market orders, 133–134foreign exchange rates, 25, 147foreign exchange swaps, 71–74forex, 1forward foreign exchange, 1, 2, 19, 47–54,71, 75forward market, 2forward outright, 47forward pips, 47, 129forward points, 47forward transaction, 2, 21, 37, 61, 71, 113, 177forward/forward, 61, 71
fundamental analysis, 147–149, 151–154, 177funding, 35, 83funds, 2, 45futures, 3, 19, 21, 113–116, 177fx, 1gamma, 88, 110gilts, 158global perspective, 177gold standard, 1, 8government bonds, 157, 159governments, 25gross domestic product (GDP), 153gross national product (GNP), 175head-and-shoulders formation, 165hedge ratio, 110hedging, 35, 83, 87historical volatility, 88history, 7hit, 129housing starts, 153, 175implied volatility, 88, 110impulse waves, 164index-linked deposits, 68indicative rate, 129indirect terms, 42industrial production, 175initial margin, 140interbank market, 27interest rate differential, 47, 55, 71, 87, 90interest rate parity, 151interest rate swap, 75interest rates, 155, 156, 157, 158International Monetary Fund (IMF), 9International Monetary Market (IMM), 2, 9, 28,118, 137internet trading, 3intervention, 14, 17, 21, 25in-the-money, 88, 91, 110intrinsic value, 87, 90, 110introduction, 1Japanese Government bonds (JGBs), 155key factors, 155–159knock-out options, 107, 108leading indicators, 175leading stock index, 156, 159leg, 110leverage, 113, 140, 141limit order, 135lines and channels, 165live option price, 92
Indexlogical exercise, 90long, 61long-dated, 56Maastrict Treaty, 13, 16macroeconomic fundamentals, 177maintenance, 142margin, 3, 110, 113, 141–143marked-to-market, 110, 113market if touched (MIT), 135market maker, 33, 36, 43, 51, 60market on close, 135market on opening, 135market orders, 133–134, 135market risk, 46, 54, 93market user, 43, 51matched sales, 175“mine”, 61, 130Ministry of Finance (MoF), 155Ministry of International Trade and Industry(MITI), 155monetary policy, 148money spread, 110moving average convergence divergence(MACD), 172moving averages, 172market overview, 19–23naked position, 110non-deliverable forwards (NDF), 63–69odd date, 47, 61offer-sell price, 27, 33, 42, 50, 61offered, 61one cancels the other order (OCO), 135option buyer, 79, 84option premium, 79, 87, 90, 92option seller, 79, 84option writer, 79, 84, 111options, 3, 21, 35, 37, 79–93, 95–107, 177orders, 133–134out-of-the-money, 88, 91, 110outright forward, 59, 62over the counter options (OTC), 80, 110overbought, 61overnight, 55, 62oversold, 62par, 62participants, 25–31payroll/employment, 153, 176personal income, 176pip, 62Plaza Accod, 16political factors, 158portfolio investment, 36
premium, 47, 50, 61, 110price determinants, 45price risk, 46, 54price taker, 33producer price index (PPI), 153, 175purchasing power parity (PPP), 151purposes, 35–37put option, 79, 97, 110put ratio spread, 106ratio spread, 110ratio write, 111reciprocal rates, 41relative prices, 147relative strength index, 172repurchase agreements, 175request for price (RFP), 138retail sales, 153, 176reversal arbitrage, 111right-angle triangle, 168risk, 62, 129risk consideration, 46risk management tool, 63roles played, 33–34settlement, 62, 93, 111short-dated, 55–56, 62single currency, 15Smithsonian agreement, 11Snake, 11, 16sovereign risk, 67special drawing rights (SDR), 10speculate, 83speculation, 87speculators, 2, 13, 15, 30, 34, 45spot market, 2, 41–46spot next, 55, 62spot rate, 41, 62, 87, 90spot transaction, 2, 21, 41, 71, 177spot value, 41, 55, 62spread, 43, 44, 62, 111, 129, 135, 137square, 62stochastics, 173stock market, 160stop close only, 135stop limit, 135stop orders, 133, 134, 135straddle, 98, 99, 111strangle, 100, 111strike price, 79, 87, 90, 111subjective considerations, 148supports and resistances, 165swap, 21, 62, 71–74, 75–77swap points (pips), 47, 62Swiss National Bank (SNB), 156symmetrical triangle, 167
181
182
Index
tax management tool, 83technical analysis, 147–149, 163–173, 177theta, 89, 111ticks, 115time decay, 89time value, 87, 90, 111tom next, 55, 62trade balance, 154trader, 33, 83transaction exposure, 36, 67translation exposure, 37, 67treasury, 158, 160Treaty of Rome, 13two-way price, 27, 33, 42, 113, 129
unemployment, 153, 176uptrend, 165value date, 62value terms, 1variable currency, 42variation margin, 142vega, 111volatility, 88, 90, 111wedge, 168World Bank, 9writer, 79, 84, 111“yours”, 62
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