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Alphabet G

 

G7- The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy.

 

G10- G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.

 

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

 

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. The was that where the price of gold is fixed against the currency it means that the increased supply of gold does not lower the price of gold but causes prices to increase.

 

Good until canceled- An instruction to a broker that unlike normal practice the order does not expire at the end of the trading day, although normally terminates at the end of the trading month.

 

Grid- Fixed margin within which exchange rates are allowed to fluctuate.

 

Gross Domestic Product- Total value of a country's output, income or expenditure produced within the country's physical borders.

 

Gross National Product- Gross domestic product plus " factor income from abroad" - income earned from investment or work abroad

 

Alphabet H

 

Hard currency- Any one of the major world currencies that is well traded and easily converted into other currencies.

 

Head and Shoulders- A pattern in price trends which chartist consider indicates a price trend reversal. The price has risen for some time, at the peak of the left shoulder; profit taking has caused the price to drop or level. The price then rises steeply again to the head before more profit taking causes the price to drop to around the same level as the shoulder. A further modest rise or level will indicate and a further major fall is imminent. The breach of the neckline is the indication to sell.

 

Hedge- The purchase or sale of options or futures contracts as a temporary substitute for a transaction to be made at a later date. Usually it involves opposite positions in the cash or futures or options market.

 

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

 

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

 

Handle - Every 100 pips in the FX market starting with 000. 

 

Hawk - hawkish - A country's monetary policy-makers are referred to as ‘hawkish’ when they believe that higher interest rates are needed, usually to combat inflation or restrain rapid economic growth or both. 

 

Hedge - A position or combination of positions that reduces the risk of your primary position. 

 

Hit the bid -To sell at the current market bid. 

 

HK40 / HKHI -A name for the Hong Kong Hang Seng Index.

 

Alphabet I

 

Illiquid - Little volume being traded in the market; a lack of liquidity often creates choppy market conditions. 

 

IMM - International Monetary Market, the Chicago-based currency futures market, that is part of the Chicago Mercantile Exchange. 

 

IMM futures - A traditional futures contract based on major currencies against the US dollar. IMM futures are traded on the floor of the Chicago Mercantile Exchange. 

 

IMM session - 8:00am - 3:00pm New York. 

 

INDU - Abbreviation for the Dow Jones Industrial Average. 

 

Industrial production - Measures the total value of output produced by manufacturers, mines and utilities. This data tends to react quickly to the expansions and contractions of the business cycle and can act as a leading indicator of employment and personal income data. 

 

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

 

Initial margin requirement - The initial deposit of collateral required to enter into a position. 

 

IPO - A private company’s initial offer of stock to the public – short for Initial Public Offering. 

 

Interbank rates - The Foreign Exchange rates which large international banks quote to each other. 

 

Interest - Adjustments in cash to reflect the effect of owing or receiving the notional amount of equity of a CFD position. 

 

Intervention - Action by a central bank to affect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates. 

 

Introducing broker - A person or corporate entity which introduces accounts to a broker in return for a fee. 

 

INX - Symbol for S&P 500 Index. 

 

ISM manufacturing index - An index that assesses the state of the US manufacturing sector by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Values over 50 generally indicate an expansion, while values below 50 indicate contraction. 

 

ISM non-manufacturing - An index that surveys service sector firms for their outlook, representing the other 80% of the US economy not covered by the ISM Manufacturing Report. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.

 

Alphabet J

 

Japanese economy watchers survey - Measures the mood of businesses that directly service consumers such as waiters, drivers and beauticians. Readings above 50 generally signal improvements in sentiment. 

 

Japanese machine tool orders - Measures the total value of new orders placed with machine tool manufacturers. Machine tool orders are a measure of the demand for companies that make machines, a leading indicator of future industrial production. Strong data generally signals that manufacturing is improving and that the economy is in an expansion phase. 

 

JPN225 - A name for the NEKKEI index.

 

Alphabet K

 

Keep the powder dry - To limit your trades due to inclement trading conditions. In either choppy or extremely narrow markets, it may be better to stay on the sidelines until a clear opportunity arises. 

 

Kiwi - Nickname for NZD/USD. 

 

Knock-ins - Option strategy that requires the underlying product to trade at a certain price before a previously bought option becomes active. Knock-ins are used to reduce premium costs of the underlying option and can trigger hedging activities once an option is activated. 

 

Knock-outs - Option that nullifies a previously bought option if the underlying product trades a certain level. When a knock-out level is traded, the underlying option ceases to exist and any hedging may have to be unwound.

 

Alphabet L

 

Last dealing day - The last day you may trade a particular product. 

 

Last dealing time - The last time you may trade a particular product. 

 

Leading indicators - Statistics that are considered to predict future economic activity. 

 

Level - A price zone or particular price that is significant technically or based on reported orders/option interest. 

 

Leverage - Also known as margin, this is the percentage or fractional increase you can trade from the amount of capital you have available. It allows traders to trade notional values far higher than the capital they have. For example: leverage of 100:1 means you can trade a notional value 100 times greater than the capital in your trading account.* 

 

Leveraged names - Short-term traders, referring largely to the hedge fund community. 

 

Liability - Potential loss, debt or financial obligation. 

 

LIBOR - The London Inter-Bank Offered Rate. Banks use LIBOR as a base rate for international lending. 

 

Limits / Limit order - An order that seeks to buy at lower levels than the current market or sell at higher levels than the current market. A limit order sets 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 117.00/05, then a limit order to buy USD would be at a price below the current market, e.g. 116.50. 

 

Liquid market - A market which has sufficient numbers of buyers and sellers for the price to move in a smooth manner. 

 

Liquidation - The closing of an existing position through the execution of an offsetting transaction. 

 

Liquidity - The ability of a market to accept large transactions with minimal to no impact on price stability. 

 

London session - 08:00 – 17:00 (London). 

 

Long position - A position that appreciates in value if market price increases. When the base currency in the pair is bought, the position is said to be long. This position is taken with the expectation that the market will rise. 

 

Longs - Traders who have bought a product. 

 

Loonie - Nickname for USD/CAD. 

 

Lot - A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

 

Alphabet M

 

Macro - The longest-term trader who bases their trade decisions on fundamental analysis. A “macro” trade’s holding period can last anywhere from around 6 months to multiple years. 

 

Manufacturing production - Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only measures the 13 sub sectors that relate directly to manufacturing. Manufacturing makes up approximately 80% of total Industrial Production. 

 

Margin - The required collateral that an investor must deposit to hold a position. 

 

Margin call - A request from a broker or dealer for additional funds or other collateral on a position that has moved against the customer. 

 

Market capitalization - The total value of a listed company – share price multiplied by the number of shares issued. 

 

Market maker - A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial product. 

 

Market order - An order to buy or sell at the current price. 

 

Market risk - Exposure to changes in market prices. 

 

Mark-to-market - Process of re-evaluating all open positions in light of current market prices. These new values then determine margin requirements. 

 

Maturity - The date for settlement or expiry of a financial product. 

 

Medley report - Refers to Medley Global Advisors, a market consultancy that maintains close contacts with central bank and government officials around the world. Their reports can frequently move the currency market as they purport to have inside information from policy makers. The accuracy of the reports has fluctuated over time, but the market still pays attention to them in the short-run. 

 

Models - Synonymous with black box. Systems that automatically buy and sell based on technical analysis or other quantitative algorithms. 

 

MoM - Abbreviation for month over month, which is the change in a data series relative to the prior month's level. 

 

Momentum - A series of technical studies (e.g. RSI, MACD, Stochastics, Momentum) that assesses the rate of change in prices. 

 

Momentum players - Traders who align themselves with an intra-day trend that attempts to grab 50-100 pips.

 

Alphabet N

 

NAS100 - A name for the NASDAQ 100 index. 

 

Net position - The amount of currency bought or sold which has not yet been offset by opposite transactions. 

 

New York session  - 8:00am – 5:00pm (New York time). 

 

No touch - An option that pays a fixed amount to the holder if the market never touches the predetermined Barrier Level. 

 

NYA.X - Symbol for NYSE Composite Index.

 

Alphabet O

 

Offer (also known as the Ask price) - The price at which the market is prepared to sell a product. Prices are quoted two-way as Bid/Offer. The Offer price is also known as the Ask. The Ask represents the price at which a trader can buy the base currency, which is shown to the right in a currency pair. For example, in the quote USD/CHF 1.4527/32, the base currency is USD, and the ask price is 1.4532, meaning you can buy one US dollar for 1.4532 Swiss francs. 

 

In CFD trading, the Ask represents the price a trader can buy the product. For example, in the quote for UK OIL 111.13/111.16, the product quoted is UK OIL and the ask price is £111.16 for one unit of the underlying market.* 

 

Offered - If a market is said to be trading ‘offered’, it means a pair is attracting heavy selling interest, or offers. 

 

Offsetting transaction - A trade that cancels or offsets some or all of the market risk of an open position. 

 

On top - Attempting to sell at the current market order price. 

 

One cancels the other order (OCO) - A designation for two orders whereby if one part of the two orders is executed, then the other is automatically cancelled.

 

One touch - An option that pays a fixed amount to the holder if the market touches the predetermined Barrier Level. 

 

Open order -  An order that will be executed when a market moves to its designated price. Normally associated with Good 'til Cancelled Orders. 

 

Open position - An active trade with corresponding unrealized P&L, which has not been offset by an equal and opposite deal. 

 

Option - A derivative which gives the right, but not the obligation, to buy or sell a product at a specific price before a specified date. 

 

Order - An instruction to execute a trade. 

 

Order book - A system used to show market depth of traders willing to buy and sell at prices beyond the best available. 

 

Over the counter (OTC) - Used to describe any transaction that is not conducted via an exchange. 

 

Overnight position - A trade that remains open until the next business day.

 

Alphabet P

 

Paid - Refers to the offer side of the market dealing. 

 

Pair - The forex quoting convention of matching one currency against the other. 

 

Paneled - A very heavy round of selling. 

 

Parabolic - A market that moves a great distance in a very short period of time, frequently moving in an accelerating fashion that resembles one half of a parabola. Parabolic moves can be either up or down. 

 

Partial fill - Where only part of an order has been executed. 

 

Patient - Waiting for certain levels, or news events to hit the market before entering a position. 

 

Personal income - Measures an individual’s total annual gross earnings from wages, business enterprises and various investments. Personal income is the key to personal spending, which accounts for 2/3 of GDP in the major economies. 

 

Pips - The smallest unit of price for any foreign currency, pips refer to digits added to or subtracted from the fourth decimal place, i.e. 0.0001. 

 

Political risk - Exposure to changes in governmental policy which may have an adverse effect on an investor's position. 

 

Portfolio - A collection of investments owned by an entity. 

 

Position - The net total holdings of a given product. 

 

Premium - The amount by which the forward or futures price exceeds the spot price. 

 

Price transparency - Describes quotes to which every market participant has equal access. 

 

Profit - The difference between the cost price and the sale price, when the sale price is higher than the cost price. 

 

Pullback - The tendency of a trending market to retrace a portion of the gains before continuing in the same direction. 

 

Purchasing managers index (PMI) - An economic indicator which indicates the performance of manufacturing companies within a country. 

 

Purchasing managers index services (France, Germany, Eurozone, UK) - Measures the outlook of purchasing managers in the service sector. Such managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries and inventories. Readings above 50 generally indicate expansion, while readings below 50 suggest economic contraction. 

 

Put option - A product which gives the owner the right, but not the obligation, to sell it at a specified price.

 

Alphabet Q

 

Quote - An indicative market price, normally used for information purposes only. 

 

Quantitative easing - When a central bank injects money into an economy with the aim of stimulating growth. 

 

Quarterly CFDs - A type of future with expiry dates every three months (once per quarter).*

 

 

 

 

 

 

 

 

Albhabet G
Alphabet H
Alphabet I
Alphabet J
Alphabet K
Alphabet L
Alphabet M
Alphabet N
Alphabet O
Alphabet P
Alphabet Q