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201. Euro

See European Monetary Unit

202. Eurocurrency

A currency that is deposited in a financial institution located outside the currency’s country of origin.

203. Eurodollar

US dollars deposited in a bank outside the USA.

204. European Central Bank

Established in Frankfurt in 1998, the ECB is responsible for all monetary policy decisions that influence the Euro currency. Based on the Maastricht Treaty, the ECB’s main responsibility is to ensure price stability. To this end, it is authorized to issue the Euro and is responsible for setting interest rates for those countries that have converted to the Euro.

205. European Currency Unit

The predecessor of the Euro.

206. European Monetary System

An arrangement in the 1970s and 1980s where many European countries linked their currencies to prevent large fluctuations in value. It was one of several initiatives leading to the deployment of the Euro.

207. European Monetary Unit

The currency of the European Monetary Union (EMU), introduced in 1999. The following countries and their currencies were replaced with the Euro

208. European Option

An option whose holder can exercise it only at the expiry date

209. European Union

The group of European countries joined together to promote economic, political, and social co-operation.

210. Excess Margin Deposits

Deposited funds in a trading account above and beyond what is required for margin requirements.

211. Exchange

The physical location of trading activity. Some famous examples include the New York Stock Exchange or the Chicago Mercantile Exchange.

212. Exchange Control

Various devices a central bank uses for controlling the movement of foreign exchange so as to not deplete a country’s reserves.

213. Execution

Completing a trade

214. Exercise Price

See Strike Price

215. Exit

In the case of a long position, the sale of the long currency. In a short position, the purchase of the short currency, resulting in a closed position.

216. Exotic

As opposed to the major currencies which are heavily traded, exotics are the less traded currencies.

217. Exotics

The lesser traded currencies, as opposed to the major currencies which are heavily traded.

218. Expiration Date

The day on which a financial option is no longer valid.

219. Exposure

The net of all long and short positions for a particular currency. Based on the traders’ positions for all currencies, his/her exposures can result in either loss or gain.

220. Factory Orders

An economic indicator that marks the change from one period to another of the orders for durable and nondurable goods. More orders mean economic growth whereas the opposite signifies a slowdown.

221. FASB #8

See Financial Accounting Standards Board’s Statement Number 8.

222. Fast Market

Strong buying and/or selling pressure in the market, in which prices often gap and move too quickly to be disseminated

223. FDIC

See Federal Deposit Insurance Corporation.

224. Fed

See Federal Reserve

225. Fed Fund Rate

The interest rate on Fed fund account balances that is closely monitored to gauge the Fed’s view on the economy. The accounts are held by member banks and are usually used for lending or borrowing from one another.

226. Fed Funds

Account balances held by banks at their local Fed Bank.

227. Fed Meetings

The Federal Reserve System (the Fed) is the US central bank responsible for conducting US monetary policy by influencing money and credit conditions in the economy. The Federal Reserve Board of Governors and the Federal Open Market Committee (FOMC) hold regularly scheduled and special meetings that are followed closely by market watchers.

228. Federal Deposit Insurance Corporation

The US regulatory agency that administers bank deposit insurance.

229. Federal Deposit Insurance Corporation

The US regulatory agency that administers bank deposit insurance.

230. Federal Open Market Committee

Committee made up of Federal Reserve members who meet eight times a year to discuss current monetary policy and its effect on the present economy, and to address any possible changes needed.

231. Federal Reserve

The Central Bank of the United States

232. Federal Reserve Board

The 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.

233. Fedwire Settlement

System used by the Federal Reserve banks and other banks

234. Fiat Currency

Fiat currency is the opposite of a gold standard arrangement. In a fiat currency system, the currency�s value rises and falls on the market in response to demand and supply pressures. It is this fluctuation that makes it possible to speculate on future currency values

235. Fill

Completing an order to buy or sell

236. Fill or Kill

An order that must be executed immediately based on certain criteria such as price and quantity. If it cannot be executed, the order is immediately canceled.

237. Fill Price

The price at which a buy or sell order goes through.

238. Financial Risk

The possibility that a business won’t be able to meet its financial obligations.

239. Finex

Currency trading at the New York Cotton Exchange.

240. Firm Quote

When a buyer or seller requests a firm quote, the dealer provides a bid and ask quote that can be immediately executed if the buyer or seller wishes. See Indicative Quote.

241. Fiscal Policy

Using tax policy to affect economic conditions.

242. Fisher Effect

The effect of interest rates on international money movement such that money moves into currencies paying higher interest rates.

243. Fixed Exchange Rate

Foreign exchange policy where a central bank maintains an official rate for their currency, often intervening to keep the rate fixed within a limited range.

244. Fixing

Determining rates by selecting a level which, as well as possible, balances buying and selling pressure. An example is London Gold Fixing.

245. Flat

See Square

246. Flexible Exchange Rate

An exchange rate that is fixed, but is re-evaluated frequently.

247. Floating Exchange Rate

An exchange rate whose value is determined by market forces.

248. FOMC

See The Federal Open Market Committee

249. Force Majeure

French for greater force. Represents a clause in a contract that relieves either party from fulfilling the obligations of the agreement should an extraordinary event prevent the completion of the contract. Typical examples include war, labor strikes, riots, and natural disasters. Commonly-included in futures and options contracts especially when dealing with commodities such as oil and agricultural products

250. Foreign Exchange

Buying or selling one currency against another currency.

251. Foreign Exchange Centers

The largest forex center in the world is London. Other financial centers which follow the sun across the sky are New York, Tokyo, Hong Kong, Singapore, and Zurich. Trading passes from one center to the next, the traders in one bank’s dealing desk handing off the trading book to their colleagues in another center.

252. Forex

Acronym for Foreign Exchange.

253. Forward

A transaction that settles at a future date.

254. Forward Contracts

A transaction that settles at a future date. The buyer and seller are bound by the contract to settle on the specified date

255. Forward Point

Differential added to or subtracted from the spot rate to calculate the forward rate. The differential is based on anticipating future conditions and fluctuates accordingly.

256. Forward Rates

An exchange rate that differs from the spot exchange rate by forward points. The forward points are either added to or subtracted from the spot rate depending on anticipation of future conditions.

257. Free Reserves

The margin by which excess reserves exceed borrowings

258. Fundamental Analysis

The study of economic factors (GDP, Trade Balance, Employment, and so on) that can influence prices in financial markets.

259. Fundamental Trader

An investor who uses fundamental analysis.

260. Fundamentals

Economic factors (GDP, Trade Balance, Employment, and so on) that can influence prices in financial markets.

261. Funding Currencies

Low interest rate currencies

262. Futures

An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange while forwards are traded over the counter (OTC).

263. Futures Contract

An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange while forwards are traded over the counter (OTC).

264. FX

An acronym for Forex

266. G10

G7 plus Belgium, The Netherlands, and Sweden

267. G20

A group composed of the following 20 countries

268. G7

The seven leading industrialized countries

269. G8

G7 and Russia.

270. Gearing

A term related to margin trading where you are controlling a position whose face value is greater than the money you deposit.

271. Globex

An after hours electronic futures and options trading platform developed by Reuters.

272. Going Long

The purchase of a currency pair.

273. Going Short

Selling a currency pair by first borrowing it, then returning it at a later time by buying it back (hopefully once prices are lower). See Selling Short.

274. Gold Standard

A commitment made by certain countries to fix the prices of their domestic currencies in terms of a specified amount of gold. Also known as the Bretton Woods System, the Gold Standard was enacted in 1946 and created a system of fixed exchange rates that allowed governments to sell their gold to the United States treasury at a fixed price. On August 15, 1971 President Richard Nixon ended the Bretton Woods system.

275. Golden Cross

In technical analysis, when two moving averages intersect, usually a short one like a 20 day and a long one such as 40 day. This is considered a favorable sign that the underlying currency will move in the same direction

276. Goldilocks Economy

Term which describes an economy that has steady growth and acceptable inflation. In this sense, the economy is not too hot and not too cold.

277. Good Until Canceled

An order that does not expire at the end of the trading day as is usual practice. Unlike what its name suggests, it does expire at the end of the trading month though, as opposed to being open forever.

278. Grid Trading

A series of positions and open orders that are built with a predetermined spread defined by the trader

279. Gross Domestic Product

The total value of a country’s output produced within its physical borders.

280. Gross National Product

GDP plus production and income from nationals abroad.

281. Hard Currency

A currency that investors have confidence in. Examples could be the US Dollar or the Euro

282. Head and Shoulders

A price trend pattern which has three peaks, the middle one higher than the surrounding two forming what looks to be a head with two shoulders on either side. This pattern is seen as an indicator of a trend reversal.

283. Hedge

A term used to describe reducing risk associated with adverse market movements by using two counterbalancing investments, thereby minimizing any losses caused by price fluctuations. For example, if you sell a house in Holland to relocate to the UK (your new base currency), you are in a long Euro (EUR) position and short Pounds Sterling (GBP). To offset this position you would need to sell the equal amount of EUR to make up for the short GBP position.

284. Hedge Fund

A private fund which usually solicits investments from wealthy individuals. It is unregulated as it’s assumed that the investors are knowledgeable and realize the speculative nature of the fund. It usually invests in high risk, short term instruments in order to achieve above-average returns.

285. Hit the Bid

Selling at the bid price

286. Holder

Buyer and subsequently owner of a currency pair.

287. IFEMA

International Foreign Exchange Master Agreement

288. IM

See International Monetary Market

289. IMF

See International Monetary Fund.

290. In the Money

When the strike price of an option is cheaper than the underlying asset’s current price

291. Inconvertible Currency

See Unconvertible Currency.

292. Indicative Quote

A market maker’s price. It is not dealable, but is for information purposes only. See Firm Quote.

293. Inflation

A rise in prices or a drop in the purchasing power of money

294. Initial Margin

The first deposit by a customer which determines a corresponding maximum trade size.

295. Initial Margin Requirement

When entering a position, the minimum amount that must be paid in cash.

296. Interbank Market

A market in which financial institutions can trade. The term refers to short term money or foreign exchange markets that are only accessible to banks or financial institutions. There is no physical market place; the transactions take place over communication networks such as Bloomberg or Reuters.

297. Interday Trading

Positions that are opened and closed within the same trading day.

298. Interdealer Market

Same as Interbank Market.

299. Interest Rate

The rate charged or paid for the use of money. An interest rate is expressed as an annual percentage of the principal. Interest rates often change as a result of inflation and Central Bank policies.

300. Interest Rate Carry

See Carry.