Forex Investment and Currency Trading

All Forex investors must master the basic structure and vocabulary of the market before they trade.
Spot
A spot or Forex transaction is the most basic exchange in the foreign exchange market. It is simply the exchange of one currency for another. Every Forex trade consists of two simultaneous transactions; a buying of one currency and a selling of another. That’s why it is called a spot or cash transaction. Technically all transactions have a two-day settlement, except for Canadian transaction, which have a one-day settlement.
For example, one trader exchanges $1 with another trader for 105 yen, just as an American tourist [...]

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Real Effective Exchange Rate (REER)
The real effective exchange rate is a moving measure of a currency’s value relative to a base period value of 100. For example, REER uses a base of January 1990 = 100. Changes in the REER reflect a change in the value of a currency relative to a basket of its trading partner currencies, after also accounting for inflation at home and abroad. The trade weights are the average of imports and exports between the 39 countries included in the REER matrix, using foreign trade data for 2001 through 2003. Analysis of REERs relative to long-term [...]

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Description
An Inverse Floater Deposit (or Inverse Floater) is a structured deposit that pays a coupon that is inversely linked to a floating interest rate index. The initial coupon is usually much higher than a comparable vanilla deposit. Typically, if the index goes up by 1% then, depending on the leverage of the Inverse Floater, the coupon received will go down by 1% (no leverage), 2% (twice leveraged), 3% (three times leverages) etc… The coupon is typically expressed as:
Coupon = Max (X% - Leverage x Index, Min Coupon%)
Inverse Floaters are typically structured as principal protected – the minimum coupon will therefore [...]

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Description
A Fixed Rate Range Accrual Swap is a structured swap where the company receives a relatively high return if the reference index fixes within a certain range. Typically, a structured coupon is of the form X% x n/N, where X% is a fixed rate, N is the total number of observation days associated with the structured coupon and n is the total number of observation days for which a reference rate (e.g. 1 month, 3 month, 6 month or 12 month LIBOR) lies within a pre-defined range.
Application
Fixed Range Accrual Swaps are used in structured deposits and notes, where the coupon [...]

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