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Friday, August 29, 2008
FOREX GLOSSARY
Ladder
Dealers analysis of the forward book or deposit book showing every existing deal by maturity date, and the net position at each future date arising.
Lagging Indicator
A measure of economic activity which tends to change after change has occurred in the overall economy e.g. CPI.
Last Trading Day
The day on which trading ceases for an expiring contract.
Lay Off
To carry out a transaction in the market to offset a previous transaction and return to a square position.
Leading Indicators
Economic variables that are considered to predict future economic activity (i.e. Unemployment, Consumer Price Index, Producer Price Index, Retail Sales, Personal Income, Prime Rate, Discount Rate, and Federal Funds Rate).
Leads and Lags
The effect on foreign trade payments of an anticipated move in the exchange rate, normally a devaluation. Then payment of imports is faster and export receipts is slowed down.
Left-hand side
Taking the left hand side of a two way quote i.e. selling the quoted currency
Leverage
Also called margin. The ratio of the amount used in a transaction to the required security deposit
Liability
In terms of foreign exchange , the obligation to deliver to a counterparty an amount of currency either in respect of a balance sheet holding at a specified future date or in respect of an un-matured forward or spot transaction.
Libor - London InterBank Offered Rate
The London Inter-Bank Offered Rate. Large international banks use LIBOR when borrowing from another bank.
Life of Contract
The period between the beginning of trading in a particular future and the expiration of trading
LIFFE
London International Financial Futures Exchange
Limit Down
The maximum price decline from the previous trading day's settlement price permitted in one trading session.
Limit Move
A price that has advanced or declined the permissible limit permitted during one trading session.
Limit Order
An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 110.00/06, then a limit order to buy USD would be at a price below 110. (ie 109.20)
Limit Price
The price that the client specifies when entering a limit order.
Limit Up
The maximum price advance from the previous trading day's settlement price permitted in one trading session
Limited Convertibility
When residents of a country are prohibited from buying other currencies even though non-residents may be completely free to buy or sell the national currency.
Liquid
The condition in the market where there is ample amount of volume to buy or sell
Liquidation
The closing of an existing position through the execution of an offsetting transaction
Liquidation Level
The account value level that initiates the liquidation of all the client's open position at the best price or exchange rate available at that moment. Liquidation occurs when the Account Value is not sufficient to maintain the current open position(s). A client can prevent liquidation by depositing additional margin into the account, or by closing out existing open position(s).
Liquidity
The ability of a market to accept large transaction with minimal to no impact on price stability.
Locked Market
A market is locked when the bid price equals the asked price.
Long
A position to purchase more of an instrument than is sold, hence, an appreciation in value if market prices increase.
Long Dated Shorts
A forward purchase and sale with a brief uncovered position between them. This may also be referred to as long short dates.
Long Hedge
The purchase of futures contracts for price protection purposes, as a defensive position against an increase in cash prices, or falling interest rates
Long Position
A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.
Loonie
The Canadian Dollar.
Loss in Excess of their Margin Deposit
There exists the opportunity for clients to lose more than the margin that they initially pledge to open and maintain a position.
Lot
A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.
Dealers analysis of the forward book or deposit book showing every existing deal by maturity date, and the net position at each future date arising.
Lagging Indicator
A measure of economic activity which tends to change after change has occurred in the overall economy e.g. CPI.
Last Trading Day
The day on which trading ceases for an expiring contract.
Lay Off
To carry out a transaction in the market to offset a previous transaction and return to a square position.
Leading Indicators
Economic variables that are considered to predict future economic activity (i.e. Unemployment, Consumer Price Index, Producer Price Index, Retail Sales, Personal Income, Prime Rate, Discount Rate, and Federal Funds Rate).
Leads and Lags
The effect on foreign trade payments of an anticipated move in the exchange rate, normally a devaluation. Then payment of imports is faster and export receipts is slowed down.
Left-hand side
Taking the left hand side of a two way quote i.e. selling the quoted currency
Leverage
Also called margin. The ratio of the amount used in a transaction to the required security deposit
Liability
In terms of foreign exchange , the obligation to deliver to a counterparty an amount of currency either in respect of a balance sheet holding at a specified future date or in respect of an un-matured forward or spot transaction.
Libor - London InterBank Offered Rate
The London Inter-Bank Offered Rate. Large international banks use LIBOR when borrowing from another bank.
Life of Contract
The period between the beginning of trading in a particular future and the expiration of trading
LIFFE
London International Financial Futures Exchange
Limit Down
The maximum price decline from the previous trading day's settlement price permitted in one trading session.
Limit Move
A price that has advanced or declined the permissible limit permitted during one trading session.
Limit Order
An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 110.00/06, then a limit order to buy USD would be at a price below 110. (ie 109.20)
Limit Price
The price that the client specifies when entering a limit order.
Limit Up
The maximum price advance from the previous trading day's settlement price permitted in one trading session
Limited Convertibility
When residents of a country are prohibited from buying other currencies even though non-residents may be completely free to buy or sell the national currency.
Liquid
The condition in the market where there is ample amount of volume to buy or sell
Liquidation
The closing of an existing position through the execution of an offsetting transaction
Liquidation Level
The account value level that initiates the liquidation of all the client's open position at the best price or exchange rate available at that moment. Liquidation occurs when the Account Value is not sufficient to maintain the current open position(s). A client can prevent liquidation by depositing additional margin into the account, or by closing out existing open position(s).
Liquidity
The ability of a market to accept large transaction with minimal to no impact on price stability.
Locked Market
A market is locked when the bid price equals the asked price.
Long
A position to purchase more of an instrument than is sold, hence, an appreciation in value if market prices increase.
Long Dated Shorts
A forward purchase and sale with a brief uncovered position between them. This may also be referred to as long short dates.
Long Hedge
The purchase of futures contracts for price protection purposes, as a defensive position against an increase in cash prices, or falling interest rates
Long Position
A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.
Loonie
The Canadian Dollar.
Loss in Excess of their Margin Deposit
There exists the opportunity for clients to lose more than the margin that they initially pledge to open and maintain a position.
Lot
A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.
Labels: Forex Glossary
