PCM Glossary

[PCMAnalyst]

T-Bill

Treasury Bill.

Take Profit Order

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 for a profit. The rate deemed to be the level where the trader wants to take a profit is sometimes referred to as the "take-profit point".
As the name suggests, take-profit orders are used to lock in profits in the event the rate moves in a favorable direction. For example, if you are long a currency pair position and believe the price will rise to a certain level, but are unsure what it will do beyond that level, placing a take-profit order at that point will automatically close out your position allowing you to lock in profit.

Takeover

Assumption of control of another (usually smaller) firm through purchase of 51 percent or more of its voting shares or stock.

TD

The Toronto-Dominion Bank (TD) (TSX: TD NYSE: TD TYO: 8640 ) is a bank headquartered in Toronto, Ontario. It is one of Canada's Big Five banks, being the second largest bank in the country by assets and market capitalization

TD Securities

A unit of Toronto- Dominion Bank

Analysis">Technical Analysis

An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.

Technical Correction

An adjustment to price not based on market sentiment but technical factors such as volume and charting.

Terms of Trade

The ratio between export and import price indices.

Terms of Trade Index - New Zealand

Measures how favorable New Zealand 's terms of trade are. The terms of trade figure is calculated as the ratio of an export to the price of an import, per commodity. A higher value is generally bullish for the New Zealand economy, signifying that the products New Zealand exports are worth more than the products it imports. Stronger terms of trade can result from increased demand for New Zealand exports or increased demand for the New Zealand dollar, both of which are beneficial for the New Zealand economy. The figure can be important to market participants because New Zealand relies so highly on exports. The figure is reported in headlines as the percentage change in the index from the previous quarter. A positive change is viewed as favorable for the New Zealand economy, while a negative change is viewed as a bearish sign for the economy.

Tertiary Industry Index - Japan

Evaluates the monthly change in output produced by Japan's service sector. Japan's economy is very export based, because this report excludes manufacturing and only measures service industries catering mainly to domestic needs, the Tertiary Industry Index is a key indicator of domestic activity. The index incorporates data from firms involved with wholesale and retail trade, financial services, health care, real estate, leisure, and utilities. The report excludes industrial manufacturing sectors that tend to be influenced by foreign demand. The tertiary industry index is posted monthly as a percentage change from the previous month's figure.

Theta

A measure of the sensitivity of the price of an option to a change in its time to expiry.

Thin Market

A market in which trading volume is low and in which consequently bid and ask quotes are wide and the liquidity of the instrument traded is low.

Think Tank

A research institute or organization employed to solve complex problems or predict or plan future developments, as in military, political, or social areas.

TIBOR

Tokyo Inter-bank Offered Rate.

TIC-Treasury International Capital

These Treasury data track the flows of financial instruments into and out of the United States. Instruments tracked include Treasury securities, agency securities, corporate bonds, and corporate equities.

Tick

The smallest possible change in a price, either up or down.

TIFFE

Tokyo International Financial Futures Exchange.

Tight Money

A condition where there is a shortage of credit as a result of monetary policy restricting the supply of credit normally through raising interest rates.

Time Deposit

Savings account or CD held in a financial institution, usually a bank, for a fixed term or with the understanding that the customer can withdraw only by giving advanced notice.

timing the market

Attempting to predict future market directions, usually by examining recent price and volume data or economic data, and investing based on those predictions. also called market timing.

Today/Tomorrow

Simultaneous buying of a currency for delivery the following day and selling for the spot day, or vice versa. Also referred to as overnight.

Tom next - Tomorrow Next

Simultaneous buying and selling of a currency for delivery the following day and selling for the next day or vice versa.

Tomorrow Next - Tom/Next

Simultaneous buying and selling of a currency for delivery the following day.

TP

A customer's instructions to buy or sell a currency pair which, when executed, will result in the reduction in the size of the existing position and show a profit on said position.

Tradable amount

Smallest transaction size acceptable.

Trade Date

The date on which a trade occurs.

Trading day

In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. When a trading day ends, all share trading ends and is frozen in time until the next trading day begins. There are several other special circumstances which would lead to a shortened trading day, or no trading day at all.

Trading Range

The spread between the high and low prices traded during a period of time.

Trading Volume

The number of shares, bonds or contracts traded during a given period, for a security or an entire exchange. also called volume.

Tranche

When some part of an issue comes to the market at a different time and possibly at a different price.

Transaction

The buying or selling of securities resulting from the execution of an order.

Transaction Cost

The cost of buying or selling a financial instrument.

Transaction Date

The date on which a trade occurs.

Transaction Exposure

Potential profit and loss generated by current foreign exchange transactions.

Trend Lines

A line drawn that connects either a series of highs or lows in a trend. The trendline can represent either support as in an uptrend line or resistance as in a downtrend line.

Triple Top

A pattern in which a currency has reached a price three times previously, yet has been unable to sustain movements beyond those three peaks. A triple top signifies a strong resistance level.

Trust bank

Japanese bank that combines the functions of a commercial bank, depository institution, and a trust company.

Truth in Lending

A federal law requiring lenders to fully disclose in writing the terms and conditions of a mortgage, including the annual percentage rate and other charges. Also known as Regulation Z.

Turnover

The total volume of all executed transactions in a given time period. The trading volume of the market or of a particular security.

two-way market

The Nasdaq requirement that market makers quote both a bid price and an ask price in every security in which they make a market, and that they execute orders at those prices. also called two-sided market.

Two-Way Price

A quote in the foreign exchange market that indicates a bid and an offer.

Two-way quotation

When a dealer quotes both buying and selling rates for forex transactions.

Two-Way Quote

A type of quote that gives both the bid and the ask price of a security, informing would-be traders of the current price at which they could buy or sell the security. The two-way quote also shows the spread between the bid and the ask, giving traders an idea of the current liquidity in the security (a smaller spread indicates more liquidity).

This type of quote provides more information to users than a last-trade quote, which quotes only the price at which the security last traded.

An example of a two-way quote would be: Citigroup quote of $52.50/$53.30. This tells traders they can currently purchase Citigroup shares for $53.30 or sell them for $52.50. The spread between the bid and the ask is $0.80 ($53.30-$52.50).

[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.
Account">
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]

[Danielpeters]

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