A measure of how much the price of a currency changes over time.
A hedge is the practice of buying a physical commodity to protect against a possible currency devaluation.
Market-Maker – A dealer or broker that provides a two-way quote (i.e. a bid and ask price) for which the dealer agrees to buy or sell. Offering both sides of a trade literally "makes" a market for those wishing to engage in currency trading. In recent years, new developments in web-related technologies have made it possible for independent brokers to develop internet-based trading platforms.
These brokers serve as market-makers and provide a two-way quote for each currency pair they support. OANDA is an example of a forex market-maker.
Refers to the number of buyers and sellers in the market willing to trade at any given time. Generally speaking, the greater the liquidity within a market, the greater the number of trades completed, which translates into higher volumes.
An attempt to profit on the fluctuation in prices for currencies and other investment securities.
A commitment to fix the value of a currency to a specific quantity of gold. Under this system, the holder of the country's currency can convert funds to an equal amount of gold. After World War II, economies in Europe were left in tatters. To help these economies recover – and to avoid mistakes made in the wake of the First World War – the Bretton Woods Accord was convened in July 1944. Several resolutions arose from Bretton Woods, but it was the "pegging" of foreign currencies to the U.S. dollar, rather than gold, that arguably had the greatest immediate impact on the global economy.
A contract to buy or sell a specified amount of a currency pair at a given exchange rate.