Forex Terms With "F"

FCM
See Futures Commission Merchant.

Federal Deposit Insurance Corporation
A regulatory agency of the created to oversee that bank deposits are insured against bank failures. It was created in 1933 to restore confidence in the banking system. It insures up to US $100,000 per banking institution.

Federal Reserve/Fed
The central bank of the United States, responsible for monetary policy.

Fixed Exchange Rate
When the exchange rate of a currency is not allowed to fluctuate against another, i.e. the exchange rate remains constant. Typically, under fixed exchange rate regimes, currencies are allowed to fluctuate within a small margin. Fixed exchange rate regimes require central bank intervention to maintain the fixed rate.

Fixed Interest Rate
An interest rate used for loans, mortgages and bonds that remain at the same rate throughout the period.

Flat/Square
To either have no positions or positions that cancel each other out.

Floating Rate Interest
An interest rate that is allowed to adjust with the market. The opposite of a fixed interest rate.

Foreign Exchange (Forex)
The buying and selling of currencies.

Foreign Currency Effect
Refers to how changes in the exchange rate affect the return on foreign investment.

Forward Contract
A deal in which the price for the future delivery of a commodity is set in advance of the delivery. The Forward rate is obtained by adding the margin to the spot rate. It is used to hedge against adverse fluctuations in the exchange rate that can affect amount of profit or loss at that future date.

Forward Points
Refers to the pips that were added to or subtracted from the current exchange rate to obtain the forward price/rate.

Future Rate Agreements (FRAs)
FRAs are agreements that are made that allow for borrowing and lending at a constant interest rate for a specified period in the future.

Front Office
Refers to the sales personnel (trading and other business personnel) in a financial company.

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

Futures Commission Merchant
A Futures Commission Merchant engages in futures and options transactions. An FCM has a role in the futures market that is similar to that of a broker in the securities market.

Futures (Financial Futures)
Future contracts that commit both sides to an exchange/transaction of financial instruments, currencies or commodities at a future date and a predetermined price. Future contracts are similar to forward contacts, but future contracts can be traded in the futures markets. Can be used to hedge or speculate against the value of the asset at the expiry date.