Foreign Exchange Primer (eBook)

SHANI SHAMAH joined Jared James Associates as a Director mid 2006 to focus on treasury products including foreign exchange, currency options, commodities and the spectrum of short-term money markets instruments. The coverage extends globally across all revenue and non-revenue generating areas with specialization in trading, sales, structuring, research/strategy and eCommerce. With over 26 years experience in the City with various top and second tier international financial institutions, mostly in foreign exchange and currency options, she is also a specialist in the business development of eCommerce offerings (both institutional and retail) and a generalist in various other financial products with a formidable appreciation and market awareness of the risk management and compliance functions.

Disclaimer ix

1 Introduction 1

PART I MARKET OVERVIEW 7

2 A Brief History of the Market 9

3 MarketOverview 25

4 Major Participants 33

5 Roles Played 43

6 Purposes 45

PART II FOREIGN EXCHANGE PRODUCTS 49

7 Spot Foreign Exchange 51

8 Forward Contracts 59

9 Short- and Long-Dated Contracts 69

10 Broken-Dated Contracts 73

Glossary of Terms for Chapters 7 to 10 77

11 Non-Deliverable Forwards 81

12 Foreign Exchange Swaps 91

13 Currency Swaps 95

14 Foreign Exchange Options 99

15 Picturing Profit and Loss of Options 117

Glossary of Terms for Chapters 14 and 15 133

16 Foreign Exchange Futures 137

17 Exchange for Physical 145

PART III ESSENTIAL KNOWLEDGE 149

18 Foreign Exchange Dealing Rooms 151

19 Managing the Relationship with an Institution 155

20 Foreign Exchange Dealings 159

21 Foreign Exchange Market Orders 165

Glossary of Terms for Chapter 21 169

22 Electronic Foreign Exchange Trading 171

23 Margin Trading 179

PART IV FUNDAMENTALS AND TECHNICAL ANALYSIS 183

24 Fundamental versus Technical Approaches 185

25 Fundamental Analysis 191

26 Key Factors Impacting Currencies 197

27 Technical Analysis 207

Glossary of Terms for Chapters 24 to 27 221

28 Market Psychology 223

29 Final Remarks 231

Index 235