Forex glossary of terms
Forex glossary - D
Daily Charts - Charts that encapsulate the daily price movement for the currency pair traded. Since the currency market operates 24 hours a day, the daily chart typically runs from 5 PM New York time to the same time on the following day.
Day Order - An order that if not executed on the specific day is automatically canceled.
Day Trading - A Day Trading deal is a currency exchange deal which renew automatically every night at 22:00 (GMT time) starting the day the deal was made and until it ends. The deal ends in one of the following events: 1.Termination initiated by you. 2.The day trading rate has reached the Stop-Loss rate you predefined.3.The deal end date. As long as the deal is open, it is charged a renewal fee every night at 22:00 (GMT time).
Deal Date - The date on which a transaction is agreed upon.
Deal Ticket - The primary method of recording the basic information relating to a transaction.
Dealer - An individual or firm acting as a principal, rather than as an agent, in the purchase and /or sale of securities. Dealers trade for their own account and risk in contrast to the brokers who do trade only on behalf of their clients.
Debit spread - An option spread in which there is a net payout of premium.
Declaration Date - The latest day or time by which the buyer of an option must intimate to the seller his willingness or unwillingness to exercise the option.
Default - when a borrower cannot service its bond (both interest and principal) and/or refuses to make payments on its debts
Deferred - See Back Months.
Deferred pricing agreement - A cash sale in which you deliver the commodity and agree with the buyer to price it at a later time.
Deficit - Shortfall in the balance of trade, balance of payments, or government budgets.
Delivery - The settlement of a transaction by receipt or tender of a financial instrument or currency.
Delivery Date - The date of maturity of the contract, when the final settlement of transaction is made by exchanging the currencies. This date is more commonly known as the value date.
Delivery Risk - A term to describe when a counterparty will not be able to complete his side of the deal. This risk is very high in case of over the counter transactions where there is no exchange which can stand as a guarantee to the trade between the two parties to the contract.
Delta - The measure of the price-change relationship between an option and the underlying futures price. Equal to the change in premium divided by the change in futures price.
Delta Hedging - A method used by option writers to hedge risk exposure of written options by purchase or sale of the underlying instrument in proportion to the delta.
Delta Spread - A ratio spread of options established as a neutral position by using the deltas of the options concerned to determine the hedge ratio.
Demand - The quantity of a commodity that buyers are willing to purchase from the market at a given price.
Depo - Deposit
Deposit - Refers to the process of borrowing and lending money. The deposit rate is the rate at which money can be borrowed or lent.
Depreciation - The decline in the value of an asset or currency.
Derivative - A security derived from another and whose value is dependent the underlying security from which it is derived. Examples of derivatives are future contracts, forward contracts and options. Underlying securities can include stocks, bonds or currencies. Derivatives can be traded and are usually used to hedge portfolio risk.
Descending Triangles - A bearish continuation pattern indicating distribution consisting of two or more comparable lows forming a horizontal line at the bottom. Descending triangles are bearish patterns that indicate distribution. The definitive bearish signal of a descending triangle is when support on the lower rung of the triangle is broken.
Desk - Term referring to a group dealing with a specific currency or currencies.
Details - All the information required to finalize a foreign exchange transaction, i.e. name, rate, dates, and point of delivery.
Devaluation - When the value of a currency is lowered against the other, i.e. it takes more units of the domestic currency to purchase a foreign currency. This differs from depreciation in that depreciation occurs through changes in demand in the foreign exchange market, whereas devaluation typically arises from government policy. A currency is usually devalued to improve the balance of trade, as exports become cheaper for the rest of the world and imports more expensive to domestic consumers.
Direct Quotation - Quoting in fixed units of foreign currency against variable amounts of the domestic currency.
Dirty Float (Managed Float) - An exchange rate system in which the currency is not pegged, but is "managed" by the central bank to prevent extreme fluctuations in the exchange rate. The exchange rate is managed through changes in the interest rate to attract/detract capital flows or through the buying and selling of the currency. This system is contrasted with a Pure Float in which there is no central bank intervention and the exchange rate is entirely determined by the market and speculation.
Discount - when a bond is selling below its par value
Discount broker - See Broker
Discount Rate - The rate at which a bill is discounted. Specifically it refers to the rate at which a central bank is prepared to discount certain bills for financial institutions as a means of easing their liquidity, and is more accurately referred to as the official discount rate
Distant - See Back Months
Dollarization - a policy measure that scraps the domestic currency and replaces it with a hard currency such as the dollar or the euro.
Documentation Risk - The risk of loss due to an inadequacy or other unforeseen aspect of the legal documentation behind the financial contract.
Domestic Rates - The interest rates applicable to deposits domiciled in the country of origin. Value and values may vary from Eurodeposits due to taxation and varying market practices.
Double Top and Bottom - A double top and bottom implies an upper limit - the top - and and lower limit - the bottom - which the currency pair has touched twice but has failed to penetrate. Accordingly, the asset can be expected to trade within this range, or, if there is a breakout, the movement is expected to be substantial.
Downgrade - when a ratings agency lowers its assigned rating for a borrower
Downtrend - A price trend characterized by a series of lower highs and lower lows.
Dow Theory - One of the first ideas that formed the beginnings of technical analysis, the Dow Theory holds that all major trends can be sub-divided into three phases - entrance, whereby savvy market participants enter the market; acceleration, whereby a slew of additional participants see the trend and enter the market, thereby accelerating the trend; and consolidation, a period characterized by the initial participants exiting their trade.
DRT - See With discretion
Duration - A weighted average of the cash flows for a fixed income instrument, expressed in terms of time.
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