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Finance GlossaryForex Trading
Forex Trading
Definition of Forex Trading
Forex trading means buying and selling currency pairs through exchange-traded derivatives or on the OTC market. A currency can only be bought and sold in exchange for another currency, which is why forex trading is always done in pairs.
Trading forex derivatives is carried out on stock exchanges authorized by regulatory bodies (SEBI & RBI), in tandem with approved brokers who allow users to engage with the forex futures trading and options trading markets.
Trading forex derivatives is carried out on stock exchanges authorized by regulatory bodies (SEBI & RBI), in tandem with approved brokers who allow users to engage with the forex futures trading and options trading markets.
Related Terms
Macro Analysis
Macro analysis is the study of broad economic factors that influence financial markets as a whole. It includes interest rates, inflation, economic growth, government policies, and global events that shape overall market direction.
Alpha
An Alpha indicates the measure by which a stock or portfolio has managed to outperform a benchmark like an index of shares.
A positive Alpha means that the security or portfolio is beating the market while a negative Alpha means that it is lagging.
Alpha can also be used to measure the competence of a fund manager and their strategies.
A positive Alpha means that the security or portfolio is beating the market while a negative Alpha means that it is lagging.
Alpha can also be used to measure the competence of a fund manager and their strategies.
Return on Equity (ROE)
The Return on Equity is a metric that helps to find the how effectively a company uses the money of its shareholders to generate profits. The ROE can be obtained by dividing the new profit generated by the equity of shareholders. When a company has a higher ROE, it implies that it has a strong management and strong profitability. Investors often compare the companies within the same sector using the ROE. The ROE also helps investors determine the potential of the company to generate wealth in the long term.
Minority Interest
Minority Interest refers to the portion of a subsidiary’s equity that is owned by shareholders other than the parent company. It represents the non-controlling stake in the subsidiary’s profits and net assets. It is shown separately in consolidated financial statements to reflect ownership accurately.
Foreign Direct Investment
Foreign Direct Investment (FDI) is the act of acquiring a majority stake in a company located in a different country with the intention of assisting, growing, and managing the business.
FDIs and FPIs may seem similar but there is a major difference - lasting interest. When a company or investor obtains at least 10% control of foreign company with the intention of actively managing the business, it’s known as lasting interest.
A company that establishes a subsidiary in another country can also be classified as FDI. FDIs can also be made through mergers and acquisitions as well as collaborations with foreign companies
FDIs and FPIs may seem similar but there is a major difference - lasting interest. When a company or investor obtains at least 10% control of foreign company with the intention of actively managing the business, it’s known as lasting interest.
A company that establishes a subsidiary in another country can also be classified as FDI. FDIs can also be made through mergers and acquisitions as well as collaborations with foreign companies
Deferred Tax Liability
A deferred tax liability is line item on a company’s balance sheet that refers to taxes that owed but due in the future. Common examples of deferred tax liabilities include:
- Paying less tax
- Sales in instalments
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