Forex Terms "B"

Back Testing
The process of designing a trading strategy based on historical data. It is then applied to fresh data to see if and how well the strategy works. Most technical analysis is tested with this approach

Balance/Account Balance
The net value of an account.

Balance of Payments
A record of all transactions made by one particular country with others during a certain time period. It compares the amount of economic transactions between a country and all other countries. This includes trade balance, foreign investments, and investments by foreigners.

Balance of Trade
Net flow of goods (exports minus its imports) between two countries.

Bank for International Settlements
The BIS is an international organization fostering the cooperation of central banks and international financial institutions. Essentially, the BIS, located in Basel, is a central bank for central banks. It monitors and collects data on international banking activity and promulgates rules concerning international bank regulation.

Back Office
Refers to the administrative arm of financial service companies, who carry out and confirm financial transactions. Duties include accounting, settlements, clearances, regulatory compliance and record maintenance.

Balance of Payments
Record of all transactions, such as trade balances and capital flows, carried out by a county with the rest of the world within a certain period.

Base Currency
In general terms, the base currency is the currency in which an investor or issuer maintains its book of accounts. In the FX markets, the US Dollar is normally considered the 'base' currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.

Basis
The difference between the cash price and the futures price.

Basis Point
Measure of a bond's yield equal to 1/100^th. A 1% change in yield is equal to 100 basis points and 0.01% is equal to one basis point.

Bear
Investor acting on the belief that prices or the market will decline.

Bear Market
Any market that exhibits a declining trend. In the long run they have a down turn of 20% or more.

Bid
The price an investor is willing to pay for an asset.

Bid/Ask Spread
The difference between the bid and the ask price.

Big Figure
Refers to the first number to the left of the decimal point in an exchange rate quote, which changes so infrequently that dealers often omit them in quotes.

Bonds
Bonds are debt instruments used to raise capital, which are issued for periods greater than one year. Bondholders are loaning money (investing in debt) to companies and governments, at the end of which they will be paid a specified interest rate. Bond prices are inversely related to interest rates, as interest rates rise, bond prices fall. There are numerous types of bonds, including treasury bonds, notes, and bills; municipal bonds and corporate bonds.

Book
Recording of the total positions held by a trader or desk.

Bretton Woods Accord (1944)
This accord established a fixed exchange rate regime, whose aim was to provide stability in the world economy after the Great Depression and the WWII. This accord fixed the exchange rates of major currencies to the US dollar and set the price of gold to $35. The accord required central bank intervention to maintain the fixed exchange rates. The US Central Bank was required to exchange dollars for gold, which eventually let to the demise of this system, when the demand for the dollar declined, as well as the gold reserves, forcing Nixon to stop the exchange of dollars for gold, effectively ending the system in 1971.

Broker
Individual or firm acting as an intermediary to bring together buyers and sellers typically for a commission or fee.

Bull
Investor who expects markets or prices to rise.

Bull Market
A market where prices are rising or are expected to rise.

Bundesbank
Germany's Central Bank.

Buy a bounce
A recommendation to instigate a long trade if the price bounces from a certain level.

Buy break
A recommendation to buy the currency pair if it breaks the current level specified.

Buy stops above
A recommendation to enter the market when the exchange rate breaks through a specific level. The client placing a stop entry order believes that when the market's momentum breaks through a specified level, the rate will continue in that direction.