Britcoin

Definition of 'Britcoin'

A U.K.-based Bitcoin exchange. Britcoin was the first Bitcoin exchange in the U.K. to offer support for GBP trading. Traders are able to trade bitcoins by placing buy or sell orders into an order book and those orders will be matched against opposing open orders in full or partially filled, with Britcoin acting as an escrow for the funds.

As of August 2011 Britcoin had been renamed Intersango.

Investopedia explains 'Britcoin'

Bitcoins are a digital currency created in 2009, which allow users of bitcoin exchanges to make payments and trades at a very low cost. Bitcoin circulation and expansion is governed by Bitcoin software and is programmed to expand as a geometric series, thus limiting the effects of monetary inflation on the virtual currency. Bitcoins are one of many virtual currencies that can be traded online by users.

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Blocked Currency

Definition of 'Blocked Currency'

Any currency that is mainly used for domestic transactions and does not freely trade on a forex market (usually due to government restrictions).  Also referred to as a "nonconvertible currency".

Investopedia explains 'Blocked Currency'

It is very difficult (if not impossible) to convert the blocked currency into a freely traded one such as the U.S. dollar.

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Bitomat

Definition of 'Bitomat'

A Polish-based bitcoin exchange. Bitomat was the first Bitcoin exchange in Poland to offer support for the Polish Zloty, officially going online on April 4, 2011. Using Bitomat, traders are able to make deposits into a virtual wallet, in either PLN or Bitcoins and place buy and sell orders, with the exchange acting as an escrow for the funds.

Bitomat was acquired by the Mt. Gox Bitcoin exchange in August of 2011.

Investopedia explains 'Bitomat'

Bitcoins are a digital currency created in 2009, which allow users of bitcoin exchanges to make payments and trades at a very low cost. Bitcoin circulation and expansion is governed by Bitcoin software and is programmed to expand as a geometric series, thus limiting the effects of monetary inflation on the virtual currency. Bitcoins are one of many virtual currencies that can be traded online by users.

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Big Mac PPP

Definition of 'Big Mac PPP'

A survey done by The Economist that determines what a country's exchange rate would have to be for a Big Mac in that country to cost the same as it does in the United States. Purchase power parity (PPP) is the theory that currencies adjust according to changes in their purchasing power. With the Big Mac PPP, purchasing power is reflected by the price of a McDonald's Big Mac in a particular country. The measure gives an impression of how overvalued or undervalued a currency is.
 

Investopedia explains 'Big Mac PPP'

The calculation of the Big Mac PPP-adjusted exchange rate looks at the price of a Big Mac in a given country and divides it by the price of a U.S. Big Mac. Let's say that we are looking at the Big Mac in China. If a Chinese Big Mac is 10.41 renminbi (RMB) and the U.S. price is $2.90, then - according to PPP - the exchange rate should be 3.59 RMB for US$1. However, if the RMB was actually trading in the currency market at 8.27 RMB for US$1, the Big Mac PPP would suggest that the RMB is undervalued.

 

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Big Figure

Definition of 'Big Figure'

The stem, or whole dollar price, of a price quote. The term "big figure" is most often used in international currency markets, where it is often abbreviated to "big fig." In the U.S., big figure is also referred to as the "handle."  The big figure is generally omitted when traders provide quotations in very fast-paced markets, such as the interbank currency market, because the assumption is that it is common knowledge and does not need to be specified.

Investopedia explains 'Big Figure'

For example, assume that the Japanese yen is trading versus the US dollar in the interbank spot market at 85.50 (bid) / 85.55 (offered). While the big figure here is 85, interbank traders will quote the price as 50 / 55.
While omitting the big figure is accepted practice in interbank and institutional markets, it is seldom done when dealing with retail investors. Even in the interbank markets, traders may need clarification on the big figure in cases where the exchange rate is moving very rapidly, as for instance, during currency intervention by central banks. The big figure may also need to be clarified when the exchange rate approaches round numbers, such as 86.00 yen or 1.3500 euros to the US dollar.

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BBA Mortgage Approvals

Definition of 'BBA Mortgage Approvals'

The number of mortgage or home loans collectively approved by members of the British Bankers Association (BBA). This figure is published monthly by the BBA, and is considered to be an important leading indicator about the state of the housing market in the United Kingdom. 

Investopedia explains 'BBA Mortgage Approvals'

A rising number of mortgage approvals would usually indicate a growing or healthy housing market, while a decline in the number of mortgage approvals would imply that the housing market is sluggish. The BBA is the main trade association for the U.K. banking and financial services sector.

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Basket Of USD Shorts

Definition of 'Basket Of USD Shorts'

A forex trading strategy that involves the sale of the U.S. dollar against a group of currencies, rather than against a single currency. The currency group involved in such a trading strategy is called a "basket."

Investopedia explains 'Basket Of USD Shorts'

This strategy would typically be employed by traders who are bearish on the U.S. dollar, and would prefer to have a short trading position on it. The basic rationale for using a basket to short the U.S. dollar is risk mitigation through diversification. In the event that the U.S. dollar strengthens appreciably, given that it may appreciate at differing rates against various currencies, the loss on a short position may be significantly lower if multiple currencies are involved in it, as opposed to a short position using a single currency.

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Base Currency

Definition of 'Base Currency'

The first currency quoted in a currency pair on forex. It is also typically considered the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.

 It is sometimes referred to as the "primary currency".

Investopedia explains 'Base Currency'

For example, if you were looking at the CAD/USD currency pair, the Canadian dollar would be the base currency and the U.S. dollar would be the quote currency. The price represents how much of the quote currency is needed for you to get one unit of the base currency.

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Automatic Execution

Definition of 'Automatic Execution'

A method of executing trades without inputting them manually. In forex trading, Investors are able to trade at any time during the day or night through an automatic forex trading system. Automatic executions enable traders to execute trades based on certain technical indicators. Forex signal providers transmit and receive signals that allow for this type of trading.

Investopedia explains 'Automatic Execution'

Basically, this is a trade executed without the help of a dealer. These types of trade are done very quickly and in real time because they are automated. The lagging and slow system of manual executions don’t allow traders to continually input transactions in rapid fire form like an automatic execution allows. Stop and/or limit orders can also be enabled through this form of trading. Forex traders should be careful using automated trading however, as trades will be processed even if fundamental conditions have changed.

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Automated Forex Trading

Definition of 'Automated Forex Trading'

A method of trading foreign currencies with a computer program that is based on a set of analyses that helps determine whether to buy or sell a currency pair at any one time. Automated forex trading uses a computer program that the trader "teaches" to make decisions based on a set of signals derived from technical analysis charting tools. The signals create a buy or sell decision when they point in the same direction

Investopedia explains 'Automated Forex Trading'

In an automated forex trading system, the trader must teach the software what signals to look for and how to interpret them. It is thought that automated trading takes human psychology out of trading.

Automated day trading systems and signals are available to purchase over the internet. However, it is important to note that there is no such thing as the "holy grail" of trading systems. If the system was a perfect money maker, the seller would not want to share it. This is why big financial firms keep their "black box" trading programs under lock and key.

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Authorized Forex Dealer

Definition of 'Authorized Forex Dealer'

Any type of financial institution that has received authorization from a relevant regulatory body to act as a dealer involved with the trading of foreign currencies. Dealing with authorized forex dealers ensure that your transactions are being executed in a legal and just way.

Investopedia explains 'Authorized Forex Dealer'

In the United States, one regulatory body responsible for authorizing forex dealers is the National Futures Association (NFA). The NFA ensures that authorized forex dealers are subject to stringent screening upon registration and strong enforcement of regulations upon approval

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Australian Bureau of Statistics - ABS

Definition of 'Australian Bureau of Statistics - ABS'

Australia's national statistical office. The mission statement of the ABS is to assist and facilitate informed decision making, research, and discussion within governments and the community by providing a high quality and objective national statistical service.

Investopedia explains 'Australian Bureau of Statistics - ABS'

The Commonwealth Bureau of Census and Statistics (CBCS), the predecessor to the ABS, was established in 1905. It was replaced in 1974 by the ABS. The Australian Bureau of Statistics Act of 1975 established the ABS as a statutory authority headed by the Australian Statistician and responsible to the Treasurer.

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Aussie

Definition of 'Aussie'

Slang term that is used to refer to the Australian dollar.

Investopedia explains 'Aussie'

Similar to how the U.S. dollar is sometimes called the greenback or the Canadian dollar is called the loonie, the Australian dollar is sometimes called the Aussie to distinguish it from all the other dollars. It is also denoted as A$ or AU$.

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Application Programming Interface - API

Definition of 'Application Programming Interface - API'

An interface or "go-between" that enables a software program to interact with other software. In the context of forex trading, an API refers to the interface or platform that enables your platform to connect with the market. APIs have multiple features that facilitate information sharing, including real-time forex price quotations, trade execution and order and trade confirmations.

 

 

Investopedia explains 'Application Programming Interface - API'

Proprietary APIs are offered by almost every major online forex brokerage. Because the fast-paced nature of forex trading makes automated trading preferable to manual trading for most traders, a reliable API is an important differentiator for a forex brokerage to ensure stable operation and execution of trades.

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American Currency Quotation

Definition of 'American Currency Quotation'

A direct quotation in the foreign exchange markets whereby the value of the American dollar is stated as a per-unit measure of a foreign currency. This type of quotation shows how much U.S. currency it takes to purchase one unit of foreign currency.
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Investopedia explains 'American Currency Quotation'

For example, an American currency quote would be US$0.85 per C$1. This shows that it will take only 0.85 U.S. dollars to purchase a single unit of Canadian currency. If you wanted to purchase C$1,000, it would cost you US$850. 
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Aggregate Risk

Definition of 'Aggregate Risk'

The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.

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Investopedia explains 'Aggregate Risk'

Banks and financial institutions closely monitor aggregate risk in order to minimize their exposure to adverse financial developments - such as a credit crunch or even insolvency - arising at a counterparty or client. This is achieved through position limits that stipulate the maximum dollar amount of open transactions that can be entered into for spot and forward currency contracts at any point in time.
Aggregate risk limits will generally be larger for long-standing counterparties and clients with sound credit ratings, and will be lower for clients who are either new or have lower credit ratings.

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Adjustment

Definition of 'Adjustment'

The use of mechanisms by a central bank to influence a home currency's exchange rate. An adjustment is specifically made if the exchange rate is not pegged to another currency, meaning that the currency is valued according to a floating exchange rate. Because the central bank intervenes in the home currency's exchange rate to reduce short-term fluctuations, this is considered a managed floating exchange rate.

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Investopedia explains 'Adjustment'

Central banks may become involved if they believe that movements in the home currency are too "extreme", especially since a rapid increase or decrease in a currency's value can lead to a significant effects on its economy. Inconsistent adjustment policies in terms of an exchange rate mechanism (ERM) result in uncertainty on the part of investors, and is referred to as a "dirty" managed exchange rate policy.

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Absolute Rate

Definition of 'Adjustable Peg'

An exchange rate policy adopted by some countries wherein the national currency is largely pegged or fixed to a major currency such as the U.S. dollar or euro, but can be readjusted from time to time within a narrow interval. The periodic adjustments can are usually intended to improve the country's competitive position in the export market.

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Investopedia explains 'Adjustable Peg'

Following the adoption of the Bretton Woods system in 1944, most Western European nations pegged their currencies to the U.S. dollar, until 1971.
The Chinese renminbi or yuan was informally pegged to the US dollar in the mid-1990s until 2005 at a rate of approximately 8.28 per dollar. The peg was adjusted to about 6.83 yuan per U.S. dollar from July 2008, after three years of appreciation.

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