Thursday, January 17, 2019
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Glossary of Forex (Foreign Exchange) Terminology  J – N

J

K

L

 

Leading Indicators – Statistics that are considered to predict upcoming economic movement.

 

LIBOR – The London Inter-Bank Offered Rate. Banks use LIBOR when borrowing from alternative bank.

 

Limit order – An order with restrictions on the maximum price to be paid or the minimum price to be received. EX) if the current price of USD/YEN is 102.00/05, then a limit order to buy USD would be at a price below 102. (ie 101.50)

 

Line Charts – The Line Chart connects single prices for a designated time period.

 

Liquidity – The ability of a market to allow large transaction with minimal to no impact on price steadiness.

 

Liquidation – The closing of an existing position through the implementation of an offsetting deal.

 

Long position – A position that rises in value if market prices increase. When one buys a currency, their position is long.

 

M

 

Margin – The mandatory equity that an investor must deposit to collateralize a position.

 

Margin Deposit – The margin deposit is not a down payment on a purchase of equity, as many perceive margins to be in the stock markets. Rather, the margin is a performance bond, or good faith deposit, to ensure against trading losses. The margin requirement allows traders to hold a position much larger than the account value, which allow for this high leverage.

 

Margin call – A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the client. If the equity balance in your account falls below the margin requirement, a margin call will be generated. In the event that an account exceeds its maximum allowable leverage, ALL open positions are liquidated immediately, regardless of the size or the nature of positions held within the account.

 

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

 

Market Risk – Exposure to changes in market prices.

 

Mark-to-Market – Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.

 

Maturity – The date for settlement or expiry of a financial instrument.

 

N

 

Narrow Market – occurs when there is light trading and greater fluctuations in prices relative to volume. This is often interchanged for THIN MARKET.

 

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