What is Interest Rate Risk in Forex Trading?
The interest rate risk is the prospective for investment losses that effect from an adjustment in interest rate. The rise in interest rate affect many investments but the fixed income investment and value of bonds will decline the most. Therefore bond and security holder watch interest rate more carefully and make decision on the basis […]
What is Interest Rate Parity in Forex Trading?
It is theory in which interest rate disparity among the two countries is equivalent to the differential between spot exchange rate and forward exchange rate. The interest rate parity shows a significant role in foreign exchange market, involving foreign exchange rate, spot exchange rate and interest rates. The interest rate parity is important calculation that […]
What is Interest Rate Differential in Forex Trading?
The interest rate differential measures the difference in interest rate of two different currencies. The traders of foreign exchange market use interest rate differential when valuing the forward exchange rates. IRD is often used in lending markets, forex and fixed income. It also play an important role in calculating the carry trade. A carry trade […]
What is International Monetary Fund in Forex Trading?
It is an international organization that object to promote international trade, financial stability, and global economic growth, promote high employment and reduce poverty around the globe while occasionally depending World Bank for its means. It was formed in 1944 at Bretton Woods Conference primarily by the idea of John Maynard Keynes and Harry Dexter White. […]
What is Interbank Rates in Forex Trading?
Interbank rate also known as federal funds rate is the interest charged on small term loans made between the larger financial institutions. Usually banks borrow short term loan from other banks to ensure that they have enough liquidity for their immediate needs. The word interbank is also state the interest rate charged when financial institutions […]
What is Initial Margin in Forex Trading?
It is an initial deposit of collateral or cash needed to enter in a trade. The current initial margin requirements is 50% set by the Federal Reserve Board Regulation. This is the minimum requirements regulations but usually equity brokerage firms set initial margin higher than 50%. In order to open a margin account with brokerage […]