TRADER'S DICTIONARY - D

Daily Charts

Charts that encapsulate daily price movements for a given currency pair.

Daily Cut-Off

The designated time of day chosen by a dealer to demarcate the end of one trading day and the beginning of the next, necessary because forex markets operate 24 hours per day.

Day Order

Buy or sell order that automatically expires at the end of the current trading day.

Day Trading

An approach to trading which involves entering and closing trades on the same day or trading session.

Deal Blotter

List of all transactions completed on a given trading day.

Deal Ticket

Dealer record of the basic details of a transaction, differing slightly from the statement received by the customer.

Dealer

Individual or firm that acts as a principal in a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast to brokers, which serve as mere intermediaries, dealers are exposed to some risk.

Default

Failure of an issuer to make timely payments of both interest and principal when due.

Deficit

Describes an excess of liabilities over assets, of losses over profits, or of expenditure over income.

Deflator

An adjustment which turns nominal GDP into real GDP, by taking inflation into account.

Deflation

A decrease in the general price level of goods and services, whereby the inflation rate falls below zero percent, resulting in an increase in the real value of money.

Delivery

Refers to the (physical or electronic) exchange by buyer and seller of two given currencies.

Delta

Rate of change of an option price with respect to changes in the underlying asset value.

Demo Account

Free forex practice account that allow beginners (or veterans) to measure the profits from hypothetical trades.

Depreciation

Decline in the value of an asset, currency, or security.

Depth of Market

The volume of buy and sell orders waiting to be transacted for a particular currency pair at a particular point in time.

Details

The information necessary to execute a forex transaction, including currency pair, rate, time/date, and size.

Derivative

Financial instrument (forwards, futures, options, swaps) whose value is derived from an underlying security.

Descending Triangles

Trading pattern consisting of two or more comparable lows forming a horizontal line at the bottom. When support on the lower rung of the triangle is broken, it is believed to signal bearishness.

Deutschmark

Former currency of Germany, phased out (and replaced by the Euro) when Germany joined the European Union.

Devaluation

A deliberate depreciation of a currency (relative to one or more other currencies), usually affected by the Central Bank.

Direct Quote

A quote that indicates variable units of domestic currency per fixed units of foreign currency.

Dirty Float (Managed Float)

Exchange rate regime in which the currency is not pegged outright, but is instead "managed" by the Central Bank with the professed goal of preventing wild fluctuations in the exchange rate.

Discount Rate

Interest rate that an eligible depository institution is charged to borrow short-term funds directly from the Federal Reserve Bank.

Discount Spread

Refers to the situation whereby the bid price of a forward spread rate is less than the ask price.

Discretionary Account

Type of account whereby a customer allows an institution to make trading decisions on his or her behalf.

Disinflation

Slow-down in the inflation rate (i.e. when the inflation decreases, but still remains positive).

Divergence

Describes the phenomenon whereby a technical indicator and corresponding price chart don’t yield the same peaks/bottoms. It usually indicates trend "exhaustion."

Diversified Carry Basket

Type of trading strategy in which several carry trades are made/held simultaneously, in order to limit losses/risk from one particular carry trade position.

Double Barrier Option

A type of option incorporating two knock out or knock in levels, one either side of spot, used by participants that have strong views on both a support and a resistance level.

Double Top and Bottom

Trading pattern consisting of upper and lower limits that have been touched twice, but never breached. It is usually interpreted as a sign of uncertainty. However, when the currency breaks out of the range, the movement is expected to be significant.

Dow Theory

One of the ideas underpinning the field of technical analysis, positing that all major trends can be sub-divided into three phases: entrance, acceleration, and consolidation.

Drawdown

A drop in the value of an account, calculated by subtracting the low from the peak.

Dual Currency Service

Foreign exchange instruments that let investors place funds into a product that speculates on the movement of the exchange rate between two major currencies.

Dual Currency Swap

Type of swap used to hedge dual currency bonds in which the issuer has the option to repay principal and coupon in either the base currency or an alternative currency at a pre-agreed exchange rate.

Dual Exchange Rate

Situation in which there is an official exchange rate and an parallel "black market" rate. Also known as Two-Tier Market.

Durable Goods Orders

Monthly government report which measures consumer spending on long-term purchases, products that are expected to last more than three years. It is designed to gauge the health of the manufacturing industry.