simultaneously.

Onshore/Offshore FX

A distinction between a currency’s domestic market, subject to local regulation and capital controls, and the market for that currency traded outside the home jurisdiction. The Chinese yuan, for example, trades as onshore CNY and offshore CNH with different rules and rates.

Option Cut FX

The standard expiry time at which FX options are settled, conventionally 10:00 am New York for G10 currencies, with 3:00 pm Tokyo also used for some Asian pairs. Emerging-market options typically expire against a local cut or fixing.

See also: FX Option, Fixing, WM/R Fix, Vanilla Option

Order Book General

A real-time list of outstanding buy and sell orders for an instrument, organized by price, that shows market depth and drives matching in order-driven venues. Trades occur as incoming orders match resting orders by price and time priority.

Order Flow General

The stream of buy and sell orders reaching the market, which conveys information and moves prices as it is absorbed. Studying order flow is central to understanding FX price discovery and microstructure.

Outright Forward FX

An agreement to exchange two currencies on a single future value date beyond spot at a rate fixed today. The forward rate equals spot adjusted by the swap points and reflects only the interest-rate differential, not a forecast of future spot.

Over-the-Counter General

Trading conducted directly between two parties rather than on a centralized exchange, abbreviated OTC. The FX and bullion markets are predominantly over-the-counter, offering flexibility in size, terms, and value dates.

Overnight Swap FX

A short-dated FX swap covering the period from today to tomorrow, abbreviated O/N. Together with tom/next it is used to derive value-today and value-tomorrow rates from spot.

Payment-Versus-Payment General

A settlement mechanism in which the final transfer of one currency takes place if and only if the final transfer of the other currency also takes place, so the two legs of a trade settle simultaneously or not at all. It is designed to remove principal risk in foreign exchange settlement; CLS is the best-known FX payment-versus-payment system.

Perpetual Futures Crypto

A derivative contract that tracks the price of an underlying crypto asset with no expiry date, allowing positions to be held indefinitely. A periodic funding payment keeps its price aligned with the spot market.

Pip FX

The smallest standard increment by which an exchange rate is conventionally quoted, typically the fourth decimal place for most currency pairs and the second decimal place for yen pairs. It is the unit traders use to express price moves, spreads, and forward points.

Pip Location FX

The decimal place at which the pip falls for a given currency pair — the fourth decimal for pairs like EUR/USD and the second decimal for pairs quoted in yen. It determines how a price move translates into a number of pips.

See also: Pip, Currency Pair, Quote Currency

Pip Value FX

The monetary worth of a one-pip move for a given trade size, used to size positions and convert price moves into profit and loss. It depends on the pair, the trade notional, and the account currency.

Pre-Hedging General

A dealer’s practice of trading in anticipation of an expected client order to manage the resulting risk. Because it can move prices before the client trade, its appropriate use is governed by industry conduct standards.

Premium FX

The condition in which a currency’s forward rate is more favorable than its spot rate, so that forward points are added to spot. A base currency trades at a forward premium when its interest rate is lower than that of the quote currency.

Premium (Option) General

The price the buyer of an option pays the seller for the rights the option confers, representing the buyer’s maximum loss. It reflects factors including time to expiry, the strike relative to the forward, interest rates, and volatility.

Price Discovery General

The process by which buying and selling interest interacts to establish the market price of an instrument. In FX, much price discovery occurs in the interdealer market through order flow.

See also: Order Book, Order Flow, Benchmark

Prime Broker General

A bank that extends its credit and market access to a client, allowing the client to trade with multiple liquidity providers under the prime broker’s name while settling through a single relationship. Prime brokers set credit and net-open-position limits for their clients.

Principal FX

A party that trades for its own account as the counterparty to your trade, rather than acting as your agent. A principal is an arm’s-length party, not a fiduciary or advisor, so its interests can diverge from yours, and its price includes a margin it is not obliged to itemize.

Prime Brokerage FX

An arrangement in which a large bank (the prime broker) lets a client trade in the bank’s name with multiple liquidity providers, then handles the credit, settlement, and clearing. It gives funds and smaller firms access to interbank pricing they could not reach on their own credit.

Principal Risk General

The risk in settlement that a party delivers the currency or asset it owes but does not receive the currency or asset it is due, exposing it to a loss of the full principal rather than only a change in market value. In foreign exchange it is the danger that payment-versus-payment settlement is built to eliminate.

Principal Trading General

Dealing in which a firm trades for its own account and as counterparty to the client, taking on risk, rather than acting as an agent or fiduciary. A principal’s market-making interests may diverge from those of its counterparties, a point dealers disclose.

Private Key Crypto

A secret cryptographic value that authorizes transactions from a cryptocurrency address and proves ownership of the associated holdings. Anyone with the private key controls the funds, so its security is essential.

Proof of Stake Crypto

A consensus mechanism in which validators are chosen to confirm transactions and create blocks in proportion to the cryptocurrency they commit, or stake, as collateral. It is used as a lower-energy alternative to proof of work.

See also: Proof of Work, Block, Blockchain, Node

Proof of Work Crypto

A consensus mechanism in which participants compete to solve a computationally intensive puzzle to validate transactions and add a new block, earning a reward. It secures networks such as Bitcoin at the cost of significant energy use.

See also: Proof of Stake, Mining, Block, Blockchain

Public Key Crypto

One half of the key pair that controls cryptoasset ownership: an address-like identifier that can be shared freely so others can send funds to it. Its counterpart, the private key, must stay secret — it authorizes spending. The two are mathematically linked, but the private key cannot be derived from the public one.

See also: Private Key, Wallet, Blockchain

Purchasing Power Parity General

The theory that exchange rates should adjust over the long run so that a basket of goods costs the same across countries when expressed in a common currency. It is one framework for assessing whether a currency is over- or undervalued.

Quote Currency FX

The second currency in a currency pair, also called the terms or variable currency, in which the price of one unit of the base currency is expressed. In the rate’s arithmetic it is the numerator.

Reciprocal Rate FX

The inverse of a quoted exchange rate, obtained by dividing one by the rate, which converts a quote between American and European terms. For example, a CAD/USD rate of 1.5672 has a reciprocal of about 0.6381 USD per CAD.

Rejection Rate General

The proportion of orders a liquidity provider declines rather than executes, often because a price has moved beyond tolerance during a last-look check. Higher rejection rates reduce the effective fill ratio for the client.

See also: Last Look, Fill Ratio, Slippage

Replacement Cost Risk General

The risk that, if a counterparty defaults before settlement, the surviving party must replace the trade in the market at a less favorable rate. Unlike principal risk, the exposure is the cost of the adverse price move, not the full principal amount.

Resting Order General

An order placed in the market to execute only when price reaches a specified level, such as a limit order, which waits in the order book until filled or canceled. It contrasts with an order executed immediately at the current market price.

Risk Reversal General

A combination of a bought call and a sold put, or the reverse, used to express a directional view or to gauge the market’s volatility skew. The price difference between equivalent calls and puts reveals which side the market favors.

Rollover FX

The process of carrying an open FX position to the next value date, conventionally marked at 5:00 pm New York time, which rolls the settlement date forward by one business day. It is executed mechanically through a tom/next swap and gives rise to a financing debit or credit.

Safe-Haven Currency FX

A currency investors buy when markets turn fearful, because it is seen as stable, liquid, and dependable in a crisis. The US dollar, Swiss franc, and Japanese yen are the classic examples; they tend to strengthen in “risk-off” episodes regardless of local economic news.

Satoshi Crypto

The smallest unit of bitcoin, equal to one hundred-millionth of a single bitcoin, named after the network’s pseudonymous creator. It allows transactions and pricing in very small fractions of a coin.

See also: Wei, Mining, Market Capitalization

SEF General

A swap execution facility is a regulated platform introduced under post-2008 reforms on which certain swaps must be traded and reported. SEF requirements affect how some FX derivatives are executed and disclosed.

Settlement Risk General

The risk that one party delivers the currency or asset it owes but does not receive the other side in return, because the two legs settle at different times or places. In FX it is also called Herstatt risk and is mitigated chiefly by payment-versus-payment settlement.

Short-Dated Swap FX

An FX swap with a value date on or before spot, such as overnight, tom/next, or spot/next, used to manage near-term funding and value dates. Value-today and value-tomorrow rates are calculated by reversing the side and sign of these swap points.

Skewing General

Shifting a two-way quote in one direction to encourage flow that offsets a dealer’s inventory and discourage flow that adds to it. It is a normal inventory-management technique in market making.

Slippage General

The difference between the price a trader expects and the price at which an order is actually executed, arising when the market moves during the time it takes to route and fill the order. It can be a cost or, when prices move favorably, a price improvement.

Smart Contract Crypto

Self-executing code stored on a blockchain that automatically carries out the terms of an agreement when predefined conditions are met. Smart contracts underpin decentralized applications and many crypto financial products.

See also: Blockchain, Gas, On-Chain Settlement

Smart Order Routing General

Technology that automatically directs an order to the venue or provider offering the best available terms, splitting it across sources if necessary. It is central to execution on fragmented electronic FX markets.

Speculation General

Taking a position with the aim of profiting from expected price movements, accepting risk in exchange for potential gain. It contrasts with hedging, which seeks to reduce an existing risk.

See also: Hedging, Carry Trade, Arbitrage

Spot General

A transaction for the exchange of two currencies (or a commodity such as bullion) at the current market rate, with settlement on the standard near-term value date — conventionally two business days later in FX. Rates for all other value dates are derived from spot.

Spot Rate FX

The exchange rate quoted for a spot transaction — the price at which one currency is exchanged for another for settlement on the standard spot value date. It is the reference price from which forward rates and cross rates are calculated.

Spread General

The difference between the bid and ask prices in a two-way quote, representing the market maker’s compensation and a primary cost of trading. Spreads narrow in deep, liquid markets and widen in thin or volatile ones.

See also: Bid, Ask, Markup, Liquidity Tier

Stablecoin Crypto

A cryptocurrency designed to hold a steady value by referencing an external asset such as a national currency, typically backed by reserves or managed by an algorithm. Stablecoins are widely used as a settlement and trading medium within crypto markets.

Standing Settlement Instructions General

Pre-agreed details, abbreviated SSIs, specifying where and how each currency in a trade is to be paid and received. Using SSIs reduces errors and operational risk in the settlement process.

Stop-Loss Order General

An order that becomes active when the market reaches a specified trigger level, used to limit losses or protect gains on a position. Once triggered it is executed at the prevailing market price, which may differ from the trigger.

Straddle General

An option strategy combining a call and a put at the same strike, used to take a view on volatility rather than direction. The at-the-money straddle is the most commonly quoted volatility instrument.

Straight-Through Processing General

The automated handling of a trade from execution through confirmation and settlement without manual re-entry. It reduces operational risk and speeds the post-trade lifecycle.

Strangle General

An option strategy combining a call and a put at different out-of-the-money strikes, used to take a view on volatility at lower cost than a straddle. It profits if the rate moves sufficiently in either direction.

Strike General

The exchange rate at which the holder of an option may exercise the right to buy or sell the underlying currency. Its relationship to the current rate determines whether the option is in, at, or out of the money.

Swap Line FX

A standing arrangement between central banks that lets one borrow the other’s currency and lend it on to banks in its own jurisdiction. Dollar swap lines from the Federal Reserve act as an emergency valve when the private market for borrowing dollars through FX swaps seizes up.

Swap Points FX

The number of pips added to or subtracted from the spot rate to produce a forward rate, also called forward points, reflecting the interest-rate differential between the two currencies. They are quoted instead of full forward rates because they move with relatively stable interest rates rather than every spot tick.

Sweeping General

Filling an order by executing against available liquidity across multiple price layers or providers, working up or down the order book until the order is complete. It is the mechanism behind multi-tier liquidity aggregation.

Synthetic Eurocurrency FX

A deposit or borrowing in one currency created by combining a money-market transaction in another currency with an FX swap. The resulting synthetic interest rate is derived from the swap points and the underlying deposit rate.

T+0 Settlement General

Settlement on the same day a trade is agreed, also called value today or cash. In FX it is reached from spot by reversing the relevant short-date swap points.

T+1 Settlement General

Settlement one business day after the trade date, also called value tomorrow. A small set of FX pairs, notably USD/CAD, settle spot on a T+1 basis rather than T+2.

T+2 Settlement General

The standard FX spot convention under which the two currencies are exchanged two good business days after the trade date. Certain pairs such as USD/CAD are exceptions and settle on a T+1 basis.

Take-Profit Order General

An order to close a position once the market reaches a specified favorable level, locking in a gain. It is the profit-side counterpart to a stop-loss order.

The Greeks General

A set of measures describing how an option’s value responds to changes in market factors, including delta for the rate, gamma for delta’s change, vega for volatility, theta for time, and rho for interest rates. They are the standard tools for managing option risk.

Time on the Wire General

The latency between a trader, broker, and liquidity provider during which a quoted price may change before an order is filled. Movement during this interval is a source of slippage and rejections.

Tom/Next FX

A short-dated swap that exchanges value tomorrow against value spot, used to roll a position’s value date forward or to bring it earlier. Speculators routinely use tom/next to avoid taking physical delivery.

Trade Date General

The date on which a transaction is agreed between counterparties, distinct from the value date on which settlement occurs. Forward terms are measured from the spot value date rather than from the trade date.

See also: Value Date, Spot, T+2 Settlement

Triangulation FX

The calculation of a cross rate between two currencies by combining each currency’s quotation against a common third currency, usually the US dollar. It is the standard method for deriving and checking cross rates.

See also: Cross Rate, Arbitrage, Currency Pair

Troy Ounce Metals

The standard unit of weight for precious metals, equal to about 31.1035 grams, by which gold, silver, platinum, and palladium are quoted and traded. Gold is dealt in fine troy ounces, measuring pure metal content regardless of bar purity.

Two-Way Price General

A quote that shows both a bid and an ask simultaneously, allowing a counterparty to buy or sell without revealing direction. Market makers and market making members are obliged to provide continuous two-way prices.

See also: Bid, Ask, Spread, Market Maker

Unallocated Account Metals

The most common way to hold and trade bullion, in which the balance is a claim on a dealer’s general stock rather than specific bars, leaving the client an unsecured creditor. Metal can be allocated into identified bars on request.

USD Peg FX

An arrangement in which a country fixes or closely manages its currency’s value against the US dollar, often within a defined band. Maintaining a peg typically requires the central bank to intervene and hold dollar reserves.

Value Date General

The date on which the two currencies (or other assets) in a transaction are actually exchanged and settled, as distinct from the trade date on which the deal is agreed. Spot, forward, and short-dated trades are defined by their value dates.

Vanilla Option General

A standard call or put option with conventional terms and no special features, in contrast to an exotic option. European-style vanillas, exercisable only at expiry, are the FX market default.

Vehicle Currency FX

A currency used as the common intermediary for trades between two other currencies, because dealing through it is cheaper and more liquid than a direct exchange. The US dollar is the FX market’s dominant vehicle currency: a euro–peso trade is typically routed as EUR/USD plus USD/MXN rather than dealt directly.

Wallet Crypto

Software or hardware that stores the cryptographic keys used to access and authorize cryptocurrency transactions. It does not hold coins directly but controls the holdings recorded on the blockchain.

Wei Crypto

The smallest unit of ether, the native currency of the Ethereum network, equal to one quintillionth of one ether. Gas fees and small transfers are commonly denominated in wei.

White Labeling General

An arrangement in which one firm offers another firm’s trading platform or services under its own brand. It lets a broker provide execution and technology without building the underlying infrastructure.

WM/R Fix FX

A widely used FX benchmark, historically the WM/Reuters 4:00 pm London fix, calculated from trading observed around a short window and used to value and rebalance portfolios. Following benchmark reforms its calculation window was widened to reduce the scope for manipulation.

Yield General

The return on an investment expressed as an annualized percentage of its price or face value. Money-market instruments may be quoted on a yield basis or, like treasury bills, on a discount basis.

Yield Curve General

A graph of interest rates or yields for the same type of instrument across different maturities, showing the relationship between rate and term. Its shape reflects market expectations and influences forward pricing.

Frequently Asked Questions

What is a pip in forex?

A pip is the smallest standard increment by which an exchange rate is quoted — the fourth decimal place for most currency pairs and the second decimal for yen pairs. Traders use pips to express price moves, spreads, and forward points.

What does T+2 settlement mean in FX?

T+2 settlement is the standard FX spot convention: the two currencies are exchanged two good business days after the trade date. A few pairs, such as USD/CAD, settle on a T+1 basis instead.

What is the difference between major, minor, cross, and exotic currency pairs?

Majors are the most-traded US dollar pairs such as EUR/USD; minors pair other developed currencies; crosses combine two non-USD currencies; and exotics pair a major with an emerging-market currency. Liquidity falls and spreads widen as you move from majors to exotics.

What is contango in precious metals?

Contango is when a metal’s forward price is higher than its spot price, so the forward trades at a premium. In precious metals it typically arises when the currency interest rate exceeds the metal’s lease rate.

What is a stablecoin?

A stablecoin is a cryptocurrency designed to hold a steady value by referencing an external asset such as a national currency, usually backed by reserves or managed by an algorithm. Stablecoins are widely used as a settlement and trading medium within crypto markets.