When we trade financial products, the number one barrier is terminologies. In addition, even general terms we use in our lives in the financial world such as stock, forex, cryptocurrencies may have different meanings. In such a case, this site has prepared a convenient term dictionary. It’s a small thing, but please refer to it when you want to find out glossaries with one hand for all investors from beginners who have just started trading to experienced people.
(1) The nominal value of a security or instrument.
(2) The official value of a currency.
The value of one currency in terms of another.
(1) Foreign exchange dealer’s slang for “your price is the correct market price”.
(2) Official rates in terms of SDR or other pegging currency.
The date on which a dividend or bond interest payment is scheduled to be delivered.
Payroll employment is a measure of the number of people being paid as employees by non-farm business establishments and units of government. Monthly changes in payroll employment reflect the number of net new jobs created or lost during the month. Changes are widely followed as an important indicator of economic activity. Large increases in payroll employment are seen as signs of strong economic activity that could eventually lead to higher interest rates that are supportive of the currency at least in the short term.
It means a foreign currency which is freely convertible, i.e. a currency which is permitted by the rules and regulations of the country concerned to be converted into major reserve currencies, and for which a fairly active and liquid market exists for dealing against the major currencies.
Foreign exchange reserves of oil producing nations arising from oil sales.
Paris Inter-bank Offered Rate.
See point. (0.0001 of a unit).
The 1985 Plaza Hotel agreement by the G5 to lower the dollar .
(1) 100th part of a per cent, normally 10,000 of any spot rate. Movements of exchange rates are usually in terms of points.
(2) One percent of an interest rate, e.g. from 8-9%.
(3) Minimum fluctuation or smallest increment of price movement.
The potential for losses arising from a change in government policy or due to the risk of expropriation (nationalization by the government).
The netted total exposure in 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).
The maximum position, either net long or net short, in one future or in all futures of one currency or instrument one person is permitted to hold or control.
Producer Price Indices, equivalently, Wholesale Price Indices.
(1) The amount by which a forward rate exceeds a spot rate.
(2) The amount by which the market price of a bond exceeds its par value.
(3) In regard to options, the price a put or call buyer must pay to a put or call seller for an option contract.
(4) The margin paid above the normal price level.
(1) The rate from which lending rates by banks are calculated in the US.
(2) The rate of discount of prime bank bills in the UK.
A dealer who buys or sells stock for his/her own account.
Producer Price Index (PPI)
PPI is a measure of the average level of prices of a fixed basket of goods received in primary markets by producers. A rising PPI is normally expected to lead to higher CPI, and thereby to potentially higher short term interest rates.
The unwinding of a position to realize profits.
Purchasing Power Parity
Model of exchange rate determination stating that the price of a good in one country should equal the price of the same good in another country after adjusting for the changes in the price due to the change in exchange rate. Also known as the law of one price.
Put Call Parity
The equilibrium relationship between premiums of call and put options of the same strike and expiry.
A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period.
＊These glossaries are based on easyMarkets educational tools.