Glossary of foreign exchange terms

Bankers’ Automated Clearing Services – the process for making Sterling payments via domestic banks. Mostly used for direct credits and direct debits. BACS payments tend to take three business days to clear.

The movement of funds from one entity to another. When related to moving cash from one location (country) to another, this is often interchanged with terms including; currency transfer, foreign exchange, currency converting and more.

Clearing House Automated Payment System – a faster way of making payments. Usually cleared on the same working day.

This is the process of moving funds from one location, and therefore currency, to another.

A contract to exchange a specific amount of one currency for another on a future date, at a predetermined rate. A deposit is normally required for forward contracts.

The exchange of one currency for another at a specified rate for settlement in two working days.

Like a stop loss order, a take profit order first involves setting a currency level. Once that currency level is reached, the trade is executed in the market. The currency level used for a take profit order is always better than the current market price. This allows you to capitalise or take profit on improvements in exchange rates without having to keep an eye on the rate.