Reference

Glossary of FX terms.

The vocabulary that turns up across FX trading, money-transfer services, and corporate treasury workflow. Each entry is short and links to longer treatment where one exists.

Ask: The price at which the market-maker will sell the base currency. Higher than the bid by the spread.
Base currency: The first currency in a quoted pair. In EUR/USD, EUR is the base; the rate states how many USD buy one EUR.
Bid: The price at which the market-maker will buy the base currency. Lower than the ask.
BIS Triennial Survey: The Bank for International Settlements' three-yearly survey of FX market turnover. The most authoritative source on global FX volumes (~$7.5T/day in the 2022 survey).
CLS Bank: Continuous Linked Settlement. The interbank settlement system that eliminates Herstatt risk by settling both legs of an FX trade simultaneously. Settles ~50% of global FX flow.
Cross-rate: An exchange rate between two currencies derived from each currency's rate against a common third currency (typically USD). See the cross-rate page.
DCC: Dynamic Currency Conversion. A merchant terminal feature that converts a foreign-currency transaction to your home currency at the merchant's chosen rate. Always more expensive than declining and using your card's network rate.
ECB reference rate: European Central Bank daily reference rate, captured 16:00 CET. Used for statistical and informational purposes; not for execution. See the ECB vs mid page.
FX: Foreign exchange. The market for trading currencies.
Forward: A bilateral agreement to exchange currencies at a fixed rate on a future date. Used for hedging known future cash flows.
ISO 4217: The international standard defining three-letter currency codes (USD, EUR, GBP, JPY, ...).
Mid-market rate: The midpoint between bid and ask. The published reference rate on this site. Not a rate at which retail transactions actually execute.
Network rate: The Visa or Mastercard daily reference rate applied to a card transaction in a foreign currency. Plus the issuer markup, gives the rate that appears on your statement.
Pip: The smallest standard unit of price movement. For most pairs, 1/10,000 (the fourth decimal). For yen pairs, 1/100 (the second decimal).
Quote currency: The second currency in a quoted pair. In EUR/USD, USD is the quote; the rate is expressed in USD per unit of EUR.
Spot: An FX trade for settlement in two business days (T+2). The standard convention for most currency pairs except USD/CAD and USD/MXN, which settle T+1.
Spread: The difference between the bid and the ask. Compensation for the market-maker. See the spread page.
T+2: Trade date plus two business days. The standard FX spot settlement period.
Triangular arbitrage: Trading three pairs in sequence (USD/EUR, EUR/JPY, JPY/USD) to profit from cross-rate inconsistencies. In liquid markets, opportunities close within milliseconds.
WM/Refinitiv 16:00 London Fix: The most widely-used institutional FX benchmark. Captured at 16:00 London time. Used to value pension fund and ETF holdings.