EUREX -  A major global derivaties exchange.

Euribor -  The interest rate for inter-bank lending in EUR between the primary banks in the Eurozone. 

Euro (EUR) -  The European single currency.

European Central Bank (ECB) -  The central bank created to manage monetary policy for the Eurozone.  It represents the EUR-member countries.

Eurogroup -  The group of finance ministers that represent the EUR-member countries.

European Financial Stability Fund (EFSF) -  The temporary instrument setup and funded by the European Union member countries to provide financial assistance to member countries that require it. To be replaced by the permanent European Stability Mechanism (ESM) in June 2013.

European/American Style Option -  A European option can only be exercised on the expiry date. Compared to an American style option which can be exercised at any time prior to expiry.

European Union (EU) -  The economic association of over a dozen European countries which seek to create a unified, barrier-free market for products and services throughout the continent, as well as a common currency with a unified authority over that currency.

EUROSTOXX 50 -  A stock index containing the fifty largest European companies by weighted market capitalisation.

Eurozone -  The group of countries that use the EUR.

Exotic -  A less broadly traded currency.

Expiry Date -  The last day on which the holder of an option can exercise his right to buy or sell the underlying security.

G7 -  A group comprised of Canada, France, Germany, Italy, Japan, UK, and USA whose leaders meet since 1986 one or more times every year to coordinate economic and monetary policies.

G20 -  A group comprised of the finance ministers and central bank governors of systemically important industrialised and developing economies to discuss key issues in the global economy.

GBP -  The Great British Pound.

Gilt -  Market term for government bonds issued by the UK government.

Government Bond -  A debt instrument issued by a government, through the Treasury or Debt Management Office, for a period of time with the purpose of raising capital by borrowing. a bond is a promise to repay the principal along with interest (coupons) on a specified date.

Gross Domestic Product (GDP) -  Measures the value of goods and services produced within a country. GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.

IFO (Information and Forschung) -  An important German economic research institute and think tank which produces economic indicators of the German economy.

Illiquid Market -  A market or currency pair which has a low volume of buy/sell orders and prices can therefore move a disproportionally large amount.

Inflation -  The rate at which prices for goods and services rise.

Initial Public Offering (IPO) -  The first sale of stock by a formerly private company. Following which they become publicly listed on a stock exchange.

INR -  The Indian Rupee.

Institute of International Finance (IIF) -  The global association of financial institutions. It supports the financial industry in managing risks, developing best practices & standards; and in advocating regulatory, financial, and economic policies.

Interbank Market -  The market in which banks/financial institutions trade with each other. The term refers to short-term money or foreign exchange markets that are only accessible to banks or financial institutions.

International Monetary Fund (IMF) -  An organization of 187 countries, working to foster global monetary cooperation, secure financial stability, promote high employment and sustainable economic growth.  Has moved increasingly towards providing monetary/fiscal policy advice and loans to countries undergoing crisis.

Intervention -  A policy tool in which a national central bank takes an active participatory role in influencing the country’s currency exchange rate.

ISM (Institute for Supply Management) -  An American organisation comprised of supply management professionals mainly from the manufacturing sector which produces several American economic indicators.

LIBOR -  Short for the London Inter-Bank Offered Rate. This rate is fixed daily by the British Bankers’ Association and is the interest rate for inter-bank lending.

LIFFE (London International Financial Futures Exchange) -  An association composed of the three largest future exchanges in the UK.

Limit Order - An order to transact at a specified price or better. 

Long -  The position which is in a buy direction.  In forex, the primary currency when bought is long and the other is short.

Loonie -  Market term for the CAD.

LSE -  The London Stock Exchange.

NASDAQ -  An American stock index which traditionally lists technology companies.

Nikkei 225 -  The primary Japanese index.

NOK -  Shorthand for the Norwegian Krone, the national currency of Norway.

Nonfarm Payrolls -  An economic indicator that measures the change in the number of employed people during the last month of all non-farming businesses. One the primary economic indicators used for the US economy.

NYSE -  The New York Stock Exchange.

Open Order -  Buy or sell order that does not expire until cancelled.

Operation Twist -  A method of lowering interest rates originally used by the US Federal Reserve in the 1960’s. In practise the Fed sells short term duration securities and buys long term maturities in order to lower the interest rate on the 10-year note in particular which is the benchmark for other rates such as mortgages.

Option -  A contract that grants the holder the right, but not the obligation, to buy or sell currency at a specified exchange rate during a specified period of time.

Parity -  When a currency pair trades at 1.0000 or in other words when two currencies are worth the same.

Peg -  An exchange rate for a currency where the government has decided to link the value to another currency or to some valuable commodity like gold.

People’s Bank of China (PBOC) -  The Chinese central bank.

Pip/Pips -  The smallest unit of price for a currency pair.  For example if EUR/USD increases in price from 1.4000 to 1.4005 it is said to have moved 5 pips.

Profit Taking -  The unwinding of a position to realise profits.

PMI (Purchasing Manager’s Index) -  An indicator of the economic health of the manufacturing/services sector within a country.

Put -  A term related specifically to options, wherein Put refers to the right but not the obligation to sell an underlying asset.

S&P 500 -  A leading American stock index which lists the top 500 companies from the NYSE and NASDAQ.

Scalping/Scalper -  A trading style of holding a position for very short period of time, usually measured in seconds, and exiting after a small change in profitable price direction.

SEK -  Shorthand for the Swedish Krona, the national currency of Sweden.

Semi-Official name -  Large institutional investors which sometimes invest in forex markets at the behest of a government. 

Short -  The opposite of 'Long', the position which is in a sell direction.  In forex, the primary currency when sold is short and the other is long.

Short Covering/Short Squeeze -  The purchase of an instrument to close out a short position. To close a position, an investor purchases the same number of assets that were sold short.

SNB -  The Swiss National Bank.

Sovereign Rating -  A measure of a country’s creditworthiness with particular focus on the ratings given by the big three rating’s agencies, Standard & Poor’s, Moody’s and Fitch.

Sovereign Wealth Fund -  A fund created by a country which has large foreign exchange reserves in order to manage those reserves.  For example, the China Investment Corporation.

Spot -  The market for immediate delivery and settlement of currencies, or the current trading price for a currency pair.

Spread -  The difference between the bid and ask price of a currency.

Stagflation -  A negative phenomenon when a country/economy experiences low growth levels and rising prices i.e. inflation during the same period.

STIRS -  Short-Term Interest Rate futures which are based on the various inter-bank lending rates such as Euribor. 

Ugly - Describing unforgiving market conditions that can be violent and quick.

UK100 - A name for the FTSE 100 index.

Unconvertible Currency -  A currency that cannot be exchanged for another because of foreign exchange regulations.

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

Uptick -  Opposite of down-tick, an increase in prices.

USD -  The United States Dollar, sometimes known as the "Greenback".

Haircut -  In lending the haircut refers to the difference between the value of a loan and the value of the collateral used to secure it.

Handle -  A market term for the larger denominations when quoting a financial instruments price. For example if EUR/USD moves in price from 1.4496 to 1.4500, it has traded with a "1.44 handle" then a "1.45 handle".

Hard Currency -  A currency that investors have confidence in.

Hedge -  Taking an opposite position or trade to one that is already initiated in order to reduce risk.

Hedge Fund -  A specific type of investment vehicle that explicitly pursues absolute returns on underlying investments through various trading strategies.

Hawk/Hawkish -  Hawkish refers to an economic outlook which generally supports higher interest rates.  Hawks take the position that higher interest rates are preferable with specific regard to inflation.

JGB’s - Japanese government bonds.

JPY - The Japanese Yen.

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.

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.

JPN225 - A name for the NEKKEI index.

Kampo -  The investment arm of the Japanese postal savings organisation which focuses on overseas investments and is active in the forex markets.

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 side-lines until a clear opportunity arises.

Kiwi (NZD) -  The New Zealand Dollar.

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.

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.

Margin -  The required initial deposit of collateral to enter into a position or foreign exchange trade. This is held as a deposit on any running contract.

Margin Call -  A demand for additional funds to cover positions.

Market Marker -  A firm that stands ready to buy and sell a particular asset class on a regular and continuous basis at a publicly quoted price in order to enhance liquidity, used particularly in stocks of companies.

Market Order -  An order for immediate execution at the best available price.

Maturity -  Associated with fixed income markets, referring to the date at which principal or redemption payments have to be repaid to the counterparty.

Model’s -  Automated trading systems which use quantitative algorithms to buy/sell.  Generally used by top end Hedge funds or large institutions.

Monetary Policy -  The actions of a central bank, currency board or other regulatory committee that determines the size and rate of growth of the money supply, which in turn affects interest rates.

Month End -  Fixings related to the adjustments that international portfolio managers need to make to their currency hedges based upon the performance other asset classes they hold positions in. These portfolio managers usually reweigh their portfolios at the end of each month if moves were larger than anticipated.

Moving Average -  A basic form of technical analysis which displays the average price of a security for a set period of time. 

MPC (Monetary Policy Committee) -  The 9-member committee from the Bank of England sets UK monetary policy.  It holds regular meetings at which the UK interest rate is reviewed, with minutes of the meeting released to explain the views of the committee.

Quantitative Easing (QE) -  A method of stimulating the economy by a central bank, whereby it buy assets, typically government bonds, to inject extra liquidity into the economy.

Range -  The difference between the highest and lowest price of a traded asset class recorded during a specified period.

Rating Agency -  Independent agencies such as Moody’s, Standard & Poor’s and Fitch which assess the credit quality and likelihood of default of an issuer of debt and produce a rating to reflect this.

RBA -  The Reserve Bank of Australia.

Real Money -  A market term for institutional investors, typically large asset mangers such as pension funds or money market funds.

Recession -  A general slowdown in economic activity over a sustained period of time. Technically defined as two consecutive quarters of falling GDP.

Repo -  Shorthand for 'Repurchase Operation' which is a contract in which a seller of securities agrees to buy them back at a specified time.

Reserve Currency -  A currency held by a central bank on a permanent basis as a store of international liquidity; these are normally the USD, EUR and GBP.

Resistance -  Resistance is a term used in technical analysis to describe a price level where selling momentum for the asset exceeds the buying momentum, forming a ceiling that blocks price movements in the upward direction.

RUB -  The Russian Ruble.

T-Bill -  Shorter term government debt issued at a discount from par value instead of having a coupon.

Tightening -  When a central bank raises interest rates or otherwise conducts monetary policy in an attempt to reduce demand and curb inflation.

Toshin -  Japanese investment funds which focus on investing in non-domestic assets and are active in the Forex markets.

TSLF (Term Securities Lending Facility) -  A 28-day lending facility managed by the Federal Reserve to enhance liquidity and foster proper functioning of the financial markets. In practice larger financial institutions can receive state guaranteed Treasury collateral from offered collateral such as credit card debt.

TARP (Troubled Asset Relief Program) -  A programme started in October 2008 whereby the US Treasury bought illiquid assets from banks and other financial institutions, thus allowing them to stabilise their balance sheets.

TALF (Term Asset-Backed Securities Loan Facility) -  A programme created by the US Fed to spur consumer credit lending. The program was announced on November 25th 2008, under the TALF the Fed lent USD 1trl.

Technical Analysis -  A method of evaluating securities by analysing statistics generated by historical market activity. Charts and other tools are used to identify patterns that can suggest future activity.

Trading Pit/Floor -  The area of an exchange where trade is conducted in the old open outcry manner as opposed to electronically. 

Troika -  An investigative body created and comprised of officials from the EU, ECB & IMF which periodically evaluate Euro-zone countries involved in bailouts.

TRL -  The Turkish Lira.

Vanilla -  Typically used to describe the simplest type of option. Opposite of exotic.

Volatility -  A measure of the amount by which an asset price is expected to fluctuate over a given period. Can also be implied from futures pricing, which is referred to as implied volatility.

Volatility Index (VIX) -  An index measuring the implied volatility in the S&P 500 index, it is viewed as a leading forecasting tool for market behaviour.

XAG/USD - Symbol for Silver Index.

XAU/USD - Symbol for Gold Index.

XAX.X - Symbol for AMEX Composite Index.

Yard -  A common term for milliard, which denotes one thousand million.

Yield -  The annual rate of return on an investment expressed as a percentage. It is calculated by dividing the coupon rate by the current price.

Yield Curve -  A graph plotting the interest rate of a given security (most commonly government debt) for a range of different maturities.

YOY - Abbreviation for year over year.

Yuan (CNY) -  The Chinese Yuan.