FXCM Research Team

What Is Contribution Margin? Contribution margin is a business accounting term that measures the difference between sales revenue and the variable costs to produce or sell a product. It shows the amount of profitability a company would achieve once it covers its fixed costs, i.e., its breakeven point. A company's fixed costs remain basically the same whether it makes or sells one unit or thousands. The most common fixed costs…

What Is A Non-Deliverable Forward? A non-deliverable forward (NDF) is a contract to buy or sell a specific currency at a specified price in which the settlement of the contract at expiration doesn't involve the physical delivery of the currency, hence the name. In general, NDFs are used to hedge or speculate in local currencies in emerging markets where the currency has low liquidity, is not freely convertible, or where…

In finance, the term market capitalisation is used to reference the aggregate value of a specific security, sector, exchange, or trading venue. Frequently shortened to "market cap," it may be calculated in a variety of ways and is especially useful when comparing the relative size of tradable securities or marketplaces. Stocks One of the most common applications of market capitalisation is to corporate stock offerings. According to the U.S. Securities…

What Is A Credit Default Swap? A credit default swap (CDS) is a financial derivatives contract that acts as an insurance policy that an investor takes out in order to protect against a bond issuer defaulting on its obligations to pay interest and repay principal. The investor "swaps" their risk with an insurance company, a bank, or a hedge fund. The institution accepts the risk against the bond, defaulting in…

For active currency traders, market volatility presents a vast array of opportunities and challenges. Fluctuations in the exchange rates of forex pairs can occur rapidly and seemingly out of nowhere. If not consistently put into a manageable context, turbulent price action can prove detrimental to a trader's chances of sustaining long-run profitability. Standard deviation is one mechanism used by forex market participants to identify normal and abnormal moves in pricing.…

The Sterling ratio is an risk-adjusted investment performance measure. Similar to the Sharpe and Sortino ratios, the Sterling ratio is used to define how efficiently risk capital is being allocated. It is frequently implemented by individual investors and hedge funds in the arena of portfolio management. What Is The Sterling Ratio? In practice, the Sterling ratio quantifies investment performance by comparing periodic returns to periodic drawdowns. The unique aspect of…

The U.S. Department of the Treasury is the largest issuer of bonds in the world. It issues debt securities in order to fund the activities of the U.S. government, which generally runs high budget deficits. As of 31 December 2018, the U.S. federal debt totaled slightly below US$22 trillion. Of that amount, $16.1 trillion was held by the public and $5.9 trillion was held by other entities of the federal…

The U.S. Energy Information Administration (EIA) is an official provider of energy-related data and analytics. Initially created by the Federal Energy Administration Act of 1974, the EIA specializes in the collection, analysis and dissemination of energy industry data at the federal level. Producers, traders and government officials view the EIA as a leading authority on the current state of global energy. Mission And Products Dating back to the oil crises…

The forex is an immense international marketplace, accounting for more than US$5 trillion in average per session traded volume. Everyday participants from around the world trade forex pairs in the hopes of achieving their financial goals. Due to the fact that currency trading is a truly global pastime, the forex is open for business 24 hours a day, 5 days a week. Although technically operational around the clock, each day…

What Is A Central Bank? A central bank manages a nation's currency, money supply and interest rates and acts as a lender of last resort to the country's banks. Many are also responsible for regulating and supervising their country's banks. Many are set up to be independent from their government, although their directors are usually appointed by that country's chief executive or leader of government. Most countries have their own…

What Are The Basel Accords? The Basel Accords are a set of standards created by the Basel Committee to establish uniform banking regulation among the world's financial systems. The Basel Committee was originally called the Committee on Banking Regulations and Supervisory Practices, and it was headquartered at the Bank for International Settlements in Basel, Switzerland. It was created in 1974 by the central bank governors of the Group of Ten…