Glossary

Abenomics





Accrual Swap








Aggregate Demand






Aggregate Risk



Aggregate Supply






Algorithmic Trading (Algo)




American Depositary Receipt (ADR)






American Option



Appreciation



Arbitrage






Ask (Offer) Price





Auto-correlation





Average Rate Option







Aussie

ABENOMICS
Abenomics refers to the economic policy introduced by Japanese Prime Minister, Shinzo Abe. Abenomics is made up of quantitative easing, stimulus and inflation targets. Abenomics is an attempt to jumpstart the Japanese economy after several decades of minimal economic growth and deflation.

ACCRUAL SWAP
An interest rate swap under which a counter-party pays a vanilla floating reference rate, usually three or six month LIBOR, and receives LIBOR plus a significant spread. Interest payments to this counter-party will only accrue on days when rates stay within a certain range dictated by preset upper and lower boundaries.


AGGREGATE DEMAND 
Used loosely to describe all private and public sector demand for goods and services produced by a given country. In practice, it is interchangeable with Gross Domestic Product (GDP). Academic notions of aggregate demand make a distinction between short-term and long-term, and are modeled as a function of price levels.

AGGREGATE RISK
Can vary depending on context, but generally defined as the amount of exposure a customer has to the (potential) movement of spot and forward rates.

AGGREGATE SUPPLY 
Measures the total volume of goods and services produced by a given economy. Generally speaking, an increase in demand should lead to an expansion of aggregate supply in the economy. In the event of a mismatch between aggregate supply and aggregate demand, prices would change (i.e. inflation/deflation) in order to return the economy to equilibrium.

ALGORITHMIC TRADING (ALGO)
A pre-programmed trading system that relies predominantly on advanced mathematical and statistical formulas, which executes trades on high frequency trading platforms.

AMERICAN DEPOSITARY RECEIPT (ADR)
A vehicle which effectively enables American investors to own shares in foreign corporations. ADRS trade on exchanges like conventional securities. The sponsoring bank collects dividends, pays local taxes and converts them to dollars for distribution to American shareholders. It should be noted that ADRs are affected both by company performance and by changes in exchange rates.

AMERICAN OPTION 
An (currency) option which may be exercised at any time prior to expiration.

APPRECIATION 
Common term used to describe a currency increasing in value, as a result of market forces as opposed to official adjustment.

ARBITRAGE
The simultaneous purchase and sale of an equivalent security in different markets, with the goal of profiting from pricing inconsistencies. In the context of currency trading, arbitrage applies to a mismatch in paired exchange rates between three currencies (triangular arbitrage) or an inefficiency between identical securities listed in different markets that arises from exchange rate fluctuation.

ASK (OFFER) PRICE
The price at which specific currency or contract can be purchased. In practice, this can be understood as the number on the right side of the quote, which is usually the higher price. For example, in the quote EUR/USD 1.4122/26, the ask price is 1.4126; meaning you can buy one Euro for 1.4126 US dollars. Opposite to bid price.

AUTO-CORRELATION
The correlation between changes in a single variable over different time periods. If a price is negatively auto-correlated, a move down in one period would suggest a move up in the next, and vice versa. If it were positively auto-correlated, a move down would suggest a move down in the following period as well, and vice versa.

AVERAGE RATE OPTION 
A hedging tool where a series of spot rate fixings during the life of an option are used to calculate an average rate. If the average rate is below the strike price, then the bank must settle the difference with the customer. Otherwise, the option expires worthless with no payment made. Average rate options are generally suited for those who need protection against adverse currency moves that still wish to retain full upside potential. Also known as an Asian Option.

AUSSIE
Slang term for the Australian dollar.

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Balance Sheet



Balance of Payments





Balance of Trade





Bank of Canada (BoC)



Bank of England (BoE)



Bank of Japan (BoJ)



Bear Market



Bear(ish)


Bid Price





Bollinger Bands






 

Bretton Woods




Bull Market



Bulldogs


Bundesbank (BUBA)



Buyer/Taker

BALANCE SHEET
Financial statement showing a company's assets, liabilities, and shareholders' equity on a given date.

BALANCE OF PAYMENT
A systematic record of the economic transactions during a given period for a country. Can refer to either current account (which takes trade into account), capital account, or a combination thereof. Prolonged balance of payment deficits theoretically lead to currency depreciation.

BALANCE OF TRADE
Calculated by subtracting imports from exports. A negative balance of trade (when imports exceed exports) is called a "deficit," while a positive balance is known as a "surplus." The balance of trade is inversely related to the difference between savings and investment.

BANK OF CANADA (BOC)
Central Bank for Canada, whose actions directly weigh on the value of the Canadian Dollar (CAD)

BANK OF ENGLAND (BOE)
Central Bank for the UK, whose actions directly weigh on the value of the Pound Sterling (GBP).

BANK OF JAPAN (BOJ)
Central Bank for Japan, whose actions directly influences the value of the Japanese Yen (JPY)

BEAR MARKET
While precise standards vary, refers generally to prolonged period of falling asset prices.

BEAR(ISH)
Describes an an investor who believes that asset prices will fall.

BID PRICE
The price at which specific currency or contract can be sold. In practice, this can be understood as the number on the left side of the quote, which is usually the lower price. For example, in the quote EUR/USD 1.4122/26, the bid price is 1.4122; meaning you can sell one Euro for 1.4122 US dollars. Opposite of Ask/Offer price.

BOLLINGER BANDS
Technical analysis tool used to measure the highness or lowness of the price relative to previous trades, consisting of three bands: middle band (simple moving average), upper band (given number of standard deviations above the middle band), and lower band (given number of standard deviations below the middle band)
 

BRETTON WOODS
1944 agreement that used the price of gold to fix exchange rates for major currencies. It was replaced in 1971 by a floating exchange rate system that remains in place today.

BULL MARKET
While precise standards vary, refers generally to prolonged period of rising asset prices.

BULLDOGS
Bonds issued in the UK by foreign institutions, denominated in British Pounds.

BUDESBANK (BUBA)
Central bank of Germany and most influential member of the European System of Central Banks (ESCB).

BUYER/TAKER
Refers to the buyer/holder of an option, who has the right but not the obligation, to purchase the underlying security.

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Cable


Call Option




Candlestick Chart



Carry Trade




Central Bank




Central Bank Intervention



CME Group




Contract (Lot)


Contract for Difference (CFD)



Currency Basket



Currency Intervention



Currency Swap




Cyclical

CABLE
Refers to the Sterling/US Dollar exchange rate.

CALL OPTION 
Contract in which the buyer has the right but not the obligation to purchase a particular security for a given strike price, on (in the case of European call options) or before (in the case of American call options) the expiration date.

CANDLESTICK CHART
Type of chart that uses shaded bars to indicate trading range (i.e. high and low price) as well as the opening and closing prices for consecutive time periods.

CARRY TRADE
A trading strategy involving the sale of low-yielding currency (funding currency) in favor of a higher-yielding (carry currency) alternative, with the goal of earning a return on the spread/differential. [This differential is known as the "carry"].

CENTRAL BANK
A governmental or quasi-governmental organization that conducts monetary policy and manages the exchange rate for a given economy and its currency. It may also be charged with printing money.

CENTRAL BANK INTERVENTION
Refers to a central bank buying or selling its own currency on the spot market in order to bring about a desired exchange rate.

CME GROUP
The world's largest futures exchange, which includes the Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT), and New York Mercantile Exchange (NYMEX).

CONTRACT (LOT)
Trading unit. A standard lot in the forex market is $100,000. A mini lot is $10,000.

CONTRACT FOR DIFFERENCE (CFD)
Agreement between a client and a provider to exchange the difference between the opening and the closing value of the contract.

CURRENCY BASKET
Refers to a weighted group of currencies purchased together, usually by a Central Bank for the purpose of fixing an exchanging rate.

CURRENCY INTERVENTION
A situation where a central bank attempts to influence the value of its currency by either selling or buying it on the forex market. 

CURRENCY SWAP
Agreement between two parties to exchange principal and fixed rate interest payments on a loan in one currency for principal and fixed rate interest payments on an equal loan in another currency.

CYCLICAL
Stocks/Securities that move with the economy, gaining if the economy booms and losing if the economy weakens.

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Day Trading



Default



Deficit 



Deflation 




Depreciation 


Derivative




Divergence

DAY TRADING
An approach to trading which involves entering and closing trades on the same day or trading session.

DEFAULT
Failure of an issuer to make timely payments of both interest and principal when due.

DEFICIT
Describes an excess of liabilities over assets, of losses over profits, or of expenditure over income.

DEFLATION
A decrease in the general price level of goods and services, whereby the inflation rate falls below zero percent, resulting in an increase in the real value of money.


DEPRECIATION
Decline in the value of an asset, currency, or security.

DERIVATIVE
Financial instrument (forwards, futures, options, swaps) whose value is derived from an underlying security.

DIVERGENCE
Describes the phenomenon whereby a technical indicator and corresponding price chart don't yield the same peaks/bottoms. It usually indicates trend "exhaustion."

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Easing



Economic Indicator



EFT




Elliot Wave Theory





Equilibrium



Euro Interbank Offered Rate (Euribor)



Eurobond




Eurodollar Bonds



European Central Bank (ECB)



Exotics



Exponential Moving Average (EMA)

EASING
Refers to the use of monetary policy to expand the money supply, either by lowering interest rates or through open market operations.

ECONOMIC INDICATOR
Statistic that seeks to proxy current economic growth and stability. Economic indicators fall into three categories: leading, lagging and coincident.

ETF
Electronic Funds Transfer.


ELLIOT WAVE THEORY
Principle that collective investor psychology (or crowd psychology) moves from optimism to pessimism and back again. These swings create patterns, as evidenced in the price movements of a market at every degree of trend, over durations that range from minutes to decades.

EQUILIBRIUM
Price level/range that seems to represent a balance between demand and supply for a given currency pair.

EURO INTERBANK OFFERED RATE (EURIBOR)
Rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank.

EUROBOND
Bond in US dollars or other currency that is sold to investors who don't reside in the country whose currency is used.

EURODOLLAR BONDS
Type of Eurobond that pays both interest and principal in euros, whose most salient feature is that they are not regulated by the SEC.

EUROPEAN CENTRAL BANK (ECB)
Central Bank for the new European Monetary Union.


EXOTICS
Currencies that are not actively traded; used in contradistinction to "major currencies."

EXPONENTIAL MOVING AVERAGE (EMA)
Compared to a simple moving average, which distributes weight equally across a data series, exponential moving averages afford greater weight to recent prices/data.

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Face Value


Federal Deposit Insurance Corporation (FDIC)


Federal Funds Rate (FFR)





Federal Open Market Committee (FOMC)



Federal Reserve Bank (Fed)



Federal Reserve Board



 

Fiat Currency




Fibonacci Numbers







Financial Services Authority (FSA)


Fiscal Policy



Fixed Exchange Rate





Forward Contract




Fundamental Analysis




Futures Contract

FACE VALUE
Value of a bond to be paid out at maturity. Also known as Par Value.

FEDERAL DESPOIT INSURANCE CORPORATION (FDIC)
US regulatory agency charged with regulating US banks. The FDIC provides insurance up to $100,000 per account.

FEDERAL FUNDS RATE (FFR)
Interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions, usually overnight. The FFR is guided (but not determined outright) by the Federal Open Market Committee.

FEDERAL OPEN MARKET COMMITTEE (FOMC)
Committee made up of Federal Reserve members, which meets eight times a year to discuss/ implement monetary policy.


FEDERAL RESERVE BANK (FED)
The central bank of the United States, responsible for using monetary policy to promote economic growth and price stability.

FEDERAL RESERVE BOARD
Senior members of the Federal Reserve, each of whom is appointed by the US President. The chairman of the Fed Reserve Board serves a 4-year term, while the other members serve 14-year terms.

FIAT CURRENCY
Money declared by a government to be legal tender, and not backed by any other commodity, such as gold.


FIBONACCI NUMBERS
Sequence of numbers in which each successive number is the sum of the two previous numbers. Fibonacci numbers are used in financial/currency markets to develop trading algorithms, applications and strategies. The four most common forms are the Fibonacci fan, Fibonacci Arc, Fibonacci Retracement and the Fibonacci Time Extension.


FINANCIAL SERVICES AUTHORITY (FSA)
Agency designated by the UK Treasury to regulate the UK financial industry.

FISCAL POLICY
Refers to tax policy, government spending, and other government initiatives directed at optimizing economic performance.

FIXED EXCHANGE RATE
Exchange rate regime in which a currency is pegged by the Central Bank so that it cannot fluctuate against other currencies. Currencies can be pegged to other currencies or commodities, such as gold.


FOWARD CONTRACT
Derivative Agreement between two parties to buy or sell an asset at a certain future time for a certain price agreed today. This is in contrast to a spot contract, which is an agreement to buy or sell an asset today.

FUNDAMENTAL ANALYSIS 
The analysis of economic indicators and political and current events that could effect the future direction of financial markets. Opposite of Technical Analysis.


FUTURE CONTRACT
Standardized contract to buy or sell a specified commodity/asset of standardized quality at a certain date in the future, at a market determined price (the futures price). The contracts differ from forward contracts in that they are traded on a futures exchange.

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G8




Gold Standard





Gross Domestic Product (GDP)

G8
Forum, for governments of eight nations of the northern hemisphere: US , Germany, Japan, France, UK, Canada, Italy, and Russia. Previously known as the G7 and sometimes expanded to G10 or G20.

GOLD STANDARD
A type of exchange rate regime which fixes a currency to the price of gold. Prior to 1973, the value of the US Dollar was fixed to the price of gold, and all other currencies were fixed to the Dollar.

GROSS DOMESTIC PRODUCT (GDP)
Basic measure of an economy's economic performance, equal to the market value of all final goods and services made within the borders of a nation in one year.

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Hard Currency


Hedge/Hedging





Historical Volatility





Hyperinflation

HARD CURRENCY
Any "major" currency that investors have confidence in.

HEDGE/HEDGING 
Trading strategy implemented with the goal of reducing risk from adverse price movements that surrounds one's primary position. Typically involves taking an offsetting position in another security/currency, and/or using derivatives to limit downside.

HISTORICAL VOLATILITY 
Volatility in the underlying asset price, rate or return over a specific period in the past. It is used to check whether the implied volatility of an option is expensive by historical standards.

HYPERINFLATION
Inflation that is very high and difficult to control, whereby prices increase rapidly as a currency loses its value. Definitions vary, but one standard is inflation exceeding 50% in one month, and/or 100% in one year.

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Illiquid


Implied Volatility



Index Funds



Inflation



Initial Margin



Interbank/Interdealer Market



Interest Rate



International Organization for Standardization (ISO)



International Monetary Fund (IMF)

ILLIQUID
Security or currency that is not traded actively.

IMPLIED VOLATILITY 
The derived volatility of an asset calculated indirectly from options prices.

INDEX FUNDS
Investment funds which seek to mirror the returns of a market index by investing directly in the securities that make up that index.

INFLATION
Refers to a general rise in the price level of goods and services, measured by a price index, which leads to a decrease in the purchasing power of money.

INITIAL MARGIN
Funds required to enter into a leveraged transaction, quoted as a percentage of the price of the asset.

INTERBANK/INTERDEALER MARKET
Market open only to large financial institutions.

INTEREST RATE
Cost of using/borrowing money, expressed as a rate per period of time.


INTERNATIONAL ORGANISATION FOR STANDARDIZATION (ISO)
International organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments.

INTERNATIONAL MONETARY FUND (IMF)
International organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments.

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J-Curve






Jobber

J-CURVE
Refers to the trend of a country's trade balance following a devaluation or depreciation. A higher exchange rate initially means imports are more expensive, making the current account worse (a bigger deficit or smaller surplus).


JOBBER
Refers to a trader that aims to achieve small and consistent, short-term (usually intra-day) profits.

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Kiwi


Key Currency

KIWI
Slang term for the New Zealand Dollar.

KEY CURRENCY
The act of linking one currency to another, usually undertaken by a small country towards that of a major trading partner.

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Leverage (Margin)




Liability




Liquid Market



Liquidity




London Interbank Offered Rate (LIBOR)




London International Financial Futures Exchange (LIFFE)


Loonie


Lot

LEVERAGE (MARGIN)
The ability to borrow money to fund trading/investing activity. The amount that can be borrowed varies between brokers, and is quoted as a multiple of maximum position size to deposited funds.

LIABILITY 
Generally, a claim on a company's assets. In forex, the obligation to deliver to a counter-party an amount of currency at a specified future date, in connection to a forward or spot transaction.

LIQUID MARKET
When there are plenty of lots of a particular currency being bought and sold every day.

LIQUIDITY
Refers to the ability of an asset/currency to be easily converted through an act of buying or selling without causing a significant movement in the price and with minimum loss of value.

LONDON INTERBANK OFFERED RATE (LIBOR)
Daily reference rate based on the interest rates at which banks borrow unsecured funds from other banks in the London interbank market. It is roughly comparable to the U.S. Federal funds rate.

LONDON INTERNATIONAL FINANCIAL FUTURE EXCHANGE (LIFFE)
Association composed of the three largest future exchanges in the UK.


LOONIE
Slang term for a Canadian Dollar.

LOT
Standardized quantity in forex, composed of 100,000 units of a particular currency pair.

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Macro-based


Maintenance (Margin)






Margin


Margin Call




Market Maker



Maturity


Mean Reversion




Monetary Easing




Monetary Policy




Monetary Policy Committee (MPC)



Money Supply









Moving Average (MA)



Moving Average Convergence / Divergence (MACD)

MACRO-BASED
An investment strategy driven by macroeconomic considerations.

MAINTENANCE (MARGIN)
Minimum margin ratio above which margin account balances must remain. Falling below will trigger a margin call, whereby a customer will be requested to either deposit funds or sell securities in order to return the maintenance margin to an acceptable level.

MARGIN 
Minimum deposit required to maintain an open position.

MARGIN CALL
Oral or written notification requesting a customer to either deposit funds or sell securities in order to return the maintenance margin to an acceptable level.

MARKET MAKER
Refers to any dealer who provides a two-way quote a bid and ask price in which they stand ready to buy or sell.

MATURITY
Date (or number of years) on which payment of a financial obligation is due.

MEAN REVERSION
Theory and observed phenomenon whereby prices and returns eventually move back towards their long-term averages.

MONETARY EASING
Refers to a central bank moving to speed up the velocity of money and increase the money supply, usually by lowering interest rates or buying securities on the open market.

MONETARY POLICY
Refers to various tools available to a central bank, that can be employed to influence the money supply, and ultimately to moderate economic growth and price inflation.

MONTARY POLICY COMMITTEE (MPC)
Bank of England subcommittee that meets every month to decide the official interest rate in the UK.

MONEY SUPPLY
Total amount of money available in an economy at a particular point in time. The different types of money are typically classified as M's. M1 consists of all cash in circulation, plus all of the money held in checking accounts, as well as all the money in travelers checks. M2 consists of M1 plus all of the money held in money market funds, savings accounts, and small time deposits.M3 equals M2 plus large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets. Unlike M1 and M2, M3 is no longer published or revealed to the public by the Fed.

MOVING AVERAGE (MA)
Method commonly used with time series data to smooth out short-term fluctuations and highlight longer-term trends or cycles.

MOVING AVERAGE CONVERGENCE/ DIVERGENCE (MACD)
Technical analysis indicator that shows the difference between a fast and slow exponential moving average of closing prices.

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Net Asset Value (NAV)



NIKKEI



Non-Farm Payrolls (NFP)

NET ASSET VALUE (NAV)
In a forex trading account, equal to the balance of deposits, realized and unrealized profit/loss, and interest, minus withdrawals.

NIKKEI
The index of the 225 leading stocks traded on the Tokyo Stock Exchange.

NON-FARM PAYROLLS (NFP)
Economic indicator that measures the change in the number of employed people during the last month of all non-farming businesses.

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Off-Balance Sheet




Official Settlements Account




Open Market Operations




Option Class



Oscillator

OFF-BALANCE SHEET
Refers to financing or capital raising activities that does not appear on a given company's balance sheet, such as derivative agreements and investments in certain types of partnerships.

OFFICIAL SETTLEMENTS ACCOUNT
US balance of payments category that sums the movement of dollars in foreign official holdings and US reserves.

OPEN MARKET OPERATIONS 
The means of implementing monetary policy by which a central bank controls its national money supply by buying and selling government securities, or other financial instruments.

OPTION CLASS
All options, usually separated into calls and puts, for a given underlying asset.


OSCILLATOR
Technical analysis indicator that varies over time within a band (above and below a center line, or between set levels), used to discover short-term overbought or oversold conditions.

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Parity



Peg



People’s Bank of China (PBOC)



Purchasing Power Parity

PARITY
The condition whereby an option's value in the market is the same as its intrinsic value.

PEG
Type of exchange rate regime where one currency's value is fixed to another currency or basket of currencies.

PEOPLE'S BANK OF CHINA (PBOC)
The central bank for China, whose actions directly influences the value of the Chinese Renminbi (CNY).

PURCHASING POWER PARITY
Model of exchange rate determination based on the law of one price, which states that the price of a good in one country should equal the price of the same good in another country.

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Quantitative Analysis

 


Quantitative Easing




 

Quote Currency

QUANTITATIVE ANALYSIS 
The development and application of mathematical and statistic models towards investing and trading.

QUANTITATIVE EASING 
Describes an extreme form of monetary policy used to stimulate an economy where interest rates are either at, or close to, zero. In practical terms, the central bank purchases financial assets from financial institutions using money it has created out of nothing.

QUOTE CURRENCY
Currency listed second in a currency pairing.

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Rally



Rate Differential



Rate of Return



Recession





Reciprocal Currency



Regulated Market




Relative Strength Index (RSI)




Reserve Bank of Australia (RBA)



Reserve Bank of New Zealand (RBNZ)



Reserve Currency





Retail Prices Index (RPI)


Revaluation





Risk Management



Rollover





Running a Position

RALLY
Refers to sustained rise in asset prices.


RATE DIFFERENTIAL
Difference between two countries' benchmark interest rates, often used as a basis for forecasting exchange rates.

RATE OF RETURN
The percentage of gained or lost on an investment relative to the amount of money invested.

RECESSION
General slowdown in economic activity over a sustained period of time, or a business cycle contraction. Defined by the National Bureau of Economic Research as two consecutive quarters of falling GDP.

RECIPROCAL CURRENCY
Any market/exchange monitored by a government agency with the goal of protecting investors.

REGULATED MARKET
Any market/exchange monitored by a government agency with the goal of protecting investors.

RELATIVE STRENGTH INDEX (RSI)
Technical analysis momentum oscillator measuring the velocity and magnitude of directional price movement by comparing upward and downward close-to-close movement.

RESERVE BANK OF AUSTRALIA (RBA)
Central Bank for Australia, whose actions bear directly on the Australian Dollar.

RESERVE BANK OF NEW ZEALAND (RBNZ)
Central bank for New Zealand, whose action directly influence the value of the New Zealand dollar (NZD)

RESERVE CURRENCY
Any currency that is perceived as stable/reliable, such that Central Banks are willing to hold it in mass quantities. The US Dollar is currently the world's foremost reserve currency.

RETAIL PRICES INDEX (RPI)
Measures inflation based upon the price of a selection of family goods.

REVALUATION
Daily calculation of unrealized P&L (on open positions) based on the difference between the previous closing price and the current opening price. Also refers to a change in a country's exchange rate for a currency as a result of central bank intervention or other official action.

RISK MANAGEMENT
Refers to the use of financial instruments to manage exposure to risk, particularly credit risk and market risk.

ROLLOVER
Simultaneous closing of an open position for today's value date and the opening of the same position for the next day's value date at a price reflecting the interest rate differential between the two currencies.

RUNNING A POSITION
Slang term for Open Position.

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Selling Rate


Selling Short



Settlement


Short Position



Simple Moving Average (SMA)




Slippage



Society for World-wide Interbank Telecommunications (SWIFT)


Sovereign Risk




Speculation




Spot Market



Spread



Spread Betting



Stagflation


Sterling


Stochastic Oscillator




Stop Price




Swap



Swiss National Bank (SNB) 



Swissy


Systematic Risk

SELLING RATE
Ask or offer rate.

SELLING SHORT
The act of selling a currency pair such that one is short the base currency and long the quote currency, with the goal of profiting from depreciation.

SETTLEMENT
Physical exchange of one currency for another.

SHORT POSITION
An open position that aims to capture gains from currency depreciation.

SIMPLE MOVING AVERAGE (SMA)
Technical analysis indicator commonly used with time series data to smooth out short-term fluctuations and highlight longer-term trends or cycles, that gives equal weight to all data points.

SLIPPAGE
Refers to the phenomenon whereby the actual fill price differs from the expected fill price, as a result of a fast-moving market or broker error.

SOCIETY FOR WORLD-WIDE INTERBANK TELECOMMUNICATIONS (SWIFT)
Global electronic network for forex settlement, known for a code uniquely identifies financial institutions for the purpose of transfers and settlement.

SOVEREIGN RISK
The risk that a government will either default on its obligations or will impose regulations restricting the ability of issuers in that country to meet their obligations, such as foreign currency restrictions.

SPECULATION
Financial action that does not promise safety of the initial investment along with the return on the principal sum.

SPOT MARKET
The act of buying or selling forex based on current (spot) prices, with settlement taking place two days later.

SPREAD
Difference between the bid and ask price for a given currency pair. Also known as Bid Ask Spread.

SPREAD BETTING
Spread betting is a type of speculation that involves betting on the price movement of a currency pair without actually purchasing or selling lots.

STAGFLATION
Period of economic recession or low growth combined with high price inflation.

STERLING
Official term for the British Pound.

STOCHASTIC OSCILLATOR 
Technical analysis tool designed to compare the closing price of a currency to its price range over a given time period.

STOP PRICE
The price at which a stop order is triggered. For purchases, the stop price acts as a minimum price you will pay if an investment is made. For sales, the stop price acts as the maximum price you will receive if a holding is sold.

SWAP
Type of derivative in which two parties agree to exchange one stream of cash flows against another.

SWISS NATIONAL BANK (SNB)
Central Bank for Switzerland, whose action directly influencing the value of the Swiss Franc (CHF) 

SWISSY
Slang term for the Swiss Franc.

SYSTEMATIC RISK
The risk that derivatives permit the transmission of risk across previously unrelated markets, thus making it more likely that a large shock in one will be transmitted to others.

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Take-Profit Order (T/P)



Technical Analysis




Tier One



Tokyo Inter-bank Offered Rate (TIBOR)




Total Return Swap (TRS)





Treasury Securities

TAKE-PROFIT ORDER (T/P)
An order specifying the exact rate or number of pips from the current price point at which point a current position should be closed, and gains will be locked in.

TECHNICAL ANALYSIS
Broad approach to forecasting the future direction of prices through the study of past market data, primarily price and volume. It may also employ models and trading rules based on price and volume transformations.

TIER ONE 
Highest grading that a bank can earn for its financial strength, according to The Bank of International Settlements.

TOKYO INTER-BANK OFFERED RATE (TIBOR)
Daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Japan interbank market.


TOTAL RETURN SWAP (TRS)
Provides the buyer with the economic performance of the reference obligation – i.e. the coupon or interest from the reference obligation together with any capital gains – in return for a predetermined
funding cost. The buyer will be required to pay any capital losses.

TREASURY SECURITIES
Debt obligations of the US government that come in the form of bills (short-term), notes (medium-term), and bonds (long-term). Used as a risk-free benchmark for the pricing of US dollar dominated securities.

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Unconvertible Currency



Underlying Asset




Undervalued



Unemployment Rate



US Dollar Index (USDX)




US Prime Rate


US Treasury

UNCONVENTIBLE CURRENCY 
Any currency that cannot be freely exchanged for other(s) because of foreign exchange regulations.

UNDERLYING ASSET 
The asset/currency on which the covered warrant, futures contract or option is based and derives its value.

UNDERVALUED
When a currency is trading below purchasing power parity or other valuation metric.

UNEMPLOYMENT RATE
Economic indicator defined as the percentage of those in the labor force who are unemployed.

US DOLLAR INDEX (USDX)
Measure of the value of the US dollar, weighted according to the currencies of its trading partners.

US PRIME RATE
The interest rate at which US banks will lend to the most creditworthy borrowers.

US TREASURY 
Department within the United States government that is responsible for printing money and issuing government obligations.

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Valuation


Vanilla




Variation Margin




VIX





Volatility

VALUATION 
The process of estimating the value of an asset or currency.

VANILLA
Descriptive term that refers to a relatively simple financial instrument (option or other derivative), with standard features and no special or unusual characteristics. Opposite of Exotic Option.

VARIATION MARGIN
Refers to the funds required to bring the margin ratio back up to the required level, calculated daily.

VIX
Ticker symbol for the Chicago Board Options Exchange Volatility Index, a popular measure of the implied volatility of S&P 500 index options. A high value corresponds to a more volatile market and therefore more costly options, which can be used to defray risk from volatility.

VOLATILITY
A measure of the amount of movement in the price/rate of a currency. Often used as a proxy for risk.

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Wage Price Index



World Bank




World Trade Organization (WTO)



West Texas Intermediate (WTI)


WAGE PRICE INDEX

Any economic indicator that seeks to measure changes in the average price for labor.

WORLD BANK
International financial institution that provides leveraged loans to poorer countries for capital programs with a goal of reducing poverty.

WORLD TRADE ORGANIZATION
International organization designed by its founders to supervise and liberalize international trade.

WEST TEXAS INTERMEDIATE 
Known as Texas light sweet, a grade of crude oil. 

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XAG/USD


XAU/USD

XAG/USD
The currency symbol for Silver/U.S Dollar.

XAU/USD
The currency symbol for Gold/U.S Dollar.

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Yard


Yield



Yield Curve

YARD
Slang for one billion.

YIELD
Return on an investment, usually expressed in percentage terms.

YIELD CURVE
Graph plotting the interest rate of a given issuer (most commonly the US Treasury) for a range of different maturities.

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Z-Score

Zero Bound

Z-SCORE
Statistical method for normalizing data points around the mean.

ZERO BOUND
Refers to interest rates (and corresponding monetary policy) that are at or very close to zero percent.
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