2.4 – Forex Dealing Jargon

This forex course basics section covers the forex dealing jargon used in conversations among forex market participants.

 

People that trade currencies for a living have their own verbal shorthand for transacting trades. Also, although most transactions take place electronically, many professional traders still rely on interpersonal contact to get a more accurate “feel” for the market.

 

As two examples of forex dealing jargon, a brief conversation is presented below between two dealers that would be typical of a forex trading situation, as well as a conversation among two dealers about the market.

 

The words are also translated into normal English to illustrate some of the typical forex jargon and the manner in which it is used in the professional dealing rooms of major banks.

 

Typical Dealing Conversations

 

As you can see from the sample conversation below, professional forex dealers generally keep the wording used to quote and consummate a foreign exchange transaction as concise as possible.

 

Also, they tend to be a bit more descriptive about a transaction when confirming it since no one dealing millions of dollars in the fast-paced world of the forex market wants to take a chance on allowing any misunderstandings to occur involving the rates of exchange, dealing quantities or currencies involved.

 

A sample dealing conversation might go as follows:

 

  • Dealer 1: “Billy, its Fred in New York. Can I get a price on Cable in ten?

 

Translation: “Hello Billy at ABC Bank, its Fred at XYZ Bank in New York. Can I get your bid and offer prices on which I can sell or buy 10 million British Pounds against the U.S. Dollar?”

 

  • Dealer 2: “Sure, One fifty-five forty five-fifty”.

 

Translation: “Yes, I will buy 10 million British pounds from you at 1.5545 and I will sell you 10 million British Pounds at 1.5550 U.S. Dollars per British Pound.”

 

  • Dealer 1: “Mine ten”

 

Translation: “I would like to buy 10 million British Pounds versus the U.S. Dollar at a rate of 1.5550 U.S. Dollars per British Pound.”

 

  • Dealer 2: “Done, at 1.5550 I sell 10 Quid.”

 

Translation: “Ok, I will sell you 10 million British Pounds versus the U.S. Dollar at a rate of 1.5550 U.S. Dollars per British Pound.”

 

  • Dealer 1: “Done, at 1.5550 I buy 10 Quid.”

 

Translation: “OK, the transaction is confirmed in that I buy from you the sum of 10 million British Pounds versus the U.S. Dollar at a rate of 1.5550 U.S. Dollars per British Pounds.”

 

Typical Market Talk

 

Professional forex dealers will also often talk among each other. For example, they might ask another dealer about their opinion on the market, whether they have seen any significant transaction flows or are working any large orders.

 

A possible non-dealing market conversation between forex traders might go something like this:

 

  • Dealer 1: “What are your thoughts on the Euro? It’s up 100 pips this morning.”

 

Translation: “Can you share any information about the Euro with me? It has risen one cent or 0.01 against the U.S. Dollar during the morning trading session.”

 

  • Dealer 2: “Yes, the SNB has been buying all day.”

 

Translation: “Yes, the central bank of Switzerland known as the Swiss National Bank or SNB has been buying the Euro versus the U.S. Dollar all day, thereby making the Euro’s exchange rate relative to the U.D. Dollar rise.”

 

  • Dealer 1: “What’s your view on going long Euros?”

 

Translation: “What is your opinion about taking a currency position that involves buying the Euro against the U.S. Dollar?”

 

  • Dealer 2:Good idea, I’m working large stops a few pips away that could prompt a rally if triggered.”

 

Translation: “I agree with your idea of taking a long Euro position versus the U.S. Dollar because I have a significant number of orders to buy Euros against the U.S. Dollar placed at a level just a few hundredths of a cent above the current exchange rate for the Euro versus the U.S. Dollar. If that level trades, then I will have to execute these buy orders and so the exchange rate will probably rise as a result.”

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