Accrual - The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitrage) deals, over the period of each deal.
Adjustable Peg - an exchange rate system where a country's exchange rate is "pegged" (i.e. fixed) in relation to another currency. The official rate may be changed from time to time.
Adjustment - Official action normally by either change in the internal economic policies to correct a payment imbalance or in the official currency rate
American Option - an option which may be exercised at any valid business date through out the life of the option. This differs to a european option which may only be exercised upon expiry
Appreciation - A currency is said to ‘appreciate’ when it strengthens in price in response to market demand.
Arbitrage - The purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market, in order to take advantage of small price differentials between markets.
Ask (Offer) Price - The price at which the market is prepared to sell a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can buy the base currency. In the quotation, it is shown on the right side of the quotation. For example, in the quote USD/CHF 1.4527/32, the ask price is 1.4532; meaning you can buy one US dollar for 1.4532 Swiss francs
Association Cambiste Internationale - the international society of foreign exchange dealers consisting of national "Forex clubs" affiliated on a worldwide basis.
At Best - An instruction given to a dealer to buy or sell at the best rate that can be obtained.
At or Better - An order to deal at a specific rate or better
At Par Forward Spread - when the forward price is equivalent to the spot price
Auction Market Theory - An auction market is when buyers and sellers place their orders in the same environment and then negotiate the best execution price. The execution price is determined when the buyer's and seller's orders are equal. The vast majority of global financial markets are based on an auction market. Auction Market Theory develops and clarifies the structure of short timeframe non-equilibrium auction markets. The primary variable is value, the region of price accepted by the market.
AUDUSD - Australian Dollar/ US Dollar pair
Aussie - Trader jargon referring to the Australian Dollar/ US Dollar exchange rate
Average Rate Option - a contract where the exercise price is based on the difference between the strike price and the average spot rate over the contract period. Sometimes called an "Asian option"
 

Balance of Trade - The value of a country’s exports minus its imports.
Bar - finance slang for one million dollars.
Bar Chart - A type of chart which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line of the right of the bar.
Barranjoey - a anglicisation of the aboriginal word for a young wallaby.
Base Currency - The first currency in a Currency Pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6215 then one USD is worth CHF 1.6215 In the FX markets, the US Dollar is normally considered the ‘base’ currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.
Base Price - one hundredth of a percentage point. 50 basis points [50bp] is half a percentage point.
Basis - the difference between a spot price and a futures price
Bear Call Spread - a spread designed to exploit falling exchange rates by purchasing a call option with a high exercise price and selling one with a low exercise price.
Bear Put Spread - a spread designed to exploit falling exchange rates by purchasing a put option with a high exercise price and selling one with a low exercise price.
Bear Market - A market distinguished by declining prices.
Bid Price - The bid is the price at which the market is prepared to buy a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can sell the base currency. It is shown on the left side of the quotation. For example, in the quote USD/CHF 1.4527/32, the bid price is 1.4527; meaning you can sell one US dollar for 1.4527 Swiss francs.
Bid/Ask Spread - The difference between the bid and offer price.
Big Figure - The first two or three digits of a foreign exchange price or rate. Examples: If the USD/JPY bid/ask is 115.27/32, the big figure is 115. On a EUR/USD price of 1.2855/58 the big figure is 1.28. The big figure is often omitted in dealer quotes. The EUR/USD price of 1.2855/58 would be verbally quoted as “55/58″.
BOC - Bank of Canada
BOE - Bank of England
Book - In a professional trading environment, a ‘book’ is the summary of a trader’s or desk’s total positions
Boris - slang for Russian trading
Broker - An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a ‘dealer’ commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.
Bretton Woods Agreement of 1944 - An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.
Bull Market - A market distinguished by rising prices.
Bundesbank - Germany’s Central Bank.
 

Cable - Trader jargon referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800’s
Calendar Combination - a compound option strategy which consists of simultaneous buying of a longer-term straddle and near term straddle with a common strike price.
Calendar Spread - an option position comprised of purchase and sale of two option contracts of the same type with different expiration dates at the same exercise price.
Call - (1) An option that gives the holder the right to buy the underlying instrument at a specified price during a fixed period. (2) A period of trading. (3) The right of an bond issuer to pre-pay debt and demand the surrender of its bonds.
Canadian Ivey Purchasing Managers (CIPM) Index – A monthly gauge of Canadian business sentiment issued by the Richard Ivey Business School.
Candlestick Chart - A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.
Carry - the interest cost of financing securities or other financial instruments held.
Carry-Over Charge - a finance charge associated with the storing of commodities (or foreign exchange contracts) from one delivery date to another.
Carry Trade – Refers to the simultaneous selling of a currency with a low interest rate, while purchasing currencies with higher interest rates. Examples are the JPY crosses such as GBP/JPY and NZD/JPY.
Cash Market - The market in the actual financial instrument on which a futures or options contract is based.
Cash Settlement - a procedure for settling futures contract where the cash difference between the future and the market price is paid instead of physical delivery.
Central Bank - A government or quasi-governmental organization that manages a country’s monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.
CHAPS - Clearing House Automated Payment System
Chartist - An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.
CHIPS - Clearinghouse House Interbank Payment System - a computerised system used for foreign exchange dollar settlements.
Cleared Funds - Funds that are freely available, sent in to settle a trade.
Closed Position - Exposures in Foreign Currencies that no longer exist. The process to close a position is to sell or buy a certain amount of currency to offset an equal amount of the open position. This will ’square’ the postion.
Clearing - The process of settling a trade.
Contagion - The tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high volatility in their domestic currency, the Rupiah. From there, the contagion spread to other Asian emerging currencies, and then to Latin America, and is now referred to as the ‘Asian Contagion’.
Collateral - Something given to secure a loan or as a guarantee of performance.
Commission - A transaction fee charged by a broker.
Confirmation - A document exchanged by counterparts to a transaction that states the terms of said transaction.
Construction Spending – Measures the amount of spending towards new construction, released monthly by the U.S. Department of Commerce’s Census Bureau.
Contract - The standard unit of trading.
Counter Currency - The second listed Currency in a Currency Pair.
Counterparty - One of the participants in a financial transaction.
Country Risk - Risk associated with a cross-border transaction, including but not limited to legal and political conditions.
Covered Interest Rate Arbitrage - an arbitrage approach which consists of borrowing currency A, exchanging it for currency B, investing currency B for the duration of the loan, and, after taking off the forward cover on maturity, showing a profit on the entire set of deals.
Cross Currency Pairs - A pair of currencies that does not include the U.S. dollar. For example: EUR/JPY or GBP/CHF.
Currency symbols - the seven leading floating currencies are listed below - for a full listing, please refer to our currency listing.

AUD - Australian Dollar
CAD - Canadian Dollar
CHF - Swiss Franc
EUR - Euro
JPY - Japanese Yen
GBP - British Pound
NZD - New Zealand Dollar
USD - United States Dollar

Currency - Any form of money issued by a government or central bank and used as legal tender and a basis for trade.

Currency Pair - The two currencies that make up a foreign exchange rate. For Example, EUR/USD
Currency Risk - the probability of an adverse change in exchange rates.
Current Account – The sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). The balance of trade is typically is the key component to the current account.
 

Day Trader - Speculators who take positions in commodities which are then liquidated prior to the close of the same trading day.
Dealer - An individual or firm that acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.
Declaration Date - the latest day or time by which the buyer of an option must indicate to the seller his intention to the option. Default - the latest day or time by which the buyer of an option must indicate to the seller his intention to the option.
Deficit - A negative balance of trade or payments.
Delivery - the settlement of a futures contract by receipt or tender of a financial instrument or currency.
Delivery Date - the date of maturity of the contract, when the exchange of the currencies is made. This date is more commonly known as the value date in the FX or Money markets.
Delivery Month - the calendar month in which a futures contract comes to maturity and becomes deliverable.
Delivery Points - those locations designated by futures exchanges at which the currency represented by a futures contract may be delivered in fulfilment of the contract.
Delivery Risk - a term to describe when a counterparty will not be able to complete his side of the deal, although willing to do so.
Delta - describes how much the price of an option will change when the price of the underlying asset changes by $1.00.
Depreciation - A fall in the value of a currency due to market forces.
Derivative - A contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.
Devaluation - The deliberate downward adjustment of a currency’s price, normally by official announcement.
Discount - (1) forward rate is lower than the spot rate. (2) an option that is trading for less than its intrinsic value.
Discount Rate – Interest rate that an eligible depository institution is charged to borrow short-term funds directly from the Federal Reserve Bank.
Double - an option either to buy or sell an instrument or currency at a specified price. The exercise of the right to sell causes the right to buy to expire and vice versa.
 

Economic Indicator - A government issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.
Elliot Wave Principle - a system of empirically derived rules for interpreting action in the markets. It refers to a five-wave/three-wave pattern which forms one complete bull market /bear market cycle of eight waves.
End Of Day Order (EOD) - An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.
European Monetary Union (EMU) - The principal goal of the EMU is to establish a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. On Janaury1, 1999 the transitional phase to introduce the Euro began. The Euro now exists as a banking currency and paper financial transactions and foreign exchange are made in Euros. This transition period will last for three years, at which time Euro notes an coins will enter circulation. On July 1,2002, only Euros will be legal tender for EMU participants, the national currencies of the member countries will cease to exist. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.
EURO - the currency of the European Monetary Union (EMU). A replacement for the European Currency Unit (ECU).
European Central Bank (ECB) - the Central Bank for the new European Monetary Union.
EURUSD - Euro / US Dollar pair
Exercise Notice - a formal notification that the holder of an option wishes to exercise it by buying or selling the underlying stock at the exercise price.
Exercise Price (Strike Price) - the price at which an option may be exercised.
Expiry Date - the last day on which the holder of an option can exercise his right to buy or sell the underlying security.
Exposure - the total amount of money loaned to a borrower or country. Banks set rules to prevent overexposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.
 

Factory Orders – The dollar level of new orders for both durable and nondurable goods. This report is more in depth than the durable goods report which is released earlier in the month.
FASB #8 - Financial Accounting Standards Board's Statement Number 8 - The original accounting rules regarding foreign exchange were standardised in 1975, which set the procedures for foreign currency translations into US Dollars in the consolidated balance sheets of US multinational corporations.
Federal Reserve (Fed) - The Central Bank for the United States.
Fedwire - an automated communications and settlement system linking the Federal Reserve banks with other banks and with depository institutions.
Fill or Kill - an order which must be entered for trading, normally in a pit three times, if not filled is immediately cancelled.
Finex - a currency market part of the New York Cotton Exchange (NYCE), the oldest futures exchange in New York.
First In First Out (FIFO) - Open positions are closed according to the FIFO accounting rule. All positions opened within a particular currency pair are liquidated in the order in which they were originally opened.
Flat/square - Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.
Foreign Exchange - (Forex, FX) - the simultaneous buying of one currency and selling of another.
Forward - The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.
Forward Forward - a forward / forward deal is one where both legs of the deal have value dates greater than the current spot value date.
Forward Outright - foreign exchange deal which matures on any day past the spot delivery date.
Forward Points - The pips added to or subtracted from the current exchange rate to calculate a forward price.
Forward Rate - forward rates are quoted in terms of forward points, which represents the difference between the forward and spot rates. In order to obtain the forward rate from the actual exchange rate the forward points are either added or subtracted from the exchange rate. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefore the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.
Forward Spread - (forward points or forward pips). Forward price used to adjust a spot price to calculate a forward price. It is based on the current spot exchange rate, interest rate differential and the number of days to delivery.
Fundamental Analysis - Analysis of economic and political information with the objective of determining future movements 
in a financial market.
Futures Contract - An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts - ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.
FX - Foreign Exchange.
 

G7 - The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy.
Gamma - describes how much the Delta will change with a $1.00 price change of the underlying asset. In other words, the Gamma is the Delta of the Delta
Gap - the price Gap between consecutive trading ranges (i.e. the low of the current range is higher than the high of the previous range)
GBPUSD - British Pound / US Dollar pair
Globex - a system for global after hours electronic trading in futures and options developed by Reuters for CME and CBOT for use in conjunction with various exchanges around the world.
Going Long - The purchase of a stock, commodity, or currency for investment or speculation.
Going Short - The selling of a currency or instrument not owned by the seller.
Gold Standard - the original system for supporting the value of currency issued. The way that where the price of gold is fixed against the currency it means that the increased supply of gold does not lower the price of gold but causes prices to increase.
Gold Tranche - part of the country quota for IMF members that had to be paid in gold. This was normally 25% of the quota, the remainder being in domestic currency. The Gold Tranche was automatically available to members without condition.
Golden Cross - an intersection of two consecutive moving averages which move in the same direction and suggest that the currency will move in the same direction.
Good ‘Til Cancelled Order (GTC) - An order to buy or sell at a specified price. This order remains open until filled or until the client cancels.
Gross Domestic Product - Total value of a country’s output, income or expenditure produced within the country’s physical borders.
Gross National Product - Gross domestic product plus income earned from investment or work abroad.
Gross Settlement - a process where full payment of each transaction is made rather than clearing a group of transactions as currently occurs in the FX market. A method designed to eliminate capital risk.
 

Hedge - A position or combination of positions that reduces the risk of your primary position.
“Hit the bid” - Acceptance of purchasing at the offer or selling at the bid.
 

ICCH - International Commodities Clearing House Limited, a clearing house based in London operating world wide for many futures markets.
IFEMA - International Foreign Exchange Master Agreement
IMF - International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. The IMF supports countries with balance of payments problems with the provision of loans.
IMM - International Monetary Market part of the Chicago Mercantile Exchange that lists a number of currency and financial futures.
Implied Volatility - a measurement of the market's expected price range of the underlying currency futures based on the traded option premiums.
Implied Volatility Skews - the implied volatility varies for different strikes of an option.
Implied Rates - the interest rate determined by calculating the difference between spot and forward rates.
In-the-Money - a call option is in-the-money if the price of the underlying instrument is higher than the exercise/strike price. A put option is in-the-money if the price of the underlying instrument is below the exercise/strike price.
Inconvertible Currency - currency which cannot be exchanged for other currencies, either because this is forbidden by the foreign exchange regulations.
Index Linking - the process of linking wages, social benefits payments, prices, interest rates or loan values to an economic index, usually of prices.
Indicative Quote - a market-maker's price which is not firm.
Industrial Production – Measures the total value of output produced by manufacturers, mines and utilities. This data tends to react quickly to the expansions and contractions of the business cycle and can act as a leading indicator of employment and personal income.
Inflation - continued rise in the general price level in conjunction with a related drop in purchasing power. Sometimes referred to as an excessive movement in such price levels.
Initial Margin - the margin is a returnable deposit required to be lodged by buyers and sellers with the clearing house to secure a new futures or options position.
Instruction - the specification of the banks at which funds shall be paid upon settlement.
Inter-bank Rates - the bid and offer rates at which international banks place deposits with each other. The basis of the Interbank market.
Inter-dealer Broker - a specialist broker who acts as an intermediary between market-makers who wish to buy or sell securities to improve their book positions, without revealing their identities to other market-makers.
Interest Arbitrage - switching into another currency by buying spot and selling forward, and investing proceeds in order to obtain a higher interest yield. Interest arbitrage can be inward, i.e. from foreign currency into the local one or outward, i.e. from the local currency to the foreign one. Sometimes better results can be obtained by not selling the forward interest amount. In that case some treat it as no longer being a complete arbitrage, as if the exchange rate moved against the arbitrageur, the profit on the transaction may create a loss.
Interest Parity - one currency is in interest parity with another when the difference in the interest rates is equalised by the forward exchange margins. For instance, if the operative interest rate in Japan is 3% and in the UK 6%, a forward premium of 3% for the Japanese Yen against sterling would bring about interest parity.
Interest Rate Options - an agreement permitting a party to obtain a particular interest rate, issued both OTC and by exchanges.
Interest Rate Cap - an agreement that provides the buyer of a cap with a maximum interest rate for future borrowing requirements.
Interest Rate Collar - a combination of a cap and a floor to provide maximum and minimum interest rates for borrowing or lending.
Interest Rate Floor - an agreement which provides the buyer of the floor with a minimum interest rate for future lending requirements.
Interest Rate Swaps - an agreement to swap interest rate exposures from floating to fixed or vice versa. There is no swap of the principal. It is the interest cash flows be they payments or receipts that are exchanged.
Intervention - action by a central bank to affect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.
Intra-Day limit - Limit set by bank management on the size of each dealer's Intra Day Position.
Intra-Day Position - open positions run by a dealer within the day. Usually squared by the close of the day.
Intrinsic Value - the amount by which an option is in-the-money. The intrinsic value is the difference between the exercise/strike price and the price of the underlying security.
Inverted Market - where short term instruments are trading at premiums to long term instruments.
IOM - Index and Options Market part of the Chicago Mercantile Exchange.
Inflation - An economic condition whereby prices for consumer goods rise, eroding purchasing power.
Initial Margin - The initial deposit of collateral required to enter into a position as a guarantee on future performance.
Interbank Rates - The Foreign Exchange rates at which large international banks quote other large international banks.
Intervention - Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.
Introducing Broker - A person or corporate entity which introduces customers to a broker for a fee or commission.
Investor Pyschology - click here for an overview of the four common psychological biases that investors commonly face
ISM Manufacturing Index – An index that assesses the state of US manufacturing sector by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.
ISM Non-Manufacturing – An index that survey service sector firms for their outlook, representing the other 80% of the U.S. economy not covered by ISM MANUFACTURING REPORT. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.

J Curve - a term describing the expected effect of a devaluation on a country's trade balance. It is anticipated that import bills rise before export orders and receipts increase.
Jawbone - announcements and statements by politicians or monetary authorities to influence decisions by business, consumer, or trade union sectors, often associated with forecasts and policy implications.
Jurisdiction Risk - (1) The risk inherent in placing funds in the Centre where they will be under the jurisdiction of a foreign legal authority. (2) The risk in making a loan subject to the laws of another country.

Kappa - a measure of the sensitivity of the price of an option to a change in its implied volatility.
Kiwi - Slang for the New Zealand dollar.
Knock In - a process where a barrier option (European) becomes active as the underlying spot price is in the money. Knock out has a corresponding meaning although the option may permanently cease to exist.

Ladder - dealers analysis of the forward book or deposit book showing every existing deal by maturity date, and the net position at each future date arising.
Lagging Indicator - a measure of economic activity which tends to change after change has occurred in the overall economy e.g. CPI.
Lapsed Rights - rights for which call payments have not been made by the acceptance date.
Lay Off - to carry out a transaction in the market to offset a previous transaction and return to a square position.
Leading Indicators - Statistics that are considered to predict future economic activity.
Leverage - Also called margin. The ratio of the amount used in a transaction to the required security deposit.
Liability - in terms of foreign exchange , the obligation to deliver to a counterparty an amount of currency either in respect of a balance sheet holding at a specified future date or in respect of an un-matured forward or spot transaction.
LIBOR - The London Inter-Bank Offered Rate. Banks use LIBOR when borrowing from another bank.
LIFFE - London International Financial Futures Exchange Limit Down - the maximum price decline from the previous trading day's settlement price permitted in one trading session.
Limit - (1) The maximum price fluctuation permitted by an exchange from the previous session's settlement price for a given contract. (2) In international banking the limit a bank is willing to lend in a country. (3) The amount that one bank is prepared to trade with another. (4) The amount that a dealer is permitted to trade in a given currency.
Limit Move - a price that has advanced or declined the permissible limit permitted during one trading session. Limit Order - an order to buy or sell a specified amount of a security at a specified price or better.
Limit order - An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 117.00/05, then a limit order to buy USD would be at a price below 102. (ie 116.50)
Limit Up - the maximum price advance from the previous trading day's settlement price permitted in one trading session.
Limited Convertibility - when residents of a country are prohibited from buying other currencies even though non-residents may be completely free to buy or sell the national currency. Lines - an arrangement by which a bank agrees to lend to the line holder during some specified period any amount up to the full amount of the line.
Liquidation - any transaction that offsets or closes out a previously established position.
Liquidity - The ability of a market to accept large transaction with minimal to no impact on price stability.
Local - a futures trader who normally trades on an exchange on his/her own account.
Locked Market - a market is locked when the bid price equals the asked price.
Long Dated Shorts - a forward purchase and sale with a brief uncovered position between them. This may also be referred to as long short dates.
Long - the holding of an excess of a particular currency.
Long Hedge - the purchase of futures contracts for price protection purposes, as a defensive position against an increase in cash prices, or falling interest rates.
Long position - A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.
Lot - A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

M1 - cash in circulation plus demand deposits at commercial banks. There are variations between the precise definitions used by national financial authorities.
M2 - includes demand deposits time deposits and money market mutual funds excluding large CDs.
M3 - in the UK it is M1 plus public and private sector time deposits and sight deposits held by the public sector.
M4 - in the US it is M2 plus negotiable CDs.
Macroeconomics - Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance.
Maintenance Margin - the minimum margin which an investor must keep on deposit in a margin account at all times in respect of each open contract.
Make a Market - a dealer is said to make a market when he or she quotes bid and offer prices at which he or she stands ready to buy and sell.
Managed Float - when the monetary authorities intervene regularly in the market to stabilise the rates or to aim the exchange rate in a required direction.
Manufacturing Production – Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only measure the 13 sub sectors that relate directly to manufacturing. Manufacturing makes up approximately 80% of total Industrial Production.
Margin - The required equity that an investor must deposit to collateralize a position.
Margin Call - A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the customer.
Market Maker - A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.
Market Risk - Exposure to changes in market prices.
Mark-to-Market - Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.
Marginal Risk - the risk that a customer goes bankrupt after entering into a forward contract. In such an event the issuer must close the commitment running the risk of having to pay the marginal movement on the contract.
Mark-up - premium.
Market Amount - the minimum amount conventionally dealt for between banks.
Market Order - an order to buy or sell a financial instrument immediately at the best possible price.
Marshall-Lerner - a model that states that if the sum of the elasticity's of demand for a country's and that of the imports exceed one, then devaluation will have a positive effect upon the trade balance.
Marry - where a dealer is able to match two customer deals which off set one another.
Matched Book - if the distribution of the maturities of a banks liabilities equal that of its assets , it is said to be running a matched book.
Matching - the process of ensuring that purchases and sales in each currency and deposits given and taken in each currency are in balance, by amount and maturity.
Matching Systems - electronic systems duplicating the traditional brokers market. A price shown by a bank is available to all trades.
Maturity Date - (1) The last trading day of a futures contract. (2) Date on which a bond matures, at which time the face value will be returned to the purchaser. Sometimes the maturity date is not one specified date but a range of dates during which the bond may be repaid.
Mid-price or Middle Rate - the price half-way between the two prices, or the average of both buying and selling prices offered by the market makers.
Minimum Price Fluctuation - the smallest increment of market price movement possible in a given futures contract.
Minimum Reserve - reserves required to be deposited at central banks by commercial banks and other financial institutions. Sometimes referred to as Registered Reserves.
Mismatch - (1) A mismatch between the interest rate maturities of a banks assets and liabilities. (2) Forward purchases differ in the value date from the forward sales in a given currency.
MITI - Japanese ministry of International Trade & Industry.
MM - Money Markets.
Monetarism - a school of economics which believes that strict control of money supply is the principal tool for implementing monetary policy, especially against inflation. Policies include cuts in public spending and high interest rates.
Monetary Base - currency in circulation plus banks' required and excess deposits at the central bank.
Monetary Easing - a modest loosening of monetary constraint by changing interest rate, money supply, deposit ratios.
Monetary Policy - a central bank's management of a country's money supply. Economic theory underlying monetary policy suggests that controlling the growth of the amount of money in the economy is the key to controlling prices and therefore inflation. However, central banks' monetary capability is severely limited by global money movements. This forces them to use the indirect tool of exchange rate manipulation.
Monetary Union - an agreement between countries to maintain a fixed exchange rate between their currencies. A process which the EMS is intended to lead to, especially after the Maastricht Treaty.
Money Market - a market consisting of financial institutions and dealers in money or credit who wish to either borrow or lend.
Money Market Operations - comprises the acceptance and re-lending of deposits on the money market.
Money Supply - the amount of money in the economy
Most Favoured Nation (MFN) - an undertaking to give the rate of tariff concession offered to members of the GATT. More concessionaire rates can exist.
Moving Average - a way of smoothing a set of data, widely used in price time series.
Maturity - The date for settlement or expiry of a financial instrument.
MPC - Monteary Policy Committee (Bank of England)

Net Position - The amount of currency bought or sold which have not yet been offset by opposite transactions.
NZDUSD - New Zealand Dollar / US Dollar pair

Offer (ask) - The rate at which a dealer is willing to sell a currency. See Ask (offer) price
Offsetting transaction - A trade with which serves to cancel or offset some or all of the market risk of an open position.
One Cancels the Other Order (OCO) - A designation for two orders whereby one part of the two orders is executed the other is automatically cancelled.
Open order - An order that will be executed when a market moves to its designated price. Normally associated with Good ’til Cancelled Orders.
Open position - An active trade with corresponding unrealized P&L, which has not been offset by an equal and opposite deal.
Over the Counter (OTC) - Used to describe any transaction that is not conducted over an exchange.
Overnight Position - A trade that remains open until the next business day.
Order - An instruction to execute a trade at a specified rate.

Pips - The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.
Point of Control ("PoC") - The price point that attracted the most interest during a trading period. A Naked Point of Control is a previously established PoC that has not been transacted on or revisited in the last 7 days, and can act as a key level of support or resistance.
Political Risk - Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.
Position - The netted total holdings of a given currency.
Premium - In the currency markets, describes the amount by which the forward or futures price exceed the spot price.
Price Transparency - Describes quotes to which every market participant has equal access.
Profit /Loss or “P/L” or Gain/Loss - The actual “realized” gain or loss resulting fromtrading activities on Closed Positions, plus the theoretical “unrealized” gain or loss on Open Positions that have been Mark-to-Market.
Purchasing Managers Index - an outlook of purchasing managers. Such managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Readings above 50 generally indicate expansion, while reading below 50 suggest economic contraction.

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

Rally - A recovery in price after a period of decline.
Range - The difference between the highest and lowest price of a future recorded during a given trading session.
Rate - The price of one currency in terms of another, typically used for dealing purposes.
RBA - Reserve Bank of Australia
RBNZ - Reserve Bank of New Zealand
Resistance - A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.
Retail Sales – Measures the monthly retail sales of all goods and services sold by retailers based on a sampling of variety of different types and sizes. This data gives a look into consumer spending behavior, which is a key determinant of growth in all major economies.
Revaluation - An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.
Rho - describes how an option price will change if the interest rate changes by 1%
Risk - Exposure to uncertain change, most often used with a negative connotation of adverse change.
Risk Management - the employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.
Roll-Over - A rollover is the simultaneous closing of an open position for today’s value date and the opening of the same position for the next day’s value date at a price reflecting the interest rate differential between the two currencies. The spot forex market is traded on a two-day value date. For example, for trades executed on Monday, the value date is Wednesday. However, if a position is opened on Monday and held overnight (remains open after 1700 ET), the value date is now Thursday. The exception is a position opened and held overnight on Wednesday. The normal value date would be Saturday; because banks are closed on Saturday the value date is actually the following Monday. Due to the weekend, positions held overnight on Wednesday incur or earn an extra two days of interest. Trades with a value date that falls on a holiday will also incur or earn additional interest.
Round trip - Buying and selling of a specified amount of currency.

Settlement - The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.
Short Position - An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.
Simple Moving Average (SMA) – A simple average of a pre – defined amount of price bars. For example, a 50 period Daily chart SMA is the average closing price of the previous 50 daily closing bars. Any time interval can be applied here.
Spot Price - The current market price. Settlement of spot transactions usually occurs within two business days.
Spread - The difference between the bid and offer prices.
Square - Purchase and sales are in balance and thus the dealer has no open position.
Sterling - slang for British Pound.
Stop Loss Order - Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor’s position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49. 
Support Levels - A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.
Swap - A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.
Swissy - Market slang for Swiss Franc.

Technical Analysis - An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.
Theta - describes how the option price will change when 1 day of time has passed, and we are now 1 day closer to expiration of this option
Tick - A minimum change in price, up or down.
Tomorrow Next (Tom/Next) - Simultaneous buying and selling of a currency for delivery the following day.
Trade Balance – Measures the difference in value between imported and exported goods and services. Nations with trade surpluses (exports greater than imports), such as Japan, tend to see their currencies appreciate, while countries with trade deficits (imports greater than exports), such as the US, tend to see their currencies weaken.
Tradestation - Is a professional electronic trading platform for financial market traders. It provides extensive functionality for receiving real-time data, displaying charts, and entering investment positions. Although it comes with a large number of pre-defined indicators, individuals can create and display their own using the built-in EasyLanguage programming language. TradeStation supports the development, testing and automation of all aspects of trading. Trading strategies can be back-tested and refined against historical data before being turned on and traded "live."
Transaction Cost - the cost of buying or selling a financial instrument.
Transaction Date - The date on which a trade occurs.
Turnover - The total money value of all executed transactions in a given time period; volume.
Two-Way Price - When both a bid and offer rate is quoted for a FX transaction.

Unemployment Rate – Measures the total workforce that is unemployed and actively seeking employment, measured as the percentage of the labor force.
Unrealized Gain/Loss - The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains’ Losses become Profits/Losses when position is closed.
Uptick - a new price quote at a price higher than the preceding quote.
Uptick Rule - In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.
USDCAD - US Dollar / Canadian Dollar pair
USDCHF - US Dollar / Swiss Franc pair
USDJPY - US Dollar / Japanese Yen pair
US Prime Rate - The interest rate at which US banks will lend to their prime corporate customers.

ValueArea - ValueArea is depicted by trimming 15% from the bottom and top of a trading range/ distribution of volume by price (i.e. where 70% of trades takes place). The upper level is called the "ValueArea High" or VaH, and the lower level is called the "ValueArea Low" or VaL. These levels act as key levels of support and resistance.
Value Date - The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.
Variation Margin - Funds a broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavorable price movements.
Vega - describes how the option price will change if the volatility of the underlying asset changes by 1%
VIX or Volatility Index – Shows the market’s expectation of 30 – day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge”.
Volatility (Vol) - A statistical measure of a market’s price movements over time.

Wedge Chart Pattern – Chart formation that shows a narrowing price range over time, where price highs in an ascending wedge are incrementally less, or in a descending wedge, price declines are incrementally smaller. Ascending wedges typically conclude with a downside breakout, and descending wedges typically terminate with upside breakouts.
Whipsaw - slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.
Wholesale Prices – Measures the changes in prices paid by retailers for finished goods. Inflationary pressures typically show up here earlier than the headline retail.

Yard - Slang for a billion.