Account History : Listing of all transactions (trading and non-trading) completed for a given account.

Accounting Currency : Currency in which account deposit/withdrawal operations are denominated. Not to be confused with the currencies ultimately bought or sold with account funds.

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

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

Aggregate Risk : Can very depending on context, but generally defined as the amount of exposure a customer has to the (potential) movement of spot and forward rates.

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

Aggressor : A trader that has committed to the existing price in the market.

Agio : An archaic term used to describe the difference/premium between the official rate and the market rate.

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

American Option : An (currency) option which may be exercised at any time prior to expiration.

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

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

Around : Dealer jargon used to quote the forward premium/discount. For example, "two-two around" would translate into 2 points on either side of the present spot value.

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

Asset Allocation : Investment practice that divides funds among different types of securities/vehicles/markets in order to achieve a return that is calibrated to an investor�s risk profile.

Association Cambiste International : The worldwide affiliation of foreign exchange dealers that together make most of the market for forex trading.

At Best : An type of order to buy or sell at the best rate that is currently available in the market.

At or Better : A type of order to deal at or above (whichever is available) a given price.

At Par Forward Spread : Describes a scenario in which the forward price (for a given time period) is equivalent to the spot price.

At the Price Stop-Loss Order : A type of stop-loss order that must be executed at the requested price regardless of "market conditions."
At-the-Money : Describes an option whose strike/exercise price is equal to (or close to) the current market price of the underlying security.

Auction : Sale of securities to the highest bidder(s). In finance, it is mainly used by governments for the allocation of foreign exchange and government paper, such as US Treasury Bills. Sometimes, auctions are conducted in terms of yield, rather than price.

Aussie : Slang term for the Australian dollar.

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

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

Back Office : The departments and processes related to the settlement of financial transactions.

Back to Back : Transaction where a loan is made in one currency against a loan denominated in another currency.

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

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

Balance sheet : Financial statement showing a company�s assets, liabilities, and shareholders� equity on a given date.

Bank Line : A Line of credit provided by a bank.

Bank Notes : Issued as legal tender; while they can sometimes be converted into currencies, they are generally excluded from the forex market.

Bank of England : Central Bank for the UK, whose actions directly weigh on the value of the Pound Sterling.

Bar Chart : A chart type consisting of four points: high price and low price (represented by a vertical bar), opening price (represented by a small horizontal line to the left of the bar), and closing price (represented by small horizontal line to the right of the bar).

Barrier Option : A type of option whose value/survival depends on whether the underlying security.currency breaks a predetermined price level at any time during the life of the option. Depending on market conditions, it is variously referred to as Down and Out call/put, Down and in call/put, Up and out call/put, and/or Up and in call/put.

Base Currency : Currency in which the operating results of the bank or institution is reported.

Base currency : The base currency is the first currency in a currency pair, and the currency that remains constant when determining a currency pair's price. The United States Dollar (USD) and the European Union Euro(EUR) are the dominant base currencies in terms of daily traded volume in the foreign exchange market. The British Pound (GBP), also called sterling or cable, is the third ranking base currency. The USD based pairs are USD/JPY, USD/CHF and USD/CAD; the Euro based pairs are EUR/USD, EUR/JPY, EUR/GBP, and EUR/CHF. The GBP is the base for GBP/USD and GBP/JPY. The Australian Dollar (AUD) is its own base against the USD (AUD/USD).

Basis : Difference between the cash price and futures price.

Basis : The difference between the spot price and the futures price.

Basis Convergence : The process whereby the basis tends towards zero as the contract expiration date nears.

Basis Point : One per cent of one per cent. For example, 25 basis points is equal to .25%.

Basis point : One hundredth of a percentage point.

Basis Price : The price expressed in terms of yield-to-maturity or rate of return, rather than the actual unit price.

Basis Trading : The practice of taking opposing positions in the spot and futures markets with the goal of profiting from favorable changes between the two.

Basket : Group of currencies (as opposed to one single currency) normally used to peg/manage the exchange rate of another currency.

Bear Market : While precise standards vary, refers generally to prolonged period of falling asset prices.

Bear Put Spread : An options strategy that seeks to capitalize on a depreciating currency by buying a put option with a high strike price and selling one with a low strike price.

Bear(ish) : Describes an an investor who believes that asset prices will fall.

Bid /Ask Spread : The difference between the bid and offer (ask) prices; also known as a two-way price.

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

Big Figure : Refers to the first three digits of an exchange rate, such as the 2.30 in 2.3025. The big figure is often omitted in dealer quotes, such that a quote of "25/30" on dollar mark would indicate a price of 2.3025/2.3030.

Bilateral Clearing : In a system of limited foreign currency, payments are usually routed through the central bank, which is also charged with clearing the balance of payments.

Black-Scholes Model : The most common option pricing formula, which is based on a set of ideal assumptions that pertain mostly to the underlying security/currency.

Bollinger Bands : Technical analysis tool used to measure the highness or lowness of the price relative to previous trades, consisting of three bands: middle band (simple moving average), upper band (given number of standard deviations above the middle band), and lower band (given number of standard deviations below the middle band)
Book : Summary of a (professional) trader�s total positions; may also include gains and losses.

Booked : Refers to the location where the transaction is recorded, which may differ from the location/country of negotiation.

Break Even Point : The price at which the option buyer recovers the necessary premium paid, resulting in neither loss nor gain. With a call option, the break even point is simply the premium plus the strike price.

Break of Which (BOW) : Based on a series of predetermined levels, this describes the belief that if a price breaks a specific level, it will move towards the next level, and continue (upwards or downwards) if it then breaks through that level.

Break Out : Describes a technical scenario in which a currency/security is seen to have exited a pre-existing pattern, such as a range or other trend.

Breakaway Gap : Price gap that forms following breakout which often represents a (temporary) pricing inefficiency following a long period of consolidation.

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

Broken Dates/Period : Describes deals involving non-standard periods.

Broker : An agent who executes orders to buy and sell currencies either for a commission or based on a bid/ask spread. In the foreign exchange market, brokers essentially serve as intermediaries between banks. This commission is known as the brokerage fee.

Bull Market : While precise standards vary, refers generally to prolonged period of rising asset prices.

Bull Spread : An options strategy that seeks to capitalize on a (moderate) rise in exchange rates, executed typically by buying a call option with a low strike price and selling one with a high strike price. Also known as Buying the Spread.

Bull(ish) : Describes an an investor who believes that asset prices will rise.

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

Bullion : Refers to gold bars, as opposed to coins or indirect ownership of gold.

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

Butterfly Spread : An options strategy in which options with different expiration dates and strike prices are bought and sold simultaneously against each other.

Buyer/Taker : Refers to the buyer/holder of an option, who has the right
Cable : Refers to the Sterling/US Dollar exchange rate.

Cable : Trader term for the British Pound Sterling referring to the Sterling/US Dollar exchange rate. Term began due to the fact that the rate was originally transmitted via a transatlantic cable starting in the mid 1800's.

Calendar Spread : Options strategy which involves the purchase of futures/ options of an underlying market expiring in some named month, and the simultaneous sale of other futures/options of the same underlying market and the same striking price in a different month.

Call Option : Contract in which the buyer has the right
Cancel : To delete a previous order before it has been executed.

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

Cap/Ceiling : Maximum rate of interest that can be charged under a loan. Opposite of a floor.

Capacity Utilization : Indicator of inflation released by the Federal Reserve Bank, which measures the percentage of available resources being utilized by factories, mines and utilities.

Capital : Financial assets, or the financial value of assets such as cash.

Capital Account : One of two primary components of the balance of payments, the other being the current account. It is the net result of public and private international investment flowing in and out of a country, and includes foreign direct investment, portfolio investment, and other investments.

Capital Gains : Profit made when any asset is sold; used primarily for tax purposes.

Carry Grid : A detailed trading schematic designed to profit from a carry trading strategy.

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

Cash Market : Spot market, as opposed to the futures market.

Cash on Deposit : Total funds deposited in a trading account.

Cash Transaction : Same day settlement for a currency transaction. Also known as Value Today.

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

Central bank : The principal monetary authority of a nation, controlled by the national government. It is responsible for issuing currency, setting monetary policy, interest rates, exchange rate policy and the regulation and supervision of the private banking sector. The Federal Reserve is the central bank of the United States. Others include the European Central Bank, Bank of England, and the Bank of Japan.

Central Bank Intervention : Refers to a central bank buying or selling its own currency on the spot market in order to bring about a desired exchange rate.

Certificate of Deposit (CD) : Time deposit offered by banks with a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.

Channel : Uptrend, downtrend, or sideways trend whose boundaries can be marked clearly by two or more straight lines. A break above/below the channel signals a possible change of trend.

Chartist : One who takes a technical approach to trading, relying on charts and graphs (and their associated indicators) to discern trends and predict future price movements.

Chooser Option : Type of option where the holder can choose whether the option is a call or a put during the life of the option.

Clean Float : Exchange rate regime in which the rate is determined only by market forces, with no central bank intervention.

Cleared Funds : Settled funds that are freely available for trading.

Clearing : The process of settling a trade.

Clearing House Automated Payment System (CHAPS) : Forex settlement system used in the UK.

Clearing House Interbank Payment System (CHIPS) : International wire transfer system used by major banks.

Closed Position : The result of closing a position, in which an equal/offsetting trade is made to eliminate one�s exposure to a given currency pair. For example a position of 100 GPB/USD can be closed by buying 100 USD/GPB.

Closing Market Rate : The market rate at the end of the day.

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

Coincident Indicator : A type of economic indicator that moves in line with the general business cycle. GDP is an example of a coincident indicator.

Collateral : Asset used to secure a loan.

Commission : Transaction fee charged by a broker.

Commitments : Denotes the total number of derivative contracts, like futures and options, that are currently active on a specific underlying security. Also known as Open Interest.

Commodity Futures Trading Commission (CFTC) : Independent agency of the US government, charged with regulating commodity, currency, and financial futures and options.

Compound Option : An option, where the underlying instrument is another option. A compound option then has two expiration dates and two strike prices.

Confirmation : Written correspondence that details the terms of a given trade, including date/time of execution, quantity, price, and commission.

Construction Spending : Closely watched economic indicator released monthly by the U.S. Department of Commerce� that benchmarks spending towards new construction.

Consumer Confidence : The degree of optimism that consumers feel about the overall state of the economy and their respective personal financial situations. Consumer Confidence is indexed and gauged using surveys, the most famous of which is conducted by the University of Michigan.

Consumer Price Index (CPI) : One of the most closely watched national economic statistics, CPI measures a price change for a constant market basket of goods and services from one period to the next within the same area.

Contagion : The phenomenon whereby an economic crisis spreads from one region/economy/market to another.

Contango : Refers to a an upward-sloping curve for forwards prices. For example, contango is said to occur when the future price of a commodity is higher than the current/spot price.

Continuation : Extension of the existing trend.

Continuous Linked Settlement (CLS) : System for settling foreign exchange transactions between major banks that purports to to eliminate settlement risk.

Contract (Lot) : Trading unit. A standard lot in the forex market is $100,000. A mini lot is $10,000.

Contract for difference (CFD) : Agreement between a client and a provider to exchange the difference between the opening and the closing value of the contract.

Conversion : The process by which an asset or liability denominated in one currency is exchanged for an asset or liability denominated in another currency.

Conversion Rate : Another term for exchange rate.

Convertible Currency : Any currency that can be exchanged for another without special permission. Almost all of the world�s major currencies are fully convertible, with the notable exception of the Chinese Yuan.

Co-Owner : Secondary account holder.

Copey : Slang term for the Danish Krone.

Correction : Partial reversal in the existing trend, or a pullback after a sudden, large move to compensate for an overreaction.

Correlation : Measure of the degree to which changes in two variables/assets are related. The standard measure of correlation is the correlation coefficient, a number between -1 and one that indicates the strength and direction of a linear relationship between two variables. A correlation coefficient of -1 indicates that they are perfectly negatively correlated. A correlation coefficient of one means that they are perfectly correlated.

Correspondent Bank : Foreign bank that performs services for another bank that has no branch in the foreign location.

Counter Currency : Currency listed second in a Currency Pair. For example, in USD/GPB, Pound Sterling is the counter currency. Also known as Quote Currency.

Counterparty : One of the participants in a financial transaction.

Countervalue : Value of the counter currency in a forex trade. For example, in a trade involving the purchase of a currency against the US Dollar, the countervalue is the total USD amount of the transaction.

Country Risk : Refers to the likelihood that changes in the business environment adversely affect operating profits or the value of assets in a specific country. These changes could be the result of financial or political factors.

Covariance : A measure of how two random variables behave in relation to each other. It differs from correlation in that it incorporates measurements of the magnitude of the variations, as opposed to the correlation coefficient which is dimensionless.

Cover on a Bounce : Recommendation to close a trade based on a predicted "bounce" off an important resistance level.

Cover on Approach : Recommendation to close a trade based on a predicted approach off an important support level.

Covered Call : An options strategy in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other securities.

Crawling Peg : A type of exchange rate regime in which the rate is fixed/pegged, but adjusted periodically.

Credit Default Swap : Financial contract in which the seller of risk pays a periodic fee on the notional amount of a reference obligation, in return for a payment in the event of default.

Credit Risk : Risk that a borrower will not repay a loan on time. Often referred to as "Default Risk."
Credit Spread : Interest margin over the relevant benchmark representing the additional interest paid by the issuer to account for the incremental risk of the issuer over the risk-free rate.

Cross rates : An exchange rate between two currencies. The cross rate is said to be non-standard in the country where the currency pair is quoted. For example, in the US , a GBP/CHF quote would be considered a cross rate, whereas in the UK or Switzerland it would be one of the primary currency pairs traded.

Cross-Rate : Exchange rate derived by "triangulating" two separate exchange rates, used when two currencies cannot exchanged directly, but only through a third-party currency, such as the US Dollar. Also refers to any exchange rate/pair that does not include one�s home currency.

Cup with Handle : Technical pattern used to predict the beginning of an upward trend. A pattern that begins to curve upward and reaches the "cup line" is believed to indicate bullishness.

Currency : A country's unit of exchange issued by their government or central bank whose value is the basis for trade.

Currency (exchange rate) risk : The risk of incurring losses resulting from an adverse change in exchange rates.

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

Currency Pair : Two currencies used to create an exchange rate.

Currency Risk : Possibility that currency depreciation will negatively affect the value of one�s assets, especially those denominated in foreign currency.

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

Currency Symbol : Three-Letter code used to abbreviate/designate a currency.

Current Account : One of the two primary components of the balance of payments, the other being the capital account. It is 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).

Custodian : Bank, individual, or other organization responsible for safeguarding an individual�s financial assets or specific account.

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

Daily Charts : Charts that encapsulate daily price movements for a given currency pair.

Daily Cut-Off : The designated time of day chosen by a dealer to demarcate the end of one trading day and the beginning of the next, necessary because forex markets operate 24 hours per day.

Day Order : Buy or sell order that automatically expires at the end of the current trading day.

Day Trading : An approach to trading which involves entering and closing trades on the same day or trading session.

Deal Blotter : List of all transactions completed on a given trading day.

Deal Ticket : Dealer record of the basic details of a transaction, differing slightly from the statement received by the customer.

Dealer : Individual or firm that acts as a principal in 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 to brokers, which serve as mere intermediaries, dealers are exposed to some risk.

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

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

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

Deflator : An adjustment which turns nominal GDP into real GDP, by taking inflation into account.

Delivery : Refers to the (physical or electronic) exchange by buyer and seller of two given currencies.

Delta : Rate of change of an option price with respect to changes in the underlying asset value.

Demo Account : Free forex practice account that allow beginners (or veterans) to measure the profits from hypothetical trades.

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

Depth of Market : The volume of buy and sell orders waiting to be transacted for a particular currency pair at a particular point in time.

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

Descending Triangles : Trading pattern consisting of two or more comparable lows forming a horizontal line at the bottom. When support on the lower rung of the triangle is broken, it is believed to signal bearishness.

Details : The information necessary to execute a forex transaction, including currency pair, rate, time/date, and size.

Deutschmark : Former currency of Germany, phased out (and replaced by the Euro) when Germany joined the European Union.

Devaluation : A deliberate depreciation of a currency (relative to one or more other currencies), usually affected by the Central Bank.

Devaluation : Lowering of the value of a country's currency relative to the currencies of other nations. When a nation devalues its currency, the goods it imports become more expensive, while its exports become less expensive abroad and thus more competitive.

Direct Quote : A quote that indicates variable units of domestic currency per fixed units of foreign currency.

Dirty Float (Managed Float) : Exchange rate regime in which the currency is not pegged outright, but is instead "managed" by the Central Bank with the professed goal of preventing wild fluctuations in the exchange rate.

Discount Rate : Interest rate that an eligible depository institution is charged to borrow short-term funds directly from the Federal Reserve Bank.

Discount Spread : Refers to the situation whereby the bid price of a forward spread rate is less than the ask price.

Discretionary Account : Type of account whereby a customer allows an institution to make trading decisions on his or her behalf.

Disinflation : Slow-down in the inflation rate (i.e. when the inflation decreases, but still remains positive).

Divergence : Describes the phenomenon whereby a technical indicator and corresponding price chart don�t yield the same peaks/bottoms. It usually indicates trend "exhaustion."
Diversified Carry Basket : Type of trading strategy in which several carry trades are made/held simultaneously, in order to limit losses/risk from one particular carry trade position.

Double Barrier Option : A type of option incorporating two knock out or knock in levels, one either side of spot, used by participants that have strong views on both a support and a resistance level.

Double Top and Bottom : Trading pattern consisting of upper and lower limits that have been touched twice, but never breached. It is usually interpreted as a sign of uncertainty. However, when the currency breaks out of the range, the movement is expected to be significant.

Dow Theory : One of the ideas underpinning the field of technical analysis, positing that all major trends can be sub-divided into three phases: entrance, acceleration, and consolidation.

Drawdown : A drop in the value of an account, calculated by subtracting the low from the peak.

Drawdown : The magnitude of a decline in account value, either in percentage or dollar terms, as measured from peak to subsequent trough. For example, if a trader's account increased in value from $10,000 to $20,000, then dropped to $15,000, then increased again to $25,000, that trader would have had a maximum drawdown of $5000 (incurred when the account declined from $20,000 to $15,000) even though that trader's account was never in a loss position from inception.

Dual Currency Service : Foreign exchange instruments that let investors place funds into a product that speculates on the movement of the exchange rate between two major currencies.

Dual Currency Swap : Type of swap used to hedge dual currency bonds in which the issuer has the option to repay principal and coupon in either the base currency or an alternative currency at a pre-agreed exchange rate.

Dual Exchange Rate : Situation in which there is an official exchange rate and an parallel "black market" rate. Also known as Two-Tier Market.

Durable Goods Orders : Monthly government report which measures consumer spending on long-term purchases, products that are expected to last more than three years. It is designed to gauge the health of the manufacturing industry.

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

Econometrics : A branch of economics which seeks to develop and apply quantitative or statistical methods to the study and elucidation of economic/financial principles.

Economic Calendar : Type of calendar that is intended to inform financiers and traders about the scheduled major economic indicators, government reports and speeches by influential people.

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

Effective Exchange Rate : Use of trade/current account balance to derive a country�s "fair" exchange rate
Efficient Market Theory : Notion that financial markets are "informationally efficient", or that prices on traded assets already reflect all known information and past prices, and instantly change to reflect new information.

EFT : Electronic Funds Transfer.

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

End of day (mark to market) : Mark-to-market values a trader's open position at the end of each working day using the closing market rates or revaluation rates. Generally the revaluation rates are market rates at 5pm EST time. Any profit or loss is booked and the trader will start the next day with the position valued at the prior day's closing rate.

End of the Day (Mark to Market) : Type of accounting process, whereby the value of asset(s) are recorded at the end of each trading day based on the closing rate/price.

Envelopes : While Bollinger Bands place boundary lines based on standard deviations, envelopes place lines at fixed percentage points above and below a moving average line, designating entry and exit points for trades.

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

Escrow Account : Segregated account which seeks to separate customer deposits from dealer operating funds.

Euro : Official currency of 16 of the 27 member states of the European Union. The states, known collectively as the Eurozone, are Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. The euro is the second largest reserve currency and the second most traded currency in the world after the US Dollar.

Euro : The currency of the European Monetary Union (EMU), which replaced the European Currency Unit (ECU). The countries currently participating in the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Greece, Italy, and Spain.

Euro Interbank Offered Rate (Euribor) : Rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank.

Eurobond : Bond in US dollars or other currency that is sold to investors who don�t reside in the country whose currency is used.

Eurocurrency : Currency that is deposited in a financial institution located outside the region where the currency is primarily used.

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

European Central Bank (ECB) : Central Bank for the new European Monetary Union.

European Union : Economic and political union of 27 member states, located primarily in Western Europe.

European-style Option : An option or covered warrant that may be exercised only on the date of expiration.

Excess Margin Deposits : Deposited funds in a trading account above and beyond basic margin requirements.

Exchange rate : The price of one currency stated in terms of another currency. Example
Execution : Completion of a trade.

Exercise : Action by a holder taking advantage of a privilege or right (to buy a security/asset) offered by a company or other financial institution. This includes warrants, options, and other financial instruments.

Exotic Option : Derivative which has features making it more complex than commonly traded products (vanilla options). These products are usually traded over-the-counter (OTC), or are embedded in structured notes.

Exotics : Currencies that are not actively traded; used in contradistinction to "major currencies."
Expiration Date : Date after which a financial contract or derivative is no longer valid.

Exponential Moving Average (EMA) : Compared to a simple moving average, which distributes weight equally across a data series, exponential moving averages afford greater weight to recent prices/data.

Exposure : Net of all long and short positions for a particular currency (pair).

Face Value : Value of a bond to be paid out at maturity. Also known as Par Value.

Factory Orders : Economic indicator that measures new orders for both durable and nondurable goods.

Fast Market : Strong pressure in the market, in which prices are moving too quickly to be disseminated.

Federal Deposit Insurance Corporation (FDIC) : US regulatory agency charged with regulating US banks. The FDIC provides insurance up to $100,000 per account.

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

Federal Open Market Committee (FOMC) : Committee made up of Federal Reserve members, which meets eight times a year to discuss/ implement monetary policy.

Federal Reserve Bank (Fed) : The central bank of the United States, responsible for using monetary policy to promote economic growth and price stability.

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

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

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

Fill : Execution of an order to buy or sell.

Fill or Kill : Type of order which is either completed or rejected in full.

Fill Price : Price at which a buy or sell order is executed.

Financial Services Authority (FSA) : Agency designated by the UK Treasury to regulate the UK financial industry.

Firm Quote : Order to buy or sell a security/currency that is not subject to cancellation.

First In First Out (FIFO) : Account rule that dictates all positions opened within a particular currency pair are liquidated in the order in which they were originally opened.

Fiscal Policy : Refers to tax policy, government spending, and other government initiatives directed at optimizing economic performance.

Fisher Effect : Theory that money moves from low-yielding currencies into higher-yielding currencies, as investors chase higher interest rates.

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

Fixed exchange rate : A country's decision to tie the value of its currency to another country's currency, gold (or another commodity) , or a basket of currencies . In practice, even fixed exchange rates fluctuate between definite upper and lower bands, leading to intervention.

Fixing : A method used to determine rates/prices that seeks to balance buying and selling pressure.

Flag and Pennant : Trading pattern characterized by an upward movement with a large slope followed by a period of consolidation. It is considered a bullish pattern overall, as the pattern is expected to continue rising.

Flat on a failure : Recommendation to take profits on a long trade if the exchange rate tests but fails to break through a specified level.

Flat/Square : A situation in which a position is closed, or two positions exist that cancel each other out.

Floating Interest Rate : An interest rate that adjusts in accordance with market forces. Opposite of a fixed interest rate.

Floor : Lowest acceptable limit as restricted by controlling parties. Opposite of a cap.

Floortion : A type of compound option, whereby the purchaser has the right, but not the obligation, to enter into a floor at a predetermined rate on a predetermined date.

Force Majeure : Contractual clause that relieves either party from fulfilling the obligations of the agreement as a result of an "extraordinary event."
Foreign Currency Effect : Potential for changes in exchange rates to affect returns on overseas investments.

Foreign Exchange (Forex) : The buying and selling of currencies.

Foreign exchange (Forex) : The simultaneous buying of one currency and selling of another in an over-the-counter market.

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

Forward Points : Pips added to or subtracted from the current exchange rate to calculate a forward price.

Forward Rate : Interest rate for a future period. For example, it could refer to a one-year interest rate beginning six months from now.

Forward rate agreement (FRA) : Interest rate contract in which buyer and seller agree to exchange the difference between the current interest rate and a pre-agreed fixed rate.

Free Reserves : Margin by which reserves exceed borrowings. Also known as excess reserves.

Front Office : Refers to those personnel with whom customers have the opportunity to interact.

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

Fundamental Trader : A currency trader that relies on fundamental analysis.

Funding Currency : A comparatively low-yielding currency, which is used to borrow money so that the proceeds can be invested in a higher-yielding currency.

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

FX Forward : Obligation to buy or sell a currency at an agreed price on an agreed date. The forward or future price is decided by adjusting the spot or current price to account for changes in interest rates.

G-10 : G7 plus Belgium , Netherlands and Sweden , a group associated with the IMF discussions. Switzerland is sometimes involved.

G-20 : A group composed of the Finance Ministers and central bankers of the following 20 countries
G-7 : The seven leading industrial countries, being the United States, Germany, Japan, France, Britain, Canada, and Italy.

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

Gamma : The second order rate of change of an option, measuring change in delta with respect to changes in the underlying asset price.

Gold Contract : Standard unit of trading gold; equal to 10 troy ounces.

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

Golden Cross : Refers to a technical analysis pattern in which two moving averages intersect, believed to indicate that the reference currency will move in the same direction.

Goldilocks Economy : Term attributed to Alan Greenspan, describing an economy (and corresponding monetary policy) that is characterized by both steady growth and moderate inflation. In other words, neither too hot nor too cold.

Good-till-Cancelled Order (GTC) : Type of Order to buy or sell a security/currency at a fixed price that doesn�t expire unless the order is executed or canceled.

Grid Trading : Series of positions and open orders undertaken with a predetermined spread.

Gross : An amount calculated before deduction of tax or commissions.

Gross Domestic Product (GDP) : Basic measure of an economy�s economic performance, equal to the market value of all final goods and services
Gross National Product : Value of all goods and services produced in a country in one year, plus income earned by its citizens abroad, minus income earned by foreigners in the country.

Hard Currency : Any "major" currency that investors have confidence in.

Head and Shoulders : Refers to a technical analysis pattern resembling two peaks (the shoulders) with a higher peak between the two shoulders (the head). The bottom boundary that both shoulders reach, is regarded as a key point traders can use to enter/exit positions.

Hedge Fund : A private investment fund, usually open to a limited number of investors. Subject to fewer restrictions and regulations, hedge funds can use aggressive, often speculative and leveraged investment strategies in pursuit of higher returns.

Hedge fund : A private, unregulated investment fund for wealthy investors (minimum investments typically begin at US$1 million) specializing in high risk, short-term speculation on bonds, currencies, stock options and derivatives.

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

Hedging : A strategy designed to reduce investment risk. Its purpose is to reduce the volatility of a portfolio by investing in alternative instruments that offset the risk in the primary portfolio.

High/Low : Refers to the day�s high and low prices, respectively.

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

Hit the Bid : Acceptance by one buyer/seller of another�s price.

Horizontal Spread : Options strategy which involves the purchase of one option and simultaneously selling the same type of option with the same strike price but a different expiration.

Housing Starts : Economic Indicator that measures the number of new residential buildings that began construction during the previous month.

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

Illiquid : Security or currency that is not traded actively.

Implied Volatility : The derived volatility of an asset calculated indirectly from options prices.

In the Money : Refers to a call or put option that has intrinsic value because the exercise price is below or above, respectively, the current market price of the underlying security.

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

Indicative Quote : Price quoted by a dealer for information purposes. Opposite of a Firm Quote.

Industrial Production : Economic indicator that measures the total value of output produced by manufacturers, mines and utilities. This data point tends to mirror the expansions and contractions of the business cycle and can act as a leading indicator of economic growth.

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

Initial Margin : Funds required to enter into a leveraged transaction,quoted as a percentage of the price of the asset.

Institute for Supply Management (ISM) Manufacturing Index : Economic indicator that measures the state of the US manufacturing sector by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Values over 50 generally indicate an expansion, while values below 50 indicate contraction. There is also a non-manufacturing version of the index.

Interbank Rates : Foreign Exchange rates (or interest rates) quoted by large multinational banking institutions.

Interbank/Interdealer Market : Market open only to large financial institutions.

Interest (Rate) : Cost of using/borrowing money, expressed as a rate per period of time.

Interest Rate Swap : Derivative in which one party exchanges a stream of interest payments for another party�s stream of cash flows.

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

International Monetary Market (IMM) : Arm of the Chicago Mercantile Exchange that lists a number of currency and financial futures.

International Organization for Standardization (ISO) : International-standard-setting body composed of representatives from various national standards organizations, which determines among other things, the trading codes used by forex traders, such as EUR for Euro.

International Securities Dealers Association (ISDA) : Organization charged with regulating inter-bank markets and exchanges.

Intervention : Refers to the act of a Central Bank buying or selling currency in the spot market in order to influence the value of its own currency.

Intra-Day Position : Any position that is opened and closed within the same trading day.

Intrinsic Value : Calculated difference between an option�s exercise price and the current market price of the underlying security. May be zero.

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

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

Joint Account : Bank or investment account owned by two or more people.

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

Kiwi : Slang term for the New Zealand Dollar.

Knock In : Refers to the process whereby a European barrier option becomes active as the underlying option is in the money.

Knock Out : Refers to the process whereby a European barrier option becomes inactive as the underlying option has fallen out of the money.

Labor Productivity : Type of economic indicator that measures the growth in labor efficiency for producing goods and services.

Ladder Option : Type of Option that locks in gains as the underlying asset reaches predetermined price levels.

Lagging Indicator : Any economic indicator that reacts slowly to economic changes, and therefore has little predictive value.

Lapse : Refers to an option that has expired worthless.

Lay Off : The act of carrying out a transaction in order to offset a previous transaction and return to a square position.

Leading Indicators : Economic indicators that are used to forecast economic activity because they change before the economy does.

Leads and Lags : Effect on foreign trade payments of an anticipated move in the exchange rate, typically a devaluation, whereby importers and exporters speed up or slow down their payments to try to achieve the most favorable conversion rates.

Lesser Developed Country (LDC) : Term generally used to describe a nation with a low level of material well being. There is no single internationally-recognized definition of developed country.

Leverage : The degree to which an investor or business is utilizing borrowed money. The amount, expressed as a multiple, by which the notional amount traded exceeds the margin required to trade. For example, if the notional amount traded is $100,000 dollars and the required margin is $2000, the trader can trade with 50 times leverage ($100,000/$2000). For investors, leverage means buying on margin to enhance return on value without increasing investment. Leveraged investing can be extremely risky because you can lose not only your money, but the money you borrowed as well.

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

Liability : Generally, a claim on a company�s assets. In forex, the obligation to deliver to a counterparty an amount of currency at a specified future date, in connection to a forward or spot transaction.

Limit Order : Type of buy/sell order which cannot be executed unless a specified minimum or maximum price, respectively, is satisfied.

Limit Price : The specified price associated with a limit order.

Limited Convertibility : The condition whereby a currency cannot be freely exchanged (especially by primary users of that currency) for other currency.

Line Chart : Most basic type of chart, which plots a series of price levels over time and connects them with lines.

Liquid Market : When there are plenty of lots of a particular currency being bought and sold every day.

Liquidation : Transaction that offsets or closes out a previous position.

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

Liquidity : The ability of a market to accept large transactions. A function of volume and activity in a market. It is the efficiency and cost effectiveness with which positions can be traded and orders executed. A more liquid market will provide more frequent price quotes at a smaller bid/ask spread.

London Inter-Bank Offer Rate or LIBOR : The standard for the interest rate that banks charge each other for loans (usually in Eurodollars ). This rate is applicable to the short-term international interbank deposit market, and applies to very large loans borrowed from one day to five years. This market allows banks with liquidity requirements to borrow quickly from other banks with surpluses, enabling banks to avoid holding excessively large amounts of their asset base as liquid assets. The LIBOR is officially fixed once a day by a small group of large London banks, but the rate changes throughout the day.

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

London International Financial Futures Exchange (LIFFE) : Association composed of the three largest future exchanges in the UK.

Long : When transacting in a currency pair, the long currency is the one listed first. The goal of being long is to profit from currency appreciation
Long : A position purchasing a particular currency against another currency, anticipating that the value of the purchased currency will appreciate against the second currency.

Lookback Option : Type of option that allows the holder to "look back" at the prices of the underlying asset during the life of the option in order to select an optimal exercise price.

Loonie : Slang term for a Canadian Dollar.

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

Macro-based : An investment strategy driven by macroeconomic considerations.

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

Managed Float : Type of exchange rate regime whereby central banks regularly intervene to stabilize/control the movements of an otherwise floating currency.

Manual Trading : Process of inputting trades manually without an API.

Manufacturing Production : Economic indicator that measures the total output of the manufacturing component of industrial production.

Margin : Minimum deposit required to maintain an open position.

Margin : Funds that customers must deposit as collateral to cover any potential losses from adverse movements in prices.

Margin Account : Type of account that allows leveraged (i.e. on credit) buying and selling.

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

Margin Call : A requirement for additional funds or other collateral, from a broker or dealer, to increase margin to a necessary level to guarantee performance on a position that has moved against the customer.

Marginal Risk : Refers to 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.

Marked to Market : Refers to the accounting standards of assigning a value to a position held in a financial instrument based on the current fair market price.

Market Close : Time used to demarcate trading days for administrative purposes, necessary because forex markets operate 24 hours per day.

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

Market Maker : A dealer that supplies prices, and is prepared to buy and sell at those bid and ask prices. All CFTC registered FCMs are market makers.

Market Order : Type of order for immediate execution at the best available price.

Market Rate : Most current quote for a currency pair.

Market Risk : Describes the risk that demand and supply pressures can cause the value of an investment to fluctuate.

Martingale System : Betting strategy whereby the gambler doubles his/her bet after every loss, so that the first win recovers all previous losses plus wins a profit equal to the original stake.

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

Maximum Leverage : Largest position that a given margin deposit would cover.

Mean Reversion : Theory and observed phenomenon whereby prices and returns eventually move back towards their long-term averages.

MetaTrader : Popular online trading platform designed for financial institutions dealing with forex and derivatives markets.

Middle Rate : Refers to the price halfway between the bid and ask quote offered by dealers.

Mine and Yours : Used to signal (in an open outcry system) when a trader wants to buy and sell.

Mini Account : Type of trading account that allows traders to trade partial (i.e smaller) lot sizes.

Minimum Price Contract : Forward contract with a provision guaranteeing a minimum price at delivery of the underlying commodity.

Mobile Trading : Use of mobile devices (such as cellular phone or pda) to execute forex transactions,
Module : Portion of a computer program that carries out a specific function and may be used alone or in combination with other modules of the same program.

Momentum : Refers to the tendency of securities/currencies to continue moving in the same direction in which they are currently moving.

Monetarist : One who believes that money and monetary policy have a strong (if not the strongest) effect on economic growth.

Monetary Base (M0) : : Notes and coins (currency) in circulation and in bank vaults, plus reserves which commercial banks hold in their accounts with the central bank (minimum reserves and excess reserves).

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

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

Monetary Policy Committee (MPC) : Bank of England subcommittee that meets every month to decide the official interest rate in the UK.

Money Manager : Individual or organization responsible for the entire financial portfolio of another individual or entity, receiving management and/or performance fees as compensation.

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

Most Favored Nation : Preferential treatment afforded to fellow World Trade Organization members.

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

Moving Average Convergence / Divergence (MACD) : Technical analysis indicator that shows the difference between a fast and slow exponential moving average of closing prices.

Mutual Fund : The US equivalent of a unit trust.

Naked Put : The act of writing a put while not simultaneously short the underlying asset, creating significant downside exposure.

Narrow Market : Market characterized by thin/light trading.

Negative Carry Pair : The inverse of a traditional carry trading strategy, whereby one is long a low-yielding currency and short a high-yielding currency.

Negative or Bearish Divergence : Occurs when a new high in price takes place without a corresponding new high in a related price, average, index or other technical indicator.

Net Asset Value (NAV) : In a forex trading account, equal to the balance of deposits, realized and unrealized profit/loss, and interest, minus withdrawals.

Net Position : The amount of currency bought or sold not offset by opposing transactions.

Net Worth : Difference between one�s assets and liabilities. For public companies, this is referred to as shareholder equity.

Netting : Method of settling a trade whereby only the difference (profit or loss) is calculated.

New Home Sales : Economic indicator that measures the annualized number of new residential buildings that were sold in the previous month.

News Trading : An approach to trading that seeks to anticipate and profit from (the markets� reaction to) news announcements.

Nickel : US term for five basis points.

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

Noise : Refers to market activity that does not correspond to actual perceived market sentiment, perhaps creating a contradictory picture.

Non-Client Order : Any order submitted by a participant firm or on behalf of someone associated with the participant firm.

Nonfarm Payrolls : Economic indicator that measures the change in the number of employed people during the last month of all non-farming businesses.

Nostro Account : Foreign currency current account maintained with another bank. The account is used to receive and pay currency assets and liabilities denominated in the currency of the country in which the bank is resident.

Not Held Basis Order : Type of order whereby the price may trade through or better than the client�s desired level, but the principal is not held responsible if the order is not executed.

Note : A financial instrument consisting of a promise to pay rather than an order to pay or certificate of indebtedness.

Notional Amount : Size of a (derivative) contract.

Odd Lot : A non-standard forex transaction size. Also known as Partial Lot.

Off-Balance Sheet : Refers to financing or capital raising activities that does not appear on a given company�s balance sheet, such as derivative agreements and investments in certain types of partnerships.

Offer : The price (or rate) at which one is willing to sell.

Official Settlements Account : US balance of payments category that sums the movement of dollars in foreign official holdings and US reserves.

Offsetting Transaction : The act of entering into a position diametrically opposed to an existing position.

Offshore Bank : A bank located outside the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages.

Old Lady : Slang term for the Bank of England.

Omnibus Account : An aggregate count held by one merchant/dealer, that consists of multiple individual accounts rolled together.

One Cancels Other Order (OCO Order) : Type of order whereby two orders are submitted simultaneously. The execution of one automatically cancels the other.

Open Interest : Denotes the total number of derivative contracts, like futures and options, that are currently active on a specific underlying security.

Open Market Operations : The means of implementing monetary policy by which a central bank controls its national money supply by buying and selling government securities, or other financial instruments.

Open Order : A valid order that has neither been executed nor canceled, probably because the price/rate has not reached the level stipulated by the customer.

Open Position : The condition of being long or short currency, such that price fluctuations cause unrealized gains or losses. Opposite of closed position.

Opening Price : Price at which a stock starts dealing, either at market opening or when stock was first listed.

Opening Purchase : Transaction in which the seller of an option becomes the writer.

Option : The right, but not obligation, to buy or sell an underlying investment at a certain point in the future at the price agreed today.

Option Class : All options, usually separated into calls and puts, for a given underlying asset.

Option Series : All options of the same class with the same exercise price and expiration date.

Order : Customer instruction to a broker/dealer to buy or sell securities/currency. Unless a time limit is attached to the order, it will remain valid until either executed or canceled.

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

Out of the money : When an option has no intrinsic value, because the exercise price is above (in the case of calls) or below (in the case of puts) the current market price of the underlying security.

Outright Deal : Refers to a forward agreement that is not part of a swap.

Outright Forward : Currency exchange transaction intended to be settled at a later date.

Overbought : Describes an asset/market in which prices are perceived to have risen higher than is justified by fundamental or technical analysis.

Overheating : Occurs when an economy�s productive capacity is unable to keep pace with growing aggregate demand. It is generally characterized by an above-trend rate of economic growth and price inflation.

Overnight : A position that has not been closed by the end of business day.

Overnight Limit : Net long or short positions that a dealer can carry over into the next dealing day.

Oversold : Describes an asset/market in which prices are perceived to have fallen lower than is justified by fundamental or technical analysis.

Over-the-counter Market : The trading of stocks, bonds, commodities or derivatives directly between two parties. It is contrasted with exchange trading.

Owner : Account-holder, whose name is listed on the account opening paperwork.

Package Deal : Situation in which multiple exchange and/or deposit orders must be filled simultaneously.

Par : Official value of a currency or other asset.

Par Spread : Refers to a situation in which the bid and ask prices for a forward rate spread are identical.

Parabolic Stop and Reverse (SAR) : Technical analysis tool designed to find trailing stop loss based on the notion that prices tending to stay within a parabolic curve during a strong trend.

Parities : The value of one currency in terms of another.

Parity : The condition whereby an option�s value in the market is the same as its intrinsic value.

Partial Lot : A non-standard forex transaction size. Also known as Odd Lot.

Peg : Type of exchange rate regime where one currency�s value is fixed to another currency or basket of currencies.

Permitted Currency : Currency that is fully convertible and hence, very liquid.

Pip : The most basic price movement in forex, equal to 0.0001 (.01% of 1 unit).

Pip (tick) : The term used in currency markets to represent the smallest incremental move an exchange rate can make. Depending on context, normally one basis point (0.0001 in the case of EUR/USD, GBD/USD, USD/CHF and .01 in the case of USD/JPY).

Point & Figure Charts : Type of chart that plots price, without any consideration of time.

Political Risk : Refers to the complications businesses and investors may face as a result of a change in government policy or sudden expropriation (nationalization by the government ).

Position : Netted total exposure to a given currency. A position can be either flat or square (no exposure), long (more currency bought than sold), or short (more currency sold than bought).

Position : A view expressed by a trader through the buying or selling of currencies, and can also refer to the amount of currency either owned or owed by an investor.

Premium : Refers to the amount by which a forward rate exceeds a spot rate or the price a put or call buyer must pay to a seller for an option contract.

Premium (cost of carry) : The cost or benefit associated with carrying an open position from one day to the next calculated by using the differential in short-term interest rates between the two currencies in the currency pair.

Price Transparency : Ability of all market participants to trade at the same price.

Prime Rate : The benchmark rate from which most lending rates by banks are calculated in the US.

Principal : A dealer who buys or sells stock/currency for his/her own account.

Producer Price Index (PPI) : Economic indicator that measures average changes in prices received by domestic producers for their output.

Profit & Loss or (P & L) : The actual "realized" gain or loss from trading activities. May also include "unrealized" gains and losses from open positions.

Profit Taking : The unwinding of a position to realize profits, based on the assumption that the asset will soon fall in value.

Purchasing Power Parity : Model of exchange rate determination based on the law of one price, which states that the price of a good in one country should equal the price of the same good in another country.

Put Option : Option that gives the holder the right, but not the obligation, to sell a specified amount of a commodity, financial instrument or currency.

Put/Call Ratio : Technical analysis indicator calculated by dividing the number of put options by the number of call options for a particular asset, used to gauge market sentiment.

Put-call Parity : Defines a relationship between the price of a call option and a put option�both with the identical strike price and expiry. When both options are at the money forward, the value of the call option is equal to the value of the put option.

Quantitative Analysis : The development and application of mathematical and statistic models towards investing and trading.

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

Quote : Provision of a bid/ask spread for a currency pair.

Quote Currency : Currency listed second in a currency pairing.

Rainbow option : Options with more than one underlying asset, where these assets cannot be conveniently interpreted as a single composite asset. Also known as basket options.

Rally : Refers to sustained rise in asset prices.

Range : Difference between the highest and lowest exchange rate for a given currency pair during a given time period.

Rate : Short for �exchange rate� or �interest rate.�
Rate Differential : Difference between two countries� benchmark interest rates, often used as a basis for forecasting exchange rates.

Rate of Return : The percentage of gained or lost on an investment relative to the amount of money invested.

Rating agency : Independent agencies such as Moody�s, Standard and Poor�s and Fitch IBCA that assess the credit quality and likelihood of default of an issue or issuer and subsequently assign a rating code to that issue or issuer.

Ratio Spread : Holding an unbalanced number of long and short options positions.

Reaction : Refers to a sudden fall in prices following a period of appreciation.

Realized Profit & Loss : Refers to the gain or loss that results from closing a position.

Real-time : Without any delay. Most quote systems offer real-time prices, which are the prices at which buying and selling is actually taking place in the market at that moment.

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

Reciprocal Currency : In a quote, the currency on the right side of the equation. Same as Quote Currency.

Rectangle : Technical analysis pattern characterized by strong support and resistance lines, designating a trading range or consolidation zone.

Regulated Market : Any market/exchange monitored by a government agency with the goal of protecting investors.

Relative Strength Index (RSI) : Technical analysis momentum oscillator measuring the velocity and magnitude of directional price movement by comparing upward and downward close-to-close movement.

Repurchase Agreement (REPO) : Short-term money market instruments, used primarily to raise short-term capital.

Reserve Bank of Australia (RBA) : Central Bank for Australia, whose actions bear directly on the Australian Dollar.

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

Reserves : Refers to foreign exchange and gold, SDRs and IMF reserve positions, held by central banks and monetary authorities, which can be drawn from to conduct monetary policy and repay obligations.

Resistance : Price level that, if reached, activates many sell triggers.

Retail Prices Index (RPI) : Measures inflation based upon the price of a selection of family goods.

Retail Sales : Economic indicator that is seen as a proxy for consumption. It is considered a coincident indicator, in that activity reflects the current state of the economy.

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

Revaluation : An increase in the foreign exchange value of a currency that is pegged to other currencies or gold.

Revaluation rates : The rate for any period or currency, which is used to revalue a position or book. The revaluation rates are the market rates used when a trader runs an end-of-day to establish profit and loss for the day.

Reversal : Observed or potential shift in the current trend.

Risk : The potential for adverse activity to result in financial loss, in which case the actual return might deviate from the expected return. Risks associated with forex include market risk, liquidity risk, counterparty risk, credit risk, and political risk.

Risk Capital : Refers informally to an amount of money that could be lost without meaningfully impacting one�s financial position.

Risk Management : Refers to the use of financial instruments to manage exposure to risk, particularly credit risk and market risk.

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

Rollover : The settlement of a deal is rolled forward to another value date with the cost of this process based on the interest rate differential of the two currencies. An overnight swap, specifically the next business day against the following business day.

Rollover Credit : Amount added to a trader�s account when the long currency of a currency pair has a higher yielding interest rate than the short currency.

Rollover Debit : Amount subtracted from a trader�s account when the long currency of a currency pair has a lower yielding interest rate than the short currency. Opposite of Rollover Credit.

Rollover Rate : Refers generally to the interest rate differential that applies to a trader�s portfolio, resulting in either a rollover credit or rollover debit.

Round Lot : Refers to a standard lot of 100,000 units of a currency.

Round Trip : Buying and then selling of an equal amount of currency.

Rounding Top and Bottom : Rounded top/resistance line indicates bearishness, while rounded bottom/support line indicates bullishness.

Running a Position : Slang term for Open Position.

Same Day Transaction : Any position that is opened and closed on the same trading day.

Sell Stop Order : Type of limit order, whereby the limit price is placed below the current market price. Once triggered, the order is executed at the market price.

Selling Rate : Ask or offer rate.

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

Settlement : Physical exchange of one currency for another.

Settlement Date : Refers to the business day specified for delivery of the currencies bought and sold under a forex contract.

Settlement Risk : Potential for financial loss to result from a counterparty being unable to settle. Similar to Counterparty Risk.

Short : To sell a currency without actually owning it, and to hold a short position with expectations that the price will decrease so that it can be bought back at a later time at a profit.

Short Position : An open position that aims to capture gains from currency depreciation.

Short Squeeze : Rapid increase in the price of a stock/currency that occurs when there is a lack of supply and an excess of demand So-called because in such conditions, short sellers move to cover their positions.

Shout Option : Type of option allows the holder effectively two exercise dates: during the life of the option they can lock in the current price, and if this gives them a better deal than the pay-off at maturity they�ll use the underlying price on the shout date rather than the price at maturity to calculate their final pay-off.

Sidelined : Refers to a condition of extraordinary interest in a currency pair, such that other major currency pairs are traded thinly as a result.

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

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

Society for World-wide Interbank Telecommunications (SWIFT) : Global electronic network for forex settlement, known for a code uniquely identifies financial institutions for the purpose of transfers and settlement.

Soft Market : Describes a market characterized by more sellers than buyers.

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

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

Spike : Larger than expected price movement, caused by a news announcement or broker error.

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

Spot Price : Current market price. Settlement of spot transactions normally occurs within two business days.

Spot/Next Roll : The overnight swap from the spot date to the next business day. Another term for Rollover.

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

Spread : The difference between the bid and offer (ask) prices of a currency; used to measure market liquidity. Narrower spreads usually signify high liquidity.

Square : Condition whereby all positions in a dealer�s books (or a trader�s account) have been closed.

Squeeze : Refers to a central bank that is attempting to reduce the money supply in order to increase the price of money.

Stable Market : Refers to a market or currency pair that can accommodate large volumes without causing equally large price fluctuations.

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

Sterilization : Process by which central banks offset intervention in the forex market by activities in the domestic money market. For example, if a central bank buys foreign exchange (to counteract appreciation of the exchange rate), it will also sell government debt to contract the monetary base by an equal amount.

Sterling : Official term for the British Pound.

Stochastic Oscillator : Technical analysis tool designed to compare the closing price of a currency to its price range over a given time period.

Stockbroker : Agent that buys and sells shares on one�s behalf and earns commission on the value of the transaction. Also known as a broker.

Stocky : Slang term for the Swedish Krona.

Stop Loss Strategy : Trading strategy that involves setting multiple, partial stop loss limit orders at different price levels in order to avoid incurring further losses.

Stop Order : An order to buy or sell when the price rises to/above or falls to/below a specified stop price. When buying, a stop order is used to make an investment, but only when an upward trend has been established. When selling, a stop order is used as protection from a sudden fall in the share price, or to lock-in profits already made, and is also known as a stop loss order.

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

Straddle : Options strategy that allows the holder to profit based on how much the price of the underlying security moves, regardless of the direction of price movement.

Strangle : Options strategy that allows the holder to profit based on how much the price of the underlying security moves, with relatively minimal exposure to the direction of price movement.

Strike Price : The price at which an underlying asset can be bought or sold as specified in an option contract. Also known as Exercise Price.

Strip : Options strategy consisting of two puts and one call.

Structural Unemployment : Unemployment caused by systemic flaws in the structure of an economy, that cannot be fixed through fiscal or monetary policy.

Sub-account : Account segregation into smaller accounts, for ease of managing and executing distinct trading and hedging strategies.

Support : Level or floor that halts a currency�s downward progress, as a result of strong buying pressure at that level.

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

Swaps : A foreign exchange swap is a trade that combines both a spot and a forward transaction into one deal, or two forward trades with different maturity dates.

Swaption : The option to enter into a swap contract.

Swing Option : Type of option that gives the purchaser the right to exercise one and only one call or put on any one of a number of specified exercise dates. Penalties are imposed on the buyer if the net volume purchased exceeds or falls below specified upper and lower limits.

Swissy : Slang term for the Swiss Franc.

Symmetrical Triangle : Technical analysis pattern that consists of two lower highs and two higher lows. By extending lines through these points, a symmetrical triangle is formed. It is commonly associated with directionless markets as the contraction of the market range indicates that neither the bulls nor the bears are in control. If this pattern forms in an uptrend then it is considered a continuation pattern if the market breaks out to the upside and a reversal pattern if the market breaks to the downside. Similarly if the pattern forms in a downtrend it is considered a continuation pattern if the market breaks out to the downside and a reversal pattern if the market breaks to the upside.

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

T+ : Refers to the settlement period that is allowed once a security has been traded. T+ 5 would mean that settlement will occur five business days after the transaction day.

Take Profits : The unwinding of a position to realize profits, based on the assumption that the asset will soon fall in value.

Take the Offer : Verbal command that accepts an offer to sell a given currency pair to a dealer.

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

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

Technical Correction : Price adjustment that is expected as a result of technical factors, rather than market sentiment or fundamental developments.

Technical Indicators : Short-term trends that technical analysts use to inform predictions for future price movements. Also called Technicals and Technicalities.

Technical Trader : One whose approach to trading relies on technical analysis.

TED Spread : Difference between the interest rates on interbank loans and short-term U.S. government debt. The TED spread is now calculated as the difference between the three-month T-bill interest rate and three-month LIBOR.

Terms of Trade (TOT) : Ratio of exports to imports. An improvement in a nation�s terms of trade (the increase of the ratio) is good for that country in the sense that it has to pay less for the products it imports.

Theta : Rate of change of an option price with respect to time. Theta is a negative, reflecting the fact that the option value decreases over time.

Thin Market : Another term for Narrow Market.

Tick : Smallest possible change in a price, either up or down. Also known as Pip.

Ticker : Streaming display of current or recent rates for a given currency pair.

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

Tightening : Refers to a central bank raising interest rates or otherwise conducting monetary policy in an attempt to reduce demand and curb inflation.

Tokyo Inter-bank Offered Rate (TIBOR) : Daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Japan interbank market.

Tomorrow Next : The process of not taking delivery of a currency by closing the position and reopening it with the current trade date so the settlement date is pushed forward to the next trade date.

Total Return : Annual return on an investment including capital appreciation and interest.

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

Trade Date : Date on which a position is opened.

Trade Price Response : Belief that a currency will react when a certain price is reached, and that traders should respond accordingly.

Tradeable Amount : Smallest transaction size permitted by a broker, varying from 1 unit to 100,000 units.

Trading Margin Excess : Extra funds beyond the margin requirements for existing positions that can be used to enter into new positions or increase existing positions.

Trading Model : Sophisticated program that provides buy/sell recommendations based on evaluation of historical data.

Trading Platforms : Software applications used for trading forex online.

Trailing Stop Order : Order entered with a stop parameter that creates a moving or trailing activation price. This parameter is entered as a percentage change or actual specific amount of rise (or fall) in the security price.

Tranche : One of a number of related securities offered as part of the same transaction.

Transaction : Buying or selling a currency pair.

Transaction Cost : Fees associated with a transaction, which are either assessed by brokers directly or indirectly via the bid-ask spread.

Transaction Date : Date on which a position is opened or closed.

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

Trend : The current direction of the market, either up, down, or sideways.

Trend Lines : Lines, arcs, or other visual cues plotted on a line chart used to identify and demarcate price trends.

Triangular Arbitrage : Taking advantage of a state of imbalance between three foreign exchange markets.

Triple Top : Technical pattern in which a currency has reached a price level three times previously, but has been unable to break through that level.

Turnover : The number or volume of transactions traded over a specific period of time.

Two-Tier Market : Dual exchange rate system in which there is an official, government rate and a market rate.

Two-Way Price : When both bid and ask prices are quoted in a transaction.

Unconvertible Currency : Any currency that cannot be freely exchanged for other(s) because of foreign exchange regulations.

Uncovered Position : Another term for Open Position.

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

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

Unemployment Rate : Economic indicator defined as the percentage of those in the labor force who are unemployed.

Unit : The most basic denomination of currency. One unit of USD is equal to one United States Dollar.

Unit Labor Costs : Computed by dividing employer labor costs (payments made directly to workers plus employer payments into funds for the benefit of workers) by real value added output. There are various economic indicators that seek to measure changes in unit labor costs.

University of Michigan Consumer Sentiment Index : Consumer confidence index published monthly by the University of Michigan.

Unrealized Profit & Loss : Gains and losses that exist hypothetically, in positions that have not yet been closed.

Uptick : Describes the condition in which a new price quote is higher than the preceding quote.

Uptick : A new price quote that is higher than the preceding quote for the same currency.
Uptick Rule : Rule that dictates certain types of trades (i.e. short sales) must be executed at a price higher than the previous trade.

US Dollar Index (USDX) : Measure of the value of the US dollar, weighted according to the currencies of its trading partners.

US Prime Rate : The interest rate at which US banks will lend to the most creditworthy borrowers.

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

V Formation : Another term for Spike.

Valuation : The process of estimating the value of an asset or currency.

Value at Risk : A measure of the maximum potential change in the value of a portfolio of financial instruments with a given probability over a specific time period.

Value Date : Settlement date for a currency contract, usually two business days after the trade date.

Value Today : Same day settlement for a currency transaction. Also known as Cash Transaction.

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

Variance : Statistical measure of how widely a variable is dispersed around the mean.

Variation Margin : Refers to the funds required to bring the margin ratio back up to the required level, calculated daily.

Vega : The rate of change of an option price with respect to volatility of the underlying asset.

Velocity of Money : Average frequency with which a unit of money is spent in a specific period of time. Velocity associates the amount of economic activity associated with a given money supply.

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

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

Volatility Smile/Skew : The asymmetrical distribution of implied volatility. Out of the money puts have higher implied volatilities than calls and vice versa, a fact explained in market terms by supply and demand.

Volume : The number of shares or contracts traded in a security or an entire market during a given period of time.

Vostro Account : An account of a foreign bank held at a domestic bank, necessary in a country where the foreign bank lacks a branch presence.

Wage Price Index : Any economic indicator that seeks to measure changes in the average price for labor.

Warrant : The right, but not the obligation, to buy shares in the company issuing the warrants, on a fixed date, at a fixed price. Similar to options, but not usually tradable.

Wedge : Chart formation that shows a narrowing price range over time. In an ascending wedge, price highs become incrementally less, whereas in a descending wedge, price declines become incrementally larger.

Weekly Charts : Type of charts for which each candlestick or bar encapsulates rate data representing one week.

Whipsaw : Refers to a sharp adverse price movement, or market reversals, perhaps taking place shortly after execution.

Whisper Number : Analysts� predictions for earnings or economic indicators, which often become known to the public despite not being formally released.

Wholesale Money : Money borrowed in large amounts from banks and institutions rather than from small investors.

Wholesale Price Index : Price of a representative basket of wholesale goods, often used interchangeably with Producer Price Index.

Wire Transfer : Electronic transfer of funds from one bank to another.

Withholding Tax : Tax levied by a country of source on income paid, usually on dividends remitted to the home country of the firm operating in a foreign country.

Working day : Any day on which the majority of banks in a currency�s principal financial center are open for business. In forex transactions, a working day only occurs if banks in both (or all) currencies� countries of use are open.

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

World Trade Organization (WTO) : International organization designed by its founders to supervise and liberalize international trade.

Writer : The issuer of an option, warrant, or other derivative.

Yard : Slang for one billion.

Yield : Return on an investment, usually expressed in percentage terms.

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

ZAR : Currency symbol for the South African Rand.

Z-Certificate : Certificate issued by the Bank of England instead of stock certificates, in order to improve short-term transactions.

Zero Bound : Refers to interest rates (and corresponding monetary policy) that are at or very close to zero percent.

Zero Coupon : A security that pays no interest and is sold well below the face value. The investor gets the return in the form of capital gains.

Zero Coupon Bond : A bond issued at a discount, for which investors will not receive coupon payments for the life of the bond. Interest grows over the life of the bond such that at maturity, the bond is redeemed at par.