TRADER'S DICTIONARY - F

Face Value

Value of a bond to be paid out at maturity. Also known as Par Value.

Factory Orders

Economic indicator that measures new orders for both durable and nondurable goods.

Fast Market

Strong pressure in the market, in which prices are moving too quickly to be disseminated.

Federal Deposit Insurance Corporation (FDIC)

US regulatory agency charged with regulating US banks. The FDIC provides insurance up to $100,000 per account.

Federal Funds Rate (FFR)

Interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions, usually overnight. The FFR is guided (but not determined outright) by the Federal Open Market Committee.

Federal Open Market Committee (FOMC)

Committee made up of Federal Reserve members, which meets eight times a year to discuss/ implement monetary policy.

Federal Reserve Bank (Fed)

The central bank of the United States, responsible for using monetary policy to promote economic growth and price stability.

Federal Reserve Board

Senior members of the Federal Reserve, each of whom is appointed by the US President. The chairman of the Fed Reserve Board serves a 4-year term, while the other members serve 14-year terms.

Fiat Currency

Money declared by a government to be legal tender, and not backed by any other commodity, such as gold.

Fibonacci Numbers

Sequence of numbers in which each successive number is the sum of the two previous numbers. Fibonacci numbers are used in financial/currency markets to develop trading algorithms, applications and strategies. The four most common forms are the Fibonacci fan, Fibonacci Arc, Fibonacci Retracement and the Fibonacci Time Extension.

Fill

Execution of an order to buy or sell.

Fill or Kill

Type of order which is either completed or rejected in full.

Fill Price

Price at which a buy or sell order is executed.

Firm Quote

Order to buy or sell a security/currency that is not subject to cancellation.

First In First Out (FIFO)

Account rule that dictates all positions opened within a particular currency pair are liquidated in the order in which they were originally opened.

Financial Services Authority (FSA)

Agency designated by the UK Treasury to regulate the UK financial industry.

Fiscal Policy

Refers to tax policy, government spending, and other government initiatives directed at optimizing economic performance.

Fisher Effect

Theory that money moves from low-yielding currencies into higher-yielding currencies, as investors chase higher interest rates.

Fixed Exchange Rate

Exchange rate regime in which a currency is pegged by the Central Bank so that it cannot fluctuate against other currencies. Currencies can be pegged to other currencies or commodities, such as gold.

Fixing

A method used to determine rates/prices that seeks to balance buying and selling pressure.

Flag and Pennant

Trading pattern characterized by an upward movement with a large slope followed by a period of consolidation. It is considered a bullish pattern overall, as the pattern is expected to continue rising.

Flat/Square

A situation in which a position is closed, or two positions exist that cancel each other out.

Flat on a failure

Recommendation to take profits on a long trade if the exchange rate tests but fails to break through a specified level.

Floating Interest Rate

An interest rate that adjusts in accordance with market forces. Opposite of a fixed interest rate.

Floor

Lowest acceptable limit as restricted by controlling parties. Opposite of a cap.

Floortion

A type of compound option, whereby the purchaser has the right, but not the obligation, to enter into a floor at a predetermined rate on a predetermined date.

Force Majeure

Contractual clause that relieves either party from fulfilling the obligations of the agreement as a result of an "extraordinary event."

Foreign Exchange (Forex)

The buying and selling of currencies.

Foreign Currency Effect

Potential for changes in exchange rates to affect returns on overseas investments.

Forward Contract

Derivative Agreement between two parties to buy or sell an asset at a certain future time for a certain price agreed today. This is in contrast to a spot contract, which is an agreement to buy or sell an asset today.

Forward Points

Pips added to or subtracted from the current exchange rate to calculate a forward price.

Forward Rate

Interest rate for a future period. For example, it could refer to a one-year interest rate beginning six months from now.

Forward rate agreement (FRA)

Interest rate contract in which buyer and seller agree to exchange the difference between the current interest rate and a pre-agreed fixed rate.

Free Reserves

Margin by which reserves exceed borrowings. Also known as excess reserves.

Front Office

Refers to those personnel with whom customers have the opportunity to interact.

Fundamental Analysis

The analysis of economic indicators and political and current events that could effect the future direction of financial markets. Opposite of Technical Analysis.

Fundamental Trader

A currency trader that relies on fundamental analysis.

Funding Currency

A comparatively low-yielding currency, which is used to borrow money so that the proceeds can be invested in a higher-yielding currency.

Futures Contract

Standardized contract to buy or sell a specified commodity/asset of standardized quality at a certain date in the future, at a market determined price (the futures price). The contracts differ from forward contracts in that they are traded on a futures exchange.

FX Forward

Obligation to buy or sell a currency at an agreed price on an agreed date. The forward or future price is decided by adjusting the spot or current price to account for changes in interest rates.