Forex Trading Glossary, Letter "B"


Back office - Stands for, settlement and related processes.

Backwardation - Is a term referring to, the amount that the spot price exceeds the forward price.

Balance of Payments - The ("balance of payments") is a systematic record of the economic transactions during a given period for a country.

(1) The term is often used to mean either: (A) balance of payments on "current account" or (B) the current account plus certain long-term capital movements.

(2) The combination of the trade balance, current balance, capital account and invisible balance, which together make up the balance of payments total. Prolonged balance of payment deficits tend to lead to restrictions in capital transfers, and/or decline in currency values.

Band - This word means the range in which a currency is permitted to move. A system used in the ERM.

Bank line - A "bank line" is a line of credit granted by a bank to a customer, also known as a "line."

Bank rate - A "base rate" is the rate at which a central bank is prepared to lend money to its domestic banking system.

Base currency - A "base currency" is the currency in which the operating results of the bank or institution are reported.

Basis - This is the difference between the cash price and futures price.

Basis point - A"basis point" is one percent of one percent.

Basis trading - Is the taking of opposite positions in the cash and futures market with the intention of profiting from favorable movements in the basis.

Basket - Is the word used to talk about a group of currencies normally used to manage the exchange rate of a currency. This is sometimes referred to as a unit of account.

Bear market - A "bear market" is a prolonged period of generally falling prices.

Bear - Is the word given to an investor who believes that prices are going to fall.

Bid - This is the price at which a buyer has offered to purchase the currency or instrument.

Book - "Book" is the summary of currency positions held by a dealer, desk, or room. A total of the assets and liabilities. If the average maturity of the book is less than that of the assets, the bank is said to be running a short and open book.

Passing the Book - "Passing the Book" usually refers to the transferring of the trading of the bank's positions to another office at the close of the day, e.g. from London to New York.

Bretton Woods - This was the place where the conference, which in 1944, gave rise to the establishment of the post-war foreign exchange system that remained intact until the early 1970s. This conference resulted in the formation of the IMF. The system fixed currencies in a fixed exchange rate system with 1% fluctuations of the currency to gold or the dollar.

Broker - A "broker" is an agent, who executes orders to buy and sell currencies and related instruments either for a commission or on a spread. Brokers are agents working on commission and not principals or agents acting on their own account.

In the foreign exchange market brokers tend to act as intermediaries between banks bringing buyers and sellers together for a commission paid by the initiator or by both parties. There are four or five major global brokers operating through subsidiaries, affiliates, and partners in many countries.

Bull market - A "bull market" is a prolonged period of generally rising prices.

Bull - Is the word given to an investor who believes that prices are going to rise.

Bundesbank - The German Central Bank, or the Central Bank of Germany

Buying Rate - The "buying rate" is the rate at which the market and a market maker in particular are willing to buy the currency. This is sometimes called a bid rate.