Fractal 48 . A term invented by the mathematician Benoit Mandelbrot – inspired by the study of soybean prices. It describes a ubiquitous phenomenon of nature in which a pattern, which in turn is part of a yet larger pattern.
In theory, the composition can extend in both, directions to infinity; and the patterns, while similar, are not identical. Under a microscope, snowflakes appear to reveal a fractal character: as with an island shore-line, the more precisely you try and measure it, the closer the circumference seems to approach infinity.
Certain very simple mathematical formulae, which can be programmed with a few lines of computer code, can on constant repetition produce fractal patterns of apparently infinite complexity. The ‘Mandelbrot set’ is an exquisite example.
One can speculate that the nature’s process of genetic creation is achieved by just such a constant repetition of simple formulae. Read Chaos by James
Gleick (Viking Penquin, New York 1988).
Fundamental (s). 31 . Notionally, the underlying support for prices – linked with the perception of value. In the case of share, this would be to do with the ultimate dividend- paying power of a company. In bonds, yield to maturity plus security of capital. In commodities, simply supply and demand in currencies, the fundamentals are seen to lie in buying power (value for money) and yield.
Future (s) 17, 92 . Soon after the dollar began to float in 1971, the main dollar parities were added to the array of commodities – from pork bellies to palladium – quoted for future delivery dates in Chicago. This made the currencies the first financial futures. The purpose of the commodity futures markets was to allow producers and users to fix a price for crops or metals that would not be available for delivery until a later date. For currencies, this facility had already existed for centuries in the interbank forward market. but there was no open exchange, like a stock exchange, where this could be done. This is what the Chicago IMM (international money market) provided.the imm also provided Americans with a practical means for trading in the major “currencies” (the US dollar is the dollar: other monies are the “the currencies”). This they had lacked because few US banks outside New York had experience with foreign exchange – or any desire for experience.
So the Chicago currency futures market came to be a highly efficient market. Else-where, only the Singapore futures market has succeeded; and it’s contracts are inter-changeable (“fungible”) with Chicago’s. You can open a position in Singapore and close in Chicago – or in the EFP market.
G7 the ‘group of 7’ leading trading countries: USA, Japan, Germany, Britain, France, Italy and Canada. At times these countries have agreed to co-ordinate efforts towards international financial stability – by concerted bank intervention or other means.
GAMut Futures Fund 5 4 . One of the stable of (mostly equity) funds offered by the $2bn+ Global Asset Management group, having one of the best track records of any public futures fund. Advised by Caxton corporation (chairman Bruce Kovner ) which largely through sheer performance has become the biggest futures fund group, with over $ 1bn under management.
Gann , william 6 5 . Legendary trader, responsible for a complex technical trading system with many
adherents today.
German-zone 22 . Germany and its hard-currency neighbours incl Switzerland, Austria, Holland.
GTC (good till cancelled) 76 . You need to specify the validity of an order in terms of time, unless it’s GTC.
Harris, dr thomas 112 . A psychotherapist of the Transactional Analysis (ta) school, author of bestseller I’m OK, You’re OK.
Head & shoulders 6 2 . Famous self-descriptive chart pattern.
Hedge (s) 13,108 . As a verb, to insure against market risk, particularly foreign exchange risk, as in ‘hedge your bets’. Also a noun.
Hite, larry 71,85,89 . One of the founders of Mint investment corp, the well-known, near $1bn futures fund group.
IG Index . a way of making bets on the imm currencies (and other instruments) – interesting because betting profits are not taxable in Britain; also, for smaller players, because you don’t have to bet full contract amounts. But dealing costs are high.
IMM 17,92-4 . International Monetary Market, part of the Chicago Mercantile Exchange, is the major global centre for trading in currency futures . on a busy day it turns over $20bn and represents a large slice of global speculative business. It has been said that only 5% of world interbank forex turnover ($600bn a day) is customer orders, the rest being the froth of the clearing process. by contrast, most the IMM currency turnover represents original customer- generated risk business. Thus IMM turnover represents original customer-generated risk business. Thus IMM turnover probably accounts for as much as a third of world customer orders on occasions. The IMM is an open-cry market dealing in options into futures as well as futures them-selves, in which volume is published and open interest made available daily at the start of trading on the next day. The currencies traded included DM (125,000 per contract), Yen (12.5m), SF (125,00), Pound (62,500), Can $ (100,000) and Aus $ (100,000). They are quoted in US dollars – to four significant figures – i.e. the yen is quoted at say 7315 -7316. The spread or “turn” is usually just one point or ‘tick’, and represents the dealing cost to the customer ($12.5) of one contract, before commission. Initial margins tend to be of the
order of $2,500per contract (around 3%). As with all futures, currency contracts have specific maturity dates, currently the third Wednesday in March, June, September and December – though monthly maturities are offered in IMM options. Stops conveyed to the market-place are observed under strictly-defined exchange rules.
As with any exchange, you learn about it by trading in it. And this is the place to start currency trading for profit.
I’m OK – You’re OK 112 . By Dr Thomas Harris – Pan paperback: ISBN 0 330 23543 5.
Interbank 17,92 . Name given to the forward and cash or spot currency markets made by banks all over the world. Turnover in the (most of it among banks rather than with customers) in 1989 – London being the largest centre with a share of about 30%. However no regular statistics are available for interbank business. For practical purposes, dealing in all currencies but Yen, DM, Ј, SF and Can $ must be done in
