Big Hitters, The 68 . By Kevin Koy. Intermarket Publishing, Chicago 1986. Interviews with market traders (see book list).
Break-out 62. when a price has been moving more or less sideways in a consolidation range, it is said to break out, or to make a break-out when it moves out of the range either up or down. Such a move is defined by hindsight: if the move out of the range is not followed by a decisive continuation in the direction of the breakout, it is called a “false break-out”.
Bretton Woods 7 . the location of the meeting in 1944 between Britain, USA and Canada at which the IMF
(International Monetary Fund) and the World Bank were established. The original purpose of the IMF was to set up a system of monetary and currency stability in the post-ward period, involving exchange rates fixed to the US dollar, which was in turn fixed in relation to gold (at $35 per ounce). Hence “the Bretton Woods system” came to mean that fixed exchange regime, in which rates would only be changed in the event of “fundamental disequilibrium”.
Broker 17,93 . Most banks deal in the cash and forward foreign exchange markets on behalf of customers as well as for themselves. Dealing through banks can be economical if you use at least three banks and deal in size (over Ј5m or $10m), particularly in spot markets. You can also deal in the cash and forward markets (also called the “ interbank market”) through a broker – though there are not many left who still transact this business. Most
American futures brokers will handle the currency futures, and the big ones such as Merrill Lynch, Shearson Lehman, Prudential Securities have offices in the big European financial centres. You may have to pay $100 per ‘round trip’ (in and out). There are also smaller brokers who can be cheap, friendly and efficient. Not many are happy about accepting one-or-two-contract customers. Lind- Waldock (UK 020 7247 0471 or 0800 262 472 – toll-free), claims to be the world’s largest futures-only broker – offering the round-trip at $36 – and welcomes enquiries from anywhere in Europe or the rest of the world. Both these brokers offer a so-called execution-only service for these rates – meaning no advice. This is the kind of service you want, not opinions.
Bull (ish), bear ish48 . A bull thinks a currency or security or whatever will go up and holds it (long ) or would like to: he’s bullish. a bear is the opposite and is short or would like to be.
Cash 92 , Same as spot.
Chaos. the science of seemingly infinitely complex developments in “dynamical systems”, e.g. turbulence – and stock market crashes? Also the title of a marvellous book by James Gleick. (See also fractal ).
Chartist 5 9 . A pure chartist believes that the only data worth studying for the analysis of market prices is price. Some also look at volume and open interest and other market data, in which case they may be referred to as Technical analysis.
Clearing process 3 0 . The process whereby an order, which may be for billions of dollars, spreads through the market-dealing mechanism until buyers and sellers are finally matched.
Commercial 13 . Companies who need to deal in foreign exchange (or any other commodity) for the purposes of carrying on their business.
Consensus 54 . Majority opinion, sometimes bordering on universal opinion. –
realism 62 . Means expecting chart patterns to be self-fulfilling.
Consolidation 62 (see also Breakout). The settling down of a price after a significant move, sometimes in a definable fluctuating range.
Contrarian 50 , 111 . One who endeavours to go systematically against the consensus .
Conversion flow, process 55,77. at a price peak, sentiment is widely bullish at a trough it’s widely bearish . In between , bulls are being gradually converted to bears. This is the conversion process or flow. We can track it through actual people of our acquaintance, or through media reports.
Core position 78 . The position we hold for the underlying trend, without concern for adverse fluctuations. We may add trading positions when we are particularly confident about the short-term direction.
Correction 55 . Or reaction. When a price moves against the underlying trend, temporarily.
Cross rate 17,32,105-6 . All non-dollar parities. The Dm-Ј, SF-DM and Yen-DM were quoted on theIMM from 29 may 1991.
– games 108. Trend-following speculation in the cross-rates.
Cross es 3 2 . Short for cross-rate. Beware short-hand. You will hear professionals talking of “buying the Yen cross”. Ask them what they mean: buying what, selling what?
Currency overcoat 9 5 , or overlay . In the early 1980s, CB drew attention to the fact that trading international securities and trading currency were two separate processes that had no criteria in
