Forex Glossary - B

Balance of Trade

The value of a country's exports minus its imports.


Bar Chart

A type of forex chart which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line of the right of the bar.


Base Currency

The first currency in a Currency Pair. It shows how much the base currency is worth as measured against the second currency at forex. For example, if the USD/CHF rate equals 1.2615 then one USD is worth CHF 1.2615 In the FX markets, the U.S. 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.


Bear Market

A forex market distinguished by declining prices.


Bid Price

The bid is the price at which the market is prepared to buy a specific currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can sell the base currency. It is shown on the left side of the quotation. For example, in the quote USD/CHF 1.2627/32, the bid price is 1.2627; meaning you can sell one U.S. dollar for 1.2627 Swiss francs.


Bid/Ask Spread

The difference between the bid and offer price. Big Figure Quote - Dealer expression referring to the first few digits of an exchange rate. These digits are often omitted in forex dealer quotes. For example, a USD/JPY rate might be 117.30/117.35, but would be quoted verbally without the first three digits i.e. "30/35".


Book

In a professional trading environment, a "book" is the summary of a forex trader's or desk's total positions.


Broker

An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a "dealer" commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.


Bretton Woods Agreement of 1944

An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the forex currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.


Bull Market

A forex market distinguished by rising prices.


Bundesbank

Germany's Central Bank.