Forex Terms B



Balance-of-payments. All the international commercial and financial transactions of the residents of one country.

Bank of Canada (BOC). The central bank of Canada.

Bank of England (BOE). The central bank of the United Kingdom. It is a less independent central bank. The government may overwrite its decision.

Bank of France (BOF). The central bank of France.

Bank of Italy (BOI). The central bank of Italy.

Bank of Japan (BOJ). The Japanese central bank.

Bar chart. A type of chart that 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 to the right of the bar.

Barrier options (trigger options, cut-off options, cut-out options, stop options, down/up-and-outs/ins, knock-ups). Options very similar to European style vanilla options, except that a second strike price (the trigger) is specified that, when reached in the market, automatically causes the option to be expired (knock-out options) or "inspired" (knock-in options).

Bearish tasuki. A bearish two-day candlestick combination. It consists of a long blank bar that has a low above 50 percent of the previous day's long black body, and closes marginally above the previous day's high. The second day's rally is temporary, as it is caused only by profit-taking. The sell-off is likely to continue the next day.

Bearish tsutsumi (the engulfing pattern). A bearish two-day candlestick combination. It consists of a second-day bearish candlestick whose body "engulfs" the previous day's small bullish body.

Bilateral grid. An exchange rate system that links all the central rates of the EMS currencies in terms of the ECU.

Black closing bozu. A bearish candlestick formation that consists of a long black bar (upper shadow).

Black marubozu (shaven head). A bearish candlestick formation that consists of a long black bar (no shadow).

Black opening bozu. A bearish candlestick formation that consists of a long black bar (lower shadow).

Black-Scholes fair value model. The original option pricing model, which holds that a stock and the call option on the stock are comparable investments and thus a risk-less portfolio may be created by buying the stock and selling the option on the stock, as a hedge. The movement of the price of the stock is reflected by the movement of the price of the option, but not necessarily by the same amplitude. Therefore, it is necessary to hold only the amount of the stock necessary to duplicate the movement of the price of the option.

Blank closing bozu. A bullish candlestick formation that consists of a long blank bar (lower shadow).

Blank marubozu (shaven head). A bullish candlestick formation that consists of a long blank bar (no shadows).

Blank opening bozu. A bullish candlestick formation that consists of a long blank bar (upper shadow).

Bollinger bands. A quantitative method that combines a moving average with the instrument's volatility. The bands were designed to gauge whether the prices are high or low on a relative basis. They are plotted two standard deviations above and below a simple moving average. The bands look like an expanding and contracting envelope model. When the band contracts drastically, the signal is that volatility will expand sharply in the near future. An additional signal is a succession of two top formations, one outside the band followed by one inside. If it occurs above the band, it is a selling signal. When it occurs below the band, it is a buying signal.

Book method. Point-and-figure chart's original name.

Box spread. A compound option strategy that consists of four options with a common expiration date: a long call and a short put at one strike price, and a long put and a short call at a different strike price.

Breakaway gap. A price gap that occurs in the beginning of a new trend, many times at the end of a long consolidation period. It may also appear after the completion of major chart formations.

Breakout of a spread triple bottom. A bearish point-and-figure chart formation that suggests that the currency is likely to break a support line the third time it reaches it. The currency failed to reach the support line once.

Breakout of a spread triple top. A bullish point-and-figure chart formation that suggests that the currency is likely to break a resistance line the third time it reaches it. The currency failed to reach the resistance line once.

Breakout of a triple bottom. A bearish point-and-figure chart formation that suggests that the currency is likely to break a support line the third time it reaches it.

Breakout of a triple top. A bullish point-and-figure chart formation that suggests that the currency is likely to break a resistance line the third time it reaches it.

Bullish tasuki. A bullish two-day candlestick combination. It consists of a long black bar that has a high above 50 percent of the previous day's long blank body, and closes marginally below the previous day's low.

Bullish tsutsumi (the engulfing bar). A bullish two-day candlestick combination. It consists of a second bullish candlestick whose body "engulfs" the previous day's small bearish body.

Bundesbank. The German central bank.

Business firms (establishment) survey. Survey of the payroll, workweek, hourly earnings, and total hours of employment in the non-farm sector.

Business Inventories. An economic indicator that consists of the items produced and held for future sale.

Butterfly spread. A compound option strategy that consists of a combination of a bull spread and a bear spread, using either calls or puts.

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