PCM Glossary

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ABC Consumer Confidence --- ABN AMRO--- Absolute Return--- ACCI--- Account--- Accrual Bond--- Actuals--- Adjustable Peg --- Adjustment --- ADP --- Advance Retail Sales - United States ---...

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ABC Consumer Confidence <br />
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The U.S. Consumer Confidence Index (CCI) is an indicator designed to measure , which is defined as the degree of optimism on the state of the economy that consumers are...

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Back

To withdraw from a position.

Back Office

Administration and support personnel in a financial services company. They carry out functions like settlements, clearances, record maintenance, regulatory compliance, and accounting. When order processing is slow due to high volume, it is commonly referred to as "back office crunch."

Back Testing

The process of testing a trading strategy on prior time periods. Instead of applying a strategy for the time period forward, which could take years, a trader can do a simulation of his or her trading strategy on relevant past data in order to gauge the its effectiveness.
Most technical-analysis strategies are tested with this approach.

Back to Back

An intercompany loan channeled through a bank.

Backwardation

A theory developed in respect to the price of a futures contract and the contract's time to expire. Backwardation says that as the contract approaches expiration, the futures contract will trade at a higher price compared to when the contract was further away from expiration. This is said to occur due to the convenience yield being higher than the prevailing risk free rate.

Bail Out

A situation in which a business, individual or government offers money to a failing business in order to prevent the consequences that arise from a business's downfall. Bailouts can take the form of loans, bonds, stocks or cash. They may or may not require reimbursement.

Balance

Balance Finance is here to provide an alternative home finance solution for “Everyone Everyday” that includes Salary Earners, Tradesman, Contractors, Business Owners, Investors, or even First Home Buyers, either way our goal is to help you achieve your goal as smoothly as possible.

Balance of Trade

The difference in value between the total exports and total imports of a nation during a specific period of time.

Balance-of-Payments

A systematic record of a nation's total payments to foreign countries, including the price of imports and the outflow of capital and gold, along with the total receipts from abroad, including the price of exports and the inflow of capital and gold.

Band

A thin strip of flexible material used to encircle and bind one object or to hold a number of objects together.

Bank for International Settlements- BIS

The Bank for International Settlements (BIS) is a banker's bank. BIS serves the world's central banks as well as other official monetary institutions and nations. Serving some 140 financial institutions, BIS promotes cooperation among central banks, conducts economic research, and offers asset management, money market instruments, fixed-rate investments, foreign exchange, and short-term credit. The bank does not offer financial services to individuals or corporations. In addition to its head office in Basel, Switzerland, the bank has representative offices in Hong Kong and Mexico City. Founded in 1930, BIS is one of the world's oldest international financial institutions.

Bank holiday

A bank holiday is a public holiday in both the United Kingdom and Ireland. There is some automatic right to time off on these days, although the majority of the population not employed in essential services (e.g. utilities, fire, ambulance, police, health-care workers, London Underground) receive them as holidays; those employed in essential services usually receive extra pay for working on these days. Bank holidays are often assumed to be so called because they are days upon which banks are shut, but this is not in fact the case. Some of the assumed bank holidays are days on which the banks are shut but are not, in fact, a bank holiday (e.g. Good Friday and Christmas Day). Legislation does not allow certain payments to be deferred to the working day.

Bank Lending - Japan

The value of all outstanding loans with Japanese banks. Bank lending is important because lending increases with increased business confidence and investment. It is particularly insightful for the Japanese economy because of the weakness that has plagued the Japanese banking sector. The headline number is for total loans and discounts and is a percentage change from the previous year.

Bank Line

Bank's moral commitment to lend, as distinct from its contractual, legal, commitment; alternate name for a Line of Credit. A bank line is an indication of a bank's willingness to lend to a particular borrower up to a predetermined amount, usually for working capital purposes, and for a one-to-three-year period. The line is renewable at the option of the lender, so long as the borrower meets certain conditions, for example, agreeing to keep a portion of the line in a Compensating Balance with the lender to maintain the business in sound financial condition.

Bank Notes

Note issued by a bank representing its promise to pay a specific sum to the bearer on demand and acceptable as money. Also called bank bill.

Bank of England Meeting Minutes - United Kingdom

The Bank of England Monetary Policy Committee keeps notes from its rate decision meetings. The detailed minutes from these meetings give some of the best insight into the monetary policy decision making process and what the BOE thinks about economic developments inside and outside of the UK. Markets tend to focus most of their attention on the key points discussed during the meeting that suggest future interest rate changes. For example if the minutes state that high consumer spending and a rapidly expanding housing market are fueling inflation, then markets participants will tend to monitor these key sectors closely in order to gauge the likelihood of a rate increases in the future.

Bank Rate

The rate of discount established by a country's central bank.

Bar Chart

A graph consisting of parallel, usually vertical bars or rectangles with lengths proportional to the frequency with which specified quantities occur in a set of data. Also called bar chart.

Base Currency


Base Price

A base price is the price of the cost of a new car without getting any other options, just standard options. Nothing optional or anything like that.

Base Rate

In probability and statistics, base rate generally refers to the (base) class probabilities unconditioned on featural evidence, frequently also known as prior probabilities. For example, if it were the case that 1% of the public are "medical professionals" and 99% of the public are not "medical professionals," then the base rates in this case are 1% and 99%, respectively.

Basing

A fortified center of operations.

Basis

In linear algebra, a basis is a set of vectors that, in a linear combination, can represent every vector in a given vector space or free module, and such that no element of the set can be represented as a linear combination of the others. In other words, a basis is a linearly.

Basis Convergence

The process whereby the basis tends towards zero as the contract expiry approaches.


Basis Point

A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

Basis Price

Price quotation for a security expressed in terms of yield to maturity. This will usually only be quoted on fixed-income securities such as bonds.

Basis Trading

Basis trading is an arbitrage strategy usually consisting of the purchase of a particular security and the sale of a similar security (often the purchase of a security and the sale of a corresponding futures contract).

Basket

An item resembling such a container in shape or function.

BBA

The leading trade association that represents the views of those involved in the banking and financial services industry within the U.K.

BCI-Business Cycle Indicator

Composite of leading, lagging and coincident indexes created by the Conference Board and used to forecast changes in the direction of the overall economy of a country. They can be used to confirm or predict the peaks and troughs of the business cycle and are published for the U.S., Mexico, France, the U.K., South Korea, Japan, Germany, Australia and Spain.

Bear

An investor who believes that a particular security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.

Bear Call Spread

A type of options strategy used when a decline in the price of the underlying asset is expected. It is achieved by selling call options at a specific strike price while also buying the same number of calls, but at a higher strike price. The maximum profit to be gained using this strategy is equal to the difference between the price paid for the long option and the amount collected on the short option.

Bear Market

A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. As investors anticipate losses in a bear market and selling continues, pessimism only grows. Although figures can vary, for many, a downturn of 20% or more in multiple broad market indexes, such as the Dow Jones Industrial Average (DJIA) or Standard & Poor's 500 Index (S&P 500), over at least a two-month period, is considered an entry into a bear market.

Beige Book - United States

Report on current economic conditions in each of the 12 Federal Reserve districts covering the entire US. Regional Banks in the Federal Reserve System gather anecdotal information based on surveys of executives, economist and market participants. The Beige Book summarizes this data into a relatively short document, giving a picture of economic trends and challenges faced by different parts of the nation. In addition to providing useful information on the economy, the report is also a window into how FOMC members may vote at the next interest rate policy meeting. Because each report is based on anecdotal information as much as statistics, it is subjective and may reflect opinions of district governors. As the only comprehensive report made available to the public, the Beige Book provides a rare opportunity for markets to better understand the Federal Reserve and its views on the economy.

Bid

An offer made by an investor, a trader or a dealer to buy a security. The bid will stipulate both the price at which the buyer is willing to purchase the security and the quantity to be purchased.

Bid Price

The price a buyer is willing to pay for a security. This is one part of the bid with the other being the bid size, which details the amount of shares the investor is willing to purchase at the bid price. The opposite of the bid is the ask price, which is the price a seller is looking to get for his or her shares.

Bid-Offer Spread

The bid/offer spread (also known as bid/ask or buy/sell spread) for securities (such as stock, futures contracts, options, or currency pairs) is the difference between the price quoted by a market maker for an immediate sale (bid) and an immediate purchase (ask). The size of the bid-offer spread in a given commodity is a measure of the liquidity of the market and the size of the transaction cost.

Bid/Ask Spread

The amount by which the ask price exceeds the bid. This is essentially the difference in price between the highest price that a buyer is willing to pay for an asset and the lowest price for which a seller is willing to sell it.

Big Figure

The stem, or whole dollar price, of a quote, often used in reference to foreign currencies or money markets.

Bilateral Clearing

The system of annual settlements of accounts between certain countries, where accounts are settled by the central banks.

BIS - Bank for International Settlements

The bis is an international organisation which fosters cooperation among central banks and other agenicies in pursuit of monetary and financial stability . its bank services are provide exculsively to central banks and international organisations.

Black-Scholes Model

A financial model of the variations over time in (for example) the price of stocks on the stock market. The model, proposed in 1974, is based on the notion that the underlying price variations could be modelled as Brownian motion.

Blocked Currency

Any currency that is mainly used for domestic transactions and does not freely trade on a forex market (usually due to government restrictions). Also referred to as a "nonconvertible currency".

Blotter

A book containing daily records of occurrences or transactions.

blue chips

A stock that sells at a high price because of public confidence in its long record of steady earnings.

BoC=Bank of Canada

The central bank of Canada, that came into existence after the passing of the Bank of Canada Act in 1935, influences the country's economy and money supply.

BoJ=Bank of Japan

Founded in 1882 as Japan's central bank, the Bank of Japan primarily issues banknotes and acts as a treasurer for the government. It is responsible for implementing lending rate changes as well as maintaining fluctuations in reserve requirements. The bank's mission is also to compile data and perform research and analysis pertaining to the overall economy. The Bank of Japan maintains a so-called "quantitative easing monetary policy" within the nation's economy, meaning it injects the financial market with excess funds hoping to stimulate economic recovery; however, due to some criticism, the bank might be tightening its fiscal policies in the future.

Bollinger Bands

Because standard deviation is a measure of volatility, Bollinger bands adjust themselves to the market conditions. When the markets become more volatile, the bands widen (move further away from the average), and during less volatile periods, the bands contract (move closer to the average). The tightening of the bands is often used by technical traders as an early indication that the volatility is about to increase sharply.

Bond

A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing.

Book

A set of written, printed, or blank pages fastened along one side and encased between protective covers.

Booked

Reserved in advance; held for future use. See reserve

BOP

A systematic record of a nation's total payments to foreign countries, including the price of imports and the outflow of capital and gold, along with the total receipts from abroad, including the price of exports and the inflow of capital and gold.

BRC

Promotion reply postcard preaddressed to the mailer and usually sent as permit mail, requiring no postage payment by the responder. Mailers pay a fee of approximately $400 per year for a business reply permit. Business reply cards, which are mailed at First-Class postage rates.

BRC Shop Price Index - UK

A monthly indicator of price changes at the most popular retail outlets in the United Kingdom. The index takes into account five hundred of the most commonly purchased goods and gives insight into consumer-price inflation. Shop Prices differentiate themselves from British CPI by coming out days before the headline inflation figure. Increases in the BRC Shop Price Index are bullish for the Pound, given that the Bank of England usually raises interest rates to control inflation reflected in the BRC. Conversely, a falling BRC Shop Price Index suggests falling price pressures.


Break Out

Technical analysis term used to describe price action rising above resistance or dropping below support. Breakouts may come through the continuation of an exiting natural trend, or after new information has been made available to the market

Break-Even Point

The price at which an option's cost is equal to the proceeds acquired by exercising the option. For a call option, it is the strike price plus the premium paid. For a put option, it is the strike price minus the premium paid.

Bretton Woods

An agreement struck in the summer of 1944, in which the U.S., the U.K., and their wartime allies set up the rules for the post-World War II monetary system. The meeting set the structure for the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which in the U.S. is more commonly known as the World Bank.

Bretton Woods Accord of 1944

The Bretton Woods Accord was established in 1944, towards the end of World War II. The United Nations Monetary Fund convened in Bretton Woods, New Hampshire, with representatives from the United States, Great Britain and France. The Bretton Woods Accord established the policy of pegging currencies against the U.S. dollar in order to stabilise the global economy. It set fixed exchange rates for major currencies and subsequently established the International Monetary Fund (IMF).Up until WWII, the British Pound was the the dominant world currency by which most currencies were compared. However, during World War II the Nazis undertook a major counterfeiting effort against the British Pound, and thus damaged it's standing. In contrast, WWII transformed the U.S. dollar from a failed currency after the stock market crash of 1929 to benchmark currency by which most other international currencies were compared. The U.S. economy was thriving, and the United States emerged as a world economic power. The first element of the Bretton Woods Accord was to peg the U.S. dollar to the price of gold at $35.00 an ounce, using the Gold Standard. With this benchmark anchoring the U.S. dollar, other major currencies were pegged to it and allowed to fluctuate no more than 1% on either side of the set standard. When a currency's exchange rate would approach the limit on either side of this standard the respective nation's central bank would intervene to bring the exchange rate back into the accepted range. The Bretton Woods Accord governed currency relationships until the early 1970's when a floating exchange rate system was adopted.

British Retail Consortium-BRC

Trade association for the UK retail industry. Includes news, details of policy work, events, and business information.

Broad Liquidity

A category of the money supply which includes: all funds in M3, individual holdings in accounts, savings bonds, T-bills with maturity of less than one year, commercial papers, and banker's acceptances.

Broken Dates

Term used in Foreign Exchange trading and the Euromarket for a forward exchange contract or money market contract with delivery of currency, CDs, and so on, to take place on a nonstandard date; for example 28 days instead of 30 days. Also called cock date.

Broker

An individual or firm which acts as an intermediary between a buyer and seller, usually charging a commission. For securities and most other products, a license is required.

Brokerage

Used interchangeably with broker when referring to a firm rather than an individual. also called brokerage house or brokerage firm.

BSA

Government legislation that was created in 1970 to prevent financial institutions from being used as tools by criminals to hide or launder their ill-gotten gains. This is achieved by requiring banks and other financial institution to provide documentation (such as currency transaction reports) whenever clients deal with transactions that involve substantial sums of money ($10,000 or more) that appear to be suspicious. This way, authorities have the ability to easily reconstruct the entire situation.

BSI

British Standards Institution wants to help keep business practices and products up to snuff. Doing business as BSI Group, the not-for-profit enterprise works with industry leaders and international groups to set and maintain industry standards. Its British Standards unit helps draft and market both UK and international specifications and guidelines, such as ISO standards. Its Management Systems unit offers certification services to customers in more than 120 countries, and BSI Product Services tests products in a wide range of industries. The group also provides training services and conducts conferences. BSI Group was founded in 1901.

BUBA

Nickname given to Bundesbank, the Central Bank of Germany.

Bull

An investor who believes that a particular security, a sector, or the overall market is about to rise. opposite of bear.

Bull Market

A prolonged period in which investment prices rise faster than their historical average. Bull markets can happen as a result of an economic recovery, an economic boom, or investor psychology. The longest and most famous bull market is the one that began in the early 1990s in which the U.S. equity markets grew at their fastest pace ever. opposite of bear market.

Bulldogs

Bond issued in pounds sterling on the London market outside the U.K. Category: Financial affairs - taxation - customs • u-bolt with specially shaped sheeve used to clamp together two wire ropes Category: agriculture, fisheries, forestry - food processing industries • the foreign market in the United Kingdom.

Bundesbank

German central bank with headquarters in Frankfurt. Like the US Federal Reserve System (The Fed), it is owned by private banks.

Business Climate

General economic environment comprising of the attitude of the government and lending institutions toward businesses and business activity, attitude of labor unions toward employers, current taxation regimen, inflation rate, and such.

Business Conditions Survey

A survey of businesses in the manufacturing industry that gives an early indication of price direction, employment levels, and general business conditions. The survey covers manufacturers in the Third Federal Reserve District, which is headquartered in Philadelphia and includes the eastern two-thirds of Pennsylvania, southern New Jersey, and Delaware. The data is released at the end of the month that has been surveyed. Traders in the financial markets pay attention to the survey because it may give early insight into what other, broader manufacturing surveys, such as the ISM Index, will show. However the Philadelphia Fed Survey usually isnÂ’t a market-moving release. The data is presented as a diffusion index for current conditions and a six-month outlook

Business Cycle Indicator-BCI

Composite of leading, lagging and coincident indexes created by the Conference Board and used to forecast changes in the direction of the overall economy of a country. They can be used to confirm or predict the peaks and troughs of the business cycle and are published for the U.S., Mexico, France, the U.K., South Korea, Japan, Germany, Australia and Spain.

Business Inventories

A detailed, itemized list, report, or record of things in one's possession, especially a periodic survey of all goods and materials in stock.

Buy and Hold

A passive investment strategy in which an investor buys stocks and holds them for a long period of time, regardless of fluctuations in the market. An investor who employs a buy-and-hold strategy actively selects stocks, but once in a position, is not concerned with short-term price movements and technical indicators.

buy in

Options trading: procedure whereby the responsibility to deliver or accept stock can be terminated. In a transaction called buying-in or closing purchase , the writer buys an identical option (only the premium or price is different). The second of these options offsets the first, and the profit or loss is the difference in premiums.Securities: transaction between brokers wherein securities are not delivered on time by the broker on the sell side, forcing the buy side broker to obtain shares from other sources

Buy Limit Order

To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can't control the price at which your order will be filled.

Buy On Margin

Buying an asset by making an initial payment-called the Margin-and borrowing the balance needed to cover the purchase price from a bank or broker. When securities or commodities are purchased on margin, there is no need to borrow any funds from a bank or broker to cover the rest of the cost. The margin represents a down payment. There are numerous examples: buying a house by making a down payment and financing the rest through a mortgage, buying securities through a broker, and so on. In securities purchasing, the amount of margin needed is regulated by the Federal Reserve Board.

Buy stop

Always placed above the current market price.Used to limit the potential loss on a short position.

Buy Stop Order

An order to buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price.

Buyer's Market

A market condition characterized by low prices and a supply of commodities exceeding demand

Buying Rate

The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another. For example, the higher the exchange rate for one euro in terms of one yen, the lower the relative value of the yen.

Buying Selling FX

foreign exchange (FX) The currencies of foreign countries, as bought and sold on a foreign-exchange markets. Firms or organizations require foreign exchange to purchase goods from abroad or for purposes of investment or speculation.

[PCMAnalyst]

Cable <br />
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In the context of the forex market, the exchange rate between the U.S. dollar and the British pound sterling. Because it is the norm in forex for most major currencies to be quoted against...

[PCMAnalyst]

Daily Trading Limit

Maximum that many commodities and options are allowed to rise or fall in one day. When a market reaches its limit early and stays there all day, it is said to be having an up-limit or down-limit day.

Day Order

A day order will not be executed if the limit or stop order prices were not met during the day. A way to increase the life of an order is to order securities on a 'good 'till cancelled' basis, where, as the name implies, the trade will not expire until it is cancelled or until it reaches a maximum time limit set by the brokerage.

Day Trader

A day order will not be executed if the limit or stop order prices were not met during the day. A way to increase the life of an order is to order securities on a 'good 'till cancelled' basis, where, as the name implies, the trade will not expire until it is cancelled or until it reaches a maximum time limit set by the brokerage.

Day Trading

A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. Most trades are entered and closed out within the same day.

DCLG

The Department for Communities and Local Government[1] (CLG) is the UK Government department for communities and local government in England, since May 2006.[1] The department originated in 2001 as the Office of the Deputy

Deal Date

The date on which a transaction is agreed upon.

Deal Ticket

The primary method of recording the basic information relating to a transaction.

Deal Ticket/Deal Slip

The primary method of recording the basic information relating to a transaction.


Dealer

An individual or entity, such as a securities firm, when it acts as a principal and stands ready to buy and sell for its own account. More generally, an individual or entity which buys and sells products and holds an inventory.


Debt

An amount borrowed or owed between two parties. Debt comes with the implied (or explicitly stated) promise to repay, a repayment schedule and interest arrangements on outstanding debt.

Debt may be reflected in the form of a contract, bond, mortgage or other form stating terms of repayment, maturity date and interest arrangements An amount owed to a person or organization for funds borrowed. Debt can be represented by a loan note, bond, mortgage or other form stating repayment terms and, if applicable, interest requirements. These different forms all imply intent to pay back an amount owed by a specific date, which is set forth in the repayment terms.


Declaration Date

The latest day or time by which the buyer of an option must intimate to the seller his willingness or unwillingness to exercise the option.


Default

Failure by the bond issuer to pay the interest or principal, when due.


Deficit

A negative balance of trade or payments.


Deflator

A statistical tool that converts current dollars into inflation-adjusted dollars, in order to compare prices over time after factoring out the overall effects of inflation.


Delivery

An FX trade where both sides make and take actual delivery of the currencies traded.


Delivery Date

The date of maturity of the contract, when the final settlement of transaction is made by exchanging the currencies. This date is more commonly known as the value date.


Delivery Month

The calendar month in which a futures contract comes to maturity and becomes deliverable.


Delivery Points

A location or facility designated by a futures exchange for tendering and accepting goods deliverable according to the terms of a futures contract.


Delivery Risk

A term to describe when a counterparty will not be able to complete his side of the deal. This risk is very high in case of over the counter transactions where there is no exchange which can stand as a guarantee to the trade between the two parties to the contract.


Delta

1.The change in price of a call option for every one-point move in the price of the underlying security. also called hedge ratio.

2.The ratio of the change in price of an option to the change in price of the underlying asset. Also called the hedge ratio. Applies to derivative products. For a call option on a stock, a delta of 0.50 means that for every $1.00 that the stock goes up, the option price rises by $0.50. As options near expiration, in-the-money call option contracts approach a delta of 1.0, while in-the-money put options approach a delta of -1. See: hedge ratio, neutral hedge. Call deltas range from 0.00 to +1.00; put deltas range from 0.00 to -1.00. If the call delta is 0.69, the put delta is -0.31 (call delta minus 1 equals put delta; 0.69 -1 =-0.31).


Department for Communities and Local Government

Department for Communities and Local Government (UK Government department, successor to ODPM)


Depo

Deposit
The initial outlay required of a client by a futures position to open a futures position, returnable upon liquidation of that position.


Depository Institution

A depository institution is a financial institution in United States, such as a savings bank, that is legally allowed to accept monetary deposits from consumers. Federal depository institutions are regulated by the Federal Deposit Insurance Corporation (FDIC). An example of a non-depository institution might be a mortgage bank. While licensed to lend, they cannot accept deposits.


Depreciation

A fall in the value of a currency due to market forces.


Derivative

A contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.


Derivatives

A broad term relating to risk management instruments such as futures, options, swaps, etc.. The contract value moves in relation to the underlying instrument or currency.


Desk

Term referring to a group dealing with a specific currency or currencies.


Details

All the information required to finalize a foreign exchange transaction, i.e. name, rate, dates, and point of delivery.


Devaluation

The act by a government to reduce the external value of its currency.


DEWR

Department of Employment and Workplace Relations (Australia)

DEWR Skilled Vacancies - Australia

Measures the monthly change in skilled job vacancies across Australia . Expressed as an index, the Skilled Vacancies Index is a leading indicator for the Australian Labor market. A high number of vacancies indicate a job market where labor is in demand and employers are pressured to increase wages. Rising wages put upward pressure on inflation than can lead to interest rate changes. On the other hand fewer skilled vacancies imply a tighter job market where skilled workers face greater difficulty finding employment, possibly weighing wages down.


DIBOR

Dublin Inter-bank Offered Rate.


Direct Quote

Representation of cost of unit of a foreign currency in terms of national currency.


Dirty Float

An exchange rate system in which the currency is not pegged, but is "managed" by the central bank to prevent extreme fluctuations in the exchange rate. The exchange rate is managed through changes in the interest rate to attract/detract capital flows or through the buying and selling of the currency. This system is contrasted with a Pure Float in which there is no central bank intervention and the exchange rate is entirely determined by the market and speculation. Also known as "Managed Float."


Discount

Less than the spot price example: forward discount.


Discount House

An institution that purchases promisory notes and resells them or holds them until maturity.


Discount Rate

The rate at which member banks may borrow short term funds directly from a Federal Reserve Bank. The discount rate is one of the two interest rates set by the Fed, the other being the Federal funds rate. The Fed actually controls this rate directly, but this fact does not really help in policy implementation, since banks can also find such funds elsewhere. also called Federal Reserve Discount Rate.


Discretionary Account

An account in which the customer permits a trading institution to act on the customer's behalf in buying and selling currency pairs. The institution has discretion as to the choice of currency pairs, prices, and timing-subject to any limitations specified in the agreement.


Distributive Trade

Distribution of material goods to consumers, through retailing and wholesaling


Dividend

That part of the earnings of a corporation that is distributed to its shareholders; usually paid quarterly


Domestic CGPI -Domestic Corporate Goods Price Index- Japan

The Domestic Corporate Goods Price Index measures prices for goods purchased by Japanese corporations. As prices for input materials and the overall cost of manufacturing change, companies adjust retail prices accordingly. The CGPI comprehensively tracks these supply-side price pressures and increases in the index often precede upward movement in the CPI. If an increase in the CGPI is followed by a rise in the CPI, concerns about inflation may prompt the Bank of Japan to raise interest rates. The headline numbers are the percentage change in the index month or month and annually.

Note : The index's base year is the year 2000 and the base value is 100. Thus, an index value of 105 signifies a 5% increase in prices since the year 2000. The data report also contains individual indexes for each commodity category used in the Wholesale Price Index.


Domestic corporate Goods Price Index_Domestic CGPI - Japan

The Domestic Corporate Goods Price Index measures prices for goods purchased by Japanese corporations. As prices for input materials and the overall cost of manufacturing change, companies adjust retail prices accordingly. The CGPI comprehensively tracks these supply-side price pressures and increases in the index often precede upward movement in the CPI. If an increase in the CGPI is followed by a rise in the CPI, concerns about inflation may prompt the Bank of Japan to raise interest rates. The headline numbers are the percentage change in the index month or month and annually.


Domestic Demand

Measure of the amount of goods and services sought by German consumers. This sort of consumption is the largest component of GDP and key to German economic growth. Given that Germany is the largest country in the Euro-zone; its economic activity will be reflected in Euro-zone figures and watched by the European Central Bank. Though Germany is traditionally an export driven economy, the strength of domestic demand can determine whether economic slowdown or growth is in the future.


Double

An option either to buy or sell an instrument or currency at a specified price. The exercise of the right to sell causes the right to buy to expire and vice versa.


Durable Goods Order

An economic indicator which measures the changes in sales of products with a life span in excess of three years.


Dwelling Starts - Australia

The number of construction starts on new homes in the past month. The figure, officially called Construction of Dwellings, measures growth in the construction sector and reflects the overall health of the housing market. Increased spending on expensive items like new homes reflects consumer optimism towards the economy. The headline number is the percentage change in Dwelling Starts from the previous month's figure.

[PCMAnalyst]

Easing

Modest decline in price.


ECB--European Central Bank

The Central Bank for the new European Monetary Union.


Echo Watchers Survey

The Economy Watchers Survey asks business-cycle sensitive workers their thoughts on existing and future economic conditions, giving a detailed picture of economic trends in Japan . The survey is based on questionnaires from 'man on the street' sectors that are particularly vulnerable to business cycle turns. These segments of the economy include sectors such as retail, restaurant service, and taxi driving. With this combined data the Japanese Eco Watchers report serves as both a consumer confidence indicator and a leading indicator for the rest of the economy. The report is usually released less than two weeks after the reporting month, thus its statistics are usually very timely. The headline number is released where 50 represents the center midpoint line of boom/bust sentiment.


Economic Exposure

The risk on a company's cash flow arising from foreign exchange fluctuations


Economic and Monetary Union - EMU

An economic and monetary union is a single market with a common currency. It is to be distinguished from a mere currency union (e.g. the Latin Monetary Union in the 1800s), which does not involve a single market.

The largest economic and monetary union at present is the Eurozone. The Eurozone consists of the European Union member states that have completed the third stage of the EMU by adopting the Euro. Some non-EU members have also adopted the Euro, but they are not part of this EMU


Economic Exposure

Reflects the impact of foreign exchange changes on the future competitive position of a company in the sense of the impact it can have on the future cash flows of the company. An exposure to fluctuating exchange rates, which affects a company's earnings, cash flow and foreign investments. The extent to which a company is affected by economic exposure depends on the specific characteristics of the company and its industry.


Economic Indicator

A government issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.


Economy - Overheated

Is an economy on a high growth rate trajectory placing pressure on the production capacity resulting in increased inflationary pressures and higher interest rates.


ECP-Eurocommercial Paper

An unsecured, short-term loan issued by a bank or corporation in the international money market, denominated in a currency that differs from the corporation's domestic currency.

For example, if a U.S. corporation issues a short-term bond denominated in Canadian dollars to finance its inventory through the international money market, it has issued eurocommercial paper.


ECU

European Currency Unit.
ECU. A composite monetary unit consisting of a basket of European Community currencies that served as the predecessor to the Euro.


ECU - European Currency Unit

A basket of the member currencies. As a composite unit, the ECU consists of all the European Community currencies, which are individually weighted. It was created by the European Monetary System with the eventual goal of replacing the individual European member currencies.


EDI

Electronic Data Interchange.
(Electronic Data Interchange) The electronic communication of business transactions, such as orders, confirmations and invoices, between organizations. Third parties provide EDI services that enable organizations with different equipment to connect. Although interactive access may be a part of it, EDI implies direct computer-to-computer transactions into vendors' databases and ordering systems.

Efficient Market Theory

The theory that the current market price reflects all information and expectations regarding the currency pair in question. The theory also assumes that the market cannot overprice or underprice an asset, and hence the current price is the correct valuation at the time.


Efficient Markets

Markets where assets are traded in which the price is indicative of all current and relevant information and thus it is impossible to have undervalued assets.


EFT

Electronic Fund Transfer.
Electronic funds transfer or EFT refers to the computer-based systems used to perform financial transactions electronically.

EIA Natual Gas Report

The Energy Information Administration (EIA) provides weekly information on natural gas stocks in underground storage for the U.S., and three regions of the country. The level of inventories help determine prices for natural gas products.


EIA-Energy Information Administration

Energy Information Administration
The Energy Information Administration (EIA), as part of the U.S. Department of Energy, collects and disseminates data on energy reserves, production, consumption, distribution, prices, technology, and related international, economic, and financial matters. Coverage of EIA's programs includes data on coal, petroleum, natural gas, electric, and nuclear energy.


Elliot Wave Theory

A theory based on the notion that the market moves in waves, which consist of trends followed by partial corrections. The Elliot Wave Theory states that there are 5 waves within an overall trend.


Empire State Manufacturing Survey - United States

The New York Fed conducts this monthly survey of manufacturers in New York State. Participants from across the state represent a variety of industries. On the first of each month, the same pool of roughly 175 manufacturing executives (usually the CEO or the president) is sent a questionnaire to report the change in an assortment of indicators from the previous month. Respondents also give their views about the likely direction of these same indicators six months ahead. This index is seasonally adjusted using the Philadelphia Fed's seasonal factors because its own history is not long enough with data only going back a couple of years. (Federal Reserve Bank of New York)


employment cost index

A closely watched economic report by the Bureau of Labor Statistics that indicates the total cost of employing a civilian worker. A larger-than-expected increase in the index is likely to place downward pressure on both bond and equity prices.


Employment Level - Switzerland

The number of paid employees working at least six hours each week. The headline number for the employment level, which is officially known as "workforce jobs," appears as both the total number of employees and as a year on year percentage change in that figure. The Swiss employment level is important serving as the headline figure for job growth or decline. Higher job growth accompanies economic expansion and could spark inflationary pressures. Swiss unemployment has historically been very low, averaging half that of the EU. Whereas most countries consider an unemployment rate of 4% very low, Switzerland is accustomed to rates below 4%. Relevance : Rarely affects markets


EMS

European Monetary System

A system designed to stabilize if not eliminate exchange risk between member states of the EMS as part of the economic convergence policy of the EU. It permits currencies to move in a measured fashion (divergence indicator) within agreed bands (the parity grid) with respect to the ECU and consequently with each other.


EMU

European Monetary Union


EMU (Economic and Monetary Union)

Economic and Monetary Union


End Of Day Order - EOD

An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.


Entrepot

A term used for international trade where goods are shipped to a centre for re-export. Hong Kong engages in significant amounts of this form of trade.


Envelopes

While Bollinger Bands place boundary lines based on standard deviation, envelopes place lines at fixed percentage points above and below a moving average line. The upper and lower limits specify entry and exit points for currency traders.


EOD - End Of Day Order

An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.


EOE

European Options Exchange.


Equilibrium

A price region that suggests a balance between demand and supply for an currency pair in the marketplace.


Equipment Investment - Germany - Euro-zone

Measures the total value of German investments in equipment including machinery and construction equipment. Equipment Investment is a part of GDP and released at the same time, therefore changes in the figure directly change overall GDP. But Equipment Investment is also an early indicator for production since companies generally make capital expenditures in a healthy economy when the need to expand operational productivity exists. Because such capital expenditures are sensitive to business conditions, the report can also forecast economic growth or recession. The headline number is the percentage change in Equipment Investment in the reporting quarter.


equity market

The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.

This market can be split into two main sectors: the primary and secondary market. The primary market is where new issues are first offered. Any subsequent trading takes place in the secondary market.


ERM

Exchange Rate Mechanism.


Euro

The common currency adopted by eleven European nations(Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal) on January 1, 1999.


Eurobond

A long-term loan issued in a currency other than that of the country or market in which it is issued. Interest is paid without the deduction of tax.


Euroclear

One of the leading clearing systems for eurobonds.


Eurodollar

US currency or funds held in banks outside the US—in Europe or anywhere else. Eurodollars are used commonly for settling international transactions.


European Monetary Union

An institution of the EU, whose primary goal is to establish a single currency (the euro) for the entire EU.


European Monetary Union - EMU

The principal goal of the EMU is to establish a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. On Janaury1, 1999 the transitional phase to introduce the Euro began. The Euro now exists as a banking currency and paper financial transactions and foreign exchange are made in Euros. This transition period will last for three years, at which time Euro notes an coins will enter circulation. On July 1,2002, only Euros will be legal tender for EMU participants, the national currencies of the member countries will cease to exist. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.


European Union

The group formerly known as the European Community.


Exchange Rate Risk

The risk that a business' operations or an investment's value will be affected by changes in exchange rates. For example, if money must be converted into a different currency to make a certain investment, changes in the value of the currency relative to the American dollar will affect the total loss or gain on the investment when the money is converted back. This risk usually affects businesses, but it can also affect individual investors who make international investments.


Exchange control

Rules used to preserve or protect the value of a country's currency.


Exchange Rate Risk

The potential loss that could be incurred from an adverse movement in exchange rates.


Execution

The Process of completing an order or deal.


exercise

When an option or warrant holder takes up his or her option to buy or sell the underlying instrument (for example shares, commodities, an index etc) he/she is said to exercise the option or warrant.


Exercise (options)

The owner of an option contract may exercise it, indicating that the financial transaction specified by the contract is to be enacted immediately between the two parties, and the contract itself is terminated. When exercising a call, the owner of the option purchases the underlier at the strike price from the option seller, while for a put, the owner of the option sells the underlier to the option seller.


Exercise Notice

A formal notification that the holder of an option wishes to exercise it by buying or selling the underlying stock at the exercise price.


Exercise Price - Strike Price

The price at which an option can be exercised.


Exotic

A foreign exchange term for a thinly traded currency. Exotic currencies are illiquid, lack market depth and trade at low volumes. Trading an exotic currency can be expensive, as the bid-ask spread is usually large.

Exotics are not considered major currencies because they are not easily traded in a standard brokerage account. Major currencies include the U.S. dollar, eurodollar, Canadian dollar and Swiss franc. Examples of exotic currencies include the Thai baht, Uruguay peso or Iraqi dinari.


Expansion

Growth, as in an economic recovery.


Expiration Date

(1) Options - the last date after which the option can no longer be exercised. (2) Bonds-the date on which a bond matures.


Expiration Month

The month in which an option expires.


Expiry Date

The last day on which the holder of an option can exercise his right to buy or sell the underlying security.


Exponentially Weighted Moving Average - EMA

While the simple moving average distributes weight equally across the data series, exponentially weighted moving averages place greater weight to more recent data. As a result, they tend to provide a faster signal.


Exposure

In foreign exchange, a potential for gain or loss because of movement in foreign exchange rate.

[PCMAnalyst]

face value <br />
<br />
The value printed on the face of a stock, bond, or other financial instrument or document. <br />
<br />
<br />
Factory Orders <br />
<br />
An economic indicator which refers to the total orders of durable and...

[PCMAnalyst]

G10

Eleven industrialized nations that meet on an annual basis to consult each other, debate and cooperate on international financial matters. The member countries are: France, Germany, Belgium, Italy, Japan, the Netherlands, Sweden, the United Kingdom, the United States and Canada, with Switzerland playing a minor role.


G5

The Group of Five. The five leading industrial countries, being US, Germany, Japan, France, UK.


G7

The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy.


Gamma

The rate at which a delta changes over time or for one unit change in the price of the underlying asset.


Gap

A mismatch between maturities and cash flows in a bank or individual dealers position book. Gap exposure is effectively interest rate exposure.


GCC=Gulf Cooperation Council

GCC is an association of Persian Gulf nations formed for the purpose of collective defense against aggression.

The Gulf Cooperation Council, or GCC, is made up of Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Oman and Bahrain.


GDP=Gross Domestic Product

Measures the value of goods and services produced with in a country . GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.


German ZEW Indicator of Economic Sentiment

Experts are asked for a qualitative assessment of the direction of inflation, interest rates, exchange rates and the stock market in the next six months. Thus the indicator provides a medium-term forecast for the German economy.


Gilt-edged Securities

Stocks and shares issued and guaranteed by the British government to raise funds and traded on the Stock Exchange. A relatively risk-free investment, gilts bear fixed interest and are usually redeemable on a specified date. The term is now used generally to describe securities of the highest value.
According to the redemption date, gilts are described as short (up to five years), medium, or long (15 years or more).


Gilts

Risk-free bonds issued by the British government. They are the equivalent of U.S. Treasury securities.


Globex

A system for global after hours electronic trading in futures and options developed by Reuters for CME and CBOT for use in conjunction with various exchanges around the world.


GNP Deflator

Removes inflation from the GNP figure. Usually expressed as a percentage and based on an index figure.


GNP Gap

The difference between the actual real GNP and the potential real GNP. If the gap is negative an economy is overheated.


Going Long

The purchase of a stock, commodity, or currency for investment or speculation.


Going Short

The selling of a currency or instrument not owned by the seller.


Gold Standard

The original system for supporting the value of currency issued. This system was in vogue before 1973 when the fixed exchange rates were prevalent.


Gold Tranche

Part of the country quota for IMF members that had to be paid in gold. This was normally 25% of the quota, the remainder being in domestic currency. The Gold Tranche was automatically available to members without condition. Amount of gold that each member country of the International Monetary fund (IMF) contributes as part of its membership obligations to the fund, and can readily borrow when facing economic difficulties.


Golden Cross

An intersection of two consecutive moving averages which move in the same direction and suggest that the currency will move in the same direction.


Good Till Cancelled Order - GTC

A buy or sell order which remains open until it is filled or canceled.


Government Expenditures - Euro-zone

The value of spending by Euro-zone governments. Euro-zone Government Expenditures is a major component of Euro-zone GDP. However, its release has relatively little market impact since the fiscal policy of Euro-zone governments is usually well-anticipated in advance. Nevertheless, any unexpected change in government expenditures due to unforeseen events can affect to markets


Government Spending

Represents public expenditure by the German government. The government budget on spending is determined by fiscal policy. Thus, it is very predictable and rarely, if ever, moves the market upon release.


grantor

The seller of an option contract


Greenery Day

Greenery Day (April 29): day for commemorating the Emperor Showa's love for nature and many trees he planted on tours throughout the country. (Up to 1988, this day was celebrated as the birthday of the Emperor Showa.)


Gross Domestic Product

Measures the value of goods and services produced with in a country . GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.


Gross Fixed Capital Formation (GFCF) - Euro-zone

A measure of European investment in capital goods. Fixed capital investments typically increase productivity and GDP growth. When businesses are investing in the big fixed capital items, such as machinery, vehicles, and buildings, it typically reflects optimism for future growth; otherwise, those businesses would other uses for that money. Higher capital investments also tend to increase productivity and contribute to GDP growth. This makes GFCF a measure of business sentiment as well as a leading indicator for economic growth. The headline figure of GFCF is expressed in annualized percentage change for the quarter. Note: GFCF makes up about 20% of the Euro-zone GDP, with Machinery, equipment, vehicles, land-improvements, and buildings being the biggest contributors. Software and artwork are sometimes considered as the intangible fixed assets.


Gross National Product

Gross domestic product plus income earned from investment or work abroad.


GTC - Good 'Til Cancelled Order

An order to buy or sell at a specified price. This order remains open until filled or until the client cancels.

[PCMAnalyst]

Hard Currency

A currency, usually from a highly industrialized country, that is widely accepted around the world as a form of payment for goods and services. A hard currency is expected to remain relatively stable through a short period of time, and to be highly liquid in the forex market.


HBOS

Halifax Bank of Scotland


Hedge

A transaction that reduces the risk on an existing investment position.


Hedge Fund

A mutual fund organized as a limited partnership and using high-risk, speculative methods to obtain large profits.

An investment company that uses high-risk techniques, such as borrowing money and selling short, in an effort to make extraordinary capital gains.


Hedge Ratio

The number of futures or options required to hedge a given exposure in the cash market.


Hedged position

One open buy position and one open sell position in the same currency.


Hedging

A hedging transaction is one whose main aim is to protect an asset or liability against a fluctuation in the foreign exchange rate rather than profit from the exchange rate fluctuations.


Help Wanted Index

The help wanted index is a monthly index of the number of lines of help-wanted advertising in 51 major newspapers from around the country. This index indicates strength or weakness in the labor market.


HIA

Housing Industry Association


HICP

Harmonized Index of Consumer Prices
An inflation indicator used by the European Central Bank.
The overall Consumer Price Index data for the twelve European Union member countries is referred to as the Harmonized Price Index (HICP)


high or low- Spike

A significantly lower low or higher high within a data series. Points where an currency spikes often signify a potential reversal in the direction of the trend, and hence can be valuable tools in analyzing a chart.


High/Low

Refers to the daily traded high and low prices of a given currency pair.


Hit the bid

Acceptance of purchasing at the offer or selling at the bid.


Household Consumption - Euro-zone

Euro-zone Household Consumption reports the mean expenditure on individual consumption goods and services per household per year. The figure is reported in the annualized percent change. Increases in Household Consumption are suggestive of increases in economic growth and of higher levels of consumer optimism, both positive indicators for the economy. However, unrestrained growth can result in inflationary pressures. Thus this report can be used as a leading indicator for inflationary pressures.


Housing Equity Withdrawal-HEW

Housing equity withdrawal (HEW) is new borrowing secured on dwellings that is not invested in the housing market (e.g. not used for house purchase or home improvements), so it represents additional funds available for reinvestment or to finance consumption spending.


Housing Starts

The number of residential building construction projects begun during a specific period of time, usually a month; a key economic indicator.


HPI

House Price Index


Hyperinflation

A period of rapid inflation that leaves a country's currency virtually worthless.

[PCMAnalyst]

IBD/TIPP Economic Optimism Index

The IBD/TIPP Economic Optimism Index is the earliest and most authoritative take on consumer confidence each month and predicts with 90% reliability monthly changes in sentiment in well-known polls by The Conference Board and the University of Michigan. The IBD/TIPP Economic Optimism Index is based on a survey of 1,000-plus adults chosen at random nationwide. The poll is generally conducted in the first week of the month and has a margin of error of plus or minus 3.1 percentage points. The TIPP Economic Optimism Index is based upon responses to three questions: (1) In the next 6 months, do you think that economic conditions in the country will be better, worse or about the same as compared to now? (2) In the next 6 months, do you think that your personal financial situation will be better, worse or about the same as compared to now? (3) How satisfied are you with the current federal economic policies meant to keep the economy going in the right direction: Very satisfied, somewhat satisfied, not very satisfied or not at all satisfied?


ICCH=International Commodities Clearing House Limited

A clearing house based in London operating world wide for many futures markets.


ICSC

International Council of Shopping Centers

ICSC-UBS Store Sales


This weekly measure of comparable store sales at major retail chains, published by the International Council of Shopping Centers, is related to the general merchandise portion of retail sales. It accounts for roughly 10 percent of total retail sales. The ICSC-UBS index is one of the most timely indicators of consumer spending, since it is reported every week. It gets extra attention around the holiday season when retailers make most of their profits. It is also a useful indicator when special factors can cause economic activity to momentarily slide. For instance, it was widely watched in the aftermath of Hurricanes Katrina and Rita which hit New Orleans and the Gulf Coast in 2005.


IEA

International Energy Agency


IFEMA

International Foreign Exchange Master Agreement.


IFO

Institut für Wirtschaftsforschung An der Universität München (German: Institute for Economic Research at the University of Munich)


ILO

International Labor Organization


IMF

International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. The IMF helps its members to tide over the balance of payments problems with supplying the necessary loans.


IMM=International Monetary Market

The International Monetary Market (IMM), largely the creation of Leo Melamed, is part of the Chicago Mercantile Exchange (CME), the largest futures exchange in the United States and the second largest in the world after Eurex, for the trading of futures contracts and options on futures. The IMM was started on May 16, 1972. Two of the more prevalent contracts traded are currency futures and interest rate futures.


Implied Rates

The interest rate determined by calculating the difference between spot and forward rates.


In-the-Money

A call option is in-the-money if the price of the underlying instrument is higher than the exercise/strike price. A put option is in-the-money if the price of the underlying instrument is below the exercise/strike price.


Inconvertible Currency

Currency which cannot be exchanged for other currencies either because it is forbidden by the foreign exchange regulations or the currency witnesses extreme volatility that it is not percieved to be a safe haven for parking the funds.


Index Linking

The periodic adjustment of the money values of some regular scheduled payments based on the movement of the CPI or some other price index. The payments may be wages or salaries, social security or other pensions, other social security benefits, rents, interest payments, etc.


Index of Consumer Confidence

The Index of Consumer Confidence (CCI) measures how people feel about the United States economy. It is issued monthly by The Conference Board, an independent economic research organization, and is based on 5,000 households. Such measurement is indicative of consumption component level of the gross domestic product. The Federal Reserve looks at the CCI when determining interest rate changes, and it also affects stock market prices.


Indicative Quote

In forex trading, a currency quote that is provided by a market maker to a trading party but that is not firm. In other words, when a market maker provides an indicative quote to a trader, the market maker is not obligated to trade the given currency pair at the price or the quantity stated in the quote. Contrast this to a firm quote, in which a market maker guarantees a specified bid or ask price to a trader up to the maximum quantity specified in the quote.
Market makers will typically provide indicative quotes if a trader requests a quote for a currency pair but does not specify the quantity to be traded, or if there is some doubt as to the market maker's ability to transact the currency pair at the bid or ask quoted. The bottom line is that traders can rely on indicative quotes as a reasonable estimate of the exchange rate at which they can enter their currency trade, but there is no guarantee that this will be the rate they get.


Indirect quote

See reciprocal currency.


Industrial New Orders

The value of new contracts for goods produced by the manufacturing sector. A rising level of Industrial New Orders forecasts increased production and a rising GDP. There are two headline numbers released for this report, month to month and annualized change.


Industrial Production

The index of industrial production measures the physical output of the nation's factories, mines and utilities


Industrial Production Index-IPI

An indicator that shows the production output from industrial activities, such as mining, manufacturing and utilities. It is released by the Federal Reserve Board each month.


Inflation

An economic condition whereby prices for consumer goods rise, eroding purchasing power.


Info Quote

Rate given for information purposes only.


Initial Margin
This is the deposit required by a broker in order for a trader to start a transaction.


Initial Margin Requirement

The minimum portion of a new security purchase that an investor must pay for in cash.


Instruction

The specification of the banks at which funds shall be paid upon settlement.


Inter-dealer Broker

A specialist broker who acts as an intermediary between market-makers who wish to buy or sell securities to improve their book positions, without revealing their identities to other market-makers.


Interbank Rates

The Foreign Exchange rates at which large international banks quote other large international banks.


Interest Rate Futures

An Interest Rate Future is a futures contract with an interest-bearing instrument as the underlying asset. Examples include Treasury-bill futures, Treasury-bond futures and Eurodollar futures. The global market for exchange-traded interest rate futures is notionally valued by the Bank for International Settlements at $5,794,200 million in 2005.


Interest Rate Risk

The potential for losses arising from changes in interest rates


Intermarket Analysis

An analysis of an underlying asset that incorporates examinations of various markets. Namely, four markets are examined: currencies, commodities, stocks, and bonds. Intermarket analysis is centered on the idea that the four markets are correlated.


International Capital flows= TIC flows

Summarizes the flow of stocks, bonds, and money market funds to and from the United States . The headline figure is the difference in value between American purchases of foreign securities and foreign purchases of American securities, expressed in millions of dollars. The Treasury International Capital or TIC statement is a major component of the American capital account and gives valuable insight into foreign demand for American investments and dollar.

A positive figure indicates that more capital is entering the US than leaving as sales of American securities to foreigners exceed American purchases of foreign securities. Such positive figures suggest that American security markets are competitive with those of other countries. Foreign security purchases are especially important in the case of a trade deficit, as a positive figure can offset the depreciating effect of a trade shortfall. On the contrary, a negative or declining TICS figure reflects a declining capital flow picture. Outflows are indicative of weaker demand for US assets which puts downward pressure on the value of the dollar.

A key feature of the TIC data is its measurement of the types of investors the dollar has; governments and private investors. Usually, a strong government holding of dollar denominated assets signals growing dollar optimism as it shows that governments are confident in the stability of the U.S. dollar. Most importantly seems to be the purchases of Asian central banks such as that of Japan and China. Waning demand by these two behemoth US Treasury holders could be bearish for the US dollar. As for absolute amount of foreign purchases, the market generally likes to see purchases be much stronger than the funding needs of that same month's trade deficit. If it is not, it signals that there is not enough dollars coming in to match dollar going out of the country. As a side note, purchases by Caribbean central banks are generally seen to be less consistent since most hedge funds are incorporated in the Caribbean. Hedge funds generally have a much shorter attention span than other investors.


International Merchandise Trade-Canada

The difference between imports and exports of goods. Merchandise Trade differentiates itself from Trade Balance because it does not record intangibles like services, only reporting on physical goods. Because exports of tangibles like oil, gold and manufacturing contribute to a large part of Canada 's GDP, trade data can give critical insight into developments in the economy and into foreign exchange rates.


International Securities Dealers Association - ISDA

Organization which foreign currency exchange banks have formed to regulate inter-bank markets and exchanges.


International Swaps and Derivatives Association- ISDA

Organization defining the terms and conditions for derivative trades.


Intervention

Action by a central bank to effect the value of its currency by entering the market.


Intra-Day limit

Limit set by bank management on the size of each dealer's Intra Day Position.


Intra-Day Position

Open positions run by a dealer within the day. Usually squared by the close.


Intraday

During a single trading day.


Intrinsic Value

The amount by which an option is in-the-money. The intrinsic value is the difference between the exercise/strike price and the price of the underlying security.


Inverted Market

A futures market in which the nearer months are selling at premiums over the more distant months; characteristically, a market in which supplies are currently in shortage.


Investment Lending

The value of loans provided to individuals and corporations. An increase in Investment Lending forecasts growth in the economy since greater capital investments typically finance expansions of output and productivity and usually occur in periods of high consumer and business confidence. During these periods borrowers are willing to make investments because they hold reasonable expectations that their investments will pay off in the future. By making these investments, borrowers both increase private expenditure and enhance the future productive capacity of the economy. Though, this figure typically does not have significant impact upon markets.

The figure is reported as a seasonally adjusted percentage change from the previous month.


Invisibles

A term for exports and imports of services as distinct from merchandise


IOM

Index and Options Market- part of the Chicago Mercantile Exchange.


IPI

Industrial Production Index. A coincident indicator measuring physical output of manufacturing, mining and utilities.


IPO

initial public offering: a company's first stock offering to the public.


ISDA - International Securities Dealers Association

Organization which foreign currency exchange banks have formed to regulate inter-bank markets and exchanges.


ISM

Institute for Supply Management


ISM Manufacturing

ISM Manufacuring assesses the state of US industry by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Though manufacturing accounts for a relatively small portion of GDP, fluctuations in manufacturing tend to bear the most responsibility for changes in GDP. Consequently, developments in manufacturing often front run trends in the overall economy, making the ISM Manufacturing figure a leading indicator of economic turnarounds. A pickup in demand for manufactured products after a period of recession, reflected by a higher ISM figure, strongly suggests a reversal upward. Conversely a slowdown in manufacturing orders and production during a boom suggests a slowing of the economy. The ISM Manufacturing Survey is valued for its timeliness, and indeed, during waning boom cycles analyst point out that ISM tends to be one of the biggest market moving economic releases. The reasoning lies within the ISM's Prices Paid and Employment subcomponents. These components reflect sentiment towards inflation and labor conditions - two of the market's most significant health indicators. Given that the ISM's timeliness, the information gleaned from such components precedes other market data (like Non-Farm Payrolls or CPI), making the ISM a significant indicator.

The headline figure is expressed as a diffusion index based on survey responses. For each category (production, new orders etc.), the index is calculated by adding the percentage of executive responding "higher" with half the percentage of "no change" responses, and subtracting the percentage of "lower" responses. The ISM manufacturing indicator is the aggregate of the results for all categories.

Values over 50 generally indicate an expansion, while values below 50 indicate contraction.

Retail Sales can be volatile due to seasonal fluctuations in demand. Thus the headline figure is the seasonally adjusted percentage change in sales compared to the previous year.


ISM Non-Manufacturing - United States

ISM Non-Manufacturing gauge of business conditions in non-manufacturing industries, based on measures of employment trends, prices and new orders. Though non-manufacturing sectors make up the majority of the economy, the ISM Non-Manufacturing has less market impact because non-manufacturing data tends to be more cyclical and predictable. However, these sectors do account for a considerable portion of CPI. As a result, the figure gives insight into conditions which can impact output growth and inflationary pressures.


ISO

ISO is the short name (not acronym) for the International Organization for Standardization.


ISTAT

Italian National Statistics Institute


Ivey Purchasing Managers Index (PMI) - Canada

A monthly measure of the change in purchases by corporate executives. One hundred and seventy-five managers distributed among different regions and sectors are asked: "Are your purchases higher, the same, or lower than the previous month" A headline value above 50 indicates an increase in purchases from the previous month and a value below 50 indicates a decrease.

[PCMAnalyst]

Jawbone

Announcements and statements by politicians or monetary authorities to influence decisions by business, consumer, or trade union sectors, often associated with forecasts and policy implications.


Job-to-applicant ratio

The job-to-applicant ratio shows how many positions are available to a job seeker


Jobber

A trader who trades for small, short-term profits during the course of a trading session, rarely carrying a position overnight.


Jobless Claims Change

Measures the number of people who claim unemployment benefits, but are actively seeking work. Released with the Claimant Count report, Jobless Claims Change serves as a barometer for the health of the UK labor market. It is similar to the Claimant Count except the headline figure is as an actual number, whereas the Claimant Count is a percentage. Higher job growth accompanies economic expansion and could spark inflationary pressures.


Jurisdiction Risk

(1) The risk inherent in placing funds in the Centre where they will be under the jurisdiction of a foreign legal authority. (2) The risk in making a loan subject to the laws of another country.


Juristiction

The geographical area over which a court or government body has the power and right to exercise authority.

[PCMAnalyst]

Key currency

One of the national currencies (dollar, euro, yen, etc.) or IMF's special drawing rights (SDR) used by a country to hold its foreign currency reserves and gold for settling international trade transactions and other obligations. Also called reserve currency.

Kiwi

Slang for the New Zealand dollar.

[PCMAnalyst]

Labor Cash Earnings - Japan <br />
<br />
The average amount of pre-tax earnings per regular employee, including overtime pay and bonuses. Though the report does not take into account all sources of household...

[PCMAnalyst]

M0 <br />
<br />
Cash in circulation . Only used by the UK. <br />
<br />
M1 <br />
<br />
Cash in circulation plus demand deposits at commercial banks. There are variations between the precise definitions used by national financial...

[PCMAnalyst]

n.s.a

not seasonally adjusted

NAB

National Australia Bank

NAHB

National Association of Home Builders.

NAPM

National Association of purchasing management-An Affiliate of Institute for Supply Management

NAPM-Chicago

The National Association of Purchasing Management - Chicago compiles a survey and a composite diffusion index of business conditions in the Chicago area. Manufacturing and non-manufacturing firms are both surveyed, but until recently, market players have believed that the survey primarily covers the manufacturing sector. Readings above 50 percent indicate an expanding business sector. The NAPM - Chicago is considered a leading indicator of the ISM manufacturing index.

NAR

The National Association of Realtors

NBNZ

National Bank of New Zealand

Negative or bearish divergence

Occurs when the direction of the price of a currency disagrees with the condition of a technical indicator.

Net Position

The amount of currency bought or sold which have not yet been offset by opposite transactions.

Net Worth

Amount of assets which exceed liabilities; May also be known as stockholders equity or net assets. For an individual, the total value of all possessions such as houses, stocks, bonds, currencies and other securities, minus all outstanding debts, such as mortgage and loans.

New Housing Price Index - Canada

A component of the Consumer Price Index (CPI) that measures changes in prices for new homes. Higher housing prices suggest stronger consumer demand and growth in the housing market. At the same time, higher housing prices that accompany economic expansion often lead to inflationary pressures. The headline number is the percentage change in the index.

Note: The New Housing Price Index takes into account the quality and features of the new homes sold. For example, if selling prices for new homes are unchanged, but the features and quality of housing have increased (e.g. added swimming pool and better construction materials), then the price for new homes is considered to have fallen.

Nickel

US term for five basis points.

NIESR

National Institute of Economic and Social Research (Britain)

Noise

Price and volume fluctuations which do not provide meaningful information about the market's direction.

nominal

A quantity that is not adjusted for inflation.

Non Resident Bond Holdings - New Zealand

The monetary value of bonds held by non residents of New Zealand . Non Resident Bond Holdings measure the willingness of foreigners to finance New Zealand 's economy and government. A high value is indicative of a budget deficit and debt, suggesting that foreign investments are required to finance New Zealand 's continued patterns of spending.

Non-farm payroll

The non-farm payrolls report is one of the key indicators of the labor market in the US. The report tends to include information on salaries, wages, bonuses and net pay after deductions. A strong payrolls number indicates that companies are keeping a solid base of employees and is therefore perceived as positive for the economy.

Nostro Account

A foreign currency current account maintained with another bank. The account is used to receive and pay currency assets and liabilities denominated in the currency of the country in which the bank is resident.

A bank account that one bank holds with another bank in a foreign country. This account is usually held in the foreign country's currency, and is used to carry out transactions that are denominated in that foreign currency.

Note

A financial instrument consisting of a promise to pay rather than an order to pay or a certificate of indebtedness.

NYSE

New York Stock Exchange

NZIER

New Zealand Institute of Economic Research

[PCMAnalyst]

OCO - One Cancels the Other Order

A designation for two orders whereby one part of the two orders is executed the other is automatically cancelled.For example, an investor with limited funds may place an order to buy both stocks and bonds and specify that it's a "one-cancels-the-other-order." In other words, if the market favors stocks and they are bought, the order to buy bonds will be canceled. Conversely, if the market suggests bonds are the way to go, the order will be to buy bonds and the order to buy stocks will be canceled

OCR-Official Cash Rate

The Official Cash Rate (OCR) is the interest rate set by the Reserve Bank to meet the inflation target specified in the Policy Targets Agreement. The agreement signed in September 2002, between the Minister of Finance and the Governor of the Reserve Bank, requires the Reserve Bank to keep inflation, on average over the medium term, at between 1 and 3 percent per annum.

Odd Lot

A non standard amount for a transaction.

ODPM

Office of the Deputy Prime Minister (UK)

OECD

Organization for Economic Cooperation and Development

Off-Balance Sheet

Financing or the raising of money by a company that does not appear on the company's balance sheet, such as Interest Rate Swaps and Forward Rate Agreements.

Off-Shore

The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market but only with other foreign banks. This is known as an off shore banking unit.

Offer

The price at which a currency pair or security is for sale; the quoted price at which an investor can buy a currency pair. This is also known as the 'ask', 'ask price', and 'ask rate'.

Offer - ask

The rate at which a dealer is willing to sell a currency. See Ask (offer) price

Official Reserve Assets - Japan

The wealth controlled by the Bank of Japan. Japan holds enormous reserves of foreign currencies, currently holding the largest foreign reserve of American Dollars in the world. Central Banks have recently moved to diversify their currency reserves; the shift has been away from the traditionally favored Dollar toward other currencies like the Euro. Because of the size and influence of the Bank of Japan's huge Reserve Assets, adjustments can radically alter the supply of a currency in the market and sway other banks to act. Long term trends in the Bank's reserve asset figures merit close attention.

All these assets help Japan ensure its financial well-being when faced with economic or geo-political issues. In particular, large foreign currency reserves give the BOJ the freedom to exert a measure of control over its exchange rate by manipulating the supply of foreign currencies.

official reserves

Holdings of gold and foreign currencies by official monetary institutions.

Offset

The closing-out or liquidation of a futures position.

The elimination or reduction of a current long or short position by making a transaction with the same security in the opposite direction. Also known as close out or even up.

Offsetting transaction

A trade which serves to cancel or offset some or all of the market risk of an open position.

Offshore

The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market but only with other foreign banks. This is known as an off shore banking unit.

Old Lady

Old lady of Threadneedle Street, a term for the Bank of England.

One Cancels Other Order

Where the execution of one order automatically cancels a previous order also referred to as OCO or 'One cancels the other'.

One Cancels the Other Order - OCO

A designation for two orders whereby one part of the two orders is executed the other is automatically cancelled.

Open Market Operations

The central bank operations in the markets to influence exchange and interest rates.

Open Order

Buy or sell order that remains in force until executed or cancelled by the customer.

Option

A contract conferring the right but not the obligation to buy (call) or to sell (put) a specified amount of an instrument at a specified price within a predetermined time period.

Option Premium

The option premium is the price the buyer of the options contract pays for the right to buy or sell a security at a specified price in the future.

Option Class

All options of the same type - calls or puts -listed on the same underlying instrument.

Option Series

All options of the same class having the same exercise/strike price and expiration date.

Options

An agreement that allows the holder to have the option to buy/sell a specific currency at a certain price within a certain time. Two types of options – call and put. A call is the right to buy while a put is the right to sell. One can write or buy call and put options. Options do not have as much liquidity as the underlying (spot) currency.

Order

A customer's instructions to buy or sell currencies.

OTC - Over the Counter

Used to describe any transaction that is not conducted over an exchange.

A security that is not traded on an exchange, due to an inability to meet listing requirements. For such securities, brokers and dealers negotiate directly with one another over computer networks and by phone, and their activities are monitored by the NASD. Also known as unlisted.

Out-of-the-Money

A put option is out-of-the-money if the exercise/strike price is below the price of the underlying instrument. A call option is out-of-the money if the exercise/strike price is higher than the price of the underlying instrument.

Outperform

In general, this means to do better than some particular benchmark. Mutual Fund XYZ is said to outperformthe S&P500 if its return exceeds the S&P500 return. However, this language does not take risk into account. That is, one might have a higher return than the benchmark in a particular year because of higher risk exposure. Outperform is also a term used by analysts to describe the prospects of a particular company. Usually, this means that the company will do better than its industry average. Related: underperform.

Output

1.Manufacturing: Amount of energy, work, goods or services, etc. produced by a machine, factory, firm, or an individual in a period.

2.Contracting: Desired result from a project or contractor.

Over the Counter - OTC

A decentralized market (as opposed to an exchange market) where geographically dispersed dealers are linked by telephones and computer screens.

Overall Household Spending

A survey of both wage-earning and non-working households, such as those classified as single-member, unemployed, or retired. The headline figure is the percentage change in average spending per household from the previous year. Increases in household spending are favorable for the Japanese economy because high consumer spending generally leads to higher levels of economic growth. Higher spending is also a sign of consumer optimism, as households confident in their future outlook will spend more. At the same time accelerated growth exerts inflationary pressure, which can lead to interest rate increases in the future.

Overbought

A term used to characterize a market in which currency prices have risen at a pace that is above typical market acceleration, and hence is due for a retracement.

Overheated /Economy

Is an economy on a high growth rate trajectory placing pressure on the production capacity resulting in increased inflationary pressures and higher interest rates.

Overnight Limit

The maximum amount of a net long or short position that a dealer can carry over into the next dealing day.

Overnight Position

Trader's long or short position in a currency at the end of a trading day.

Overnight trading

The buying or selling of currencies between 9pm and 8am local time. This type of transaction occurs when an investor takes a position at the end of the trading day in a foreign market that will be open while the local market is closed. The trade will be executed sometime that evening or early morning.

Oversold

The opposite of overbought; exists when the price of a currency decelerates at an abnormally fast rate, and hence is due for an upwards reversal.

A situation arising in the market after prompt and significant downturn of the price (Forex rate).

[PCMAnalyst]

Package Deal <br />
<br />
An order that contains a number of exchange or deposit items that must be completed simultaneously, or not at all. Package deals allow traders to ensure specific prices or times to...

[PCMAnalyst]

Quanto option

An option in which the foreign exchange risk in the underlying instrument has been removed.

Quote

A simultaneous bid and offer in a currency pair.

QV=Quotable Value New Zealand, Ltd

Quotable Value Limited (QV) is New Zealand's largest valuation and property information company. QV operates from 22 offices throughout New Zealand and with subsidiary companies in three states of Australia.
QV was formed in July 1998. The establishment of the company has led to three unique areas of operation: Valuations, Online Services and Rating and Taxation, each dedicated to meeting and exceeding the needs of customers in specific markets.

[PCMAnalyst]

Rally <br />
<br />
A recovery in price after a period of decline. <br />
A substantial rise in the price of a security, commodity, or overall market, following a decline. <br />
<br />
Range <br />
<br />
The difference between the...

[PCMAnalyst]

S&P - Standard and Poors

A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&&P 500.

s.a

seasonally adjusted

Same day transaction

A transaction that matures on the day the transaction takes place.

same store sales

statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more.

SDR

International financing instrument created in 1970 by the International Monetary Fund (IMF) to coincide with the disfavor of the US dollar as the principal currency of the world trade. Also called paper gold, an SDR is neither paper nor gold but an accounting entry. It is not backed by any currency or precious metal, and is used only among governments and IMF for balance Of payments settlements. SDRs are a measure of a country's reserve assets with IMF and, whereas not 'money' in the strict sense, have several characteristics of money as interest bearing assets, store of value, and means of settling indebtedness. They are distributed among all member states of IMF in proportion to each member's quota of IMF dues based on the member's GNP. Used mainly to supplement gold and convertible (hard) currencies in maintaining stability of foreign exchange markets, SDRs are valued on the basis of the value of a basket of 16 major currencies with periodically adjusted weightage reflecting each currency's importance in global trade.

SEC

Securities & Exchange Commission A federal agency that regulates the US financial markets. The SEC also oversees the securities industry and promotes full disclosure in order to protect the investing public against malpractice in the securities markets.

SECO


The State Secretariat for Economic Affairs

Secured Loan

A loan which is backed by assets belonging to the borrower in order to decrease the risk assumed by the lender. The assets may be forfeited to the lender if the borrower fails to make the necessary payments.

Securitization

The process of creating a financial instrument by combining other financial assets and then marketing them to investors.

Sell Limit Order

An order to execute a transaction only at a specified price (the limit) or higher.

Sell Stop Order

A Sell Stop is a Stop Order that is placed BELOW the current dealing Bid price and is not activated until the market Bid price is is at or below the stop price. The sell stop order, once triggered, becomes a market order to sell at the current market price.

Selling Rate

Rate at which a bank is willing to sell foreign currency.

Selling Short

A situation where a currency has been sold with the intent of buying back the position at a lower price to make a profit.

Selloff

A sudden drop in price as a result of widespread selling.

Series

All options of the same class which share a common strike price and expiration date.

Session

Period of trading activity from the time a market opens until it closes. also called trading session.

Settlement

The actual delivery of currencies made on the maturity date of a trade.

Settlement Date

It means the business day specified for delivery of the currencies bought and sold under a forex contract.

Settlement Risk

The risk that one party will deliver and the counterparty will not be able to pay and vice versa.

Share

Certificate representing one unit of ownership in a corporation, mutual fund, or limited partnership.

Shop Price Index

A monthly indicator of price changes at the most popular retail outlets in the United Kingdom. The index takes into account five hundred of the most commonly purchased goods and gives insight into consumer-price inflation. Shop Prices differentiate themselves from British CPI by coming out days before the headline inflation figure. Increases in the BRC Shop Price Index are bullish for the Pound, given that the Bank of England usually raises interest rates to control inflation reflected in the BRC. Conversely, a falling BRC Shop Price Index suggests falling price pressures.

BRC appear in the headlines as the monthly percentage change for the BRC Shop Price Index.

Short

In foreign exchange, when a currency pair is sold, the position is said to be short. It is understood that the primary currency in the pair is 'short', and the secondary currency is 'long'.

Short position

In foreign exchange, when a currency pair is sold, the position is said to be short. It is understood that the primary currency in the pair is 'short', and the secondary currency is 'long'.

Short sale

The sale of a specified amount of currency not owned by the seller at the time of the trade. Short sales are usually made in expectation of a decline in the price.

Short Squeeze

The pressure on short sellers to cover their positions as a result of sharp price increases.

A situation in which the price of the stock rises and investors who sold short rush to buy it to cover their short position and cut their losses. As the price of the stock increases, more short sellers feel compelled to cover their positions. More common than the opposite, long squeeze.

Short-term interest rates

Normally the 90 day rate.

Sidelined

When there is above ordinary interest in a currency pair, other major currency pairs that are thinly traded as a result of this are considered "sidelined".

Sideways

A price which is neither rising or falling; here also called flat.

SITC

Standard International Trade Classification. A system for reporting trade statistics in a common manner.

SL

Order to buy or sell when a given price is reached or passed to liquidate part or all of an existing position.

Slippage

The difference between estimated and actual transaction costs.

SNB

Swiss National Bank

SOFFEX

Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.

Soft Market

More potential sellers than buyers, which creates an environment where rapid price falls are likely.

speculation

Speculation is the practice of selecting investments (exposing one's self to risk) with the intention of profiting from price fluctuations.

As opposed to hedging (where investors enter positions to reduce risk in another investment) or gambling (just risk), speculators make informed decisions before choosing to expose one's self to additional risk.

Spike

A large, quick, temporary rise or fall in price.

Spot

(1) Immediate delivery against cash payment, as opposed to future delivery against cash or credit payment

(2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.

Spot Market

A market in which commodities, such as grain, gold, crude oil, or RAM chips, are bought and sold for cash and delivered immediately. also called cash market.

Spot Commodity

Commodity bought or sold in a spot market, with the expectation that it will be actually delivered on the contracted date.

Spot Price

The current market price of a currency that normally settles in 2 business days (1 day for Dollar/Canada).

Spot Price/Rate

The price at which the currency is currently trading in the spot market.

Spread

This point or pip difference between the bid and ask price of a currency pair.

Square/Flat

Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (flat) position. example: you bought $500,000 then sold $500,000 = FLAT

Squeeze

Action by a central bank to reduce supply in order to increase the price of a currency.

Stable Market

An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.

Stagflation

Recession or low growth in conjunction with high inflation rates.

Stake

In economics: a. A share or an interest in an enterprise, especially a financial share. b. Personal interest or involvement: a stake in her children's future.

Standard

A term referring to certain normal amounts and maturities for dealing.

Standard and Poors - S&P

A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&&P 500.

Sterilization

Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.

Sterling

Another term for the British currency, 'The Pound'.

Stock Index

Statistical indicator used in measurement and reporting of changes in the market value of a group of stocks/shares. Different stock indices (such as Dow Jones Industrial Average, Russell 1000, Standard And Poor’s 500) track the market differently depending on (1) which averaging method is used to establish the index, (2) whether the index is broad based or narrow based, and (3) whether the averaging method assigns weights on the basis of market price or market capitalization. Also called Share Index

Stocky

Market slang for Swedish Krona.

Stop (loss) Order

Order to buy or sell when a given price is reached or passed to liquidate part or all of an existing position.

Stop Loss Order

Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor's position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.

Stop Order or Stop

An order to buy or to sell a currency when the currency's price reaches or passes a specified level.

Stop Out Price

US term for the lowest accepted price for Treasury Bills at auction.

Stop-Loss order

A Stop Loss is an order to close a trade when the market moves a specified amount.

Straddle

The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.

Strike Price

Also called exercise price. The price at which an option holder can buy or sell the underlying instrument.

Strike Price- Exercise Price

The price at which an option can be exercised.
The purchase or sale price of underlying stock that an option holder sees upon the exercising an option contract.

Strip

1.A combination of two puts and one call.

2. bond that is issued by the U.S. Treasury for which interest and repayment of principal are separated and sold individually as zero-coupon bonds. The letters STRIP compose an Acronym for Separate Trading of Registered Interest and Principal of Securities.

Structural Unemployment

Unemployment resulting from changes in the basic composition of the economy. These changes simultaneously open new positions for trained workers.

An example of structural unemployment is the technological revolution. Computers may have eliminated jobs, but they also opened up new positions for those who have the skills to operate the computers.

Support Levels

A price at which a currency or the currency market will receive considerable buying pressure.

SVME

Society for Veterinary Medical Ethics

The Society for Veterinary Medical Ethics was founded in 1994 by a group of veterinarians, biomedical researchers, and academics to promote discussion and debate about ethical issues arising in and relevant to veterinary practice. The Society presently has approximately 160 members, including veterinary school deans, officers of the AVMA and state veterinary medical associations, board-certified laboratory animal medicine specialists, biomedical scientists, officers of humane societies, clinical veterinary practitioners, members of veterinary school and university faculties, and veterinary-oriented students. The SVME publishes a newsletter, holds a plenary meeting with lectures and discussions at the AVMA annual convention, distributes information regarding recent publications relevant to veterinary ethics, and actively seeks to increase and elevate the level of discussion of issues in veterinary ethics. Although most members of the SVME are veterinarians, membership is not limited to veterinarians.

Swap

A transaction which moves the maturity date of an open position to a future date.

Swap price

A price as a differential between two dates of the swap.

Swissy

Market slang for Swiss Franc.

[PCMAnalyst]

T-Bill <br />
<br />
Treasury Bill. <br />
<br />
Take Profit Order <br />
<br />
An order used by currency traders specifying the exact rate or number of pips from the current price point where to close out their current position...

[PCMAnalyst]

U.S. Dollar Index =USDX

A measure of the value of the U.S. dollar relative to majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.

Currently, this index is calculated by factoring in the exchange rates of six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. This index started in 1973 with a base of 100 and is relative to this base. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period.

UBS Consumption Indicator - Switzerland

Index for consumer spending in Switzerland. The Consumption Indicator moves with changes in real consumer spending and can be used as a gauge of the strength of domestic demand. A rising indicator value reflects rising consumer spending, which generally leads to economic growth and potentially augur inflationary pressures to come.

The UBS Consumption Indicator is calculated using five specific indicators of spending and expressed in the form of an index. These indicators are: new car sales, business trends in retail, overnight hotel stays by Swiss nationals in Switzerland , the consumer sentiment index and credit card transactions. The headline is the index value for the month. Because the index value is always positive markets compare the current index value to the short and long-term average values in order to gauge Switzerland 's economic health. In the long term the average has been approximately 1.5, but may change with time.

Uncovered

Another term for an open position.

Under-Valuation

An exchange rate is normally considered to be undervalued when it is below its purchasing power parity.

Unit Labor Cost

Unit labor cost or labor cost per unit of manufacturing output is the cost of worker compensation and benefits per unit of manufactured output.

Unrealized Gain/Loss

The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains' Losses become Profits/Losses when position is closed.

Unsecured Loan

Backed not by collateral but only by the integrity of the borrower

Up tick

A new price quote that is higher than the preceding quote for the same currency.

Uptick Rule

In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

USDX=U.S. Dollar Index

A measure of the value of the U.S. dollar relative to majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.

Currently, this index is calculated by factoring in the exchange rates of six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. This index started in 1973 with a base of 100 and is relative to this base. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period.

Useable Margin

Amount of money in the account that can be used for trading.

[PCMAnalyst]

Value added tax


Value Added Tax. A consumption tax that is equal to the aggregate value added to the product at each stage of production.

Value Date


The maturity date of the currency for settlement, usually two business days (one day for Canada) after the trade has occurred.

Value Spot


Normally settlement for two working days from the date the contract is entered into. Value Today Transaction executed for same day settlement; sometimes also referred to as "cash transaction."

Vanilla

A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike. To compare with exotic options which have additional terms.

Variation Margin

Additional margin required to bring an account up to the required level due to market fluctuations.

VAT

value added tax
A consumption tax that is equal to the aggregate value added to the product at each stage of production.

Vega

Expresses the price change of an option for a one per cent change in the implied volatility.

Velocity of Money

The speed with which money circulates or turnover in the economy. It is calculated as the annual national income: average money stock in the period.

Victoria Day

(in Canada) the first Monday preceding May 25, observed as a national holiday.

Visible Trade Balance - UK

The difference between imports and exports of goods. Visible Trade differentiates itself from Trade Balance because it does not record intangibles like services, only reporting on physical goods. Because Britain's economy is highly trade driven, Visible Trade data can give critical insight into developments in the economy and into foreign exchange rates.

VIX

The Chicago Board Options Exchange Volatility Index
The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge".

There are three variations of volatility indexes: the VIX tracks the S&P 500, the VXN tracks the Nasdaq 100 and the VXD tracks the Dow Jones Industrial Average.

VOL - Volatility

Statistical measure of the change in price of a financial currency pair over a given time period.

Volatility

A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes (historic). Can be implied from futures pricing, implied volatility.

Volatility - VOL

Statistical measure of the change in price of a financial currency pair over a given time period.

Volatility Swap

A forward contract whose underlying is the volatility of a given product.

This is a pure volatility instrument allowing investors to speculate solely upon the movement of a stock's volatility without the influence of its price. Thus, just like investors trying to speculate on the prices of stocks, by using this instrument investors are able to speculate on how volatile the stock will be.

Vostro Account

Local currency account maintained by a local bank for a foreign (correspondent) bank. For the foreign bank it is a nostro account.

Voting Stock

Common stock (ordinary shares) the ownership of which gives an entity right to vote in the issuing firm's annual general meeting (AGM). Opposite of non-voting stock. Also called voting shares.

[PCMAnalyst]

Wage drift

The difference between the basic wage and actual earnings including overtime and bonuses.

Warrant

1. A warrants is a form of traded option. It is a right but not obligation to buy shares in a company at a future date and at a prearranged price.

2. A type of security issued by a corporation (usually together with a bond or preferred stock) that gives the holder the right to purchase a certain amount of common stock at a stated price.

Wash trade

A matched deal which produces neither a gain nor a loss.

wda

working day adjusted
Working day or trading adjustments refer to the correction for differences in the number of working or trading days in a given month or quarter which differ from year to year which will impact upon the level of activity in that month or quarter for flow series or the sort / type of day for stock series.


Whipsaw

To lose money in a volatile market as a result of buying securities before rapid drops and selling before rapid rises.


Wholesale inventories

The stock of unsold goods held by wholesalers. Wholesalers act as intermediaries between manufacturers or importers, and retailers. Wholesalers sell directly to retailers, who strive to act in accordance (ideally) with consumer demand. Consequently, high Wholesale Inventories indicate that unsold goods are piling up, suggesting that retailers are facing lagging consumer demand and unwilling to purchase goods. Conversely, declining Wholesale Inventories suggest retailers are buying more goods to meet strong or rising demand. Because Wholesale Inventories reflect the demand retailers have for their manufacturers' wares, the report offers an early indication of the potential strength of consumer spending.

Wholesale Money

Money borrowed in large amounts from banks and institutions rather than from small investors.

Wholesale Price Index

The Wholesale Price Index (WPI) was first published in 1902, and was one of the more economic indicators available to policy makers until it was replaced by the producer price index (PPI) in 1978.
Wholesale price index is the index that is used to measure the change in the average price level of goods traded in wholesale market. A total of 435 commodities data on price level is tracked.

Wire Transfer

Electronic transfer of funds; usually involves large dollar payments.


Work Force

The total number of people employed or seeking employment in a country or region.

Working day

A day on which the banks in a currency´s principal financial centre are open for business. For FX transactions, a working day only occurs if the bank in both (all relevant currency centers in the case of a cross are open) currencies is working.

World Bank

A bank made up of members of the IMF whose aim is to assist in the development of member states by making loans where private capital is not available.

Write Down

Make a downward adjustment in the accounting value of an asset

Writer

The seller of an option contract. also called grantor or option writer.

WTO

World Trade Organization

The World Trade Organization (WTO) is an international body that seeks to foster free trade and resolve trade issues among member nations. Specifically, the World Trade Organization promotes trade agreements among countries, which provide the rules for the international exchange of goods, services, and intellectual property. World Trade Organization agreements have detailed conditions for resolving trade conflicts; if governments can't resolve trade disputes on their own, they are brought to the World Trade Organization for resolution. One weakness of the World Trade Organization, however, is that its decisions are not accompanied by a significant enforcement mechanism. The World Trade Organization was established in 1995 after the conclusion of the Uruguay Round of trade talks. But the origins of the World Trade Organization extend back much further, to the inauguration of the General Agreement on Tariffs and Trade in 1948.

[PCMAnalyst]

XAG

Silver Exchange Rate (ISO)

XAU

Gold Exchange Rate (ISO)

[PCMAnalyst]

Yard

A slang word used in the currency industry meaning 'billion'.

Year To Date - YTD

The period beginning January 1st of the current year up until today's date.

Yield

Annual income earned from an investment, expressed usually as a percentage of the money invested.

Yield Curve

In finance, the yield curve is the relation between the interest rate (or cost of borrowing) and the time to maturity of the debt for a given borrower in a given currency.For example, the current U.S. dollar interest rates paid on U.S. Treasury securities for various maturities are closely watched by many traders, and are commonly plotted on a graph such as the one on the right which is informally called "the yield curve."

[PCMAnalyst]

Z-Certificate

Certificate issued by the Bank of England to "discount houses" in lieu of stock certificates to facilitate their dealing in the short dated gilt edge securities.


Zero Coupon Bond

A bond that pays no interest. The bond is initially offered at a discount to its redemption value.

ZEW

Zentrum für Europäische Wirtschaftsforschung (German: Centre for European Economic Research)


ZEW Indicator of Economic Sentiment

Experts are asked for a qualitative assessment of the direction of inflation, interest rates, exchange rates and the stock market in the next six months. Thus the indicator provides a medium-term forecast for the German economy.


ZEW Survey - Euro Zone

A German Firm, the Center for European Economic Research (ZEW), queries financial experts throughout Europe every month in order to make a medium-term forecast about Germany 's economic situation. They ask experts to evaluate the current situation and to predict the future direction of the economy. For all components of the survey, responses are restricted to positive, negative, or unchanged. This simple structure allows the survey to be quick and efficient in terms of turnaround time, as well as easy to understand and interpret.
The first currency quoted in a currency pair on forex. It is also typically considered the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.

[Ricard Dorman]

Great job! I am sure, this is very much useful thread for the new traders! There have so many important terms that traders need to know before their live trading.

[Danielpeters]

:cool:

[Danielpeters]

Good Idea. And thank for share with us this important information.