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Forex Terms
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PA PE PI PO PR PU
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1. Par The official value of a currency.
2. Par Spread The term used to describe the situation where the bid and ask prices for a forward spread rate are identical.
3. Paris Nickname for the US Dollar-French Franc currency pair before the French Franc was converted to the Euro.
4. Parity See Purchasing Power Parity.
5. Partial Lot Some brokerages allow trading in partial lots, which are fractions of 100,000 units that normally make up a full lot.
6. Pegged A system where a currency's value is tied with that of another currency. For example, the Chinese yuan with the US dollar. Most pegs are allowed to deviate within a small band.
7. Petrodollars Refers to the forex reserves as a result of oil sold by oil producing nations.
8. Pip The smallest upward or downward price movements quoted in forex. In EUR/USD, a movement of 0.0001 is one pip (for example, from 140.005 to 140.004 euro). In USD/JPY, a movement of 0.01 is More…
9. Point & Figure Charts Technical analysis graphs that focus solely on price without any consideration of time.
10. Political Risk Changes in government policy or to a wider extent, government instability that might have negative effects on the currency.
11. Position A trade that is still in effect. See Open Position and Closed Position.
12. Premium See Carry.
13. Premium Spread Refers to the situation where the bid price of a forward spread rate is greater than the ask price.
14. Price The cost of purchasing a second currency in terms of a first currency.
15. Price Transparency The ability of all market participants to trade at the same price.
16. Principal Value The original amount invested.
17. Principals Refers to the major currencies that are traded.
18. Producer Price Index An economic indicator that gauges the month-to-month price change that producers receive for their output.
19. Profit Taking Closing a position in order to realize a gain.
20. Purchasing Power Parity Refers to functional equivalency. It is the relationship between the amount of currency needed to buy a common good in one country and the amount needed to buy the same good in the second More…

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