Trading Glossary

Aussie

refers to the AUD/USD pair.

At or better

An instruction given to a dealer to buy or sell at the best rate that can be obtained.

At best

An instruction given to a dealer to buy or sell at the best rate that can be obtained.

AUS 200

the Australian Securities Exchange (ASX 200) is an index of the top 200 companies (by market capitalization) listed on the Australian stock exchange.

Ask (Offer) price

The price which a market is prepared to sell a product. Prices are quoted two-way as Bid/Ask. The Ask price is also known as the Offer.

In FX trading, the Ask price represents the price a trader can buy the base currency, shown to the right in a currency pair. For example, in the quote USD/CHF 1.4527/32, the base currency is USD, and the Ask price is 1.4532, meaning you can buy one US dollar for 1.4532 Swiss francs.

In CFD trading, the Ask also represents the price at which a trader can buy the product. For example, in the quote for UK OIL 111.13/111.16, the product quoted is UK OIL and the Ask price is £111.16 for one unit of the underlying market.

Asian session

23:00 – 08:00 (Tokyo).

Asian central banks

Is a reference to the collective central banks from the leading Asian “Tiger” economies. As these countries economies have grown these banks have become increasingly active in major currency exchange through management of growing pools of foreign currency reserves via trade surpluses. Their market share is substantial, and has been known to influence short-term currency prices.

Average Rate Option

A contract where the exercise price is based on the difference between the strike price and the average spot rate over the contract period. Sometimes called an “Asian option”.

Auction

Sale of an item to the highest bidder. (1) A method commonly used in exchange control regimes for the allocation of foreign exchange. (2) A method for allocating government paper, such as US Treasury Bills. Small investors are given preferential access to the bills. The average issuing price is then computed on the basis of the competitive bids accepted. In some circumstances for government auctions it is the yield rather than the price which is bid.

ADP Nonfarm Employment Change

Measures the change in number of employed people during the previous month, excluding the farming industry. ADP, a leading provider of employment solutions for businesses, releases this indicator two days before the official Bureau of Labor Statistics (BLS) employment report. While the indicator has only been in existence since early 2007, it’s shown some predictive value in regard to the BLS report.

Arbitrage

The simultaneous purchase or sale of a financial product with the intention of taking advantage of minor price differences that occur when comparing different markets.

Appreciation

A financial product is said to have ‘appreciated’ when it has strengthened in price from market demands.

Analyst

A financial professional who has expertise in evaluating investments, financial markets, industries, and sectors. An analyst is able to aggregate market data in order to issue buy, sell and hold recommendations for clients.

Adjustment

A government action normally followed by a change domestic economic policy usually to correct payment imbalances or to announce a change in a nation’s official rate.

Accrual

The distribution of premiums and discounts on forward exchange transactions that relate directly to deposit swap (interest arbitrage) deals, over the period of each deal.

Buy dips

Looking to buy 20-30-pip/point pullbacks in the course of an intra-day trend.

Buy

Taking a long position on a product.

Bundesbank

Germany’s central bank.

Bulls

Traders who expect prices to rise and who may be holding long positions.

Bullish / Bull market

Favoring a strengthening market and rising prices. For example, “We are bullish EUR/USD” means that we think the Euro will strengthen against the dollar.

Buck

Market slang for 1 million units of a dollar-based currency pair or for the US dollar in general.

Broker

An individual or firm that acts as an intermediary, bringing buyers and sellers together for a fee or commission. In contrast, a ‘dealer’ commits capital and takes one side of a position, hoping to earn a spread (profit)by closing out the position in a subsequent trade with another party.

British Retail Consortium (BRC) shop price index

A British measure of the rate of inflation at various surveyed retailers. This index only looks at price changes in goods purchased in retail outlets.

Book

In a professional trading environment, a ‘book’ is the summary of a trader’s or desk’s total positions.

Bond

A name for debt which is issued for a specified period of time.

Bollinger bands

A tool used by technical analysts. A band plotted two standard deviations on either side of a simple moving average, which often indicates support and resistance levels.

BOJ

Bank of Japan, the central bank of the Japan.

BOE

Bank of England, the central bank of UK

BOC

Bank of Canada, the central bank of Canada.

Blow off

The upside equivalent of capitulation. When shorts throw in the towel and cover any remaining short positions.

Black box

The term used for systematic, model-based or technical traders.

BIS

Bank for International Settlements located in Basel, Switzerland, is literally the central bank for central banks. The BIS frequently acts as the market intermediary between national central banks and the market. The BIS has become increasingly active as central banks have increased their currency reserve management. When the BIS is reported to be buying or selling at a level, it is usually for a central bank and thus the amounts can be large. The BIS is used to avoid market error when buying or selling interest for official government intervention.

Big figure

Refers to the first 3 digits of a currency quote, such as 117 USD/JPY or 1.26 in EUR/USD. If the price moves by 1.5 big figures, it has moved 150 pips.

Bid/ask spread

The difference between the Bid and the Ask (Offer) price.

Bid price

The price at which the market is prepared to buy a product. Prices are quoted two-way as Bid/Ask.

In FX trading, the Bid represents the price at which a trader can sell the base currency, shown to the left in a currency pair. For example, in the quote USD/CHF 1.4527/32, the base currency is USD, and the Bid price is 1.4527, meaning you can sell one US Dollar for 1.4527 Swiss francs.

In CFD trading, the Bid also represents the price at which a trader can sell the product. For example, in the quote for UK OIL 111.13/111.16, the Bid price is £111.13 for one unit of the underlying market.*

Bears

Traders who expect prices to decline and may be holding short positions.

Bearish / Bear market

Negative for price direction; favoring a declining market. For example, “We are bearish EUR/USD” means that we think the Euro will weaken against the dollar.

Basis point

A unit of measurement used to describe the minimum change in the price of a product.

Basing

A method used in technical analysis – a chart pattern that shows when demand and supply of a product are almost equal. It results in a narrow trading range and the merging of support and resistance levels.

Base rate

The lending rate of the central bank of a given country.

Base currency

The first currency in a currency pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6215 then one USD is worth CHF 1.6215. In the FX market, the US Dollar is normally considered the ‘base’ currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.

Barrier option

Any number of different option structures (such as knock-in, knock-out, no touch, double-no-touch-DNT) that attaches great importance to a specific price trading. In a no-touch barrier, a large defined payout is awarded to the buyer of the option by the seller if the strike price is not ‘touched’ before expiry. This creates an incentive for the option seller to drive prices through the strike level and creates an incentive for the option buyer to defend the strike level.

Barrier level

A certain price of great importance included in the structure of a Barrier Option. If a Barrier Level price is reached, the terms of a specific Barrier Option call for a series of events to occur.

Bar chart

A chart which consists of four significant points: the high and the low prices, which form a vertical bar, an opening price, which is marked with a horizontal line to the left of the bar and the closing price, which is marked with a horizontal line to the right of the bar.

Balance of trade

The value of a nation’s exports minus its imports.

Current account

The sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). The balance of trade is typically the key component to the current account.

Currency symbols

A three-letter symbol that represents a specific currency, for example USD (US Dollar).

Currency risk

The probability of an adverse change in exchange rates.

Currency pair

The two currencies that make up a foreign exchange rate, for example EUR/USD.

Currency

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

CTAs

Refers to commodity trading advisors, speculative traders whose activity can resemble that of short-term hedge funds; frequently refers to the Chicago-based or futures-oriented traders.

Crown currencies

Refers to CAD (Canadian Dollar), Aussie (Australian Dollar), Sterling (British Pound) and Kiwi (New Zealand Dollar) – countries of the Commonwealth.

Cross (e.g. Yen cross)

A pair of currencies that does not include the US Dollar.

Crater

The market is ready to sell-off hard.

CPI

A measure of inflation – short for Consumer Price Index.

Country risk

Risk associated with a cross-border transaction, including but not limited to legal and political conditions.

Counterparty

One of the participants in a financial transaction.

Counter currency

The second listed currency in a currency pair.

Corporates

Refers to corporations in the market for hedging or financial management purposes. Corporates are not always as price-sensitive as speculative funds and their interest can be very long-term in nature, making corporate interest less valuable to short-term trading.

Corporate action

An event that changes the equity structure (and usually share price) of a stock. For example, acquisitions, dividends, mergers, splits and spin offs are all corporate actions.

Convergence of MAs

A technical observation that describes moving averages of different periods moving towards each other, which generally forecasts a price consolidation.

Controlled risk

A position which has a limited risk because of a Guaranteed Stop.*

Contract size

The notional number of shares one CFD represents.

Contract note

A confirmation sent that outlines the exact details of the trade.

Contract

The standard unit of forex trading.

Contagion

The tendency of an economic crisis to spread from one market to another.

Construction spending

Measures the amount of spending towards new construction, released monthly by the U.S. Department of Commerce’s Census Bureau.

Consolidation

A period of range-bound activity after an extended price move.

Confirmation

A document exchanged by counterparts to a transaction that states the terms of said transaction.

COMPX

Symbol for NASDAQ Composite Index.

Components

The dollar pairs that make up the crosses (i.e. EUR/USD + USD/JPY are the components of EUR/JPY). Selling the cross through the components refers to selling the dollar pairs in alternating fashion to create a cross position.

Commodity currencies

Currencies from economies whose exports are heavily based in natural resources, often specifically referring to Canada, New Zealand, Australia and Russia.

Commission

A fee that is charged for buying or selling a product.

Collateral

An asset given to secure a loan or as a guarantee of performance.

Closing price

The price at which a product was traded to close a position. It can also refer to the price of the last transaction in a day trading session.

Closing

The process of stopping (closing) a live trade by executing a trade that is the exact opposite of the open trade.

Closed position

Exposure to a financial contract, such as currency, that no longer exists. A position is closed by placing an equal and opposite deal to offset the open position. Once closed, a position is ‘squared’.

Clearing

The process of settling a trade.

Cleared funds

Funds that are freely available, sent in to settle a trade.

Choppy

Short-lived price moves with limited follow-through that are not conducive to aggressive trading.

Chartist

An individual, also known as a technical trader, who uses charts and graphs and interprets historical data to find trends and predict future movements.

CFDs

A Contract for Difference (or CFD) is a type of derivative that gives exposure to the change in value of an underlying asset (such as an index or equity). It allows traders to leverage their capital (by trading notional amounts far higher than the money in their account) and provides all the benefits of trading securities, without actually owning the product. In practical terms, if you buy a CFD at $10 then sell it at $11, you will receive the $1 difference. Conversely, if you went short on the trade and sold at $10 before buying back at $11, you would pay the$1 difference.

Central bank

A government or quasi-governmental organization that manages a country’s monetary policy. For example, the US central bank is the Federal Reserve and the German central bank is the Bundesbank.

CBs

Abbreviation referring to central banks.

Cash price

The price of a product for instant delivery; i.e. the price of a product at that moment in time.

Cash market

The market in the actual underlying markets on which a derivatives contract is based.

Carry trade

A trade strategy that captures the difference in the interest rates earned from being long a currency that pays a relatively high interest rate and short another currency that pays a lower interest rate. For example: NZD/JPY has been a famous carry trade for some time. NZD is the high yielder and JPY is the low yielder. Traders looking to take advantage of this interest rate differential would buy NZD and sell JPY, or be long NZD/JPY. When NZD/JPY begins to downtrend for an extended period of time, most likely due to a change in interest rates, the carry trade is said to be ‘unwinding’.

Capitulation

A point at the end of an extreme trend when traders who are holding losing positions exit those positions. This usually signals that the expected reversal is just around the corner.

Candlestick chart

A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.

Canadian Ivey Purchasing Managers (CIPM) index

A monthly gauge of Canadian business sentiment issued by the Richard Ivey Business School.

Call option

A currency trade which exploits the interest rate difference between two countries. By selling a currency with a low rate of interest and buying a currency with a high rate of interest, the trader will receive the interest difference between the two countries while this trade is open.

CAD

The Canadian dollar, also known as Loonie.

Cable

The GBP/USD pair. the rate was originally transmitted to the US via a transatlantic cable during the mid1800’s when the GBP was the currency of international trade.

Downtrend

Price action consisting of lower-lows and lower-highs.

Dove

Dovish refers to data or a policy view that suggests easier monetary policy or lower interest rates. The opposite of hawkish.

DJIA or Dow

Abbreviation for the Dow Jones Industrial Average or US30.

Dividend

The amount of a company’s earning distributed to its shareholders – usually described as a value per share.

Divergence of MAs

A technical observation that describes moving averages of different periods moving away from each other, which generally forecasts a price trend.

Divergence

In technical analysis, a situation where price and momentum move in opposite directions, such as prices rising while momentum is falling. Divergence is considered either positive (bullish) or negative (bearish); both kinds of divergence signal major shifts in price direction. Positive/bullish divergence occurs when the price of a security makes a new low while the momentum indicator starts to climb upward. Negative/bearish divergence happens when the price of the security makes a new high, but the indicator fails to do the same and instead moves lower. Divergences frequently occur in extended price moves and frequently resolve with the price reversing direction to follow the momentum indicator.

Discount rate

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

Devaluation

When a pegged currency is allowed to weaken or depreciate based on official actions; the opposite of a revaluation.

Derivative

A financial contract whose value is based on the value of an underlying asset. Some of the most common underlying assets for derivative contracts are indices, equities, commodities and currencies.

Depreciation

The decrease in value of an asset over time.

Department of Communities and Local Government (DCLG) UK house prices

A monthly survey produced by the DCLG that uses a very large sample of all completed house sales to measure the price trends in the UK real estate market.

Delta

The ratio between the change in price of a product and the change in price of its underlying market.

Delivery

A trade where both sides make and take actual delivery of the product traded.

Delisting

Removing a stock’s listing on an exchange.

Deficit

A negative balance of trade or payments.

Defending a level

Action taken by a trader, or group of traders, to prevent a product from trading at a certain price or price zone, usually because they hold a vested interest in doing so, such as a barrier option.

Dealing spread

The difference between the buying and selling price of a contract.

Dealer

An individual or firm that acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

Deal

A term that denotes a trade done at the current market price. It is a live trade as opposed to an order.

Day trading

Making an open and close trade in the same product in one day.

Extended

A market that is thought to have traveled too far, too fast.

Exporters

Corporations who sell goods internationally, which in turn makes them sellers of foreign currency and buyers of their domestic currency. Frequently refers to major Japanese corporations such as Sony and Toyota, who will be natural sellers of USD/JPY, exchanging dollars received from commercial sales abroad.

Expiry date / price

The precise date and time when an option will expire. The two most common option expiries are 10:00am ET (also referred to as 10:00 NY time or NY cut) and 3:00pm Tokyo time (also referred to as 15:00 Tokyo time or Tokyo cut). These time periods frequently see an increase in activity as option hedges unwind in the spot market.

EX-dividend

A share bought where the buyer forgoes the right to receive the next dividend and instead it is given to the seller.

Eurozone Organization for Economic Co-operation and Development (OECD) leading indicator

A monthly index produced by the OECD. It measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices and interest rate spreads.

Eurozone labor cost index

Measures the annualized rate of inflation in the compensation and benefits paid to civilian workers and is seen as a primary driver of overall inflation.

European session

07:00 – 16:00 (London).

European Monetary Union (EMU)

An umbrella name for the group of policies that aims to coordinate economic and fiscal policies across EU Member States.

EURO

The currency of the Eurozone.

ESTX50

A name for the Euronext 50 index.

EST/EDT

The time zone of New York City, which stands for United States Eastern Standard Time/Eastern Daylight time.

End of Day Order (EOD)

An order to buy or sell at a specified price that remains open until the end of the trading day, typically at 5pm / 17:00 New York.

Economic indicator

A government-issued statistic that indicates current economic growth and stability. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.

ECB

European Central Bank, the central bank for the countries using the Euro.

Futures Exchange Traded Contracts

are firm commitments to deliver( or take delivery) a standardized amount of a product of commodity on a certain date at a predetermined price. Futures exist in currencies, money market deposits, bonds, shares and commodities. They are traded on exchanges with clearing corporations guaranteeing the contract, trades themselves done market to market.

Futures contract

An obligation to exchange a good or instrument at a set price and specified quantity grade at a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contracts – ETC), versus Forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.

Future

An agreement between two parties to execute a transaction at a specified time in the future when the price is agreed in the present.

Fundamental analysis

The assessment of all information available on a tradable product to determine its future outlook and therefore predict where the price is heading. Often non-measurable and subjective assessments, as well as quantifiable measurements, are made in fundamental analysis.

FTSE 100

The name of the UK 100 Index.

FRA40

A name for the index of the top 40 companies (by market capitalization) listed on the French stock exchange. FRA40 is also known as CAC 40.

Forward points

The pips added to or subtracted from the current exchange rate to calculate a forward price.

Forward

The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.

Funds

A term for USD/CAD/Fungibles Instruments that are equivalent, substitutable and interchangeable in law. May apply to certain exchange traded currency contracts offered on a number of exchanges; Can also refer to hedge fund types active in the market;

Fundamentals

The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.

Front Office

The activities carried out by the dealer, normal trading activities.

Free Reserves

Total reserves held by a bank less the reserves required by the authority.

Forward Rate

The rate at which a foreign exchange contract is struck today for settlement at a specified future date which is decided at the time of entering into the contract. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefore the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.

Forward Points

The interest rate differential between two currencies expressed in exchange rate points. The forward points are added to or subtracted from the spot rate to give the forward or outright rate depending on whether the currency is at a forward premium or discount.

Forward Deal

A deal with a value date greater than the spot value date.

Forward Cover Taking

Forward contracts to protect against movements in the exchange rate.

Forex Deal

The purchase or sale of a currency against sale or purchase of another currency. The maximum time for a deal is defined when the deal opens, the deal can be closed at any moment until the expiry date and time. A deal cannot be closed on its first 3 minutes, due to technical reasons.

Foreign Position

means a position under which one party agrees to purchase from or sell to the other party an agreed amount of foreign currency.

Foreign exchange (forex, fx)

The simultaneous buying of one currency and selling of another. The global market for such transactions is referred to as the “forex” or “FX” market.

FOMC minutes

Written record of FOMC policy-setting meetings are released 3 weeks following a meeting. The minutes provide more insight into the FOMC’s deliberations and can generate significant market reactions.

FOMC

Federal Open Market Committee, the policy-setting committee of the US Federal Reserve.

Follow-through

Fresh buying or selling interest after a directional break of a particular price level. The lack of follow-through usually indicates a directional move will not be sustained and may reverse.

Flat/square

Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 and then sold $500,000, thereby creating a neutral (flat) position.

Flat or flat reading

Economic data readings matching the previous period’s levels that are unchanged.

Fix

One of approximately 5 times during the FX trading day when a large amount of currency must be bought or sold to fill a commercial customer’s orders. Typically these times are associated with market volatility. The regular fixes are as follows (all times NY):

5:00am – Frankfurt
6:00am – London
10:00am – WMHCO (World Market House Company)
11:00am – WMHCO (World Market House Company) – more important
8:20am – IMM
8:15am – ECB

First In First Out (FIFO)

All positions opened within a particular currency pair are liquidated in the order in which they were originally opened.

Fill or kill

An order that, if it cannot be filled in its entirety, will be cancelled.

Fill

When an order has been fully executed.

Figure / The figure

Refers to the price quotation of ’00’ in a price such as 00-03 (1.2600-03) and would be read as ‘figure-three.’ If someone sells at 1.2600, traders would say ‘the figure was given’ or ‘the figure was hit.’

Fed officials

Refers to members of the Board of Governors of the Federal Reserve or regional Federal Reserve Bank Presidents.

Fed

The Federal Reserve Bank, the central bank of the United States, or the FOMC (Federal Open Market Committee), the policy-setting committee of the Federal Reserve.

Fair value

The difference between the price of a derivative contract and the underlying cash market price. Fair value means there are no arbitrage opportunities between the two prices.

Factory orders

The dollar level of new orders for both durable and nondurable goods. This report is more in depth than the durable goods report which is released earlier in the month.

Gunning, gunned

Refers to traders pushing to trigger known stops or technical levels in the market.

Guaranteed stop

A stop-loss order guaranteed to close your position at a level you dictate, should the market move to or beyond that point. It is guaranteed even if there’s gapping in the market.

Guaranteed order

Gross national product

Gross domestic product plus income earned from investment or work abroad.

Gross domestic product (GDP)

Total value of a country’s output, income or expenditure produced within its physical borders.

Greenback

Nickname for the US dollar.

Good ‘till date

An order type that will expire on the date you choose, should it not be filled beforehand.

Good ’til cancelled order (GTC)

An order to buy or sell at a specified price that remains open until filled or until the client cancels.

Good for day

An order that will expire at the end of the day if it is not filled.

Gold contract

The standard unit of trading gold is one contract which is equal to 10 troy ounces.

Gold certificate

A certificate of ownership that gold investors use to purchase and sell the commodity instead of dealing with transfer and storage of the physical gold itself.

Gold (Gold’s relationship)

Commonly accepted that gold moves in the opposite direction of the US dollar. The long-term correlation coefficient is largely negative, but shorter-term correlations are less reliable.

Going short

The selling of a currency or product not owned by the seller – with the expectation of the price decreasing.

GNP Gap

The difference between the actual real GNP and the potential real GNP. If the gap is negative an economy is overheated.

GNP Deflator

Removes inflation from the GNP figure. Usually expressed as a percentage and based on an index figure.

Going long

The purchase of a stock, commodity or currency for investment or speculation – with the expectation of the price increasing.

GMT

Greenwich Mean Time – The most commonly referred time zone in the forex market. GMT does not change during the year, as opposed to daylight savings/summer time.

Giving it up

A technical level succumbs to a hard-fought battle.

Given

Refers to a bid being hit or selling interest.

GER 30

An index of the top 30 companies (by market capitalization) listed on the German stock exchange – another name for the DAX.

Gearing (also known as leverage or margin)

Gearing refers to trading a notional value that is greater than the amount of capital a trader is required to hold in his or her trading account. It is expressed as a percentage or a fraction.

Gap / Gapping

A quick market move in which prices skip several levels without any trades occurring. Gaps usually follow economic data or news announcements.

Gamma

The rate at which a delta changes over time or for one unit change in the price of the underlying asset.

G8

Group of 8 – G7 nations plus Russia.

G7

Group of 7 Nations – United States, Japan, Germany, United Kingdom, France, Italy and Canada.

G10

G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.

Hawk

Hawkish A country’s monetary policy-makers are referred to as ‘hawkish’ when they believe that higher interest rates are needed, usually to combat inflation or restrain rapid economic growth or both.

Handle

Every 100 pips in the FX market starting with 000.

ISM non-manufacturing

An index that surveys service sector firms for their outlook, representing the other 80% of the US economy not covered by the ISM Manufacturing Report. Values over 50 generally indicate an expansion, while values below 50 indicate contraction.

Info Quote

Rate given for information purposes only.

ICCH

International Commodities Clearing House Limited, a clearing house based in London operating world wide for many futures markets.

JPN225

A name for the NIKKEI index.

Japanese machine tool orders

Measures the total value of new orders placed with machine tool manufacturers. Machine tool orders are a measure of the demand for companies that make machines, a leading indicator of future industrial production. Strong data generally signals that manufacturing is improving and that the economy is in an expansion phase.

Japanese economy watchers survey

Measures the mood of businesses that directly service consumers such as waiters, drivers and beauticians. Readings above 50 generally signal improvements in sentiment.

J Curve

A term describing the expected effect of a devaluation on a country’s trade balance. It is anticipated that import bills rise before export orders and receipts increase.

Knock-outs

Option that nullifies a previously bought option if the underlying product trades a certain level. When a knock-out level is traded, the underlying option ceases to exist and any hedging may have to be unwound.

Knock-ins

Option strategy that requires the underlying product to trade at a certain price before a previously bought option becomes active. Knock-ins are used to reduce premium costs of the underlying option and can trigger hedging activities once an option is activated.

Kiwi

Nickname for NZD/USD.

Keep the powder dry

To limit your trades due to inclement trading conditions. In either choppy or extremely narrow markets, it may be better to stay on the sidelines until a clear opportunity arises.

Lot

A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.

Loonie

Nickname for USD/CAD.

Longs

Traders who have bought a product.

Long position

A position that appreciates in value if market price increases. When the base currency in the pair is bought, the position is said to be long. This position is taken with the expectation that the market will rise.

London session

08:00 – 17:00 (London).

Liquidity

The ability of a market to accept large transactions with minimal to no impact on price stability.

Liquidation

The closing of an existing position through the execution of an offsetting transaction.

Liquid market

A market which has sufficient numbers of buyers and sellers for the price to move in a smooth manner.

Limited Convertibility

When residents of a country are prohibited from buying other currencies even though non-residents may be completely free to buy or sell the national currency and the foreign institutional investors also have the liberty to buy and sell shares on the stock exchange of that country.

Limits / Limit order

An order that seeks to buy at lower levels than the current market or sell at higher levels than the current market. A limit order sets restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 117.00/05, then a limit order to buy USD would be at a price below the current market, e.g. 116.50.

LIBOR

The London Interbank Offered Rate. Banks use LIBOR as a base rate for international lending.

Liability

Potential loss, debt or financial obligation.

Leveraged names

Short-term traders, referring largely to the hedge fund community.

Leverage

Also known as margin, this is the percentage or fractional increase you can trade from the amount of capital you have available. It allows traders to trade notional values far higher than the capital they have. For example: leverage of 100:1 means you can trade a notional value 100 times greater than the capital in your trading account.*

Level

A price zone or particular price that is significant technically or based on reported orders/option interest.

Leading indicators

Statistics that are considered to predict future economic activity.

Last dealing time

The last time you may trade a particular product.

Last dealing day

The last day you may trade a particular product.

Mutual fund

An open-end investment company. Equivalent to unit trust.

Momentum players

Traders who align themselves with an intra-day trend that attempts to grab 50-100 pips.

Momentum

A series of technical studies (e.g. RSI, MACD, Stochastics, Momentum) that assesses the rate of change in prices.

MoM

Abbreviation for month over month, which is the change in a data series relative to the prior month’s level.

Models

Synonymous with black box. Systems that automatically buy and sell based on technical analysis or other quantitative algorithms.

Medley report

Refers to Medley Global Advisors, a market consultancy that maintains close contacts with central bank and government officials around the world. Their reports can frequently move the currency market as they purport to have inside information from policy makers. The accuracy of the reports has fluctuated over time, but the market still pays attention to them in the short-run.

Maturity

The date for settlement or expiry of a financial product.

Market risk

Exposure to changes in market prices.

Market order

An order to buy or sell at the current price.

Market maker

A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial product.

Market capitalization

The total value of a listed company – share price multiplied by the number of shares issued.

Margin call

A request from a broker or dealer for additional funds or other collateral on a position that has moved against the customer.

Manufacturing production

Measures the total output of the manufacturing aspect of the Industrial Production figures. This data only measures the 13 sub sectors that relate directly to manufacturing. Manufacturing makes up approximately 80% of total Industrial Production.

Macro

The longest-term trader who bases their trade decisions on fundamental analysis. A “macro” trade’s holding period can last anywhere from around 6 months to multiple years.

Market Value

Market value of a forex position at any time is the amount of the domestic currency that could be purchased at the then market rate in exchange for the amount of foreign currency to be delivered under the forex Contract.

Mark-To-Market

The profits and/or losses are tallied at the end of the session according to the closing prices of the security and the account is “marked to the market” daily. The party will be called upon to make good the losses if there has been an adverse movement in the prices and it can book the profits in case there has been a favorable movement in the prices.

Marginal Risk

The risk that a customer goes bankrupt after entering into a forward contract. In such an event the issuer must close the commitment running the risk of having to pay the marginal movement on the contract.

Margin

Collateral that the holder of a position in securities, options, Forex or futures contracts, has to deposit to cover the credit risk of his counterparty. Other definitions to MARGIN, used in other areas are:
(1) Difference between the buying and selling rates, also used to indicate the discount or premium between spot or forward.

(2) For options, the sum required as collateral from the writer of an option.
(3) For futures, a deposit made to the clearing house on establishing a futures position account.
(4) The percentage reserve required by the US Federal Reserve to make an initial credit transaction.

Managed Float

When the monetary authorities intervene regularly in the market to stabilise the rates or to push the exchange rate in a required direction. Also called a dirty float.

Make a Market

A dealer is said to make a market when he quotes both the bid and offer prices at which he stands ready to buy and sell.

MM

Money Markets

MITI

Japanese Ministry of International Trade & Industry.

M4

In the US it is M2 plus negotiable CDs.

M3

In the UK it is M1 plus public and private sector time deposits and sight deposits held by the public sector.

M2

Includes demand deposits, time deposits and money market mutual funds excluding large CDs.

M1

Cash in circulation plus demand deposits at commercial banks. There are variations between the precise definitions used by national financial authorities.

MO

Amount of cash in circulation. UK figure.

NYA.X

Symbol for NYSE Composite Index.

Note

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

Not Held Basis Order

An 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.

Nostro Account

A 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.

Nickel

US term for five basis points.

No touch

An option that pays a fixed amount to the holder if the market never touches the predetermined Barrier Level.

New York session

8:00am – 5:00pm (New York time).

Net position

The amount of currency bought or sold which has not yet been offset by opposite transactions.

NAS100

A name for the NASDAQ 100 index.

Quarterly CFDs

A type of future with expiry dates every three months (once per quarter).*

RUT

Symbol for Russell 2000 Index.

Running profit / loss

An indicator of the status of your open positions; that is, unrealized money that you would gain or lose should you close all your open positions at that point in time.

Round trip

A trade that has been opened and subsequently closed by an equal and opposite deal.

Rollover

A rollover is the simultaneous closing of an open position for today’s value date and the opening of the same position for the next day’s value date at a price reflecting the interest rate differential between the two currencies.
In the spot forex market, trades must be settled in two business days. For example, if a trader sells 100,000 Euros on Tuesday, then the trader must deliver 100,000 Euros on Thursday, unless the position is rolled over. As a service to customers, all open forex positions at the end of the day (5:00 PM New York time) are automatically rolled over to the next settlement date. The rollover (or swap) adjustment is simply the accounting of the cost-of-carry on a day-to-day basis.

Risk management

The employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.

Risk

Exposure to uncertain change, most often used with a negative connotation of adverse change.

Revaluation

When a pegged currency is allowed to strengthen or rise as a result of official actions; the opposite of a devaluation.

Retail sales

Measures the monthly retail sales of all goods and services sold by retailers based on a sampling of different types and sizes. This data provides a look into consumer spending behavior, which is a key determinant of growth in all major economies.

Retail investor

An individual investor who trades with money from personal wealth, rather than on behalf of an institution.

Realized profit / loss

The amount of money you have made or lost when a position has been closed.

Real money

Traders of significant size including pension funds, asset managers, insurance companies, etc. They are viewed as indicators of major long-term market interest, as opposed to shorter-term, intraday speculators.

RBNZ

Reserve Bank of New Zealand, the central bank of New Zealand.

RBA

Reserve Bank of Australia, the central bank of Australia.

Rate

The price of one currency in terms of another, typically used for dealing purposes.

Range

When a price is trading between a defined high and low, moving within these two boundaries without breaking out from them.

Rally

A recovery in price after a period of decline.

Rolling over

The substituting of a far option for a near option of the same underlying stock at the same strike/exercise price.

Risks

There are risks associated with any market. It means variance of the returns and the possibility that the actual return might not be in line with the expected returns. The risks associated with trading foreign currencies are: market, exchange, Interest rate, yield curve, volatility, liquidity, forced sale, counterparty, credit, and country risk.

Risk management

The identification and acceptance or offsetting of the risks threatening the profitability or existence of an organization. With respect to foreign exchange involves, among others, consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.

Risk Premium

Additional sum payable or return to compensate a party for adopting a particular risk.

Revaluation

Increase in the exchange rate of a currency as a result of official action.

Reuter Dealing

A system for screen based trading that has been in operation since the early 1980s. It now has a matching optional enhancement known as Dealing 2000-2.

Retail Price Index

Measurement of the monthly change in the average level of prices at retail, normally of a defined group of goods.

Resistance

A price level at which the selling is expected to take place.

Reserves

Funds held against future contingencies, normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. They are an asset in the balance of payments.

Reserve Currency

A currency held by a central bank on a permanent basis as a store of international liquidity, these are normally Dollar, Deutschemark, and Sterling..

Recession

A decline in business activity. Often defined as two consecutive quarters with a real fall in GNP.

SWISSIE

The nickname for USD/CHF.

Swap

A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

Suspended trading

A temporary halt in the trading of a product.

Support levels

A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.

Support

A price that acts as a floor for past or future price movements.

Strike price

The defined price at which the holder of an option can buy or sell the product.

Stops building

Refers to stop-loss orders building up; the accumulation of stop-loss orders to buy above the market in an up move, or to sell below the market in a down move.

Stop loss order

This is an order placed to sell below the current price (to close a long position), or to buy above the current price (to close a short position). Stop loss orders are an important risk management tool. By setting stop loss orders against open positions you can limit your potential downside should the market move against you. Remember that stop orders do not guarantee your execution price – a stop order is triggered once the stop level is reached, and will be executed at the next available price.

Stop entry order

This is an order placed to buy above the current price, or to sell below the current price. These orders are useful if you believe the market is heading in one direction and you have a target entry price.

Stop order

A stop order is an order to buy or sell once a pre-defined price is reached. When the price is reached, the stop order becomes a market order and is executed at the best available price. It is important to remember that stop orders can be affected by market gaps and slippage, and will not necessarily be executed at the stop level if the market does not trade at this price. A stop order will be filled at the next available price once the stop level has been reached. Placing contingent orders may not necessarily limit your losses.

Stop loss hunting

When a market seems to be reaching for a certain level that is believed to be heavy with stops. If stops are triggered, then the price will often jump through the level as a flood of stop-loss orders are triggered.

Stock index

The combined price of a group of stocks – expressed against a base number – to allow assessment of how the group of companies is performing relative to the past.

Stock exchange

A market on which securities are traded.

SPX500

A name for the S&P index.Sterling – Nickname for GBP/USD. Also known as Pound or British Pound.

Square

Purchase and sales are in balance and thus the dealer has no open position.

Spread

The difference between the bid and offer prices.

Spot trade

The purchase or sale of a product for immediate delivery (as opposed to a date in the future). Spot contracts are typically settled electronically.

Spot price

The current market price. Settlement of spot transactions usually occurs within two business days.

Spot market

A market whereby products are traded at their market price for immediate exchange.

Sovereign names

Refers to central banks active in the spot market.

SNB

Swiss National Bank, the central bank of Switzerland.

Sloppy

Choppy trading conditions that lack any meaningful trend and/or follow-through.

Slippery

A term used when the market feels like it is ready for a quick move in any direction.

Slippage

The difference between the price that was requested and the price obtained typically due to changing market conditions.

Simple Moving Average (SMA)

A simple average of a pre-defined number of price bars. For example, a 50 period daily chart SMA is the average closing price of the previous 50 daily closing bars. Any time interval can be applied.

Sidelines, sit on hands

Traders staying out of the markets due to directionless, choppy, unclear market conditions are said to be ‘on the sidelines’ or ‘sitting on their hands’.

Shorts

Traders who have sold, or shorted, a product, or those who are bearish on the market.

Short-covering

After a decline, traders who earlier went short begin buying back.

Short squeeze

A situation in which traders are heavily positioned on the short side and a market catalyst causes them to cover (Buy) in a hurry, causing a sharp price increase.

Short position

An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.

SHGA.X

Symbol for Shanghai A Index.

Settlement

The process by which a trade is entered into the books, recording the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.

Sell

Taking a short position in expectation that the market is going to go down.

Sector

A group of securities that operate in a similar industry.

SEC

Securities and Exchange Commission.

Swissy

Market slang for Swiss Franc.

Swift

Society for Worldwide Inter-bank Financial Telecommunication is a clearing system for international trading.

Swap

The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction.

Support Levels

A price level at which the buying is expected to take place.

Structural Unemployment

Unemployment levels inherent in an economic structure.

Strip

A combination of two puts and one call.

Strike Price

Also called exercise price. The price at which an option holder can buy or sell the underlying instrument.

Straddle

The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.

Stop Out Price

US term for the lowest accepted price for Treasury Bills at auction.

Stop Loss Order

Order given to ensure that, should a currency weaken by a certain percentage, a short position will be covered even though this involves taking a loss. Realize profit orders are less common.

Sterling

British pound, otherwise known as cable.

Sterilization

Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.

Standard and Poor’s (S&P)

A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&P 500.

Stagflation

Recession or low growth in conjunction with high inflation rates.

Stable Market

An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.

Soft Market

More potential sellers than buyers, which creates an environment where rapid price falls are likely.

Short

A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms.

Settlement

Actual physical exchange of one currency for another.

Settlement Date

It means the business day specified for delivery of the currencies bought and sold under a forex contract.

Selling Rate

Rate at which a bank is willing to sell foreign currency.

SOFFEX

Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.

SITC

Standard International Trade Classification. A system for reporting trade statistics in a common manner.

TYO10

Symbol for CBOE 10-Year Treasury Yield Index.

Two-way price

When both a bid and offer rate is quoted for an FX transaction.

Turnover

The total money value or volume of all executed transactions in a given time period.

Trend

Price movement that produces a net change in value. An uptrend is identified by higher highs and higher lows. A downtrend is identified by lower highs and lower lows.

Transaction date

The date on which a trade occurs.

Transaction cost

The cost of buying or selling a financial product.

Trailing stop

A trailing stop allows a trade to continue to gain in value when the market price moves in a favorable direction, but automatically closes the trade if the market price suddenly moves in an unfavorable direction by a specified distance. Placing contingent orders may not necessarily limit your losses.

Trading range

The range between the highest and lowest price of a stock usually expressed with reference to a period of time. For example: 52-week trading range.

Trading offered

A pair is acting weak and/or moving lower, and offers to sell keep coming into the market.

Trading heavy

A market that feels like it wants to move lower, usually associated with an offered market that will not rally despite buying attempts.

Trading halt

A postponement to trading that is not a suspension from trading.

Trading bid

A pair is acting strong and/or moving higher; bids keep entering the market and pushing prices up.

Trade size

The number of units of product in a contract or lot.

Trade balance

Measures the difference in value between imported and exported goods and services. Nations with trade surpluses (exports greater than imports), such as Japan, tend to see their currencies appreciate, while countries with trade deficits (imports greater than exports), such as the US, tend to see their currencies weaken.

Tomorrow next (Tom/Next)

Simultaneous buying and selling of a currency for delivery the following day.

Tokyo session

09:00 – 18:00 (Tokyo).

Time to maturity

The remaining time until a contract expires.

Tick (size)

A minimum change in price, up or down.

Thirty (30) yr.

For example: UK 30-year gilt – UK government issued debt which is repayable in 30 years.

Thin

Illiquid, slippery, or choppy market environment. A light volume market that produces erratic trading conditions.

Ten (10) yr.

For example: US 10-year note – US government issued debt which is repayable in ten years.

Technicians or Techs

Traders who base their trading decisions on technical or charts analysis.

Takeover

Assuming control of a company by buying its stock.

T/P

Stands for “take profit.” Refers to limit orders that look to sell above the level that was bought, or buy back below the level that was sold.

Transaction

The buying or selling of securities resulting from the execution of an order.

Transaction Exposure

Potential profit and loss generated by current foreign exchange transactions

Transaction Date

The date on which a trade occurs.

Tranche

A portion of a deal or structured financing, specifically used for borrowings from the IMF.

Trade Date

The date on which a trade occurs.

Tomorrow Next (Tom next)

Simultaneous buying and selling of a currency for delivery the following day and selling for the next day or vice versa.

Tick

A minimum change in price, up or down.

Thin Market

A market in which trading volume is low and in which consequently bid and ask quotes are wide and the liquidity of the instrument traded is low.

Theta

A measure of the sensitivity of the price of an option to a change in its time to expiry.

Terms of Trade

The ratio between export and import price indices.

Technical Correction

An adjustment to price not based on market sentiment but technical factors such as volume and charting.

Technical Analysis

The study of the price that reflects the supply and demand factors of a currency. Common methods are flags, trend-lines spikes, bottoms, tops, pennants, patterns and gaps.

TIFFE

Tokyo International Financial Futures Exchange.

TIBOR

Tokyo Interbank Offered Rate.

T-Bill

Treasury Bill.

US prime rate

The interest rate at which US banks will lend to their prime corporate customers.

US OIL

A name for WTI Crude Oil.

US30

A name for the Dow Jones index.

Uptick rule

In the US, a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

Uptick

A new price quote at a price higher than the preceding quote.

Unrealized gain/loss

The theoretical gain or loss on open positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains/Losses become Profits/Losses when the position is closed.

University of Michigan’s consumer sentiment index

Polls 500 US households each month. The report is issued in a preliminary version mid-month and a final version at the end of the month. Questions revolve around individuals’ attitudes about the US economy. Consumer sentiment is viewed as a proxy for the strength of consumer spending.

Unemployment rate

Measures the total workforce that is unemployed and actively seeking employment, measured as a percentage of the labor force.

Underlying

The actual traded market from where the price of a product is derived.

UK producers price index output

Measures the rate of inflation experienced by manufacturers when selling goods and services.

UK producers price index input

Measures the rate of inflation experienced by manufacturers when purchasing materials and services. This data is closely scrutinized since it can be a leading indicator of consumer inflation.

UK OIL

A name for Brent Crude Oil.

UK manual unit wage costs

Measures the change in total labor cost expended in the production of one unit of output.

UK jobless claims change

Measures the change in the number of people claiming unemployment benefits over the previous month.

UK HBOS house price index

Measures the relative level of UK house prices for an indication of trends in the UK real estate sector and their implication for the overall economic outlook. This index is the longest monthly data series of any UK housing index, published by the largest UK mortgage lender (Halifax Building Society/Bank of Scotland).

UK claimant count rate

Measures the number of people claiming unemployment benefits. The claimant count figures tend to be lower than the unemployment data since not all of the unemployed are eligible for benefits.

UK average earnings including bonus/ Excluding bonus

Measures the average wage including/excluding bonuses paid to employees. This is measured QoQ from the previous year.

UK100

A name for the FTSE 100 index.

Ugly

Describing unforgiving market conditions that can be violent and quick.

Under-Valuation

An exchange rate is normally considered to be undervalued when it is below its purchasing power parity.

Volatility

Referring to active markets that often present trade opportunities.

VIX or Volatility index

Shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. The VIX is a widely-used measure of market risk and is often referred to as the “investor fear gauge.”

Variation margin

Funds traders must hold in their accounts to have the required margin necessary to cope with market fluctuations.

Vostro Account

A local currency account maintained with a bank by another bank. The term is normally applied to the counterparty’s account from which funds may be paid into or withdrawn, as a result of a transaction.

Volatility

A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes (historic). Can be implied from futures pricing, implied volatility.

Velocity of Money

The speed with which money circulates or turnover in the economy. It is calculated as the annual national income: average money stock in the period.

Vega

Expresses the price change of an option for a one per cent change in the implied volatility.

Variation Margin

Funds required to be deposited by a client when a price movement has caused funds to fall below the stipulated percentage of the value of the contract.

Vanilla

A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike. To compare with exotic options which have additional terms.

Value Spot

Normally settlement is for two working days from the date the contract is entered into. Value Today Transaction is executed for same day settlement; sometimes also referred to as “cash transaction”.

WSJ

Stands for The Wall Street Journal

Working order

Where a limit order has been requested but not yet filled.

Wholesale prices

Measures the changes in prices paid by retailers for finished goods. Inflationary pressures typically show earlier than the headline retail.

Whipsaw

Slang for a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Wedge chart pattern

Chart formation that shows a narrowing price range over time, where price highs in an ascending wedge decrease incrementally, or in a descending wedge, price declines are incrementally smaller. Ascending wedges typically conclude with a downside breakout and descending wedges typically terminate with upside breakouts.

Writer

The seller of a position. Also known as the grantor of the trade. “Writing a Currency” is to sell it.

World Bank

A bank made up of members of the IMF whose aim is to assist in the development of member states by making loans where private capital is not available.

Working day

A day on which the banks in a currency’s principal financial center are open for business. For FX transactions, a working day only occurs if the bank in both (all relevant currency centers in the case of a cross) are open.

Wholesale Price Index

It measures changes in prices in the manufacturing and distribution sector of the economy and tends to lead the consumer price index by 60 to 90 days. The index is often quoted separately for food and industrial products.

Wholesale Money

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

XAX.X

Symbol for AMEX Composite Index.

XAU/USD

Symbol for Gold Index.

XAG/USD

Symbol for Silver Index.

Yuan

The Yuan is the base unit of currency in China. The Renminbi is the name of the currency in China, where the Yuan is the base unit.

YoY

Abbreviation for year over year.

Yield Curve

The graph showing changes in yield on instruments depending on time to maturity. A system originally developed in the bond markets is now broadly applied to various financial futures. A positive sloping curve has lower interest rates at the shorter maturities and higher at the longer maturities. A negative sloping curve has higher interest rates at the shorter maturities.

Yield

The percentage return from an investment.

Yard

A billion units.

Zero Coupon Bond

A bond that pays no interest. The bond is initially offered at a discount to its redemption value.

Z-Certificate

Certificate issued by the Bank of England to “discount houses” in lieu of stock certificates to facilitate their dealing in the short dated gilt edge securities.