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Forex Glossary


Abnormal ReturnDescripton of unusually large profits or losses. These returns can be generated by any instrument, portfolio or company over a time period. It is found when the actual performance differs from the risk-adjusted anticipated return.
Absolute AdvantageAn individuals, companies, regions or countrys ability to use the same quantity of inputs, but have higher outputs, or have the same outputs, but in a smaller amount of time. It is often used to discussions about trade and production, whereby one who has an absolute advantage is encouraged to specialise in that production, as it is the most efficient use of resources.
Accepting RiskThis is a term used to describe a scenario whereby an individual accepts that the potential loss of a risky action is not enough to warrant the spending of money to avoid said risk. It can also be called “risk retention” because you knowingly retain the risk in your operations.
AccountabilityWillingness to be judged by others based on your own performance. In the world of finance and economics, often refers to being judged and held to account be shareholders, employees and the wider impacted community.
AccountantA professional who performs accounting activities, such as account analysis, auditing or analysis of financial statements.
Accounting Rate of ReturnThis is a formula that reflects the percentage rate of return that was expected on an investment, compared to the investments initial costs. When looking at these figures, one should note that it does not include the time value of money nor cash flows, which are vital in business.
Accounts PayableThis is a line within a companies accounting ledger that will represent a company’s obligation to pay-off any short term debts, be that to a creditor or a supplier.
Accounts ReceivableThis is a line within a companies accounting ledger that will represent a company’s balance of money that is due to itself, be it for goods/services delivered that are not yet paid for.
Accredited in Business ValuationThis is a certification that is granted to accountants that certifies them to calculate a business’ value. It requires passing an exam, and having minimum business and education requirements.
Accredited InvestorThis can refer to both an individual or a business that is permitted to trade securities that are not registered with the financial authorities/regulators.
AccrualAn accounting measure whereby transactions that have not yet occurred are included on income statements or balance sheets.
AccrualsThis is an accounting method, whereby any changes to revenue and expenses are recorded as they are incurred by the company.
Accumulation PhaseThis term describes the phase in the life of an investor or saver, whereby they are building up the value of their investments through savings. It is then followed by the distribution phase, where these funds are then accessed.
Acid-Test RatioThis is a test/method to guage a firms ability to cover its immediate liabilities with its short term assets.
AcquisitionA process/transaction, whereby one party/firm will purchase some or all of another companies shares, which will lead to a consolidation of merger of the companies.
Ad Valorem TaxThe tax based on the assessed value of an item, for example real estate or personal property. The most commonly known is property tax. This is a taxing method widely used in import/exports.
Addition Rule for ProbabilitiesComes in two formulas: one for mutually exclusive events, and the other for non-mutually exclusive events. The formula for mutually exclusive events is simply the addition of the two probabilities, the non-mutually exclusive is the addition of the two single probabilities, less the probability that they will both occur.
AdjudicationThe final ruling in a judgement. It is most often used in reference to a legal case or a court case, whereby the final decree must be adhered to. It can also refer to less formal judgements, whereby a final decision is made on a topic, ie insurance claims.
Adjustable PegExchange rate where a currency is pegged to another currency, often a stronger and more stable one.
Adjusted EBITDAEBITDA stands for “Earnings before Interest, Taxes, Depreciation and Amortisation”. This measures a firms earnings before the removal of interest, tax, and depreciation. Its standardisation/adjustment removes any potential anomolies, and allows for it to become more comparable across firms, as opposed to being a stand alone figure.
Adjusted Present Value (APV)This takes the net present value, and adds any financial benefits of using debt, for example a tax shield. This means that it takes the value of a project were it solely financed by equity, and adds the “value” of the debt.
AdjustmentActions forced by a change in internal ecnomic policy, aimed at correcting a payment imbalance or official currency rate.
Adverse SelectionThis is a situation caused by asymmetric information. In this case, it typically comes before the transaction has occurred (as opposed to moral hazard where it is after). The best example is life insurance, and the fact that people who have the highest risk to their life are often the ones that purchase it, as opposed to those that lead safer lives.
Advertising BudgetAn estimate of a companies expenditure on promotions, over a certain time period.
Affiliate MarketingA method of marketing, whereby a company will compensate third parties for promotion of their product that then leads to business transactions. The most common payment method is commission based on sales, but it can also be fixed rates.
Agency CostsCompany expenses that arise from the actions of an agent, who is acting on behalf of someone else, in this case referred to as the principal.
Agency ProblemThe conflict of interest that occurs in the agency relationship. Within finance, the most common agency problem is that between company management and company stockholders, as one is interested in the company’s future, the others in the firms stock value, and these conflicting interests may not have the same solutions.
Aggregate RiskTotal amount of exposure a bank/broker has in spot and forward exchange contracts.
Aggregate Stop-Loss InsuranceA policy designed to limit losses to a specific amount. It ensures that one off or aggregate losses do not wipe out self funded plans. If the total claims on a policy exceed the aggregate limit, then it is covered by the insurer rather than the policy holder.
AggressivePrices or traders are acting with conviction.
AgioA fee charged to exchange money from one currency to another.
Algorithmic TradingExecution of orders utilising automated or pre-programmed trading instruction, which works on variables such as price, volume or timing. It often uses very complex formulas not possible for people on a trading time scale. Typical algorithms are high frequency trading.
AltcoinAny cryptocurrency that is not Bitcoin. Some consider it to be all crypto other than Bitcoin or Ethereum.
AnalystA person that conducts analysis of the markets.
Annual General Meeting (AGM)The yearly gathering of a companies interest shareholders and stakeholders. At the AGM, an annual report will be presented which will contain all the information on the company’s performance and strategy.
Annual Percentage Rate (APR)Very common term used in economics and day to day life. The yearly interest generated on loans to borrowers or paid to investers. It is a number that is easily comparible and makes it more accesible to normal individuals.
AnnuityA contract between a party and an insurer that sees the insurer make regular or one off payments, starting immediately or in the future.
AppreciationIncrease in the value of an asset over time.
ArbitrageThe simultaneous purchase and sale of the same asset in different locations or markets in order to exploit marginal or major pricing differences. It is considered to be “risk-free profit”.
Arbitrage (FOREX)Simultaneous buying and selling of foreign exchange pairs when there is believed to be a rate discrepancy in different markets, in order to get a profit.
Arbitrage Pricing Theory (APT)A multi-factor asset pricing model. Based on the idea that an asset’s returns can be predicted using the relationship between expected returns and variables that capture systematic risk.
Asian Central BanksCentral banks and financial authorities in Asian countries.
Asian Session23:00 – 8:00 GMT
AskThe price the foreign exchange pair is offered at.
Ask (Offer) PricePrice at which the market is willing to sell a product/asset. It can be called the ask or offer price. In a forex currency pairing, the ask refers to the price at which the base currency can be bought (to the left of the pairing).
Asset Backed SecurityFinancial investment that is backed or collateralised by a pool of assets. These assets often generate revenue/cash flow, for example, debt/loans.
Asset ClassAn item that has value, ie stocks, option, Forex.
Asset SwapSimilar to a regular plain vanilla swap, but instead of swapping regular fixed and floating loan interest rates, it is fixed and floating assets that are exchanged instead. These are derivative contracts where instruments are exchanged.
Assets Under ManagementThis is the total market value of investments that are managed by a person or firm on behalf of a client/clients.
Asymmetric InformationA form of information failure that occurs when a party in an economic transaction possesses greater material than the other, putting them at an advantage/disadvantage. Every economic transaction has some form of asymetry, but some can lead to market failures if not accounted for properly.
At BestThe instruction provided to a broker, asking them to buy or sell and asset at the best rate available in a market.
At Or BetterInstruction given to dealer to buy or sell at a certain price or better.
At the moneyAn options strike price is identical to the current market price of the underlying security. This option no longer has any intrinsic value, but may have extrinsic value due to time value of money.
AUD/USDThe abbreviation for the Australian dollar and US dollar pair. Describes how many US dollars are needed to get a Australian dollar.
Aus 200Australian Securities Exchange. This is the index of the top 200 companies on Australian stock exchange by market cap.
AussieSlang for the AUD/USD pair.
AusterityA time of economic policy that is aimed at reducing public debt. Often sees governments cut spending in order to protect default of a country on its debt.
Automated DealerA trader that inputs trades without human input.
Average Daily Trading VolumeThe average number of shares traded within a day on a given stock. This can be done on a single day, or averaged over a number of days.
Average Propensity to ConsumeMeasures the percentage of an individuals income that is spend rather than saved. Often represented as a “per extra pound earnt” figure.
B2BAcronym for Business to Business dealings.
Baby BoomerTerm used to descrive the generation of people born between 1946 and 1964. Explained by the sudden burst of child births that occurred on the return of the male population at the end of the second world war.
Back OfficeA system used by banks/brokers to process and report transactions.
Back OfficePortion of a company made up of the administrative and supportive personel. Also those that are not client facing.
Back-End RatioAlso known as the “debt-to-income” ratio. Explains the ratio of an individuals income that goes towards debt. This can include expenses like mortgage, credit debt, child support etc.
BacktestingThis is the general method whereby a strategy or model is tested again previous data, to check how it would have done, ex post. Commonly used by traders to see how it would have acted in the previous market conditions.
BackwardationA scenario whereby the current price, or spot price, of a certain underlying asset is higher than the prices of the asset being traded in the futures market.
Bad CreditTerm used to describe a persons history, whereby they have failed to pay bills on time, and the liklihood that they will fail to make future payments is also high.
Bad DebtThe amount of money that a creditor (someone that has granted a loan) is going to have to write off because the recipient is unlikely to repay the loan.
Bail-InA method of financial relief given to failing financial institutions that are on the brink of collapse. It requires the cancellation of debts owed to creditors and depositors.
BailoutA method of financial relief given to failing financial institutions that are on the brink of collapse. It requires the injection of capital into a failing company, for them to use in their own way.
Balance Of Payments (BOP)A statement of transactions made between entities (people, companies, governments etc) in one country and the rest of the world. It is a way that a country can summarise its relationship with the rest of the world.
Balance Of TradeDifference between the value of a country’s exports and imports for a given period.
Balance Of Trade (BOT)The difference between a country’s exports and imports over a given time period. It is the largest component of a country’s balance of payments.
Balance SheetThis is a financial statement that reports a company’s assets, liabilities and the equity of shareholders at any point in time. It is another way of comparing companies on the same level.
Balance-of-PaymentsSystem by which a country’s economic transactions are recorded.
Balanced BudgetA situation where a company has total expected reveneus that are equal to its expected spending. Whilst not normally possible or wanted in private sector, it is normally the aim, due to use of taxpayer money, in the public sector.
Balanced Investment StrategyThe balancing of a portfolio, with stocks and bonds, that tries to balance the risk to return.
Balloon PaymentThe final amount due on a loan repayment. In some plans, it includes a larger final payment following regular smaller payments. The value of the balloon is often the actual loan, with the smaller payments simply covering the value of interest.
BandWhen a country uses a peg, the band is the permitted fluctuation.
Bandwagon EffectPsychological effect where people do things because others are doing it as well, irrespective of what the person would normally do. This related back to peoples inate “herd mentality”.
Bank NotesThis is the paper issued by a central bank that is redeemable as money and is classed as legal tender.
Bank RateThis is the rate at which a central bank is willing to lend to domestic banks.
Bank RatingRefers to a letter grade given to financial institutions by the Federal Deposit Insurance Corporation and credit rating agencies. It summarises its safety and soundness in the market.
Bank ReserveThis is the term that refers to the minimum amount of cash that a financial institution must hold in reserve at all times. The ratio is determined by the countries central bank. The purpose of this reserve is to ensure that it is able to meet a certain level of withdrawal need.
Bank RunWhen a banks customers withdraw their deposits rapidly due to fear of a banks solvency. Includes herd mentality, and can spark wider contagion that can impact the whole sector.
Bank Stress TestA hypothetical method of analysis that determines a banks ability to withstand a negative economic shock. When an institution gets large enough, they are required to do these tests internally regularly.
Bankers AcceptanceThis is a piece of paper that can act as a cheque that is post-dated. It effectively means that a bank guaruntees a payment.
Banking DayOutlines the days of the week in which the commercial banks are open.
BankruptcyLegal proceedings that are initiated when someone, or a business, is unable to repay its debts or financial obligations.
Bar ChartOne of the most popular methods to study price action of a currency pair.
Barrier LevelPrice level at which a barrier option can be exercised.
Barrier OptionType of derivative whereby the payoff depends on whether or not the underlying assets price has reached or exceeded a certain level.
Barrier OptionType of derivative where the final payoff depends on the underlying asset reaching or exceeding a certain price.
Barriers to EntryAn economic term that describes factors that may prevent a newcomer entering a certain market or industry, which in turn reduces the competition of said marketplace. Ane example might be certification, investments etc.
BarterThe exchange of goods or services without the use of money. This was the method of economics prior to fiat money, but is tough to maintain on a larger scale.
Base CurrencyCurrency of the country in which your trading account is based
Base RateLending rate of central bank.
Basel 1The first of the basel accords aimed at preventing financial crises. This accord required financial insitutions to maintain at least 8% of their capital based on their assets. It was issued in 1988.
Basel 2The second of the basel accords. Issued in 2004. It expanded the rules of the minimum capital requirements started under Basel 1. It included new rules that were used for assessing a banks capital adequacy.
Basel 3The final of the basel accords. Begun in 2009 after the financial crisis, it aimed at mitigating risk of banks. It required banks to maintain certain leverage ratios, and reserve capital levels.
Basic Earnings Per Share (EPS)Tells investors how much of a firms net income was allocated to each share of common stock. It is very informative for companies that only use common stock for their capital structure.
BasingChart pattern used in technical analysis that shows when demand and supply of a certain asset are nearly equal. Often appears as a merging of support and resistance levels.
Basis PointOne hundredth of a percent, or 0.0001.
Basis Point (BPS)This is the most common unit of measurement of interest rates, and makes changes easier to understand when shown to the public. A basis point is 1/100th of a percent (0.01%).
Basis RiskThis is the risk that a hedging strategy will not lead to perfect offsetting of price changes, and thus lead to more risk. An easy way to understand it is that if you used an asset to offset the risk of another asset, but it may not be perfectly negatively correlated, then the prices may not move in the same size, and so you may still have risk that you cannot get rid of with that strategy.
Basket of GoodsA term used when comparing inflation. The CPI (consumer price index) compares the price change of a representative number of goods and services, which is referred to as a basket of goods. It allows easier and more accurate comparison of price changes over time. The basket has goods and services that are classed as normal, ie foods, fuel etc, and not rare items, like supercars or watches.
Bear (Bearish)The view that there is going to be a decrease in the price of a currency.
Bear MarketTerm used to describe a market that is experiencing a prolonged period of price decline. This is often caused by widespread negative and pessemistic sentiment.
Behavioural EconomicsThe study of psychology relating to economic decision making of individuals and corporations/institutions. Widely used to try and better understand peoples approaches to risk, and why people seem to make “irrational” decisions. Also used to try and predict the impact of economic models and economic decisions.
Behavioural FinanceA subfield of behavioural economics, this is the application of psychology to the financial decisions of investors and financial actors. Used to try and better understand common place anomolies within both the wider stock market and individual financial decicions.
Bell CurveCommon type of statistical distribution of a varialbe, which is also known as the normal distribution.
Benefit-Cost RatioAn indicator that is used to express the relationship between the relative costs of a decision, and the potential benefits of that same decision. The decision may relate to a past of potential future choice/project.
Better Business BureauStarted in 1912, it is used to assess the performance and trustworthiness of a company or service. It can be used for small or large businesses, and helps to add confidence to an individuals choices.
BidPrice at which a buyer/market is willing to buy.
Bid PricePrice at which the /buyer/market is willing to buy a product.
Bid/Ask SpreadDifference between buy and sell price of a foreign exchange pair.
Big FigureSecond figure after the decimal point in a price.
Binomial DistributionA probability distribution that summarises the likelihood that one of two independent values occurs under a set of parameters. A common example is the odds of flipping a coin.
BISBank of International Settlement based in Basel, Switzerland. This is the central bank for central banks.
Black BoxTerm to describe model based traders. The models are often too complex for human interpretation.
Black FridayThe day after the US day of thanksgiving. Typically a day of shopping deals and discounts that signals the start of the holiday shopping season. Initially a US tradition, it has slowly begun to spread to the rest of the world for its impact on sales.
Black MarketEconomic activity that takes place outside of the government sanctioned channels. Often relates to illegal activities, either for the act itself, ie organ markets, or to help people avoid price controls or taxes.
Black MondayRefers to Monday October 19th, 1987, when the DOW Jones lost nearly 22% in a single day. Sparked a global market decline. By the end of the month, most markets had lost nearly 20%.
Black TuesdayRefers to Tuesday October 29th 1929, when the DOW Jones lost 12% in a day. The sharp drop off saw a panic led sell-off of over 16 million shares. Signaled the end of the roaring 20s and the beginning of the great depression.
BlockchainA digital database that is distributed amongs the nodes of a peer-to-peer network. Used as the foundation for cryptocurrency, which uses it as opposed to centralised banking system.
Blow OffChart pattern that shows a steep incline followed by steep decline in security price, usually on high volume. Often caused by the ending of a large number of shorts.
BOCBank of Canada.
BOEBank of England.
BOJBank of Japan.
Bollinger BandsCombines moving averages and volatiltiy of an instrument in order to guage whether prices are high or low. It is 2 above and below the moviing averages.
BondDebt that is issued for a specific period of time. Can be annuity of perpetuity.
BookTotal number of currency positions open at a given moment. Aim is to have a net of zero, meaning that shorts and longs cancel out.
Book ValueThis is the cost of carrying an asset on a company’s balance sheet. On a balance sheet, it can be calucated as the total assets less intangible assets and liabilities.
Book-to-Market RatioCompany indicator that shows its value through the comparison of its book value to its market value. The market value is calculated by calculating its market capitalisation.
BootstrapIn business, this refers to a situation whereby an entrepreneur begins a company with little capital, and uses its own money generation to grow, as opposed to invested capital.
Brain DrainA term of slang that is used to describe the impact of emigration. Often describes the process whereby something causes large movements in people, and so those that are considered vital to the future state of a country’s economy leave for a safer location, and so leave only those that have little impact.
BRC Shop Price IndexBritish measure of inflation based on surveyed retailers.
Breakaway GapOccuring at the beginning of a new trend, this is the visible price trend.
BreakoutThe situtation where the price of an asset breaks through a previous level of resistance or support. It suggests a new trend or price direction.
BRICAcronym for Brazil, Russia, India and China. They are believed to be the leaders of the worlds economy by 2050.
BrokerAn agent, often working on commision or spreads, that executes orders to buy or sell currencies.
BrokerageA company that offers its trading services to the public, often where brokers are found.
BuckSlang for one million units of a dollar based currency pair.
Bull (Bullish)The view held by traders that go long on currency, expecting that the prices will increase.
Bull MarketA market that is in long term, continual uopward trends.
BullishActions that are favouring the strengthening of the market, or increase in prices.
BullsTraders that believe that the market is going to increase in prices, regardless of the current trend.
BundesbankGermanies central bank.
Business DayA day when banks are open for business.
BuyAction of taking a long position on a product, usually with the hope that the price will increase. Opposite of a short/sell.
Buy DipsAction of purchasing an asset after having fallen a certain number of pips (often 20-30) within an intra-day period.
Buy Limit OrderOrder to fulfil a transaction at a specified price or lower.
Buy on MarginBuying a currency pair, but only part of the position value is covered for by cash. Margin is the part of the value that is paid for, not borrowed for.
Buy-and-HoldPassive investment strategy whereby an individual will purchase a stock and hold it for a long period of time regardless of the price fluctuation. These investors are looking for long term movements and are not interested in short term movements or scalping.
Buyers MarketA change in economic supply-and-demand relationships whereby purchasers have the advantage over sellers in the price negotiations. This could be the case when there are more sellers than buyers.
C-SuiteRefers to the upper levels of a company’s executives and managers. The reason for calling it “c suite” is that most of the people in those roles have a “c” at the start, ie CFO, CEO etc
CableGBP/USD pairing.
CADCanadian Dollar
Call OptionIn FOREX, this describes a currency trade where an interest rate difference between countries is exploited. The currency with a low interest rate is sold, and the one with a high interest rate is purchased. The trader received the interest rate difference whilst the trade is open.
Call OptionA financial derivative that grants its holder the right but not the obligation to purchase an asset or security at a set price within a certain period of time.
Candlestick ChartChart that indicates the trading range for the day, including the opening and closing prices. If the open is higher than close, the candle is shaded. If the opposite is true, it is unshaded.
Capital AccountA part of the balance of payments. This part records the flow of money to and from a country from international investment transactions.
Capital Asset Pricing ModelShortened to the CAPM, this is a statistical model that is used to estimate the expected return of a given investment based off of the relative risk of said investment compared to the market.
Capital BudgetingAn undertaken process that aims to evaluate potential investments, prior to approval or disapproval.
Capital GainsThe increase of a capital assets value when sold, compared to the price at which it was purchased.
Capital Gains TaxA tax leveid on investors upon selling an asset. The amount is based on the value by which the asset appreciated between purchase and sale of said asset.
Capital Market LineThis is a concept whereby one can visually represent all of the risk-return combinations possible when combinging the risk-free asset, and the market portfolio of risky assets, in every possible combination of investment, ie 100% risk-free to 100% market portfolio.
Capital MarketsThis is a broad term to describe the “locations” where funds are exchanged between capital suppliers and sellers. These funds can take the form of equity, securities, bonds etc.
Capital StructureA term used to describe the combination of debt and equity used by a company to finance its operations and growth.
CapitalisationA method of accounting which sees newly purchased assets be depreciated over its useful life, rather than simply being expensed in the current accounting period.
CapitalismA broad term to describe an economic system. Characterised by private ownership in which control of goods and production is decided by the free market alone without intervention from external forces, ie governments.
CapitulationDramatic surge in selling pressure in a declining market. Often follows a significant downturn in prices, where pressure builds once investors don’t want to suffer further losses, and so further sell positons, increasing the downwards pressure. Often acts as a signal for an expected reversal.
Carbon CreditThese are permits that allow the holder to emit certain quantities of greenhouse gases. In the automotive industry, these permits are sold between manufacturers to keep within limits.
Carded RateForeign exchange rates quoted by a bank for small foreign exchange transactions.
Carried InterestThis is the share of profit of a hedge fund/private equity fund/venture capital group that is earned by the general partners. It is often based on performance, and is used to align their interests with the interests of the fund.
CarryInterest cost of financing assets/securities.
Carry TradeStrategy where one longs a high interest currency and shorts a low interest rate currency.
Cash CowA business/product/asset that, once paid off, will produce consistent cash flows for the rest of its lifespan.
Cash FlowThe net amount of cash being transferring into and out of a company.
Cash MarketThe market upon which the derivate contract of an asset is actually based.
Cash on DepositFunds that are deposited within a trading account.
Cash PricePrice of a product that is for instant delivery/price of the good at that instant.
Cash-on-Cash ReturnA rate of return that shows the cash income earned on the cash invested into a project. Often used in reference to property investment.
Caveat Emptor (Buyer Beware)Latin phrase that translated to “let the buyer beware”. In short it means that a buyer must buy at their own risk. The seller is only able to give as much information, and unless the buyer asks, anything that comes up as an issue is a risk they must take.
CBsCentral bank abbreviation.
Central BankGovernment or quasi-government organisation in charge of a countries monetary policy.
Central Limit TheoremThe statistical concept that states that a distribution of a sample moves more towards a “normal” one the greater the same size, regardless of the populations distribution.
Ceteris ParibusA term used in shorthand to indicate “all things remaining equal”. Often used to clarify the impact of one variable on another, whilst all other variables are held constant.
CFD“Contract for Difference” gives traders exposure to the change in value of an underlying asset whilst using leverage to trade accounts far higher than what they actually have. Means that a trader can benefit from trading a security without actually owning it.
Chapter 11 BankruptcyA form of bankruptcy that involves the reorganisation or the debtors affairs. Also called “reorganisation” bankruptcy.
Chartered AccountantAn international accreditation grandted to accounting proffesionals outside of the US.
ChartistTrader that uses charts/graphs/histrocial data to find trends and predict movements. Also known as a “technical trader”.
Checks and BalancesProcedures put in place to try and mitigate risks and mistakes made by parties. Aimed at preventing a centralisation of power, it allows groups/companies/governments to function effectively without taking too much control.
Chief Executive Officer (CEO)Highest ranking executive within a company structure, whose main role is to make major decisions, and control the running of the company.
Chief Financial Officer (CFO)A senior executive in charge of the firms financial actions.
Chief Operating Officer (COO)A senior executive in charge of overseeing the firms day-to-day admin and operational functions.
Chief Technology Officer (CTO)A senior executive in charge of a company’s technological needs, as well as R&D.
Child Tax CreditTax benefits granted to taxpayers for a qualifying child.
ChoppyPrice moves that are only short lived and not often conducive of aggressive trading.
Churn RateThe rate at which a customer stops doing business with an entity.
CIPM“Certificate of Investment Performance Measurement”.
Cleared FundsThese are funds that are freely available and are sent to settle a trade.
ClearingThe process whereby a trade is settled.
Clearing HouseDesignated intermediary between a buyer and a seller within a financial market. Aimed at increasing the efficiency of a market as buyers and sellers often don’t know of each others existance.
Closed EconomyTerm reffering to a country that does not trade of engage with other exchanges or countries.
Closed PositionExposure that not longer exists. A postion can be closed by taking an equal but opposite position.
ClosingProcess of closing a position.
Closing PricePrice of an asset when it was traded to close a position.
Coase TheoremTheory that bargaining between individuals or groups over property rights will lead to optimal and efficient outcomes.
CollateralAsset used to secure a loan or act as a guaruntee of performance.
Collateralised Debt ObligationA complex structured financial product that is backed by a pool of mortgages/loans and other assets, which is then sold to institutional investors.
CollusionA form of illegal agreement between competitors where they aim to disrupt the market equilibrium by becoming non-competitive and acting as “one”.
Commercial Mortgage-Backed SecurityA fixed income investment that is backed by a mortgage on a commercial property rather than residential real estate.
CommissionCommon fee charged for buying or selling a product.
Commodity CurrenciesCurrencies of countries whose main exports are natural resources.
Common LawBody of unwritten laws based on legal precedents established by the courts. It was initially established in the UK where law was developed over hundreds of years.
CommunismA political and economic system that advocates for classless countries where production is owned by the wider community, and there is no such thing a private property, or it is greatly curtailed. It goes against capitalism.
Comparative AdvantageAn ability for an economy or company to produce a given good more efficiently than its peers. In international trade, country’s are encouraged to specialise in producing goods in which they have a comparative advantage, as this is the best use of inputs.
ComponentsDollar pairs that form crosses.
Compound InterestThe interest on a loan, upon which interest is further accrued, over many periods of time until the debt is paid.
COMPXSymbol for the NASDAQ Composite Index.
ConfirmationDocument shared by two parties describing the terms of a transaction.
Conflict of InterestStems when an individual has clashing interest between personal and proffesional duties. This conflict can result in an inability to perform a task to the standard needed with reliability.
ConglomerateA corporation made up of many, sometimes unrelated, businesses.
ConsolidationPeriod of bound activity that follows an extended price move.
Construction SpendingMeasures the US expenditure on new construction.
Consumer GoodsThis relates to products/goods that are often expected to be purchased by the average consumer, ie not a yacht.
Consumer Price Index“CPI”. Month-on-month indicator that shows the change in cost of living by comparing common basket of goods price across time.
Consumer Price IndexCPI measures the monthly change in prices paid by consumers across individual countries.
Consumer SurplusEconomic measure of consumer benefits. Often a term used to describe the overall sum of benefits experiences by a wider group of consumers, even when not all consumers experience the same benefit.
ContagionPsychological impact of a local crisis that leads to its spread into other markets.
ContangoFutures prices of a commodity are higher than the spot price. The assets price is expected to rise in the future to meet the futures price.
Continuous CompoundingThe act of compounding an interest rate over an infinitely number of time periods, with an infinitely small time period in between each period. That is why it is similar to being compounded continuously.
ContractStandard unit of forex trading.
Contract NoteConfirmation of trade details.
Contract RateNotional rate represented by a single CFD.
Contract SizeNotional number of shares represented by a sinlge CFD.
Controlled RiskPosition that limits risk with a guarunteed stop.
ConvexityA measure of curvature. In econonomics and finance, often describes the relationship between bond prices and bond yields.
CopeySlang for the Danish Krone
CopyrightThe legal right of an intelectual property’s owner.
Corporate ActionAn event within a corporation that changes the equity structure of a stock.
Corporate TaxThe tax levied on corporations profits. Often higher than regular income tax.
CorporatesCorporations in the market for hedging or financial management. Their interests are often longer term than speculators.
CorporationA term that describes a legal entity that is distinct from its owners. Owners are not liable for debt by the corporation.
CorrelationRelationship between two (seemingly) independent things.
CorrelationA statistical measure that compares the degree to which two or more securities or data move in relation to each other.
Cost of Goods Sold (COGS)This is the basic price of producing a good sold by a company. It is the price needed to break even and turn a profit.
Cost per Click (CPC)A revenue model used by online advertisers. It bills advertisers based on the number of times that a visitor clicked on display adds.
Cost-Benefit AnalysisA method used to evaluate a decision, whereby the costs and benefits are weighed against each other.
Cost-of-LivingThe amount of money needed to cover basic expenses by a household over a certain time period.
Cost-of-Living Adjustment (COLA)This is an adjustment that is made to social security and other government funded social income systems, in order to counteract the impact of inflation.
Cottage IndustryAn industry characterised by its ownership and operation by a single family, often from within the home. Often producing labour intensive goods, they may have the advantage of needing only small investment, but they suffer when competing against factory-sized competition.
Counter CurrencySecond listed currency in a currency pairing.
CounterpartA party in a financial transaction.
Country RiskThe risk associated with transactions that are cross-border in nature. Can include legal, political and even natural conditions.
Coupon RateThe nominal yield on a fixed-income security, ie bond. It is the payment paid by the issuer to the face value of the bond.
CoverThe action of taking out a forward foreign exchange contract, or closing of a short by buying an asset which has been sold.
CPIConsumer Price Index
CraterA market that is ready to sell-off hard.
CreditAn agreement whereby the borrower received money or a good, and they are expected to repay it over a period of time, often at the “cost” of interest on top of the sum.
Credit RiskThe chance of a loss coming from a debtors inability to repay a loan, or meet a contractual obligation.
CrossA currency pair that does not include the dollar.
Cross-RateExchange rate between two currencies.
Crown CurrenciesCurrencies of the commonwealth.
CTASCommodity trading advisors and speculative traders who can resemble short-term hedge funds.
CurrencyMoney form issued by government or CB that is used as legal tender and basis for trade.
Currency PairCurrency pair that makes up a foreign exchange rate.
Currency RiskChance of an adverse change in exchange rates.
Currency SymbolsThis is the three letter symbol for a currency, ie USD, GBP
Current AccountSum of the balance of trade, net factor income and net transfer payments.
Current AccountThis is an account used to take records of a country’s transactions with the rest of the world over a given time period.
Customer to Customer (C2C)Business model whereby individuals trade with each other, without the need for coporate intermediaries. Simple examples in reality are auctions.
Cyclical IndustryAn industry that is condsidered to be sensitive to the business cycle. This type of industry will see higher revenues and growth during times of economic prosperity, and downturns in times of economic turmoil.
Dark WebThis is a part of the internet that cannot be accessed through conventional search engines for the reason that it is encrypted.
Data MiningProcess used to turn raw data into useful information. This information can then be used for any purpose
Data Univeral Numbering System (DUNS) NumberA unique 9 digit number series that is used to identify a business. It is created by Dun&Broadstreet, which places the company and its details into its database.
Day OrderBuy or Sell order that expires at the end of the day.
Day TradeTrade opened and closed on the same day.
Day TraderTraders that open and close trades on commodities on the same day.
Day TraderTrader that completes large volumes of short and long trades to make the most of intraday market price movements. Where traders can use leverage to multiply the upswings, they can also multiply the downswings.
Dead Cat BounceA short, temporary recovery of asset prices after a prolonged bear market. It looks like a small bounce on the price charts, after which the downtrend continues.
Deadweight LossThe cost to society caused by a market inefficiency, or policy implementation, that is caused by a change in the demand and supply equilibrium.
Deadweight Loss of TaxationA measurement of loss that is caused by the implementation of taxation. Whilst often tax generates income for the government or taxing body, there are other costs, ie productivity, tax evasion, spending etc, that can actually counter the positives, and this is measured by the DWL.
DealTerm that denotes a trade completed at the current market price. Not an order.
Deal BlotterList of all the trades that were completed on a trading day.
Deal DateDate upon which a trade was entered.
Deal Ticket/Deal SlipMost common method of recording the basic information relating to a transaction.
DealerPerson/firm acting as the principal in the purchase of a foreign exchange, as opposed to being an agent. They take on their own risk.
Dealer MarketA mechanism where multiple buyers (market makers) will post the prices at which they are willing to purhcase an asset. They are the ones that provide liquidity to the market as they offer both the bid and offer price. An example would be banks and foreign exchange. They show both the prices that they are willing to buy and sell currencies at.
DealingAct of buying/selling foreign currencies on FOREX markets across the globe.
Dealing SpreadDifference between buying and selling price on a contract.
Dealing SystemsSystems that link investment banks one-on-one in order to complete and facilitate FOREX transactions.
Death BenefitA pay-out to the beneficiary of a life insurance policy, where the holder dies. Not often subject to income tax, and the beneficiary often gets the sum in one lump-payment.
Death TaxesTaxes imposed by the state on someones estate on their death. It is levied on the individual that received the deceaseds estate. Also known as inheritance tax.
DebitPart of accounting that shows as an increase or decrease in liabilities of a company’s balance sheet.
DebtSomething that is owed to another party. Often in the form of money, but it can be anything. Often used to make large purchases that could not be made otherwise. Unless forgiven or written off, the debt is often subject to repayment with interest.
Debt FinancingA method of financing. A company will raise working capital (money that can be used for business) by selling debt instruments. The means that someone will buy this debt, whereby they will receive smaller future payments for the debt, and the company will get larger lump sums that can be used in the short term.
Debt InstrumentA tool or instrument that a company can use in order to raise capital in the short term, for smaller payments in the long term.
Debt OverhangA level of debt large enough to prevent a company from taking on any more debt to help finance future projects. These entities can be very profitable, but exist nevertheless, as the payments towards the debt could risk eating all profits.
Decision TreeA method of decision making whereby a firm or individual will draw out all choices possible with consequences and steps, in order to most efficiently make a choice.
Deep in the MoneyAn option whose strike price is grealty higher or lower than the market price. The price of the option is expected to rise or fall in unision with the market movements of the underlying security or asset, as the options have a delta of around 1.
DefaultThe failure to make the interest payments on debt. Everyone from individuals to countries can default on debt.
Default RatePercentage of all outstanding debts that a lender is expecting to, or has, written off as unpaid or unlikely to be paid. After 270 days of no payment, a loan is typically said to have been defaulted.
Defend a levelActions taken to prevent a product from trading at a certain price point or zone, often due to interest in that product.
DeficitNegative balance of trade/payments.
DeficitA term that summarises the situation where expenses exceed revenues, imports exceed exports, or liabilities exceed assets.
DeflationA decline in prices over time. The opposite of inflation. Often associated with a contraction in the supply of money.
DeleveragingReduction of debt and the opposite of leveraging.
DelinquentA delinquent is someone that is in arrears on their debts. It does not mean that they are a debtor, simply that they are both a debtor and are past due on their debts. If these debts are not paid up to date, then they risk running into default.
DelistingRemoving a stocks listing from an exchange.
DeliveryA trade in which both parties take physical delivery of the product being traded.
Delivery DateThe date upon which delivery is due.
DeltaRatio between change in product price, and change in price of underlying market.
DeltaAn change in the estimated price of a derivative caused by a $1 change in the price of the underlying asset.
Delta NeutralA method of portfolio creation whereby various assets are held with countered deltas, such that they are balanced to have a net delta of 0. This means that the portfolio will have a net change of 0.
Demand CurveA visual/graphical representation of the relationship between the price of a good/service and the quantity of said good/service demanded by the customers.
Demand ElasticityA unit of measurement that represents the change in the demand of a good/service in relation to a change in its price. It tries to summarise in a sinlge number the % change of demand in response to a change in price.
Demand ShockThis is an event or circumstance that leads to a sudden, but often temporary, increase or decrease in the demand for a product/service.
DemographicsTerm used to describe the study of a population, based on various factors that may include, but are not limited to, age, race, sex etc.
Department Of Communities And Local Government (Dclg) Uk House PricesMonthly survery that uses large number of house sale figures to measure price trends in UK real estate market.
DepositMoney held within a bank account or financial institution that requires a transfer of funds from one party to another. A deposit can also act as a form of collateral for goods/services to be delivered.
Deposit RateComposite of rates for lending and borrowing a currency over a specified time period.
DepreciationDecrease in asset value over time.
DepressionA severe and long-term downturn in an economy. This is the next level up on a recession, whereby it is classed as a deep recession that lasts three or more years, where gross domestic product in a single year falls by at least 10%.
Depth of Market (DOM)This is a term to encompass the liquidity of a market. It is based on the number of open buy and sell orders for an asset, which could be a stock or futures contract. Can also be referred to as an “order book” due to the nature of it being a list of pending orders that are not yet fulfilled.
DeregulationThe reduction/elimination of government intervention within a market/industry. The intention in this action is often to increase competition within a certain targeted industry.
DerivativeFinancial contract whose value is based on an underlying asset.
DerivativeForm of financial contract, whereby the value of said contract is determined by that of an underlying asset/groups of assets/benchmark.
DevaluationPegged currency is allowed to weaken based on official actions.
Developed EconomyTerm to describe a country whose economy can be desscribed as both high growth and high security. Data used to make this conclusion is often income-per-capita, industrialisation, standard of living, and technological infrastructure.
Digital WalletIt is an application that runs on any connected device. It securely stores pament information, passwords etc on the cloud. They can often be accessed on both computers and mobile phones. They are now being used to replace cards, but aslo gift cards, coupons, event tickets, reservations etc.
Direct InvestmentMore commonly referred to as Foreign Direct Investment (FDI), the term describes the act of investing into foreign business interests to gain a controlling interest. It can either be done within a company, ie firm investing directly into a country, or through equity investment into an already existing firm.
DisclosureThe timely release of information about a company that may be relevant to investors that wish to make a decision about a company. It often includes both positive and negative news. It is similar in the world of law, where all parties should have access to the same information in the interests of fairness.
DiscountThe amount by which it is cheaper to buy a currency for future delivery compared to a spot delivery.
DiscountIn the general world of finance, “discount” is used to describe a situation whereby a security/asset is traded for below its fundemental value. In fixed income trading, it is used to describe the difference between the trading price of a bond is below that of its face value.
Discount RateThe rate at which a currency is discounted.
Discount RateThe interest rate that is used to “discount” future cash flows into the discounted cash flow model. This works on the udnerstanding that $10 in 10 years is going to be worth less than $10 today due to inflation.
Discretionary AccountThis is a form of investment account whereby the broker in charge is permitted, without continual authorisation, to buy and sell securities.
Discretionary ExpenseAn expenditure that the owner, be it an individual/household/business, can live without. In business, managers often have discretionary expense accounts for matters such as meals and entertainment, as this makes up marginal amounts in the grand scheme of the business.
Discretionary IncomeThe amount of ones income that is left for spending, investment or saving, after that have paid all the relevant and neccesary taxes and necessities.
DisequilibriumInternal or external forces prevent a market from reaching its natural equilibrium, and so forces the market to fall out of balance.
DisinvestmentThis can refer to two things. Firstly it can refer to the liquidation of an asset by a company. On the other hand, it can refer to the reduction in capital expenditure, and their movement into more productive areas.
Disposable IncomeThe amount of money one has to spend/save after income taxes have been paid.
Distressed SalesA situation whereby something must be sold quickly. This often leads to a discounted sale, as the funds are often needed. This pressure then puts the seller at a disadvantage and they must accept a lower offer to find the neccesary liquidity.
DivergenceIn technical analysis, where price and momentum move in opposite directions. Bullish and bearish both signal large shifts in price directions.
DivergencePrice of an asset moves in the opposite direction of its technical indicator. This suggests that the current price trend may be weakening and may signal that it will reverse in due course. Often used by traders to predict price movements and entry/exit points.
Divergence Of MasTechnical observation that describes how different period moving averages are moving away from each other. This often acts as a forecast of price trends.
Diversified CompanyA company that has either many unrelated business’ or products. This often means that these business’ may move in opposite directions when an economic event occurs, allowing the parent company to operate in all economic conditions.
DividendAmount of company earnings shared with its shareholders.
DividendThe distribution of a company’s earnings to its shareholders. Often determined by the board of directors, they are paid quarterly. They can be paid out in cash or additional stock options.
Dividend Discount Model (DDM)A method of company valuation that assumes a firms fair stock price is the present value of its future dividend payments. This requires information on dividend growth.
Dividend Irrelevance TheoryThe concept that firm dividend payments have no impact on its stock price.
Dividend Per Share (DPS)This is the sum of all dividend payments issued for each share outstanding. Calculated by dividing sum of all dividends in a year, by the number of outstanding ordinary shares.
Divident Growth RateThe annualised rate of growth that a dividend has undertaken over a period of time. Used to make assumptions about the future. Because of this, firms often try to continualy increase the dividend as they are aware of its impact in company valuation models.
Djia Or DowAbreviation of DOW JONES or US30.
Dodd-Frank Wall Street Reform and Consumer Protection ActAn act that was passed after the 2008 crisis. It sought to make the financial system safer in response to the lack of care and risk management shown by the financial industry, which ultimately led to the financial crash.
DojiThis is a session whereby the candle representing it has an open and close that are the same. It appears on charts as an elongated addition sign “+”, as whilst prices may flucatuate throughout the day, they begin and end on the same level.
DollarUS dolllar. Other dollars must be more specifically described.
DollarisationA situation whereby alongside or instead of a domestic currency, the dollar is also introduced. It can also be a case of currency substitution. If a country’s currency loses its value or purpose as a medium of exchange, the dollar is often introduced as a stable currency.
Dotcom BubbleThe economic bubble created when stock equity valuations saw techology companies values increase rapidly during the 90’s bull era. After 2001, the bubble burst and entered a large bear market. This was seen as the bursting of the bubble.
Double EntryA fundemental aspect of modern day bookkeeping which states that every transaction has an equal and opposite impact on at least two different accounts. This means, for example, that if one firm sees a positive income of $10, there must be a firm that sees a negative expenditure of $10 also, which is why it is called double entry bookkeeping.
Double TaxationTax principle that describes the action of taxes being paid twice on the same source of income. Often occurs when income is taxed at both the corporate and personal level. It can also occur in international trade, and is often a driving factor in tax avoidance and evasion.
DoveData or policy that implies easier monetary policy or a lowering of interest rates.
DowntrendActions within prices that consist of lower lows and lower highs.
DrawdownSize of drop in account value from its high to its low.
DrawdownThis is a peak-to-trough decline over a period of time. Whilst often quoted as a percentage, it can also be an absolute figure. In trading, if a $10’000 account drops to $8’000, before returning back to $10’000, then it is said to have seen a 20% drawdown.
Dual Income, No Kids (DINK)Slang phrase for a couple that both work, but have no kids. They often have far more disposable income as they don’t have the large expense that is children.
Due DiligenceThe investigation, audit or review of facts and details that may be under consideration. In a contract dealing, due diligence is often needed before signing so that all parties are happy to move ahead.
DuopolyA market where two companies control nearly all of said market for a given product or service. The most basic form of oligopoly, where a market is dominated by a small number of operators.
Dutch AuctionAuction type where the auctioneer starts at a very high price, lowering the price until someone places a bid. The first bid wins the auction, as long as it is above a reserve price that is often unknown. This form of auction is used to prevent bidding wars.
Early AdopterThis term refers to an person or business that adopts a new technology or product sooner than the rest of the market. They often pay more given the nature of early adoption, however they are betting that the product will take off and that they will control the market.
EarmarkingThis is the practice, most commonly used in politics, to set certain amounts of money aside for certain purposes.
EarningsEarnings are a company’s after-tax net incomes. Earnings are considered to be the most important number in economics and business.
Earnings Before Interest, Taxes (EBIT)A number that is vitally important in accounting. It is an indicator that shows a companies profitability, as it is revenue less tax and interest.
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA)Another widely used accounting indicator. This measures a companies profitability to a different degree, and shows a companies cleaner profits.
EasierIndication that a currency is weaker than from the previous quoted price.
EasingSmall price decline of a currency when the currencies CB enacts monetary policy to induce spending.
ECB“European Central Bank”
ECN“Electronic Comminication Network”
EconometricsThe use of statistics and statistical methods to develop theories and study economics, based on current hypotheses in economics and finance.
Economic CollapseA collapse most often follows a financial crisis, and sees an economy struggle to fall further. Depending on the severity of the initial crisis, these collapses can last many years.
Economic CycleThe regular fluctuations of an economy between growth and contraction. It is impossible to stop and is considered a normal part of economics. What people try to do is prevent a deep contraction and make the expansion as high as possible.
Economic EquilibriumA state in which all economic forces are balanced. In its most common form, it is where demand tends to meet supply and set prices.
Economic IndicatorUsed to guage the current economic conditions.
Economic IndicatorA piece of economic data that people use to interepret or draw conclusions about investment opportunities. It can also be used to determine health of an economy and company, and with it, hypotheses are easier to form.
Economic RecoveryThe stage of the business cylce that follows a recession and sees the economy begin to bounce back into growth.
Economic StimulusAn action taken by the government in order to try and boost private sector economic growth. These stimuli can either target the entire economy, or certain sectors, depending on what is needed at the time.
EconomicsA social science that focuses on all aspects of the economy, including production, distribution, consumption of goods and services. It also looks at choice making by all agents in an economy, from individuals to governments.
Economies of ScaleThe cost advantage associated with increasing output. In most cases, if someone benefits from economies of scale, you will see the average cost per unit decrease as scale increases.
Economies of ScopeSimiilar to economies of scale, scope means that the average cost of producing one good decreases as other goods are made.
EconomistA proffesional who studies the relationship between resources and output. It can be done on small community scales, through to global economics.
EconomyA large and complicated system which includes the related production, consumption, exchange and sale of goods and services, and how resources used for these actions are allocated and spread throughout all the participants.
Effective Exchange RateCountry’s currency strength/weakness, based entirely off of its trade of balance.
Effective Tax RateThe percentage of income that is paid in taxes by an individual through to a corporation. This does not mean a single tax, but all taxes that are paid, expressed as a single rate.
Efficient Market Hypothesis (EMH)An economic hypothesis that states the stock market and associated stock prices reflect all information that is available at any level, and that the production of a consistent alpha is impossible as a result of this.
EgalitarianismPhilosophical concept that pushes forward equality and equal treatment in all forms. In economics, this tends to take the form of income equality, as this is thought to be beneficial for economic and political development.
EIAEnvironmental Investigation Agency.
EIA Crude OilWeekly EIA report on petroleum status.
ElasticityA single unit measurement that expresses a variables sensitivity to change in other variables. Most commonly done in economics, elasticity tries to capture the impact on demand when other economic variables change.
Electronic Communication NetworkComputer that allows trading products outside of stock exchanges. Primarily selling of stocks and currencies.
Electronic MoneyMoney that, whilst possible to get access to in physical form, is only really used for online transactions. This exists mainly for increased liquidity and convenience.
Elevator PitchSlang term used to describe a pitch that is brief and could be performed in the time it takes an elevator to move between floors.
Elliot Wave PrincipleSystem of emperically derived rules that allow for interpretation of markets. Specifically a 5 wave/3 wave pattern which combines to form a complete bull or bear market.
EmbargoTrade restriction that is used as an economic sanction. They are often used in response to a negative action by a certain country, and they are enacted most commonly by governments or country groups.
EmbezzlementA form of white-collar crime whereby assets are deliberately missused by the person that they have been entrusted to. Whilst the person may have legal ownership of the asset, the use is not that what it was intended for.
Emerging IndustryAn industry that is in the early stages of development. There may only be a few companies that are in said industry, focusing mainly around a new product or idea that is yet to prove itself.
Emerging Market EconomyThe economy of a developing nation that is growing more internationally engaged, both in industry and trade.
EmigrationThe process whereby people leave one country to live in another. It is the opposite side of immigration. Most people emigrate for economic reasons, but in some cases, it may occur for political or safety reason.
Empire BuildingThe attempted increase in size and scope of ones power and influence.
Employee BuyoutA process whereby an employer offers employees a voluntary severance package. This means that they need to reduce staffing costs, but don’t want to suffer the costs of firing an employee. Conditions often include benefits and pay for a certain period after being let go.
Employers’ Liability InsuranceA form of insurance policy that handles claims made by employees who have, in some form, suffered an injury or potentially illness whilst at work.
End Of Day Order (Eod)Order to sell at a predetermined price that remains open until the end of the trading day.
EntrepreneurAn individual who, at their own risk, begins a new business. In return for their risk taking, they are often the one that bears most of the rewards also.
EOD“End of Day Order”
EquilibriumThe state of an economy when both supply and demand are balanced.
Equity FundA type of mutual fund that is mainly seen to invest in stocks. It can be managed in different ways, with the main distinction being active or passive. Passively managed funds invest in indexes that don’t need much action.
EscrowA concept in law that describes a legal agreement between two parties, where an asset or sum of money is held by a third party on behalf of both parties. It is held until the transaction is over, so that both parties feel more as ease and are less exposed.
ESG InvestingAn ever more prominent set of standards for company behaviour that are focussed on the more socially consicious and beneficial side. It tends to look at the impact of business’ or investments on the environment, local society and the corporate governance.
Est/EdtNew York time zone. Eastern Standard Time/Eastern Daylight Time.
EstoppelA legal principle that prevents someone contradicting something that they previously said, or that was agreed to by law.
Estx50Euronext 50 Index.
EuroEurozone currency
Euro Interbank Offer Rate (Euribor)A rate that is an average of the interet rates at which banks within the eurozone lend, unsecured, on the interbank market. This market is for banks to lend to each other on the short term.
European Monetary UnionGroup of policies that coordinates economic and fiscal policy of the EU member states.
European Session7:00 – 16:00 London.
Eurozone Labor Cost IndexMeasure of annual rate of inflation in compensations of typical works.
Ex-anteA term that refers to future events based on forecasts, as oppsoed to certain results. It literally translates into “before the event”. It would be used when predicting returns in the future.
Ex-DividendType of share where the next dividend is given to the seller, not the buyer.
Ex-postA term used when drawing conclusions that are based on actual results. Literally translates into “after the fact”.
Excess ReturnsReturns on an investment that exceed what was expected, based on either a given benchmark or index that is similar.
Exchange RateValue of one currency in terms of another currency.
Exchange RateThe rate at which one can purchase another currency using their own currency. These rates have huge global impacts, and it can boost or hinder international trade, as the rate can make more or less appealing the goods and services offered by different nations.
Excise TaxA tax that is levied at the time of purchase. Most commonly found on items such as fuel, alcohol etc.
ExecutorAn appointee of an estate whose role it is to adminitster the will and final testament of the deceased owner.
Exogenous GrowthThe belief that economic growth is fueled almost solely by technological progress rather than economic forces.
Exotic CurrenciesCurrencies of nations that do not have developed international markets and that are seen as illiquid.
ExpatriateAn individual living or working in a country other than the one of their citizenship. Most commonly done for work purposes, or by retirees who move to alternate climates.
Expected ReturnThe anticipated profit or loss on an investment. They are expected because they are based on historical rates of return, as opposed to beliefs for the future.
Expiry DateDate of transaciton expiry, of 2 working days before settlement.
Exponential GrowthGrowth pattern that sees greater and greater increases over time. The rate of growth continually increases.
ExportersCompanies that sell goods internationally. This means that they sell foreign currency and purchase domestic currency from abroad.
ExposureTotal quantity of money loaned to someone else. Rules are often in place to prevent overexposure.
ExpropriationA governmental act that sees governments claim ownership of private property. Commonly against the wishes of the owner, it would be done in the greater benefit of the population.
ExtendedMarket that is believed to have moved too far and too fast.
ExternalityThe cost or benefit of an economic action that is not felt by the person/company that caused the action. Simply put, it is the benefit felt by someone else, due to the action that you took.
Extrinsic ValueThe difference between the market price of an option, and the intrinsic value.


Face ValueThe original dollar value of an asset/security, which will have been stated by the issuer.
Factors of ProductionInputs that go into a good or service. The most common factors of production are land, labour and capital. These often go into production models in economics.
Factory OrdersA report that gives the dollar value of new orders of both durable and non-durable goods.
Fair ValueA price that a reasonable buyer would be willing to pay, and that a seller would be willing to accept, in order to complete an exchange.
FANG StocksThese are the stocks of four of the largest american companies: Facebook (now Meta), Amazon, Netflix and Google (or Alphabet).
Fast FashionOften low priced, but “in fashion” clothing that is intended to move quickly. Aimed at meeting short term trends in fashion, it is continually renewed. Claimed to be a large driver of labour exploitation in the east.
Fear of Missing OutOften called FOMO, this is the phychological challenge that traders often face. It tends to lead to overtrading as people fear missing out on profits or good trades, and this leads them to make unneccesary errors.
FEDFederal Reserve Bank. Central bank of the US.
Fed OfficialsMembers of the board of the FED. They are often the individuals behind important decisions.
Federal Trade Commission (FTC)An independent and bipartisan US agency who are tasked with protecting consumers and the competitive market of the US. Its main role is to enforce anti-trust legislation to ensure competition.
Fiat CurrencyIn this system, value of a currency rises and falls depending on demand and supply pressures, as with any good. This is why FOREX trading is possible.
Fiat MoneyGovernment issued currency that is backed, in value, by the government that backed it. This is in contrast to being backed by a commodity, ie gold or silver, or current situations, where a currency is backed by the dollar.
Fibonacci RetracementA statistical tool that is graphically represented on price charts. It is often used to visualise the likely placement of support and resistance lines.
FICO ScoreA credit score created by the “Fair Isaac Corporation”. It is used to asses an individuals credit rating.
FIFOFirst in First out. This is when the trades of a certain currency pair are liquidated in the same order as they were made.
FillOrder has been fully executed.
Fill or Killif the order cannot be filled, it will be cancelled.
FinanceThe study, or system, of the creation, circulation and management of money.
Financial CrisisA situation where an economy sees a steep decline in value. Often, companies and people cannot pay their debts, and there is a shortage in liquidity of the market. There are a variety of ways that they begin, but they can be due to bank runs, bubbles, market crashes or soverieng debt defaults that all cause a lack of confidence.
Financial InstitutionA company that deals in financial or monetary transactions of almost any sort. This can include lending, deposits, exchanges etc.
Financial InstrumentA financial asset that can be traded. It can also take the form of “packages” of capital that can be traded as a group.
Financial MarketThe location where financial securities can be traded and exchanged. There are a variety of forms, which can include forex, bonds, stocks and financial derivatives. Each are based off of liquidity.
Financial RiskSimply the chance and risk of losing money in business or investment.
Financial Times Stock Exchange Group (FTSE)A british financial organisation that gives indexed offerings to be used on the global financial markets.
Finder’s FeeCommission paid to the facilitator of a transaction. It is often given to firms that specialise in the location of “deals” that would otherwise pass the interested parties by. The party that pays the fee is not fixed, and depends on the initiator.
FirmerCurrency is stronger or strengthening.
First In, First Out (FIFO)A system of inventory management whereby assets that were acquired first are sold/used/disposed of first also.
Fiscal MultiplierA measure of the impact that increased spending will have on an economy. It is often believed that an increase in spending of “1” will lead to an increase in the economy of “>1”. The multiplier can be dependant on taxes and government policies.
Fiscal YearOne-year period that companies and governments use for fiscal reporting, and for their budgeting.
Fisher EffectEconomic theory, created by Irving Fisher, that outlines the relationship between inflation and both real and nominal interest rates. Simply put, it states that real interest rates equal the nominal interest rate less the expected inflation rate.
Five-Year RuleThis is a rule that applies to the withdrawal of funds from a retirement account. Simply put, it states that one must wait 5 years in order to access their retirement savings. Impacts can be different depending on what type of retirement fund one uses.
FixA group of five time zones in which large amounts of FOREX traded currency is bought or sold to fulfil orders. They are often linked with market volatility. This includes Frankfurt (5:00), London (6:00), WMHCO (11:00), IMM (8:20), ECB (8:15).
Fixed AnnuityAn insurance contract that pays the buyer (holder), a specific, fixed and guarunteed interest rate on the contributions to the account. This is the type of annuity held in a retirement plan.
Fixed CostA type of cost that does not change. This means that as a cost, it is not linked to an increase or decrease in the quantity of goods/services that are produced or sold.
Fixed Exchange RateAn exchange rate regime that is enforced by a central bank (or potentially government, depending on seperation of powers), that will see the local currency tied to that of another currency, or to the price of gold. It is aimed to increase stability, and this should benefit international trade and investment.
Fixed Rate MortgageA type of mortgage that sees the homeowner pay a fixed level of interest on the entire life of the loan. This is a very popular form of mortgage for people that want stability for the future, and often sees the initial sum paid off when the house is sold, or when the holder dies.
FlatData readings that are unchanging from the previous levels.
Flat TaxA tax rate that is independent of earnings or incomes.
Flat/SquareLanguage that describes a position that has been reversed completely.
Floating Exchange RateAn exchange rate regime that sees the country’s currency rate set by the international forex market and the powers of supply and demand.
Follow throughNew buying or selling interest that has been sparked after a directional break at a certain price leve. The lack of any follow through often indicated that the move will not be sustainable, and may even reverse.
FOMCFederal Open Market Committee. Policy setting group within FED.
Fomc MinutesThe minutes from FOMC meetings. Gives more insight into reasoning behind particular choices.
Food and Drug Administration (FDA)US government agency that has various obligations that cover areas including food, drugs, cosmetics, supplements, blood products etc.
Force MajeureA term included in many legal contracts which protects one or more parties from the impact, and thus liability or major unforseen events, ie acts of god.
ForecastingThe act of using historical data in order to try and predict future events with a certain level of accuracy.
ForeclosingLegal process whereby a lender attempts to recover as much of an unpaid debt as possible by taking ownership of the loaned/mortgaged property.
Foreign AidA form of assistance, monetary or otherwise, that is sent from one country to another, voluntarily. It is often done in forms of food, supplies etc, when a country goes through a negative shock, ie war or natural disaster.
Foreign Direct Investment (FDI)The investment directly into another country, be it though purchase/investment into an already existing company, or through expansion of their own company into new territory.
Foreign ExchangeThis is the global marketplace where foreign and domestic currencies are exchanged, using the forces of supply and demand as in any other market place. It is the largest exchange in the world, dealing with trillions of dollars daily.
Foreign Exchange RiskThe risk of losses that are associated with changes in exchange rates. Companies that operate across various countries, or take payment in different currencies, are exposed to exchange rates that can have both a positive or negative impact on their income and expenses.
Foreign Exchange/Forex/FxThe simultaneous buying and selling of currencies.
Forensic AccountingAn accounting method used most often in auditing and investigations. They are used to more closely inspect that finances of either an individual or company.
Forex (FX)A shortened term for foreign exchange. This still refers to the global electronic marketplace where currencies are exchanged daily.
Fortune 500A list of the 500 largest companies in the US. Developed by Fortune magazine, they are ranked based on their annual revenues.
ForwardA pre-specifies exchange rate for a contract that will be settled at a pre-determined future date.
Forward ContractA customised contract between two parties to buy/sell an asset for a specific price at a future date.
Forward Exchange RateThe exchange rate quoted and agreed on in a forward contract.
Forward PointsThe pips added or subtracted from the spot rate to determine the forward exchange rate.
Forward Settlement DateSettlement date of a forward contract.
Fra40Index of the 40 largest (market cap) companies listed on the French stock exchange.
Fractional Reserve BankingA part of the banking system used most widely that means banks are only required to hold a certain fraction of their deposits in physical cash form. It is for this reason that bubbles are sometimes created, and that every customer of a bank would not be able to withdraw their money at once. This leads to banks being at risk of bank runs if confidence is shaken.
FranchiseA business model where a license is granted/sold. The operator pays a mix of upfront and ongoing fees to use the brand name and gets the support of the parent company. Examples of this are McDonalds.
Free Cash FlowThe final sum of cash that a company is able to generate after accounting for all cash outflows.
Free EnterpriseAnother term for the free market. Describes the situation whereby the market determines all, including prices, products, services etc, instead of being done by the government.
Free TradeAn agreement between two or more parties to reduce the barriers to trade. One of the largest examples is the EU and the Common Market.
FreemiumA business model that offers a basic version of a service/good for free, and that offers a more premium version for a small fee.
Front OfficeThis, unlike back office, refers to the part of a business that is more customer facing.
FTSE 100Name of UK 100 index.
Full DisclosureA requirement that publicly traded companies release various facts and pieces of information into the world for free exchange.
FundA pool of money that is used or allocated for a specific purpose. It can be for anything from a road maintainance scheme, to money set aside for customer insurance claims.
Fund ManagerThe individual in charge of implementing an investment strategy for a fund, in order to grow the size of the fund for future use. They are often paid a fee for their work, which is often a percentage of their performance.
Fund rateThe interest rate that depository institutions lend their reserves to other depository institutions in an uncollateralised basis, overnight.
Fundamental AnalysisAssessment of all information available on a tradable product used to determine the future outlook and therefore attempt to predict its future price movements. Often very subjective.
FundamentalsBasic ingredients of exchange rates, ie inflation, interest rates and economic activity.
Funded TraderA trader who is using capital that is not theirs. Acting on behalf of another firm, or perhaps borrowing the capital.
Funded TradingTrading that occurs when capital is traded without ownership. Traders can trade on behalf of another group, retaining some profit shares that are agreed seperately.
Fundemental AnalysisAn analysis method used by market traders to try and determine a stocks real or fair value. Traders try to use this to determine if they feel that the market is over or undervaluing an asset.
FundsHedge fund types active within the market.
FungibilityAbility of a good or an asset to be interchanged with other goods of the same type.
FuturesAgreement between parties to execute a transaction at a future date when price is agreed in the present.
Futures ContractObligation to exchange goods at a set price at a specified quantity at a future date. Similar to a forward. Difference is that future is settled on an exchange (more universal sizes) whereas forwards are settled OTC, meaning contracts are more specific to each transaction.
Futures ContractA more general contract between two parties to buy/sell an asset for a certain price at a future date. Unlike forward contracts, due to the greater familiarity of futures, there is often more liquidity in this market that sees greater volume.


G7Group of 7 nations – USA, Germany, Japan, France, Italy, Canada and UK
G8Group of 8 nations – G7 and Russia
Game TheoryA social science of strategy and choice. It aims to looks at concepts such as optimal decision making, competition, and real life games.
GapAn area of discontinuity on a stocks chart that represents a price change between market close and open, that occurs when there is no trading. This often occurs when there are news events that alter the fundementals of the market.
Gap/GappingA market movement that skips large price intervals without any trading. This often occurs when news or economic data is released.
GbpjpyThe UK and Japanese pairing.
gbpusdThe UK and USA pairing.
GearingA figure that represents a company’s ratio of debt-to-equity.
Gearing (Also Known As Leverage)This can also be referred to as leverage. It occurs when a trader trades a value that is greater than the amount of capital that the trader is able to hold.
Gen XThe generation of individuals that were born between the mid 60’s and the early 80’s.
General Data Protection Regulations (GDPR)Legal framework that outlines the methods for collecting and storing personal information of those both in and outside of the EU. It aims to give individuals control over the way that their data is used, as companies must inform customers in how they use personal data.
General Equilibrium TheoryThis theory, in some cases called the Walrasian Equilibrium Theory, attempts to explain the functioning of the entire economy, as opposed to a combination of individual equilbriums.
Gentleman’s AgreementAn informal often unwritten agreement that is based on the integrity of the parties involved. Whilst it is not normally binding in law, breaking such an agreement can have negative impacts on reputation.
GentrificationThe act of changing a city neighbourhood from poor to rich, or low to high value. In most cases, common development is now thrown under the umbrella term. It leads to higher home prices, and a change in the population, as the original homeowners are then prices out.
Geographical DiversificationThe act of holding various investments from different regions, or at least different geographical locations. This can help to reduce risk, as unless the world economy struggles, you are unlikely to see more than one country struggle at the same time.
Geographical Labour MobilityThe mobility and flexibility that workers of a countrty enjoy in moving to other areas of their country in search for work.
Geometric MeanThe average of a set of values, regardless of their number or size. Found by taking the product of their values, and then finding the nth root of said sum.
Ger40Top 40 companies on German stock exchange (market cap). Another name for the DAX.
Gift in TrustA method of indirectly granting assets to a beneficiary, without having to pay tax on the gifts that exceed the gift tax allowance. It is most commonly used to move wealth to the next generation.
Gig EconomyA section of the service economy that is based on freelance, flexible and temporary employment. It often sees “employees” find customers through an online platform. An example of this is Uber. Some companies try to be a part of this sector, as the legal status of “self employed” allows them not to meet certain obligations of a proper employer.
GivenA bid being hit or selling interest.
Giving It UpTechnical level succumbs to a hard-fought battle.
Glass CeilingAn invisible and metaphorical barrier that sees certain people and groups prevented from moving further up the chain, be it pay, managerial or executive ladders. In many cases, it is used to explain why most top management is made up of white males.
Global RecessionExtended period of economic decline, but this time on a global scale. Whilst it can be caused by a single cause, leading to local recessions that occur simultaneously, it can also be caused by unrelated local events.
GlobalisationThe increased spread of financial products, goods, assets, technologies etc across the world, moving across countries, cultures and generations.
GmbHAbbreviation of the german words for “company with limited liability”.
Gmt (Greenwich Mean Time)Most commonly referred to time zone in FOREX trading. This does not change during the year.
Going ConcernA term used in accounting that suggests a company is able to operate for an infinite time given the resources it has, until is can prove otherwise.
Going LongPurchasing a stock with the expectation of the price going up, with the intention of selling the currency at a later date.
Going ShortSelling a currency with the expectations of the price going down, with the intention of buying the currency back at a later date.
Gold (Gold’s Relationship)Commonly accepted concept that gold prices move in the opposite direction to the US dollar. The relationship breaks down in the shortter-term.
Gold CertificateOwnership certificate that gold investors use to buy and sell it.
Gold ContractA standard unit of trading gold. Equals 10 troy ounces.
Golden CrossIn technical analysis, when two moving average intersect. Considered a good sign that the underlying currency will move in the same direction.
Golden HandcuffsA group of financial incentives that are created in the hope of retaining employees and disincentivise them from leaving a job.
Golden HandshakeA clause often found in the contract of an executive. This clause will often suggest that if the employee is to leave due to firing/retirement/negligence, they will still be offered a very valuable severance package.
Golden RuleA type of fiscal policy that suggests governments should not borrow in order to fund current spending,   but only to make investments. These investments are then expected to be beneficial for the economy and often pay for themselves through tax.
Golder ParachuteThe substantial benefits given to employees if they find themselves jobless after their company is merged with or acquired by another company.
Goldilocks EconomyAn economy that has steady growth and stable inflation.
Goldilocks EconomyA term that describes a situation where the economy’s state is just right. The three things that often suggest a goldilocks economy are full employment, and stable economy and growth.
Good ‘Til Cancelled Order (Gtc)An instruction that does not terminate at the end of the trading day. Often will expire at the end of the month.
Good ‘Til DateOrder type that expires on the date specified.
Good For DayOrder that expires at the end of the day if not fulfilled.
GoodwillAn intangible and invisible asset that is often associated with the purchase of one company by another. This purchase will benefit the buyer not only with the obvious things that the company brings, but some intangibles that may give it a new advantage.
Grace PeriodThis term describes a period of time after a loan has been given in which a payment can be made without a penalty.
Graduate Management Admission Test (GMAT)A standardised graudate management admission test that aims to test maths, verbal reasoning, and analytical writing. It is most commonly used for admission to business schools and MBA programmes.
Grandfather ClauseThis clause allows the continued action that whilst legal when started, may now go against rules. This means that the action would not be allowed if it was initiated today. The exemptions may be temporary or permenant.
GreedyTerm to describe an approach to trading whereby the trader wants more than they have, even if needs are met. Often leads to losses as they throw away data and info and trade off of emotion.
Green Chip StocksStocks or shares of environmentally friendly companies.
Green InvestingThe investment into companies that have either favourable or neutral impacts on the environment. They are often included in ESG investments.
GreenbackNickname for the US dollar.
GreenwashingAn action taken by companies whereby they mislead or outright lie to investors to make it appear that their actions are beneficial or less negative on the environment, whereas in reality this is not the case.
Grid TradingPositions and orders that are constructed with a spread predetermined by the trader.
Gross Domestic Income (GDI)Measure of a nations/country’s economic activity. It sums up all of the goods and services that were produced within the borders of a nation during a certain time span.
Gross Domestic ProductValue of a country’s output, expenditure or income within its borders.
Gross Domestic Product (GDP)A more expensive and reliable metric, it sums the market value of all finished goods and services produced within a country over a certain time period.
Gross National Happiness (GNH)An increasingly important economic metric that tries to capture the “happiness” of a country. This looks more to the quality of life of a country, and was first introduced y the King of Bhutan in the 1970s as a way to look at life other than simply through money.
Gross National ProductThis is GDP plus income earned from a country’s assets or citizens abroad.
Gross National Product (GNP)Estimate of the value of goods and services produced in a country in a certain time span.
Gross ProfitThe profit that a company makes after it has deducted the costs associated with making/producing the good or service. This does not include costs such as taxes, which go into net profits instead.
Gross Profit MarginA metric that captures the amount of revenue left after COGS have been deducted from total revenue.
Growth CompanyA company that creates cash flows or earnings that increase at a higher rate than that of the wider economy. These companies tend to have opportunities to reinvest within their own company, which in turn leads to high rates of growth.
Growth FundA fund that has capital appreciation, not dividend payments, as its main goal. This means that they are interested in overall value as opposed to the cash flow it can generate in dividends. The companies that they may reinvest into would have good internal growth opportunities, R&D and lots of research.
Grunt WorkA term that describes work considered to be rather tough, thankless and menial. It may also refer to work that is also not very pleasant, and takes a lot of effort.
Guaranteed StopStop-loss order that is certain to close your position at the level dictated by yourself. It is guarunteed even if there is gapping in the market.
Guarunteed LoanA loan that has been guarunteed by a third party. This means that if the borrower fails to make a payment, the third party is held liable and must meet the terms of the loan.
GuaruntorThe individual or company that acts as a third party to a guarunteed loan. They are the ones that must pay if the borrower fails to meet payments, or defaults on the debt.
Guerilla MarketingA method of marketing that sees a company or individual use suprising or unorthodox marketing techniques to promote themselves or attack someone else.
Gunning/GunnedAn act whereby the trader pushes to trigger known stops or technical levels within the market.
HaggleThe act of negotiation between two parties in a transaction, until an agreeable price is reached for both parties. The process often sees offers and counteroffers made until common ground is found.
Halo EffectTerm describing the favouritism shown by customers to a product or brand with which they have had a previous positive experience. It is something that brands and companies aim for as it makes it easier to sell new products.
HandleIndicates 100 pips in the FX market, starting at 000.
Hard AssetTerm to describe an asset that is both tangible and that has inate value, ie oil or a painting.
Hard CurrencyConfidence inspiring currency.
Hard SellAn approach to selling/marketing that sees direct and insistent language and approaches. The aim is to get a sale in the short term, as opposed to letting the consumer think it over in the longer term.
Harry MarkowitzNobel prize winning economist that developed the Modern Portfolio Theory, which, in summary, found that investors care more about the performance of the overall portfolio than the performance of a single stock.
HawkTerm used to describe people that are willing to sacrifice the economy, ie growth, employment etc, in order to protect inflation.
Hawk/HawkishAn approach to monetary policy is said to be hawkish when it is thought that higher interest rates are needed, most commonly to fight inflation or to prevent rapid economic expansion.
Hazard InsuranceForm of insurance that sees the property protected from various forms of damange, ie fire, weather, natural events etc. It will often mention all covered weather events explicitly, so as not to allow loopholes.
Hazard RateThe likelihood that if something survives to a certain moment, it will survive to the next.
Head and ShouldersPrice movements that appear to have a head and a shoulder. Often believed to indicate a price trend reversal. Price rises for some time, and flattens when profit is taken (shoulder). Rises again (to the head) until more profit taking causes it to fall back to the shoulder. A larger price drop is beleived to follow later.
HeadhunterPerson or employee whose job it is to recruit an employee on behalf of the employer. It is often done to find specific talents, as opposed to letting many people apply and then filtering them out.
Headline EarningsA reporting method where corporate earnings are reported, but it does not include profits or losses from old operations, fixed assets sales, or any devaluations or write-offs.
Heads of AgreementA non-binding document that in effect outlines that loose partnership for an agreement or transaction.
Health InsuranceA contract between a company and an individual/customer whereby the insurer agrees to pay all covered health expenses, in return for a monthly premium. Often done on a one year basis, insurers re-evaluate their risk and translate this into a changing premium to express their opinion of a persons risk of health issues.
Heckscher-Ohlin ModelAn economic theory which suggests that a country will export a product that they are most capable of producing in larger numbers.
HedgePosition/positions taken to reduce risk on your primary position.
Hedge FundAn actively managed investment fund where the managers aim to use a variety of different tools and financing options in order to try and beat the market.
Hedge RatioThe value of a position that is protected with a hedge strategy, versus the value of the entire position.
HedgingStrategy used to offset ones market risk.
HeteroskedasticityA situation that sees the standard deviations of a variable lack consistency and are not constant.
High Net Worth Indiviuduals (HNWIs)Designation for people whose networth is over $1 million in highly liquid assets. This means that living in a $1 million house doesn’t make you a HNWI.
High Street BankTerm that refers to banks that have many branch locations that are physical. The locations of these banks is most often on the high street due to the high footfall and easy access for its customers.
High-Frequency Trading (HFT)Trading method that uses computers to conduct a large number of transactions in a small amount of time. It uses algorithms to analyse the market and prices in order to try and beat the market.
Highly Leveraged TransactionA bank loan that goes to a company that already has high levels of pre-existing debt. These were often used in the late 20th century to help finance buyouts and acquisitions.
Hire Purchase AgreementA method of purcahse of an expensive good, whereby the buyer puts down a deposit that grants them access to the good, after which they have to pay of the remainder of the balance plus interest.
Hit The BidSell at the currently offered market bid.
Hk50/HkhiHong Kong Hang Seng index.
HM Revenue and Customs (HMRC)The main taxing authority in the UK. It is in charge of enforcing many things, ie tax, child benefits, minimum wages and customs law.
HolderThe buyer and subsequent owner of a currency pair.
Home BiasTerm descibing the tendency for investors to look most favourably on investments that exist within their home country, whilst ignoring the clear benefits of diversifying abroad.
HomoskedasticThe situation whereby the error term or a regression model is constant and unchanging. Alternately, one can say that the variance of the data is constant.
Horizontal AcquisitionThe creation of a new company where one has purchased another that exists in both the same industry, and at the same level along the production chain.
Horizontal IntegrationWhere a company grows along the same level in the value chain, making similar products or goods, as opposed to moving vertically into a new point on the value chain.
Horizontal MergerBusiness consolidation that occurs between two business’ that operate at the same point, around the same product, or in the same space as each other.
Hostile TakeoverThe acquisition of a company by another, where the company being taken over did not want it to occur. It can be done in many forms, with the most common being the purchase of a majority of the stock, giving them a majority shareholding.
Hot IPOAn initial public offering (IPO) of a hotly anticipated and highly demanded stock.
Hot WalletA cryptocurrency wallet that is always online and is always connected to the internet and crypto network.
Household IncomeThe combined gross income of a household, which is the sum of the incomes of all people within a home, above a certain age. It doesn’t matter if there is no relation, simply that they are under the same roof.
Housing BubbleAn economic situation whereby housing prices increase due to high demand and speculation, to the point where it is on the verge of collapse. The bubble will always burst, as at some point, the artificial pressure to increase the prices slows, and prices begin to drop. This drop then impacts mortgages and other collateralised loans, which bursts the bubble and sees demand drop, along with prices.
HubrisThe characteristic of excessive confidence which often leads an individual to believe that they are incapable of doing wrong, and that all that they do is correct.
Human CapitalThe economic value that is attached to an individuals experience and skillset. The more that you know and that you can do, the higher your value in the eyes of the economy.
HyperinflationThe process whereby a currency sees its value decrease and in excessively high rate. The signs of this decrease in value is when prices run out of control. It often leads to the failure of both the currency and economy, as people lose faith. This would seen in Hungary and Germany, when the price of bread in local currency was millions.
Hypothesis TestingA statistical approach whereby people use data to test certain assumptions regarding a population. The more data, that more support there is behind the result of the hypothesis test.
Identity TheftThe crime of stealing someones personal and financial information in order to commit fraud.
Idiosyncratic RiskThis is a type of risk in investing that is specific to some part of the investment, ie the stock, the sector or the company. This type of risk is able to be hedged and eradicated because of its specificity.
IFEMAInternational Foreign Exchange Master Agreement.
IlliquidTerm to describe an enivronment where there is little traded volume. Can often create choppy market conditions.
IlliquidThis refers to a financial asset that cannot easily and quickly be turned into cash, without the possibility of enduring a loss of value. Good example is a house, which could only be turned into cash quickly if it were sold at a heavy discount.
IMMInternational Monetary Market, which is a Chicago based currency futures market.
Immediate FamilyFamily members that are only one generation away or along the same generation. This would typically include parents, siblings, spouse and children.
ImpeachmentThe process, in US law, that permits congress to bring charges of treason, bribery and other high crimes, against a high-ranking civil officer, up to the president.
Imperfect CompetitionTerm describing a market which does not follow the typical lines of neoclassical perfect competition. In this world, prices are set by companies, they fight for market share, and are often protected by barriers to both entry and exit.
Imperfect MarketAn economic market that does not meet the high standards of a perfect market. Due to its theoretical nature, it can be suggested that all markets are in some form imperfect.
Implicit CostThis is a cost that has already been incurred, but because the product/asset has not been sold, the cost does not yet exist on paper.
Import DutyThis is a tax that is collected on imports into a country, and in certain scenarios and on certain goods, also its exports. The value of the duty would depend on the value of the good.
In-houseThis is a term that relates to something being done within a company, as opposed to using an external company, or outsourcing.
Income EffectA term in microeconomics that expresses the impact that a change in a persons income can have on their consumption of goods, and their purchases. Sometimes the consumption of a good will decrease, stay the same, or increase as income increases.
Income InequalityTerm that refers to the uneven nature of income distribution throughout a country or economy. The more unequal the spread of money, the greater the inequality.
Income TaxThe money that is sent to the government based on the amount of taxable income that someone can generate. It is effectively the cost you must bear to earn money, that goes into the country and its infrastructure.
Inconvertible CurrencyA currency that is forbidden, by the regulations, to be traded for other currencies.
IncorporationLegall process that is used in order to create a legal entity or company. The resulting incorporated company is its own legal entity, for which a manager or owner cannot be held liable.
Incremental Cost of CapitalA term in budgeting that refers to how the average cost of a company’s equity or debt changes with each additional unit.
IncumbentAn incumbent is an individual that is currently within a position or that holds certain responsibilities.
IndexA tool used to measure a change in a set of data in a more representative way. It is often done in a method whereby a point of the data is used at the “base”, and all other data points are compared in a percentage, against this base. This allows comparisons over time, as opposed to being swayed or distracted by arbitrary numbers that may be misleading.
Index FundThis is a type of mutual fund where the portfolio is created by mimicking a financial market index, such as the FTSE100. The reason that these are used is that they target large stable companies, give great diversification and lower operating costs.
Indicative QuoteMarket maker’s price that can be used to indicate somethings price, but that cannot be traded on.
IndicatorTools in statistics and economics used to measure economic conditions and express situations and effects in more comprehensible terms, ie health of an economy based on GDP.
InduAbbreviation of the Dow Jones Industrial Average.
Industrial ProductionTotal value of production output created by manufacturers, mines and other utilites. Can act as one of the leading indicators of employment and personal income data.
IndustrialisationA process by which an economy transforms into one of good manufacturing, away from agriculture. Whilst this is not necessarily an aim for countries, it is a process that many western economies try to move along.
Inefficient MarketA market that does not allow the accurate representation of an assets true value, either because it does not know it, or because there are not adequate avenues for the real information to become known. This can lead to large inefficiencies that have wider losses on the economy.
InflationCondition of economy whereby the price of consumer products rise, lowering the purchasing power.
InflationTerm to describe the rising of prices. It can alternately be looked at as a decrease in the buying power of a currency, as you need more of it to buy the same goods over time.
Inflation rateThe rate by which prices are rising on consumer goods, often quotes as a percentage.
Inheritance TaxA tax, imposed by the government or state, that is levied on the inherited assets. It is often paid by the inheritor, rather than the deceased.
Initial Jobless ClaimsMeasures the number of people that filed for unemployment insurance for the first time during a one week period.
Initial MarginA form of deposit required to be given by both buyers and sellers when opening a position.
Initial Margin RequirementThe minimim needed margin for a newly opened position, that needs to be settled in cash.
Initial Public Offering (IPO)The process by which a company moves from being privately owned to being publicly owned. The company is divided into stocks, which at a certain point must initially be placed onto the market for the first time.
Insider TradingThe trading of a public stock by an individual that has access to information that is not public knowledge and that gives them an advantage in predicting prices, and thus making money.
InsolvencyTerm to describe a situation where a debtor is unable to meet their financial obligations. This does not mean the same as illiquid. Insolvent means that they don’t have the financial ability to meet their debts.
Instant Funded TradingTrading that occurs when the capital used is not ones own, but can be “traded” very rapidly after a decision has been made.
Instant FundingA form of trading whereby, for a small fee, and strict rules, you are able to gain access to trading capital that you otherwise would not be able to access.
InstructionSpec of the banks at which the funds will be paid when settlement is needed.
Intangible AssetA non-physical asset, ie digital art.
Inter-dealer BrokerSpecialist that acts as an intermediary between market-makers who want to improve their book positions without losing their annonimity.
Interbank MarketA global network where banks and financial institutions trade between themselves. It is often used in the short term for banks to hedge and minimise their risk exposures from exchange rates and interest rates.
Interbank RatesThe bid and offer rates that banks use when depositing between each other. This is the basis of interbank markets, ie LIBOR.
InterestThe cost of holding someones money, ie borrowing.
Interest Rate DifferentialDifference between the interest rates that are applicable to a currency pair.
Interest-Only MortgageA mortgage where the borrower only pays of the value of the interets, never eroding the initial capital. The initial capital is then repaid on sale of the property.
International Bank Account Number (IBAN)An international numbering system that is used to identify all overseas banking accounts, both specifying the country and bank. It makes it easier to send money internationally.
International Organisation for Standardisation (ISO)A international organisation, that is not attached to any single government. It has created a wide range of standards that are known across various industries and markets, and show people that there are certain standards that a company has met.
InterpolationA statistical method whereby an unknown value is estimated by using currently known values.
Intertemporal ChoiceAn economic term that describes how a current choice can impact your future self. The most basic way of looking at it is that if you don’t spend $1 today, you will have $1 tomorrow, and you would need to see the impact of this and which is better.
InterventionThe action most often taken by CBs in order to effect the value of the domestic currency. The CB often comes into the market and acts as a large player buying up or selling large swathes or currency.
Intraday TradingTerm that describes the security trading that is conducted within a day, and that does not last a significant period of time. People that trade intraday are called day traders, as they look to profit within the short term price changes, not the long term trends.
Intrinsic ValueA method of deducing an assets or object value not by simply using the price at which it is being traded, but instead by using complex models that are used to take into consideration various different aspects of the asset or good.
Introducing BrokerBroker that introduces customers to market makers in return for commission or spreads.
INXSymbol for S&P 500 Index.
IOUA document that acknowledges the existence of a debt. It is often an informal unwritten document that shows an agreement may exist, but for it to be legal, it must be moved into a proper legal contract.
IPOPrivate companies initial public offering of stock onto the market for the public.
ISM Manufacturing IndexIndex for the US manufacturing sector, based off of expectations for future productions, new orders, inventory, employment and delivers, by currency executives. Values above 50 indicate expansion, below 50 contraction.
Ism Non-ManufacturingIndec for the 80% of US economy not covered by the ISM Manufacturing Report. Values above 50 show expansion, and below 50 contraction.
January EffectThis term refers to the apparent rally in stock prices that occurs during the month of January. This price increase is placed on the increased buying pressure that follows the increased selling pressure during the month of December, which occurs due to investors trying to offset any capital gains taxes.
Japanese Machine Tool OrdersTotal value of orders places with machine tool manufacturers. Indicator of future industrial production. Strong data signals that the economy is in expansion.
Japanese YenJapanese currency unit. Third most traded currency.
Jekyll and HydeTerm for a stock market which appears to have “two personalities”. It can have both bearish and bullish traits, whilst being predominantly one or the other.
Job MarketThis is the market in which employers seek out employees and where employees seek out employment. Whilts it does not exist in a physical sense, it does have the same attributes as a market. Employees and employers offer and ask for the prices and skills that they want, and once they “meet in the middle”, employment occurs.
JobberTrader that commonly practices short-term, small trades for profits. Rarely holds positions overnight.
Jobseekers Allowance (JSA)This is a benefit allowance that is granted to the unemployed workforce whilst they are seeking work. It is often given on the condition that a person shows proof of seeking work. It can also be given, in lesser form, to those that work less than 16 hours per week.
John F. Nash Jr.American mathematician who was responsible for creating the equilibrium theory known as a “Nash equilibrium”. Of this, the most famous concept is the prisoners dilemma, which shows the costs and benefits of collaborating or not.
John Maynard KeynesFounder of Keynesian economics and seen as the father of modern day macroeconomics. He studied how modern markets operate on a large scale
Joint LiabilityTerm referring to a debt for which two or more individuals are liable. This means that both people are in charge of settling the debt.
Joint ProbabilityA statistical measure that denotes the probability of two events occuring at the same time.
Joint TenancyLegal arrangement whereby two or more people are the legal owners of a property, meaning that they enjoy equal shares of both the rights and obligations attached to the property.
Joint Venture (JV)A business term that refers to the process whereby two or more parties agree to pool together their financial resources in order to complete a specific task, ie investing.
JPN225Name for the NEKKEI Index.
Junk BondA class of bond that carries with it a high risk of default. Junk bonds are often issued by companies that are looking for capital, but that are financially compromised and are more likely than others to default on the payments of their debt.
Just CompensationThis type of compensation occurs when a government seizes someones property for public use. When governments take action, and your property is in the way, the government will give you just compensation, instead of you being able to simply ask for any sum of money, ie extorting them. The value is often what would be classed as “market fair value”.
Just in Case (JIC)A type of inventory management where companies will keep large parts of inventory at hand. This is often to protect themselves from being sold out of popular products. Companies that use this will often hold products that are tough to predict in terms of demand, and they will have to pay higher inventory holding costs in order to keep the stock levels.
Just in Time (JIT)A type of inventory management where companies will time the delivery of their raw materials or produced materials with their production schedules. This often means that they will have very little stock in inventory, and will be at the mercy of consumer demand. If demand goes up beyond their expectations, they will struggle to meet it.
Karl MarxPhilosopher and economist whose theories around capitalism, socialism and communism brought him to fame. He published the Communist Manifesto, which is still a core part of communism to this day.
Keep The Powder DryLimit of your trades due to wild trading conditions. In rought trading conditions, sometimes best to wait until a clearer opportunity arises.
Keepwell AgreementA contract between a parent company and its subsidiary that maintains that the parent will help the subsidiary to maintain solvency through a financial backing agreement.
Key CurrencyFor a smaller country, this is the act of aligning their currency to that of a different, major trading partner.
Key EmployeeThis refers to an employee that is considered very important in their decision making for a company, or that has a major ownership of the company. Due to their role, one can often find that key employees see greater financial compensation and other job incentives, that are not enjoyed by regular employees.
Key Performance Indicators (KPI)A group of measurements that are often used to guage a company’s performance, in a variety of both short and long-term metrics.
Key RatioA group of ratios that relate to a company’s finances, which, if reached, would suggest that a company’s financial condition are arguably perfect.
Keystone XL PipelinePipeline in the US that aimed at moving oil from Canada to refineries in the US. It has been a source of huge contention due to the power that it gives one country over another. This had lead to different presidents having different opinions on the matter, and giving and revoking permission on the pipeline.
KickbackIllegal payment that is intended as a bribe. Kickbacks are often given in return for preferential treatment. The kickback itself can take any real form of value, and is often hidden within the cost of the good. It is seen as illegal as it can get in the way of smooth market operations.
Kicking the TiresAn expression that suggests someone is doing very little research prior to a decision. The term comes from car sales, when the purchaser would test the car simply by kicking the tires and using only that info to decide on the purchase.
Kidnap InsuranceA form of insurance policy often used by the very wealthy, that protects them from being kidnapped. Whilst it will not actually stop the act of kidnapping, the policy is often intended to be used to meet the demands that are often made when a kidnapp occurs, as opposed to the victim having to pay out of their own pocket.
KiwiTrader term for the New Zealand Dollar.
Knock-InsAn option strategy that requires the underlying asset to reach a certain price point before a previously purchased option can activate. They are used to decreease premium costs of an underlying option, and are also good to trigger hedging activities.
Knock-OutsAn option strategy that nullifies a purchased option on an underlying asset when a price point is reached. When they are traded, the underlying asset option ceases existance, and so any hedging may need to be undone.
Know your Client (KYC)A basic standard in the investment world which requires advisors and managers to know who their client is, their identity, and also their general knowledge and profile in and of finance.
Knowledge EconomyA part of the economy that functions around intellectual capital. It works around the ability of people and companies to make the most of, and capitalise on, discoveries and research.
KurtosisStatistical term used to describe data. Kurtosis refers to the layout of the common inverted bell curve that most data follows. Normal distribution sees data evenly spread, with the tails on both ends having less and less weighting. Kurtosis concicely represents how much data resides in the tails, as it is not always perfectly normal, and this can have a large impact.
Labour IntensiveTerm that suggests that a process/product/industry depends on and thus requires a large amount of labour in order to function and operate.
Labour MarketAlso known as the job market. This is the market in which employers seek out employees and where employees seek out employment. Whilts it does not exist in a physical sense, it does have the same attributes as a market. Employees and employers offer and ask for the prices and skills that they want, and once they “meet in the middle”, employment occurs.
Labour ProductivityThis is a measure of a country’s output on an hourly basis. The specific way of looking at it is that it shows how much GDP is created by a single hour of labour, ie a person working an hour.
Labour UnionOrganisation formed by workers, mostly within a specific industry of labour group, that aims to represent the groups interests on a larger and more powerful scale. It often aims to improve pay, working conditions, and really is there to give individual workers a greater voice.
Lagging IndicatorThis is a type of indicator that will see change after the variable with which it correlates changed. This can apply within economics, finance or business, and they are almost always used to confirm trends.
Laissez FaireAn approach to economics that was initially developed in 18th century france. It supports a lack of government intervention in business, allowing them to operate as they wish.
LandlordThe owner of a property that is subsequently then rented or leased out to othere parties, in exchange for payments. A landlord can be an individual or company, and anything in between, including the government.
Last In, First Out (LIFO)A method of inventory management that sees the most recently produced items as being the first ones sold.
Law of Diminishing Marginal ReturnsEconomic theory that suggests that once an optimal level of production has been reached, each additional unit thereafter will add less and less to the overall output.
Law of Large NumbersTheory that suggests that as a sample size increases, its mean approaches that of the overall population.
Law of One PriceAn economic concept that implies that, controlling for certain factors, the price of an identical good should be the same across all locations, globally.
Law of Supply and DemandExplanation of the interaction between sellers and buyers of a resource, and their impact on prices.
LayoffThe termination, be it temporary or permanent, of an employee, for reasons that are nothing to do with performance. This is often the case when companies need to cut costs, or due to economic downturns.
Lead TimeThe time that passes from the beginning to the end of a process. This can be anything, from ordering a good and its delivery, to a production chain.
Leading IndicatorsThese are statistics that are considered to be good indicators of future economic activity.
LeakageCapital or income that comes from a repetitive system. In regular life, leakage would be a non-consumption use of income, which could be taxes or savings.
LeaseholdA term for an asset that is being leased from the owner.
Left-hand SideTaking left-hand side of a two-way quote.
Legal MonopolyA company that operates as a monopoly, but not due to bad competition, instead being down to economic mandate. This can often be done due to needs or due to the implementation of regulated prices, which would not need competition to keep them low.
Lehman BrothersFinancial firm that collapsed in 2008 after declaring bankruptcy. It collapsed after 164 years of operation, mainly due to the overleveraging it held within the sub-prime mortgage sector.
Lender of Last ResortA lender, most commonly a central banks, that offers loans to companies or banks that are in financial difficulty. The firms may be on the verge of collapse, and so important that there would be wider costs if it was permitted to collapse. In the US, the LOLR is the federal reserve.
Letter of CreditA letter from a bank that guaruntees that a buyers payment to a seller will arrive on time and in the correct amount.
Letter of GuaranteeIt is a letter stating that a bank will act as a guaruntor in a sale. To get this letter, one must apply like a loan, and if the bank believes that the risk is acceptable, it will issue the letter, confirming payment even if the customer defaults.
Letter of IntentDocument that outlines the preliminary agreement between two parties to do business together, and also outlines the main terms of the prospective deal.
LevelPrice zones or spot prices that are considered to be significant on technical standpoints.
LeverageThis is the percentage or fractional increase in the amount that you are able to trade, compared to the amount of capital that you have. If you are leveraged 100:1, this means that you are able to trade 100 times a greater notional value of capital compared to what you have.
LeverageStrategy whereby borrowed money is used to increase the return on an investment. The money that is borrowed often takes the form of a financial instrument.
Leveraged Buyout (LBO)The buyout of a company using borrowed money to meet the costs.
LiabilityA potential loss, debt or even financial obligation.
LibelThe publishing, in any form, written/spoken/televised that runs the risk of harming someones reputation, and that is not true. It can be taken to court, as it is a civil wrong.
LiborLondon Inter Bank Offer Rate. The rate at which london banks lend to each other over night.
Licensing AgreementWritten contract between two parties, that sees the owner of a brand/patent or trademark, give permission to another party to use said property.
Life InsuranceA contract between a policy holder and the insurer that means on death of the insured, the insurer will pay out a given sum of money to named beneficiaries.
Limited Liability Company (LLC)A legal structure of a company that sees the owner being protected from pursuit of debts that are in the name of the company.
Limits/Limit OrderThese types of orders seek to set minimum and maximum levels at which something can be bought or sold. Most commonly seeking to buy at prices lower than market, and sell at prices higher than market.
Line of Credit (LOC)Preset limit on borrowing that can be accessed at any time.
Linear RelationshipStatistical term that describes a straight-line relationship between two or more variables. It often means that when one variable changes by a given amount, the other will always change by a given amount in a fixed relationship, ie when one variable increases by 1 unit, the other will always increase by 2.
Liquid AssetAn asset that can easily be converted into cash. This often requires there to be a large market with many actors and trades being conducted, as this means that there will be lots of chances to sell. It also means that the asset can be sold for cash at near or on fair value.
Liquid MarketA market that has a large number of buyers and sellers, that allow for prices to move in a smooth manner.
LiquidationThis is the process of closing an existing position by executing an offsetting transaction.
LiquidationBringing a business to an end and distributing the assets to rightfull claimants.
Liquidity CrisisA situation that sees a challenge gaining access to cash or liquid assets. A crisis occurs when this is the case across many business’ at the same time. If too large, it can lead to bankruptcy or widspread economic defaults.
Living WageTheoretical income level that would permit people to get all of the neccessities that they need, and live a life to a decent standard of living. The ideal level, as suggested by economists, would be that only 30% of income is spent on housing.
Loan SharkPerson or company that loans money to highly risky individuals or businesses. The repayment is often gained with high interest rates, and in some cases, illegal use of violence to collect debts. It is often done with organised crime, as in most countries, interest rates are capped.
LobbyA group of people that get together with the aim of influencing people in power, most commonly politicians, in order to get legislative movement in their own favour, ie preventing oil import bans that would damage oil industry in a given country.
London Session8:00 – 17:00 (London)
Long PositionThis is a common position whereby the value increases if the market price increases. Usually taken when market is expected to rise.
LongsTraders who have purchased a product.
LoonieNickname for the Canadian Dollar or the US/Canadian dollar currency pairing.
Lorenz CurveCurve that is often used in conjunction with a GINI graph, that shows the income inequality within a country. If the curve follows a 45 degree line, it is equal. If it follows the x axis and then the right side y axis, this would represent the extreme case of a single individual having all of the countries wealth and income.
LotA common unit used to measure the amount of the deal. The value of a deal always corresponds to an integer value of lots.
LotsThis is a standardised method of trading within FOREX, whereby a trade of 100’000 units of a particular currency is traded.
Low-Hanging FruitTerm that refers to something that is easy to get and does not require lots of energy to obtain. This can either be customers that may be easy to obtain, or investments that don’t take much money to do. Whilst simple to get, they are often also associated with lower rewards.
Loyalty ProgramA programme offered to customers, by business’, that sees them rewarded for being their customer and spending money with them. It often rewards customers with discounts, offers and incentives. It is used to build brand loyalty, and often generates more income than it costs to run.
Lump-sum paymentA sum of money that is paid in a single payment.
Luxury TaxA sales tax that is charged on goods and services that are deemed both non-essential, and accesible only to the wealthiest in society.
M1Section of money supply that includes currency, demand deposits and other liquid deposits, including savings.
M2Section of money supply that includes M1, but also cash, checking deposits, and non-cash assets that are considered liquid.
M3Section of money supply that includes M2 as well as large time deposits, money market funds, repo funds and larger liquid assets. Most of these assets are not as liquid and refer to funds and finances of institutions.
MacroName for the longest term traders. They are the ones that make their trade decisions based on fundemental analysis. Their trades can last from six months through to multiple years.
MacroeconomicsPart of economics that covers the behaviour of the overall economy.
Magna Cum LaudeA title awarded to an individual whose academic degree was awarded with a notable distinction, ie high performance.
MaintenanceThis is the minimum margin that a customer must maintain in their margin account.
Maintenance MarginThis refers to the minimum amount of money, or “equity”, that one must hold in a margin account after the purchase of an asset has been made. The current level is often around 25%, as set by finance industry standards.
Maintenance Margin (forex)The minimum margin that has to be readily available to support all open trades.
Majority ShareholderIndividual or company that owns and thus control more than 50% of a companies outstanding shares.
Make a MarketOne is said to be able to “make a market” when they quote bid and offer prices on which they are ready to deal.
Make to OrderA moethod of manufacturing whereby production only begins once an order has been placed. Whilst this takes the longest amount of time, as there is no reserve, it is often associated with high quality and rare products, ie made to order supercars.
Manufacturers Suggested Retail Price (MSRP)This is the price that a products manufacturer recommends that it be sold at. Often reffered to as the sticker price, it is most quotes in car sales.
Manufacturing ProductionTotal output of the manufacturing section of the industrial Production figures. Overall accounts for approx. 80% of Industrial production.
MarginTerm refers to the collateral that an investor must deposit, and often maintain, with their broker. The role of the margin is to cover any credit risk that the broker must take by having the client as a customer.
Margin (forex)The difference between the buying and selling rates. It can also be used to show the discount/premium between a spot and a forward rate.
Margin CallThis is the demand for more funds to be added to your maintainance margin, as it is no longer sufficient given adverse price movements.
Marginal Cost of ProductionThe change to the total production cost that comes with making an additional unit. In the early stages, as scale is increased, the MCP is decreasing as efficiency is reached.
Marginal Propensity to ConsumeThe MPC refers to the amount of a pay increase thaat goes towards spending and thus the rest of which goes to savings.
Marginal Rate of SubstitutionA model in economics that expresses the relationship that consumers have between two products, and how they like to exchange them. Most commonly used is the relationship between work and free time.
Marginal RevenueThe increase in overall revenue that results from an increase in a single unit of sale.
Marginal Tax RateThe increase in overall tax that one pays for every additional unit of income that someone has.
Marked to MarketThis is the act of adjusting an account daily, in order to better reflect the accrued profits or losses that are then used to calculate margin requirements on a daily basis.
Market CannibalisationThe loss in sales that a company experiences after introducing a new product that competes with its already existing products. It can be so extreme that it displaces sales 1:1, and leads to no new extra revenue.
Market EconomyA system of economics that sees decisions and prices decided by the interaction of its citizens between each other and companies in the market place.
Market FailureTerm that refers to a situation whereby there is an inefficient spread of goods and sales across an economy. The failure does not have to result in economic collapse, and can be barely noticable.
Market IndexHypothetical porfolio of stocks and holdings that would act as a representative segment of a financial market. The value of the index comes from summing the holdings. An example would be tech indexes, that represent the value and direction of the technological sector of an economy.
Market MakerA firm or person that shows both sides of the market, including both ask and offer prices. This helps to make the market and establish liquidity.
Market Maker (forex)This is an individual or a firm that is allowed to create and maintain a market in a foreign currency.
Market OrderThis is an order that dictates an instrument is to be bought or sold for the best possible price at the time of order placement.
Market PenetrationA measure that aims to show how much of a total market is made up of a companies or persons product or service.
Market RiskAn undiversifiable type of risk that can impact firms and people, and their investment decisions. This type of risk cannot realistically be hedged, as it will impact all things in the same direction.
Market ShareThe share of an industries total sales that are made of a particular company or product.
Market Spot Exchange RateCurrent spot exchange rate on the foreign exchange market.
Market-To-MarketThe act of re-evaluating all open positions, in light of current market prices. It is these values that are then used to determine margin requirements.
MarkupThe difference between an available price and the price being charged. It can apply to investment opportunities, and often sees extra price charged for every level that it goes through, so that each level gets some form of reward for the work. This added value can lead to larger levels of markup than the products simple price.
Martial LawA suspension of regular law that grants military powers unlimited power to protect civilian rights and liberties. Rarely used, but still important if there is danger to wider society.
Mass ProductionTerm that refers to the production of a large quantity of a product. In order to aid this quantity of assembly, the products are often standardised both to make it easier, and to keep costs lower.
Matching SystemsThese are electronic systems that duplicate traditional broker markets. Prices show be a bank can be used by all trades.
Mature IndustryAn industry that has passed through both the growth and emerging phases. Companies that reach this stage tend to be larger, more mature and stable, meaning that they are less likely to fail.
MaturityDate of settlement/expiry or a financial product.
Maturity DateDate on which the foreign exchange is to be delivered or received.
Mean ReversionTheory that suggests that even through times of volatility, returns of an asset will always return to the long run mean. Whilst this does mean that prices can change long term, it also means that they will fluctuate around a certain point, which is most often the mean.
Medley ReportMedley Golbal Advisors are a consultancy firm that are in close contact with CBs, government officials etc from around the world. Their reports are said to have so much inside information, that once released, it can move markets. Whilst its accuracy is questioned, it is still said to have weight.
Merchant BankFinancial institution that conducts certain financial industry tasks, such as underwriting, financial advising, fundraising etc. The services that they provide are not avaiable to the public, except to HNWI.
MergerA legal agreement that sees two companies agree to merge or unite into a single company.
Mergers and Acquisitions (M&A)A generic term that tends to encompass the joining of two companies into one. Whilst it only mentions two methods, this umbrella term also includes tenders, asset purchases etc.
Michigan Consumer SentimentMonthly survery of consumer confidence levels in the US, conducted by University of Michigan. Based on telephone interviews that gather information on consumers beliefs about the economy.
MicroeconomicsA more specific study within economics that looks at how individuals make and change responses to financial inputs, ie prices, incentives etc.
Mid-price or Middle RatePrice halfway between two prices (buying and selling) offered by the market.
MiddlemanInformal term that refers to an intermediary.
Milton FriedmanNobel winning economist known best for the advocation of the free market. He is often put next to Keynes as one of the most important figures in modern economics.
Minimum WageA legal standard that shows the lowest wage per hour that can be paid to a worker. It is illegal to have someone work for less than this wage.
Minority InterestTerm that refers to a stake in a company that is less than half.
MioOne million.
Mobile BankingThe action of making financial transactions and having access to your bank services through your mobile device.
ModelsSynonym of Black Box. Systems that buy or sell based on technical analysis.
Modus OperandiA latin term that often refers to ones regular pattern of behaviour. In terms of economics, it often refers to a companies known discernable behaviour. If a company is known to be aggressive in its market and use price to challenges oppostion, it would be said that this is their “modus operandi”.
MomAbbreviation  of “Month-over-month”.
Mom-and-PopColloquial term that describes a small, often family run business enterprise. They are often local, and pose no threat to larger regional competitors, surviving mostly on local loyalty.
MomentumRate of acceleration in a securities price. This can be positive or negative. It is often used as a strategy for trading, where investors try to rise the momentum to gain profits, before the price slows and begins to rever back to the mean.
Momentum PlayersTraders who allign themselves with day-on-day trends in attempts to grab 50-100 pips.
Monetary EasingActs taken by CBs where they loosen monetary constraints. Done either by changing interest rates, money supply or deposit requirements.
Monetary PolicyThe policies that are implemented by a countries, often independent, central bank,to control money supply. These policies usually revolve around interest rate manipulation to try and control inflation. The main goal of these policies is to help and incite growth in an economy, without being political.
Money LaunderingThe illegal activity whereby illegally obtained money is made to appear legitimate, by passing it through legitimate businesses. The most popular means of doing this is through a cash heavy business, as the source of this cash is not expected to be proved or traced, unlike with credit or debit cards.
Money MarketThe market in which there is a large volume of sales of short term debt products, ie reserves or commercial paper.
MonopolistA person, company or group that has sole control of an entire industry, meaning that they solely set the price, and that there is no competition for customers.
MonopsonySimilar to a monopoly, a monopsony has only a sinlge party within it. However, in this case, the single entity is on the buying side, meaning that they can in effect control the price downwards, as opposed to monopolies, where the price is often artificially high.
Moral HazardThis is the risk that someone enters into a contract not in good faith, knowing that there is going to be a failure. This is due to asymetric information, and sees failure after the contract has been signed. Most commonly seen in insurance, a good way of understanding it is to say that someone who has car insurance is likely to act more wrecklessly.
MortgageLoan given to purchase some form of property, ie building, land, etc. The property itself is often used as collateral.
Mortgage RateThe rate of interest that is set on the mortgage loan. This only changes for mortgages that are floating and not fixed rates. The rate will change in response to the central bank interest rate, and thus can hugely impact the property market if it makes repayments too unaffordable.
MothballingThe setting aside or deactivation of an asset, in the hope of using it at some future point in time. This may be for future projects, but so that you don’t need to repurchase the equipment or asset. It is very common in industries that use expensive equipment, that may be used in cycles of demand.
Moving AverageThis is a method of smoothing data sets, widely used in time series data.
MultiplierA type of economic factor, that when changed, will lead to increases or decreases in other variables, in such as way that is greater than the apparent initial change. The movement of a single interest rate may have far wider impacts, for example.
Mutual FundA managed fund that uses a pool of money taken from shareholders to invest in various projects or investments.
Mutually ExclusiveTerm used in statistics to describe two events that cannot occur together, not because of desire, but because it is impossible, ie being day and being night in the same location at the same time is mutually exclusive.
Named BeneficiaryAn individual, as stated in a legal document, that is entitled to receive an asset, policy pay-out, pension etc, on someones behalf. It is mots commonly seen in life insurance, where the named beneficiary gets the pay-out on the policy holders death.
Nas100Abbreviation of the NASDAQ 100 Index.
NasdaqAn american financial services firm that owns and operates 3 stock exchanges in the US.
Nash EquilibriumA scenario in game theory that sees players in a non-cooperative game unable to benefit from changing only their choice. This means that given the other players choices, they are at their best pay-out.
National BankThis has two meanings. In the US, a national bank is one that is available or present across the country. Internationally, a national bank is another term for central bank.
NationalisationThe action taken by a government whereby a private industry is taken control over by the government. Through this action, and its not being done through the markets, there is no compensation to the current private players. This can be done for public benefit, foreign resentment, or consolidation of power by a government.
Natural MonopolyAn industry that sees only one player, not due to illegal activity, but due to very high entry costs, and large economies of scale, that make it very difficult to enter the market once it has already been entered.
Natural SelectionIn finance, this term suggests that over the long term, only the companies that are best suited to survive, and that can adapt to new scenarios and environments of the economy, will survive and live on.
Natural UnemploymentThe number of people that are unemployed from real economic forces, as opposed to something artificial. This can be due to job moving, increased technology, lack of skills needed etc.
Negative CorrelationRelationship between two variables that sees ones value decrease as the others increases.
Negative Interest RateSituation where borrowers are paid to borrow, as opposed to the lender. This is a tool that is used in a last resort when in an economic slump, once interest rates have already been exhausted. The aim is to increase money supply by reducing the willingness to save money.
Nest EggLarge amount of money that has been saved (or other assets) for a specific purpose. These nest eggs are often used to have something to spend in the future, almost like a pension.
Net ExporterTerm for a country that sees its exports outweigh its imports.
Net ExposureThis is the difference between a funds long positions (where they benefit from price increase), and its short positions (where they benefit from a price decrease). The difference shows how exposed the fund is to market fluctuations.
Net ImporterTerm for a country that sees its imports outweigh its exports.
Net IncomeTotal sales of a company, less all its expenses. This net income is what the shareholders or owners will then take home.
Net of TaxTerm that refers to the amount of money left over once it has been adjusted for tax levels. Companies will often compare the outcome of an investment before and after tax to see its viability.
Net PositionTotal amount of currency that have been bough or sold, that have not yet been offset with a counterning transaction.
Net WorthValue of assets owner by a person, or a company, less all of their liabilities. The assets do not have to be liquid, simply theirs.
Network EffectA social effect that sees the value of something increase, the greater the number of participants involved. A great example is the internet, which gets better and better the more people that use it, and it had no real value before it has any users.
New York Session8:00 – 17:00 (New York).
News TraderAn individual that makes trading decisions based on the news. Whilst this can be regular expected things such as reports and actions, it can also be on unexpected news, such as breaking news, crashes etc.
NFPAbbreviation for Non-Farm Payrolls.
Nigerian ScamVery popular form of scam that sees the scammer request financial help in order to illegally transfer money. The most common format has been for people to ask for small sums (ie $5000), so that they can send the victim a huge sum of money (ie $1 million), which aims to make the small initial transfer seem like a great investment.
No Documentation Mortgage (No Doc)A form of mortgage that requires no type of income verification from the borrower. It was this type of mortgage that helped fuel the property bubble in 2008.
No TouchThis is an option that pays a fixed ammount to the holder of the option, even if the market never reaches a preagreed Barrier Level.
NoiseInformation and activity that can appear relevant, but in fact is distracting from the main point or task. In investing or economics, lots of things can appear as relevant, but in truth can simply be noise that has no real impact.
Non-Compete AgreementA form of legal agreement that states an employee is not allowed, for a certain period of time, to reenter or act within a given industry, once their current employment in that industry ends. This will often be the case when a company is purchased, the old owner will not be allowed to simply reenter the market, or the purchase will not be as valuable to the buyer.
Non-Competitive TenderA form of tender where only one company is invitied to make an offer. Tenders often see many companies compete to get a contract, but non-competitive sees only one. Prices are often higher due to lack of competition.
Non-Disclosure Agreement (NDA)A legal contract that prevents the signatory from discussing confidential information or relationships.
Non-Executive DirectorTerm referring to a member of a company’s board of directors, but one that does not have an executive role, ie CEO.
Non-Farm PayrollVery important piece of data in the US that shows employment within the US, but not within farming, private homes, and active military members. It tends to cover approximately 80% of the US workforce.
Non-negotiableA term of a contract that is not open to modification or debate.
NonfeasanceAn act by someone, where they knowingly fail to perform a task or role that they are required to do by their position. Due to this lack of performance, damage can occur or there can be harm. Nonfeasance can lead to prosecution.
Normal GoodA type of good that sees a direct relationship in demand and income. It is usually in the food or clothing section. The other types of goods would be luxury goods, where this relationship between income and demand does not exist in the same way.
North American Free Trade Agreement (NAFTA)Agreement between US, Canada and Mexico that was in force between 1994 and 2020, that aimed to bolster trade in North America.
Not for ProfitAn organistion that does not earn profit for the owners. All money and profits are then reinvested into meeting the goals of the company.
NYA.XSymbol for the NYSE Composite Index.
ObligationThe responsibility of the parties within a contract to fulfil the terms outlined within in. This can be an employment contract, supply contract etc.
Occupancy RateThe proportion of a property or group of properties that have a tenant, compared to the amount that have available space. It can also be used in reference to beds in a hospital, or anything where the two outcomes are occupied vs available.
October EffectA psychological anomoly that occurs during the month of October. Whilst no data really supports the concept that stock prices decrease during the month, many traders and investors get nervous during the month because of the tendancy for market crashes to occur throughout history.
Odd LotThis is a non-standard transaction size. Within FOREX, this would be anything that is not in lot sizes of 100’000 units of currency.
OfferThis is the price at which the seller is willing to sell. The lowest such price available is often known as the best offer. Also called the ask price.
OfferedA way of describing a market condition. Characterised by heavy selling interest in a certain pair.
Offsetting TransactionThis is a trade that cancels or to some degree offsets market risk of an open position.
OffshoreA location that is not ones own country. It is most commonly heard in finance when referring to tax havens where financial regulation is greatly different to that of the home country.
Oil FieldArea of land, not always a field, that is used to extract petroleum from the ground. The method of extraction can be different, but the product is always the same.
Oil ReservesThe amount of oil that exists within a certain region that is yet to be, but still could be, extracted from the ground. For the oil to count towards the reserves figure, it must be reachable, and not simply sit at unattainable depths under the countries borders.
OligopolyMarket structure where there is only a small number of firms operating. Barriers to entry are high, but once within the market, it is difficult to prevent the actor from having some influence.
OligopsonyMarket strucutre where there are only a few buyers operating, meaning that they can push the price lower than normal, but not as low as a monopsony.
OmbudsmanAn official, or group of officials, that investigate complaints within certain industries or sectors. They can investigage anyone, including companies, government departments etc, and they can recommend decisions based on the outcome of their investigation.
On TopAn attempt to sell at the current market order price.
One Cancels Other Order (O.C.O. Order)This is a description of an order whereby two orders are placed. If one of the orders is executed, the other order is automatically cancelled.
One Percent RuleA golden rule that aims to identify if a properties rental income will match or exceed the mortgage payments. This is applied to investment properties as opposed to homeowners.
One TouchAn option that will pay its holder a fixed amount if the market touches a preagreed Barrier Level.
One-Child PolicyPolicy that existed in China in order to prevent exponential increase in their population. Each family was only allowed to have a single child. It was introduced in 1979, and phased out in 2015.
One-Stop ShopA firm, or group of companies, that offer a variety of services and products that will meet many of their customers demands. It often means that a customer only needs go to this one company for their needs to be met, as opposed to going to many.
Onerous ContractA type of contract that will cost the engaging party most to fulfil than they will generate in returned income. Across the world, these types of contracts must still be included within a companies accounts.
Online BankingThe possibility to perform banking and banking related tasks online, ie over the internet.
Open HouseA form of home showing where any interested parties are able to show up to a home that is on the market without an appointment, in order to see if it meets their needs to buy. Often operated by the broker themselves, the owners are not usually present.
Open InterestThis shows the total number of outstanding financial derivatives that have yet to be settled on a financial asset. Examples of this derivative would be a future or options.
Open OrderDescription of an order that will be executed when a market reaches a designated price. This is often linked with good ’till cancelled orders.
Open OutcryA type of trade communication method used in trading pits prior to 2010. Pits are no longer used, and things are done online.
Open PositionActive trade that does not yet have any realised profits or losses, and which has not been offset by an opposing trade.
Operating CostThese are the costs that are associated with the regular operation of a company in the day to day.
Operational RiskThe risk that is faced by a company in the day-to-day business activities. This type of risk is internal to a company, and cannot be hedged.
OptionThis is a financial derivative that gives the holder the right, but not the obligation, to buy or sell a product at a pre-agreed price before a certain date.
OrderInstruction to execute a trade.
Order BookThis is a system that is used to show the depth of the market in terms of traders willing to buy and sell at a price beyond the best currenctly available.
Organisation of the Petroleum Exporting Countries (OPEC)Term that refers to the worlds 13 largest oil exporters. It was founded in 1960 in order to help coordinate demand and supply of oil across the globe. It is a form of cartel, whereby the members try to keep control on supply so that prices remain high and they can keep profiting from it.
OscillatorsThis is a quantitative method that gives signals about overbuying and overselling conditions.
OTCAbbreviation of “Over the Counter”.
Out-of-Pocket ExpensesExpenses that, when covered, may not be reimbursed to the individual. Employees will often have expense accounts that cover their costs in certain scenaries, but in some cases, it will not be covered, so will have to be out-of-pocket.
Outright DealForward deal that is not part of a swap.
OutsourcingA business practice that sees a company hire an outside party to perform a certain task that they need. This can be something like production of their good, or it can be doing something that was in the past performed in-house, ie cleaning services.
Over the CounterA transaction that is not conducted via an exchange. Often characterised by more tailored deals between two counterparties.
Over-sellingA practice that sees a salesperson continue a sales pitch even after the purchase decision has been made be the customer. Whilst it may appear innocent, it can sometimes lead to annoyance and the reversal of the purchase decision.
Over-the-counter (OTC)Security trading that occurs via a broker-trader network, as opposed to through a highly liquid exchange.
OvercollateralisationA situation that sees the level of collateral supplied be more than enough to cover any potential losses that may occur on failure. It can sometimes be used as a form of certainty for all parties that the loan will be repaid.
OverdraftThe extension of credit from a financial institution. The customer may no longer have their own money, but they may have a fixed overdraft. Because it is now a loan, it is often subject to interest payments after a certain period of time.
OverheadBusiness expenses that cannot be linked or related to the specific activity. In most business’ this would be something like rent and amenities.
OverleveragedA situation that sees a company carry too much debt compared to its cash flows, meaning that interest payments may risk the companies liquidity and thus future.
Overnight RateThe interest rate at which institutions borrow money from each other. These funds are often used to meet depository requirements that are set by law.
OversupplySituation that sees an excessive amount of a given product on the market, meaning that prices tend to fall. It can also occur when supply is normal, but demand is not there, meaning that regardless there is still a surplus.
PaidThis is reference to the offering side of the market.
PairThis is the FOREX quoting convention whereby one currency is matched against another.
PaneledA heavy round of selling.
ParThis means that the forward price of a purchase of a currency is that same as the spot price.
ParThe face value, of either a stock or a bond, as it was issued within the company’s corporate charter.
ParabolicTerm describing a market that is moving a great distance over a small period of time. This can be either up or down.
Parent CompanyA company, that though majority shareholding, controls other companies operations.
Pareto ImprovementThe ability to change allocations of goods, without harming anyone, and whilst making at least one person better off for it.
ParityA price, between two or more assets, that means they have equal value. Most often, it means that the two assets are being traded at the same price.
Partial FillA term describing the partial fulfillment of an order.
Participation RateThe proportion of a country’s workforce that is currently in work.
Passive IncomeA form of earnings, where one earns money from activities in which they are not directly involved.
PatentLegal document that protects the rights of one to their creation, most commonly their intelectual property. Patents are seen as vital in encouraging expensive investments into innovative areas of the economy.
PatientDescription of a person that is waiting for certain levels or maybe even news events to hit before entering the market.
Patriot ActPassed shortly after 9/11, it gave US law enforcement more powers in order to fight terrorism.
Payday LoanA form of short term loan that has high interest rates attached. They are typically used prior to a paycheck, with the paycheck being the collateral used to repay the loan.
Payment-in-KindThe act of using a product or service as a means of payment, as opposed to cash.
PayrollA quantity of compensation that a company must pay to their employees for or on a given date. Companies more often than not have monthly pay-rolls for their employees.
Peer-to-Peer LendingA type of lending activity that sees people able to obtain loans from other people, as opposed to banks or corporate lenders. Alternately known as “crowd funding” it has become more popular in the last decade, and is used to help companies take off, or people achieve their dreams, where lenders would typically not care.
PeggedDescription of a system where the domestic currency value is tied with that of another, more stable currency. The pegs are often allowed to flucuate within a certain band.
PeggingA foreign exchange action whereby a country’s currency is fixed to another, meaning that the exchange rate never changes. They are often used for countries that are not stable, to help imporve their imports and exports, and to reassure investors of their financial safety.
Per CapitaTerm that refers to statistical observations that are quoted “per person”.
Perfect CompetitionA theoretical marketplace where there are not only no monopolies, but where there are not barriers to entry or exit, and where people choose the prices to pay by going to the most desired company.
PerpetuityA form of security that pays a cash stream forever.
Personal IncomeA persons total annual gross earning. This is key to personal spending, which makes up 2/3 of GDP in most major economies.
PhilanthropyA form of charitably giving, whereby an individual or group does more than simply give money towards a cause. They represent the cause, push for more help to the cause etc.
PipSmallest unit of price for any foreign currency. If a currenc moves from 1.0410 to 1.0420, it is said to have moved 10 pips.
Plain VanillaA type of financial instrument that is in its most basic form and that has no extras around it, ie basic bonds, futures etc.
Plowback RatioA sign of how much of a company’s profits are retained by the business as opposed to paid out to investors. This money is often used for R&D or other business growth activities.
PointSame as Pips.
Point of SaleThe location at which a customer completes payment for the good or service that they paying. It is at this point that a sales tax is made payable.
Political RiskThis describes the exposure faced by someone to changes in a governments policy, which, if changed, could have an adverse effect on an investors position.
Ponzi SchemeA form of illegal and fraudulent business activity that sees older investors paid out using the funds gained from new investors. Whilst they can grow rather large, the moment one of the people fails, it all fails.
PortfolioCollection of investments.
PositionThis is the net total holdings of a given product.
Poverty TrapA form of economic mechanism that makes it very difficult for people in poverty to escape said poverty. Its most basic form is when one requires a large amount of capital to escape poverty, which is near impossible for the poor to obtain.
Power of AttorneyA form of legal authorisation that allows someone to make legal decisions for someone else. Often seen in medicine, where someone is no longer capable of making logical and reasonable choices themselves.
PPIProducer Price Index. Monthly report that measures selling prices that domestic producers receive for their output.
Predatory PricingA form of price competition used by  business’ where they set prices unnaturally low in order to eliminate competition. It is now illegal due to the unfair ability of large companies to swallow these low costs, but new companies are unfairly priced out.
PremiumThis is the amount by which a currency is more expensive to buy for a future delivery than for spot delivery.
Prepayment PenaltyA financial penalty that is imposed on an individual when they repay their debt earlier than planned. Lenders calculate how much they are due to earn, for example on a mortgage loan, over a given period of time. If the borrower pays it off early, they may lose lots of interest that would have been paid over coming years, and so they try to get as much of it as possible by “punishing” the borrower for paying it back early.
Price CeilingA legally enforced maximum price at which a seller is allowed to sell a product or service.
Price DiscriminationA legal form of pricing strategy that sees the same pruduct offered to different people at different prices. These prices are set by individuals’ willingness to pay, and aims to reduce the customers surplus, and transfer it to the producer.
Price Elasticity of DemandA measure that shows how demand changes when there is a change in price.
Price StickinessThe resistance of market prices to change to normal inputs. It often sees prices take a larger than normal amount of time to move to the “optimal” price.
Price TransparencyPrice quotes to which all participants have equal access.
Prisoners DilemmaA paradox in game thoery. It often sees two individuals not reach a combined optimal outcome because each only wants to optimise their own outcome.
Private GoodA type of good that must be purchased in order to be consumer. This is in contrast to public goods, that can be used without paying for them, ie walking on a pavement.
Private SectorSection of the economy that is run by private people and companies. They operate for profit.
PrivatisationThe act of a government controlled business going into the private sector and becoming privately owned. In most cases the new private company will become publicly traded.
Pro RataThe process by which something is allocated in equal portions.
ProductivityThe output, economically, per each unit of input. This input can be anything, for examplem people or capital.
ProfitDifference between cost and sale price, often where the sale price is greater than the cost price.
Profit & Loss or P&LThese are the real gains or losses that occur from trading activities. They can combine both closed positions, and also unrealised gains/losses on currently open positions.
Promissory NoteA form of debt instrument that outlines that at a certain future date, a certain amount of money will be owed by one party to another party. It is not typical debt as there is not often interest on it.
Prop FirmThis is a company that gives people access to money that is not theirs, on the agreement that they will trade for profit. There are often profit splits, combined with rules that aim to prevent excessive losses on behalf of the firm.
Prop TraderThis is a trader who uses capital granted to them by a prop firm. This means that their profits are often magnified, but they are often only entitled to a certain profit split, which is the cost of trading with another companies funds.
Prop TradingThis is the act of trading with money granted by a prop firm.
Proprietary TradingThe action of a financial institution whereby they decide to profit directly from market activities, as opposed to the typical commission based earnings that are often rather slim.
Proxy VoteA form of vote that sees a single person vote for more than themselves. It often occurs when the other person cannot attend, they don’t want to etc.
Public CompanyA company that is now owned by the government, and that is traded on the market, with shares owned by various possible people. These shareholders then have a claim on the assets and profits of the company.
Public GoodA good that can be consumed without having to be paid for. It is often a good that benefits the wider society and that would not be created if it was down to the individual. An example would be lampposts, roads, etc.
PullbackThis is the act of a trending market to retrace a certain portion of the gains, after which the trend will continue in the same direction.
Pump-and-Dump SchemeA manipulative scheme that sees the actors manipulate prices through false advertising and by trying to exagerate the possibilities of the asset, whilst holding it themselves. Once the market then prices in this new “positive” news, and the price rises, they then sell their assets. This new supply crashes the price, and sees it being dumped.
Purchasing Managers Index (Pmi)Indicator of performance of manufacturing companies within a country.
Purchasing Managers Index Services (France, Germany, Eurozone, Uk)This is a measure of the outlook of purchasing manager in the services sector. They are surveyed on wide range of topics. Readings above 50 indicate economic expansion, whilst below 50 indicated economic contraction.
Put OptionA financial product where the holder has the right, but not the obligation, to sell an underlying asset at a specified price.
Pyramind SchemeFraudulent investment pitch that depends on people believing unrealistic returns promises. Each person wants returns that are based on them getting new investors, so each new person gets more than one new person, and so on and so forth, which sees the base widen, and thus the shape of the scheme looks like a pyramid. As recreutment slows, the scheme collapses, with those high up already having benefited, and those lower down having made large losses.
Qualifying RelativeA relative that can be claimed as a dependent by a taxpayer. There must be considerable financial support given to the relative during the tax year to qualify.
Qualitative AnalysisThe analysis or judgement of a company based on imeasurable information, such as expertise, cylces, relationships etc.
Quality ControlThe process by which a company or business tries to ensure that their product quality is maintained. Whilst companies cannot realistically check every one of their products, they will often check a certain representative proportion over a given time period.
Quality of LifeA subjective metric that looks at ones happiness. It is becoming an ever increasing factor that relates to decisions about investments and also choices by consumers, ie what jobs to go into, especially after Covid and working from home.
Quant FundA fund that chooses the stocks and financial instruments that it will invest into using numerical data, as opposed to opinions and sentiments that cannnot be measured.
Quantitative AnalysisThe analysis or judgement of a company based on numerical metrics. These metrics are combined with statistical modeling, measurements etc to come to make decisions about both investment opportunities and corporate health.
Quantitative EasingThe act taken by a central bank when injecting money into an economy, in the aim of stimulating growth.
Quantitative EasingMonetary policy that sees the central bank purchase financial securities off of the market, thus increasing the amount of money on the market in an attempt to increase spending, and prevent people from saving as the value of money drops.
Quantity DiscountAn incentive that is often given to customers to purchase larger quantities of a good than normal. This discount often applies to each good once a certain threshhold has been reached. The reason that this discount is offered is because it often becomes cheaper to produce large amounts due to the economies of scale enjoyed by the producer.
QuarterThree month periods that split the year into four sections. It acts as a company’s financial and business calendar. According to this calendar, the company will have to report certain outcomes, pay dividends and release certain information.
Quid Pro QuoAn agreement where two parties will exchange goods or services reciprocally. In business, it often means that someone will do something as long as the other party also agrees to do something for them.
QuorumA minimum acceptable number of individuals that must be in attendance at an event, so that the results of the event are valid. This can be for votes etc, and the number needed for a quorum will be outlined in the company’s charter.
QuotaGovernment imposed trade restriction that limits the number, either in items or financial value, of goods that can leave or enter a county. They can also be used to prevent or encourage production within a country. They are often used to protect domestic interests and industries from foreign production.
QuoteThis is an indicative market price, most often used for information as opposed to actual trading.
QuoteIn finance it is the last price at which an asset was traded, meaning that it was the last accepted bid price and last accepted offer price.
Quote CurrencyThis is the second currency in a currency pair. If we take USD/GBP, GBP would be the quote currency. In the rate, it means that you would be able to get a certain amount of the second currency for one unit of the quote currency.
Race to the BottomA competitive situation within business whereby competing companies will attempt to offer either a product or a service for the lowest and most appealing price. As a result however, they also begin to reduce the quality to the lowest acceptable, which in turn leads to a race to get to the cheapest and lowest acceptable quality product possible.
RacketeeringAn illegal act that sees criminals use organised crime as a means of extorting illegal profits which are gained through illegal acts.
RallyThis is the recovery of a price after a period of decline.
Random Walk TheoryAn economic theory that is applied to stocks and asset prices. It suggests that future stock prices cannot be predicted using past prices or information, and that it is random. It assumes that the stock market is completely efficient, and that knowing certain information doesnt give you an advantage, because the very existance of that information means that it has been priced into the market.
RangeThis is when a price is moving between a defined high and low. It moves between these boundaries, without breaking beyond them.
RateThis is the price of one currency in terms of another.
Rate of ReturnThis is the overall gain or loss that is seen in an investment over a given period of time. The outcomes is often expressed as a percentage compared to the investments initial cost, and is sometimes even put in terms of compounding, ie the rate of return on an annual basis.
Rational BehaviourThis is a concept in economics that would see individuals or groups make choices in such a way that is optimal and maximises someones utility. If someone doesn’t do something classed as optimal, then they are said not to be rational.
RationingThe act of controlling the distribution of an asset, good or service in the name of neccessity due to a scarcity in the product or service. It is often mandated by the government. The most recent examples have been the rationing of toilet paper during the covid pandemic.
RBARoyal Bank of Australia. The Australian Central Bank.
RBNZRoyal Bank of New Zealand. The New Zealand Central Bank.
Real IncomeThis term refers to the amount of income that someone earns once inflation has been accounted for. It is often done with a reference year so that they know, in comparison to that year, what their purchasing power can achieve.
Real Interest RateThis is the interest rate that has been adjusted for inflation, to give the real rate. This can show someone the real return on their funds, or the real cost of their debt. If someone expects to earn 10% interest on their loan, but inflation is 11%, then the real interest rate would be -1%.
Real MoneyIf one is said to be real money, they are often someone/a firm of significant size, whose actions are taken as an indicator of long-term trends, as opposed to a speculator trading intra-day.
Realised GainA realised gain is one that is seen once an asset has been sold, and the price at which the sale occurs is above that at which it was initially purchased.
Realised LossA realised loss is one that is seen once an asset has been sold, and the price at which the sale occurs is below that at which it was initially purchased.
Realized Profit/LossThe actual amount of money that a trader has made or lost when a position is closed.
RebateA rebate is a general term that refers to the crediting of a certain sum of money to a customer. A very simple example of a rebate is a “buy one, get one free”, as once the transaction is taking place, you are rebated the price of a single good.
RecessionA business cycle of contraction, where there is a decline in economic activity. Most often characterised by a decrease in spending.
Reciprocal CurrencyA pair involving the US Dollar, but where the dollar is not the first currency quoted.
Recovery RateThe degree to which a loan and accrued interest can be recovered. The value is expressed at a percentage, where it shows the value of what can be recovered compared to that of the overall debt and interest.
RefinanceThe revision of a credit agreement. It often applied to a mortgage or a loan, and will see either the interest rate, the collateral, the principal or the time frame altered, which will in turn lead to a change in other variables. A refinance often occurs when there is a large move in the interest rate that would be favourable to the debtor.
RemittanceThis is the act of sending money from one person to another. It is most often used in reference to business, that would see an invoice or bill paid after someone send a “remittance advice”outlining what is owed.
RemunerationThis refers to the total amount of income received by an employee, in all forms. This means that it will include the base pay, but also bonus’, overtime, stock options etc.
Rent ControlThis is a program that is introduced by the government in order to try and limit the amount that is allowed to be asked, by a landlord, in order to rent a property. The aim is to prevent money hungry landlords from exploiting tenants.
Rent SeekingTerm that refers to a person or company that is aiming to gain greater reward for no more productivity. The term originates from the rental market, where landlords would increase rent whilst offering nothing more.
Replacement RateThis is the amount that a retiree will earn from their pension plan, expressed as a percentage of their pre-retirnement annual earnings. This means that if the rate was 100%, they would get paid the same amount through their pension as their employer paid in their final year of work.
Research and Development (R&D)The long term and often ongoing attempt by companies to improve their service or product, in an attempt to remain competitive in their industry. It is often done by highly skilled individuals in highly competitive industries.
Reserve RequirementsThe mimimum level of liquidity that a bank or financial institution must hold, as a ratio of their overall deposits, in order to meet regular and potentially even irregular deposit demands that are made by their clients.
Resistence Level/PointThis is a price point that is believed to act as a resistance level. If this level is broken by a price, it is expected to lead to significant price movement.
RestructuringThe steps taken by a company that are done to change the fundemental financial and operational aspects of itself. It can often be done when the company is facing struggles, or when they are taken over by new ownership.
ResumeFormal document that summarises an applicants skills and qualifications that are relevant to the position being applied to. The resume is often combined with a cover letter that is used to introduce the applicant and express their interest in the job opportunity.
Retail BankingBanks that operate within the financial sector, and that serve regular citizens and the needs, as opposed to business.
Retail InvestorAn investor that uses personal wealth.
Retail SalesA measure of monthly retail sales of goods and services sold by retailers based on a sample. It is a good indicator of consumer spending, which is subsequently used to guage the health and growth of an economy.
Retained EarningsThe amount a company is able to keep once costs, and also dividends, have been paid out to its shareholders.
RevaluationIf a pegged currency is allowed to strengthen or increase due to actions of officials or the government.
RevenueThe overall amount of money that is generated by a company in its operations. It is calculated by taking the average sales price, multiplied by the overall number of sales.
Revolving DoorThe movement if high level employees is referred to in this way as they move from the public sector into the private sector. As people move from the public sector where they gain contacts, leverage and experience, they then enter the private sector of the same industry, where they then often act as lobbyists or consultants for large companies, and they are often very well compensated for their knowledge.
Right of First RefusalA contractually agreement that gives the right to a single company to complete a contract or not, prior to it being offered to anyone else.
Right-hand SideLooking at the right hand side of a two way quote.
Rights IssueThis is a form of corporate action whereby shareholders are given the right to buy more stock. Used as a method of capital raising by companies.
Ring-FenceA conceptual barrier used to separate a certain portion of money from an overall pot, in order to be used for a certain project or given to a certain person or company, for a certain purpose. These funds are not used for other operations, as they want to protect them from certain risks.
RiskThis is the most common exposure to uncertainty. Often, it is negative in connotation.
RiskTerm that refers to the possibility for one to experience harm or a financial loss. Because of the negative nature of risk, if someone is going into an unknown, where they could benefit, there is said to be “upside” risk.
Risk ManagementThe use of analysis or techniques to try and reduce/control exposure to a variety of risk sources.
Risk PremiumThe amount of return that an asset or investment is expected to pay-out that is above that of the risk-free rate of return. This means that it is the premium return you are going to get for taking on more risk than the market.
Risk ToleranceThe amount of risk that an investor of individual is willing to accept, given the volatility of a market or asset price.
Risk-averseA term that suggests one tends to avoid risk if they can, or that they prefer to have less risk than more. Often used in investments, it describes an investor that would prefer to keep the money that they have then try and get higher returns for more risk.
Risk-free assetTerm to describe an asset that has a given pay-out at a certain future time, without a possibility of loss.
RolloverSimultaneous closing of a position for todays value date and opening of the same position on the next day’s value date at a price reflecting the interest rate differential between the currencies. This is often done to prevent the having to actually deliver the currency traded when the position is closed.
Round TripTrade that has been open and then closed by an equal, opposite deal.
RoyaltyPayments made to individuals or companies, in return for using their assets or intellectual property. These assets are often copyrighted or trademarked.
Rule of ThumbA term that refers to the general practice or a general approach to anything.
Running Profit/LossIndicator of your current open positions. Similar to unrealised gains or losses.
RutSymbol for the Russell 2000 Index.
Safe HavenA type of asset or investment that is believed to be a safe location, either because it will increase or maintain its value, during a period of turbluance within the economy.
Sales TaxA government imposed tax that is levied at the point of sale on goods and services. Typically, the tax is levied at the point of sale, meaning that at the point that is goes from being in the supply chain and into the ownership of the consumer.
Savings AccountA type of bank deposit that is targeted at those who want to hold their deposits for a longer of period of time, to be used at a future date. Due to the greater certainty that the money wont be withdrawn, the financial institution will be willing to pay higher rates of interest than normal.
ScalpingTrading strategy that aims to profit from minor changes in an assets price. Scalpers do not hold traders for a long period of time, and thus will often place anywhere between 10 and hundreds of trades a day that may last only a few seconds or minutes.
ScarcityA normal economic condition that sees a gap occur between the amount of a good that is available, and the amount of a good that is wanted. The greater the gap, the greater the scarcity.
SeasonalityA pattern that occurs in time-series data, that sees regular and predictable patterns occur. The pattern occurs on an annual basis, which is why it is linked to “seasons”.
SECSecurities and Exchange Commission.
SectorThis is the name for a group of securities that operate within a similar industry.
SecuritisationThe action of bringing together a number of assets, into what is often called a “pool”. They are then repackaged into a security that can be traded, and that will often bear interest payments to the holder.
SeigniorageThe difference between the cost of making money (in its physical form), and the value of the money when it is used to exchange. It may only cost $0.5 to create a $1 bill, meaning that there is seigniorage. This extra value is often retained by the government that creates the money.
Self-EmploymentAn individual that does not work for anyone else, either person or company, and that earns an income generated by work that they complete themselves.
SellTaking a short position in the expectation that the market is going to go down.
Service ChargeAn additional fee that is often paid in relation to the service that has been provided. The most common place to find such a charge is in restaurants, where a service charge is expected not for the product, ie food, but for the quality of the service, ie the person that dealt with you.
Service SectorSector of the economy that deals in intangible goods, mostly services. Services are very important, so much so that an economy said to be made mainly of the service sector is said to be more developed than other agricultural or product based economies.
SettlementThis is the process of entering a trade into the record books, including the counterparts within the transaction. It may or may not include the physical exchange of currency.
Severance PayThe overall value of compensation or benefits that are paid out to someone when there employment contract is severed earlier than agreed.
Shadow Banking SystemThe financial intermediaries that exist and offer credit and financial services to people, but that are not subject to the same regulatory and oversight requirements as others.
ShareholderIndividual or company that has some form of ownership in another company, through the holding of stock options.
Sharpe RatioAn often graphically represented measure that shows the relationship between an asset or investments return, compared to its risk. The main difference between this and other risk-return analysis is that it is compared to the risk-free rate of return.
Short PositionThis is an investment position that is taken when expectations are that the market/asset will decrease in price. Profits are made when the price declines.
Short SqueezeThis is when traders are heavily involved in shorting a large quantity of assets. However, market catalyst forces them to cover their exposure, which causes a sharp increase in the price.
Short-CoveringAfter a decline in market price, previous shorters begin to buy back the asset.
ShortfallThe degree to which an obligation, be it financial or contractual, cannot be met with the current amount of cash or liquid assets available.
ShortsThis is the name for traders that have either shorted a product, or who are bearish in market beliefs.
Sidelines, Sit On HandsDescription of traders who stay out of the market due to a lack of clear direction.
Simple InterestA simple method of measuring the amount of interest that is owed. You simply multiply the interest rate by the number of relevant time period that will pass. If it is a daily interest rate, you multiply it by the number of day that you hold the loan. The main problem with simple interest is that it does not consider compounding.
Simple Moving Average/SMAThis is a simple average of a pre-defined number of price bars. Any time interval can be applied.
SkewnessAn uneven bell curve within a normal distribution of a data set.
SlippageThe difference between the price that was requested, and the price that was actually traded. This difference often occurs due to choppy or changing market conditions.
SlipperyTerm that is used to describe a market that is believed to be ready to move quickly in any direction.
SloppyTerm that is used to describe a market that had no meaningful trend or follow-through.
Smart money/Smart Money ConceptThis is money that is placed in the market by large players/forces. The act of their placing money in the market can often influence financial markets directions.
SNBSwiss National Bank. The central bank of Switzerland.
Social EconomicsThe social branch of the wider study of economics. It studies the relationship between social behaviour and decision making, and the economy.
SocialismA social and economic movement that focusses on collective ownership as a means of production, as opposed to private and individual wealth and ownership.
SOFRThis is the Secured Overnight Financing Rate. This rate is used for US dollar denominated loans and derivatives that are used in the overnight market.
Soft SkillsTraits and skills that are interpersonal. This means that one has goods personal abilities, ie talking to others, listening etc.
SolvencyTerm that refers to a company or individuals ability to meet its long term debt obligations, and also its financial obligations. It is a good way to determine a company’s health.
SONIASterling Overnight Index Average. The overnight interest rate that banks pay to borrow in sterling from other financial institutions. It is replacing LIBOR.
Sovereign NamesThis is how traders refer to central banks that operate in the spot market.
Soveriegn Wealth FundState owned investment fund that is used to benefit the country and its citizens. The funds that are used for the fund often come from surplus’ within the governments operations.
SpecialisationThe act of a country or company producing the limited number of goods in which they have the highest productivity and greatest efficiency.
SpeculatorInvestors that take on greater degrees of risk in the hope of making greater future gains. The are called speculators, because their choices have less reasoning behind them, and the only way that they are able to trade for so long is that they use methods, ie stop-loss to prevent massive losses.
SpotThis is the foreign currency exchange that occurs two days after it is bough or sold.
Spot MarketThis is the market where products are traded for their current market price, for their immediate exchange.
Spot PriceThis is the current market price. Settlement with these prices often occurs within two business days of completion.
Spot TradeThe purchasing or selling of a product for its immediate delivery. These are often completed electronically.
SpreadDifference between the bid and offer price.
SPX500Another name for the S&P Index.
SquarePurchase and sales are in balance, and therefore the dealer has no open positions.
StagflationTerm to describe an economy that is characterised by slow growth and a high unemployment rate, which is accompanied by inflation. It is a combination that is tough to combat, as the cure for one of the problems tends to exacerbate the other problem.
Standard of LivingA term that is used to characterise ones quality of life, through the analysis of the quantity and quality of goods and services that are available to a population.
SterlingNickname for the British Pound, or the pound/dollar currency pair.
Sticky Wage TheoryA concept that suggests that the wage that is paid to an employee is often very slow to respond to the wider economy and also to the firms performance. If an economy is doing well (or if inflation is poor), or a company has a great performance, it will be a while before wages increase to reflect or cover this.
Stock ExchangeThe market on which securities are traded.
Stock IndexThis is the combined price of a group of stocks. It is quoted against a base number so as to allow assessment of how the companies within the index are performing. Examples are the S&P 500, FTSE 100 etc.
Stock SplitAction taken by a publicly traded company to increase the number of shares on the market. Each stock that is outstanding is split by the ratio expressed by the company.
Stop Entry OrderAn order to buy above the current price or sell below the current price. They are useful for those that believe that the market is going to move in a certain direction, and when you have a taget entry price.
Stop Loss OrderAn order to sell below the current price, or to buy above current price. They are used as risk management methods. By using them, you are limiting your downside against currently open positions. Traders often need to remember, however, that they are not garunteed, as they often don’t get triggered until a certain price is reached.
Stop OrderThis is an order to buy or sell once a certain price is reached. Once reached, the stop order becomes a market order and is executed at the best possible price. Because of events like slippage or market gaps, stop orders are not a guarunteed method of loss prevention.
Stop-Loss HuntingThe market appears to be nearing a certain level where there are believed to be lots of stops. If the stops end up being triggered, the price often jumps through the level as the stop-losses initiat lots of buying.
Strike PriceThis is the defined price at which an option holder is above to buy or sell a product.
Student Loan ForgivenessA decision often taken by a government that sees part or all of a students debt forgiven. This means that they are not required to repay the loan. This is a popular idea in most western economies due to the fact that education and the associated debt is funded by the government.
Subprime MortgageA mortgage that is issued to a homeowner that has low credit ratings. The interest rates on these loans are often higher in order to help compensate for the higher risk.
SubsidyA benefit, often financial, that is given to a person or business, by a government, either to help provide a good or service, or for them to purchase goods or services.
Sunk CostA form of cost that has already occurred and that cannot be recovered. These are important because many people take into consideration, when making choices, sunk costs, that can often mislead because people overemphasize the cost.
Supply ChainThe full network of companies and individuals that are included in the production process of a good or service, from the absolute raw material to the final customer.
SupportThis is the price which is said to act as a floor for past or future price movements.
Support LevelsOpposite of resistance. It is a technique used within technical analysis that shows a specific price range at which an exchange rate will naturally self-correct.
SurchargeA portion of price that is added to the quoted price. This added cost can be added either through tax or fees and may be related to additional services or products that may come with the initial quote.
Suspended TradingThe temporary suspension of trading of a given product.
SwapSimultaneous sale and purchase of the same amount of a currency at a forward exchange rate.
Swissie/SwissyNickname for the Swiss Franc, or the USD/CHF currency pair.
SWOT AnalysisA form of evaluation enacted by a company that is used to evaluate its competitive positon within its industry and wider economy in order to more efficiently and effectively develop a strategy for the future.
SyndicateA short term relationship between businesses or individuals that is used to conduct transactions that would not be possible if attempted individually.
Systemic RiskThis is a risk that runs throughout either an industry or an economy. If a risk is said to be systemic, it means that it may be interlinked. This means that if something goes wrong, ie a bank fails, as it did in 2008, there are wider repurcussions than that of the bank itself. If a company is said to have systemic risk, it is said to be a “too big to fail” company.
Take Profit Order (T/P)Instruction to sell or buy a currency pair. Once executed, it will result in a reduction of the size of the existing positon, and thus will show a profit on the position.
Take ProfitsLimit order places above the market price with a long position, or below the market price with a short position. Once the price is reached, the order is executed, and the profit is locked in.
Take-Home PayTerm that describes the overall amount of money that an individual has to take home at the end of the day, after taxes and other deductions have been considered.
TakeoverThe taking over of a company by buying its stock.
Tax AvoidanceThe use of legal methods to reduce the overall tax burden faced by either an individual or a company. This is often done through deductions, loopholes or credits that can reduce the taxable income.
Tax BenefitThe legal route, or law, that helps one reduce their overall tax liability.
Tax DeductibleAn item, service or asset that you can deduct from your income, which in turn will reduce your tax burden. Some assets are classed as non-deductible, meaning that it can only be taken off your income after you have paid taxes.
Tax EvasionThe illegal method of reducing ones tax liability. This can either be commited through simple failure to pay owed taxes, or reducing the taxable income through illegal means, ie hiding incomes.
Tax HavenA country that offers a lower tax rate than a domestic location. The tax rate can, but does not have to be, 0%, which attracts lots of business there, either to operate from that country, or to filter income through it instead to reduce their tax from home.
Taxation Without RepresentationA term that refers to a community or population that is required to pay taxes to a government that is not democratically elected.
Technical AnalysisProcess of using charts of past price movements to try and find clues as to the direction of future price movements.
Technical AnalysisThe attempt to predict future price momevements through the analysis of past market data. The most commonly used, as they can be used to predict future trends, are volume and price.
Technical CorrectionThis is an adjustment to prices, not due to market sentiments or actions, but due to technical factors, such as volume or charting.
Technicians/TechsThese are traders that base their actions on technical analysis or chart analysis.
Ten (10) YrUS government issued debt that is repayable in 10 years.
TenderAn invitation, offered up to various potential suppliers, to bid for a project. They are often done blind, so as to see a company’s real ability to complete a project, and the offering company will have a weighting system that helps decide who wins.
TermPeriod from the trade date to the settlement date.
Tertiary IndustryThe formal name for the sector for the economy that houses services. This applies broadly, to any services, from financial to educational, from hotels to food.
There Ain’t No Such Thing as a Free Lunch (TANSTAAFL)This is an expression that is used to describe the reality of what often appear to be free or easy decisions. It conveys the fact that whilst some things may appear to be free, they always have got some form of attached cost to them that may not be initially visible.
ThinDescription of a market that is illiquid or choppy in character.
Third WorldOld fashioned and now outdated term that applied to nations that were developing their economy, but that were not yet on par with developed economies. In todays media, these countries are now referred to as low- and middle-income nations.
Third-Party InsuranceA type of insurance that sees one as being protected from claims made by a third party. The most common type is car insurance, which means that if you hit someone, your insurance will cover the opposing parties costs, but not your own.
Thirty (30) YrUs government issued debt that is repayable in 30 years.
TickSmallest possible change in price. Also known as a pip.
Tick (Size)The size of the smallest possible change in price.
TickerThe streaming of the current or historic price of a currency pairing.
Time To MaturityTime remaining until a contract expires.
Time Value of Money (TVM)A fundemental economic concept that shows money is worth more now than it will be in the future. The reasoning is often two fold. Firstly, it is down to the earning potential of money that is left unused, and the second is due to inflation which means that the buying power of a sum of money decreases with time.
Tokyo Session9:00 – 18:00 (Tokyo).
Tomorrow Next (Tom Next)The simultaneous buying and selling of a currency that is delivarable the following day/tomorrow.
Too Big to FailTerm used to describe companies or sectors that are so ingrained within a society, that if they were to collapse, society would struggle to continue operating in the way that it has. The term was most often used during the financial crisis to describe some financial institutions that were bailed out by the governments of their countries, because if they had not been bailed out, they would have seen the collapse of the economic system.
Trade BalanceThe difference between imported and exported goods or services. Countries with a surplus often see their currency appreciate, and those with a deficit see their currency depreciate.
Trade DateDate on which a transaction/trade is entered.
Trade SanctionThese are legally enforcable sanctions that are placed on a country that aim at restricting its trade abilities.
Trade SizeThe number of units of a product that are included in a contract or lot.
Trade SurplusA measure of trade that sees a country’s exports outweigh its imports, meaning that they are bringing more money into their country that they are sending out.
Trade WarAn economic situation that sees two countries battle out their problems through trade, seeing the imposition of tarrifs on imports, trade blocks, sanctions etc.
TrademarkIt is a “mark” or sign that is often widely recognised that is used to help differentiate a product from its competitors. This trademark is legally enforcable, meaning that if anyone tries to copy a trademarked item, they are blocked by law. Because it is not a physical object, trademarks are seen to be a part of intellectual property.
Trading BidTerm used to describe a pair that is acting strong or moving higher, due to new bids entering the market.
Trading HaltA trading postponement, but not a suspension.
Trading HeavyThis is a term used to describe a market that feels like it wants to move lower.
Trading OfferedA pair is acting slow/weak, and yet offers to sell keep entering the market.
Trading RangeThis is the range between which the price of a stock usually moves. The period over which the range is referring is often quoted.
Trailing StopThis allows for a trade to keep benefitting from a beneficial price movement, no matter how small. However, the trade automatically closes if the price moves in a way that is detrimental to the trade.
Transaction CostThis is the cost of buying or selling a financial product.
Transaction DateThe date on which a trade occurs.
Transition PeriodThe period from and including the trade date through to the settlement date.
Translation ExposureThe risk faced by companies that operate across difference currencies. The risk comes from the fact that the value of an asset, liability or income can change solely due to a change in exchange rate. This risk can be positive or negative, but due to its unforseen nature, it is still a risk.
TrendThis is a term used to describe the current direction of the market, whether it is up, down or sideways.
Trickle-Down ThoeryAn economic theory that sees its subscribers give tax breaks and reliefs to the absolute wealthiest in society, claiming that by doing so, their money will go into the economy, and “trickle down” to those at the very bottom. It is a point of great contention due to the fact that it appears to place the lowest tax burden on those with the most, and also because it suggests that most economic growth comes from those at the top, as opposed to those at the bottom.
TurnoverTotal monetary value of all the executed transactions over a given time period.
Two-Way PriceThis is when a bid and offer price is quoted for a FOREX transaction.
Two-Way QuotationWhen the dealer quotes both the buying and selling rate for a FOREX transaction.
UglyDescription of unforgiving, harsh market conditions that are characterised by violent and quick movements.
Uk Average Earnings Including Bonus/Excluding BonusThis is a measure of the average wage earned by employess, both including and excluding bonuses. This measure is done quarter-on-quarter from the previous year.
Uk Claimant Count RateMeasures number of people claiming unemployment benefits. Often lower than unemployement data as not all those unemployed claim benefits.
Uk Oil*Name for Brent Crude Oil.
Uk100Name for the FTSE 100 Index.
Ultra-High Net-Worth Individual (UHNWI)Private individuals that have assets worth over $30 million. There are reported to be over half a million people that are HNWI.
Uncle SamPerfonified representation of the US. It became popular during the second world war to bolster spirits. When talked about in finance and economics, it refers to the federal tax authority.
Unconvertible CurrencyCurrency that cannot be converted for another currency because of foreign exchange regulations.
Under ReportingThe intential reporting of less income than is actually the case. The main reason for this decision is to avoid certain taxes.
UnderemploymentThe total number of people that are unwillingly working within an economy, in jobs that they don’t want to be, or because they cannot get regular full time jobs. It means that there is a given portion of the workforce that wants to work more.
Underground EconomyThe section of the economy that is deemed to be illegal and is comprised of illegal activity.
UnderlyingThe actually traded market from which the products price is derived.
Underlying AssetThe financial assets upon which various derivatives are based and tracked.
UndervaluedTerm in finance that suggests a security or financial asset is selling, on the open market, at a price that is below that at which is should be trading, according to information available to traders.
UnemploymentA situation whereby an individual is unemployed, but at the same time is seeking employment. Whilst sounding bad, unemployment is a key sign of a healthy economy.
Unemployment RateThis is a measure of the total number of people that are unemployed and seeking work. Quoted as a percentage of the total workforce.
Unemployment RateThe portion of a country’s workforce that is unemployed.
UnicornTerm that refers to a start-up company that is valued at over $1 billion. They are called unicorns due to their rarity.
Uninsurable RiskA form of risk that is, either due to lack of ability or due to lack of desire, unable to be insured.
UnitWidely used unit of currency. It is the smallest allowed trade size in FOREX.
United NationsInternational non-profit set up in 1945 in order to try and increase both economic and political interaction between member countries, by encouraging communication and interconnectedness.
Universal Healthcare CoverageOften a large part of a social welfare state, UHC is a form of health insurance policy that sees everyone pay a certain part of their income into a large pool, and regardless of the draw on the health system, it is always free. The best example is the NHS, where any and all procedures and needs by citizens on the NHS are free.
University Of Michigan’S Consumer Sentiment IndexThis is derived from a poll of 500 households per month. The questions within it are focussed around sentiment about US economy. The results are viewed as a good proxy for the strength or consumer spending.
Unlimited LiabilityThe full legal responsibility that business owners and managers face around their business liabilities. There is no limit to the liability, meaning that personal property can be taken to meet the debt.
Unrealised GainThis refers to the increase in the value of an asset, even though it has not actually been sold, and so the gain does not really exist.
Unrealised LossThis refers to the decrease in the value of an asset, even though it has not actually been sold, and so the loss does not really exist.
Unrealized Gain/LossThis is the hypothetical profits or losses that would occur if an open position was closed at the current market price.
Unsecured DebtA type of loan/debt that has no collateral, meaning that there is no real punishment for no repayment. These were popular in the years up to 2008 crash, as people didn’t thing default was a possibility. This then saw many debts being settled for far lower levels, or repayment plans existing that would theoretically take centuries to pay off.
Unskilled LabourThe part of the workforce that has a low economic value due to the lack of skill or education linked with the section.
Unusual ItemThis is a random and unexpected loss or gain that is experienced by a company, that does not form a part of what would be considered regular operation.
Unweighted IndexAn index that is comprised of a certain number of securities, but they all hold the same weight in the index, as opposed to being weighted to reflect the economy. A benefit of this, given that the same amount of money is invested in each security, is that a negative move of one security will not have a massive impact on the wider index.
UnwindAnother term that means to close out a position. It is more commonly used in reference to positions or deals that are complex and “wound” up, meaning it will take longer to pull apart.
Up-TickA transaction that is exectuded at a price greater than the previous one.
Up-Tick RuleA rule in the US whereby a security is not allowed to be sold short, unless that trade prior to the short was completed at a price lower than the price at which the short sale is being executed.
UpstartTerm referring to a person that has achieved lots of success and wealth, thus moving into a new economic and social group. However, due to their entry into this relatively new group, they are not yet accepted as one of their own.
UpstreamTerm within the oil industry that refers to the section of the production line that is more in production and extraction of the oil as opposed to refinery and sale.
US OilName for WTI Crude Oil.
US Prime RateInterest rates at which US banks will offer loans to their corporate customers.
US10YRBONDThis is the rate at which a 10yr US treasury bond is being offered. Can be a good indicator for future economic activity.
US30Name for the DOW Jones Index.
UtilityAn economic term that refers to someones satisfaction or welfare benefit that is associated with someones consumption of a good or a service. Another way of looking at it is that it is an economic term for someones happiness or contentness.
Vacancy RateTerm used in the rental market. It refers to the number, in percentages, of rental properties that are vacant from all of those that are available.
ValuationA process, that can be analytical, statistical or hypothetical, that aims to determine the worth of either an asset, security or company.
Value AddedThe increase in an object or assets economic value, that is given to said asset or object by a company before it is sold on to a customer.
Value ChainA descriptive model that shows the full mechanism for creating a product, which sees value added at each stage.
Value DateCommonly referred to as the maturity date, this is the date on which counterparties agree to fullfil their transaction obligations, ie exchanging payments.
Value TodayThis is a transaction where the date of settlement is the same as the trade date.
Value TomorrowThis is a transaction where the date of settlement is one day after the trade date.
Value-Added Tax (VAT)This is a form of consumption tax that is levied at every stage at which value is arguably added to the product. This exists from the very first part of production or extraction, through to the final point of sale to the customer.
Vanilla OptionThis is a type of option derivative that is its most basic form, ie call or put. It gives the holder the right but not the obligation, to purchase the underlying asset at a given price at a point in the future.
Variable Interest RateA type of interest rate applied to a loan that tends to fluctuate over time. The fluctuations are not random however, and are often linked to some form of variable, ie inflation.
Variable Rate MortgageType of mortgage where the interest repayments are not fixed as a percentage of the mortgage, but can fluctuate with general interest rates, often set by the country’s central bank. They will follow the variable, often outlined in the mortgage contract, with a certain margin, ie Interest Rate + 3 points.
Variation MarginThis is the requirement of traders to have enough of a margin within their accounts to cope with market fluctuations.
Venture CapitalType of private equity that sees a fund or person invest into small startup companies that they believe have long term potential growth.
Vested InterestA situation that often refers to someones personal interest or stake in an investment, outcome etc. If one is said to have a vested interest in a project, it often means that they are likely to benefit, at some point in the future, from the project.
VettingThe thorough process of investigating anyone from an individual to a company, prior to making a final choice to use or go ahead with them. Vetting is often used to get as much information on someone prior to a decision being made.
Viral MarketingA form of marketing that aims to spread information by both word of mouth, and through the internet. The aim is to get people to spread it to those that they know, which in turn can lead to an exponential growth in the number of people that are aware of the product or service.
Virtual BalanceThis is the potential account balance you would retain if all of your open positions were closed immediately.
VIX Or Volatility IndexShows the market’s expectations of 30-day volatility. It is often called the “investor fear guage”, as it can indicate market risk.
Void ContractA type of formal agreement that was at no point legally enforceable due to some reason. A void contract can be nullified at any time without consequence.
VolatilityExtent to which exchange rates change over time period.
VolatilityA measure, used in statistics, to understand the level of difference of a given set of returns for either a given security, or for an index.
VolumeNumber of securities traded during a specific period.
Volume of TradeThis refers to the total quanitity of shares, contracts or financial derivatives that are traded for a certain security. Whilst it can be an overarching view, it can also be focussed in on certain aspects of the trading market.
Voluntary BankruptcyA legal situation whereby a debtor seeks to be declared bankrupt as they are in no position to pay off a debt. This can be done by anyone, from an individual to a company. By showing good faith in declaring bankruptcy, it can be said to be an attempt to reduce damage.
Voluntary TerminationThe decision taken by an employee to leave a job on their own accord, as opposed to being terminated by a superior.
Vulture CapitalistA type of investor that aims to extract as much value from a declining company as possible. These capitalists do not aim to kill the company, but instead take companies that are at rock bottom, do anything to lift them up a bit, and then sell them to benefit from the profits.
WaiverA legal document that allows one side of a contract to forfeit a claim without being liable for the breaking of the contract.
Wanton DisregardA legal term that denotes ones extreme lack of care. Most commonly used within insurance, it is used to show blatent lack of care.
War BondDebt security issues by a government in times of war in an effort to raise money to help funding. Whilst the return was below that of the market, the government would use emotion to help raise the money.
War ChestReserves that have been put aside to use in times of chaos. Whilst some companies will use the money in times of trouble, some will use it in times of growth to help their competitive stance in the industry.
Warm CallingA form of marketing or solicitation that sees contact made with a customer with whom a relationship already exists. It is in stark contrast to cold calling.
WarrantA derivative that gives the holder the right, but not the obligation, to purchase a companies stock at a given price up to a certain date.
WarrantyA guaruntee offered by manufacturers that applies to the goods that they produce. It is to be a claim of quality, and often offers free repairs of the product if it breaks, under certain terms and conditions.
Weak Form EfficiencyThe weakest form of “Efficient Market Hypothesis” that claims past price movements don’t affect current stock prices and cannot be used to predict potential future prices.
Wealth ManagementAn advisory company that helps affluent clients manage their wealth, including property, investments etc, and it also helps their tax.
Wealth TaxA tax that is based on the market vale of the assets owned by taxpayers. Whilst not a traditional method of raising revenue, it is becoming more popular due to the increasing disparity in wealth distribution.
Wedge Chart PatternFormation that shows narrowing price ranges over time. Price highs decrease incrementally, and price declines are incrementally smaller also. An ascending wedge ends with downside breakout, and a descending wedge ends with an upside breakout.
Welfare Loss of TaxationThe loss of social welfare caused by the implementation of a new tax. Whilst it may have certain social benefits, the costs can sometime outweigh them due to foregone work etc.
Welfare StateA type of governing whereby the government will play a key role in the lives of its citizens. The role is to protect them and promote good living. It aims to lift the poor, protect the weak etc. A good example of this is unemployment benefits.
WhipsawThis is slang for a market of high volatiltiy, where price movements are often rapidly followed by a sharp reversal.
WhistleblowerSomeone that annonymously reports insider knowledge of illegal activity. They can be anyone that has anything to do with the company and its operations. In recent decades, whistleblowers have become protected under law.
White CollarA class of worker that earns higher than average salary in highly skilled work. Not often manual labour, they are often seen to wear “shirt and tie”.
WhitemailA method of corporate protection that a takeover target will employ in order to thwart potential takeover events.
Wholesale PricesThis is a measure of the change in prices paid by retailers for finished goods. Inflation is often visibly earlier here than in headlines.
WholesalingBuying goods in bulk from a manufacturer at a discounted price due to lower costs and economies of scale.
Windfall TaxA tax leveid against certain industries that benefit from unexpected economic conditions that allow companies within the industry to experience unexpectedly large profits. The tax is levied on the extra profits, not on all profits.
Window DressingA strategy that is used by retailers to attract customers into their store. They use the windows that face customers to display their best products.
Window of OpportunityTerm referring to a short period of time during which an opportunity exists. At the end of the period, the opportunity is no longer avaliable.
Winner’s CurseA common occurance which sees the winning bid at an auction exceed the intrinsic value of the good.
Wire FraudA form of fraud that is commited by using some form of telecommunications technology. In the past this would have used fax, but more and more common is now mobile phones.
Without RecourseTerm within a contract that means that, in the event of default, the suffering party cannot obtain judgement or reimbursement to return the money. This means that if this term is in the contract, the other party assumes the risk of default.
Working ClassTerm in socioeconomics that describes a person who holds a job that is seen to be low pay, need limited skill, or be a physically demanding job.
Working DayDay where the banks of the currency pairs principal financial centre are open.
Working OrderThis is where a limit order has been requested, but has not yet been fulfilled.
Working-age PopulationThe total section of a population that could, if possible, enter the workforce. It is done through age range.
World Trade Organisation (WTO)Established in 1995, the organisation aims to improve trade between all members.
Wrongful Termination ClaimA claim taken by a worker that believes that they were unjustly terminated from their job. They often believe that the termination goes against anti-discrimination laws, and so is wrongful. It can also be claimed if they believe the termination was due to sexual harassment or retaliation.
WSJAcronym for Wall Street Journal.
WTIOil benchmark used by the markets. Stands for “West Texas Intermediate”.
XAGThis is the currency of silver, also called the Silver Ounce.
Xag/UsdSymbol for the Silver Index.
XAUThis is the currency of Gold, also called the troy ounce of Gold.
Xau/UsdSymbol for the Gold Index.
XAX.XSymbol for AMEX Composite Index.
YardTrader term meaning “billion”.
YieldPercentage return on an investment.
Yo-YoA slang term for a very volatile market. Comes from the up and down motion of a yo-yo.
Young and Wealthy but Normal (YAWN)A group of individuals that are still in their potential youth (30s and 40’s), that have accrued large amounts of wealth. However, they do not spend it all on luxuries, and instead live life rather normally whilst using their money more for philanthropy.
YOY“Year on Year” or “Year over Year”. A method of measuring growth. One compares a metric or statistic to itself in the same time period, but one year prior.
YuanBase unit of Chinese currency. Remnimbi is the name of the currency (as Sterling is for Britain).
Zero-Beta PortfolioA portfolio that has been constructed to have no market risk. This means that when there is a move in the market, for every asset that sees a negative move, there will be an asset or group of assets that will move in the opposite direction, thus balancing the moves of the market.
Zero-Sum GameA situation in game thoery that sees one person make a gain, only if the other person makes a loss. Being called “zero sum” game comes from the idea that the amount that is lost by one is the amount gained by the other.
Zombie BankA financial institution that is insolvent, and operate only through some form of government support.
ZombiesA company that is able to generate just enough money to cover its operating costs and service debt payments, but that will not be able to pay off their debt and have any large degree of profit.