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Forex Dictionary

Term Equivalent terms Definition
Lagging Indicator Economic indicators used to confirm a previous economic trend. For example, a fall in unemployment rate is considered a lagging indicator of an economic recovery, occurring after other indicators of recovery, such as GDP growth.
Leading Indicators Economic indicators used to predict a future trend before it has occurred. For example, a reduction in the average number of hours worked by manufacturing employees is a leading indicator of economic slowdown or recession.
Leverage The ratio of margin to the maximum position size. With a deposit of $1000 and a leverage of 50:1, a trader could enter a position with a face value of $50,000 (5 mini lots). Leveraging allows you to profit quickly, but lose money just as fast.
Liability The obligation to deliver currency as part of a spot transaction. However, in speculative forex trading, currency is not delivered and instead, all profits and losses are subtracted from margin deposits.
Limit order An order to buy a currency pair at a specified price (the limit) or better. As an example, if the current price of USD/YEN is 90.00/05, then a limit order to buy USD would be at a price below 90. (i.e., 89.50), and the order will be executed only if the market reaches or betters that price.
Line Charts In technical analysis, it is simple chart that shows a market’s price (such as close) over a period of time, connecting the market’s closing prices by a line, but definitely not as popular or useful as the bar chart or the candlestick chart.
Liquidation The result of a margin call, all positions are closed to prevent further loss.
Liquidity Describes a market where there are many buyers and sellers generating a great deal of volume, and this larger liquidity translates into tighter spreads.
London Inter-Bank Offered Rate LIBOR The interest rate participating banks offer one another for unsecured loans on the London wholesale money market (or interbank market), and is roughly comparable to the US Federal funds rate. It is the most widely used benchmark for short term interest rates in the world, because most of the world’s largest borrowers borrow money on the London market.
Long position When one buys a currency, their position is long.
Lots Standardized method of sizing positions in forex; standard lots usually represent 100,000 units of a particular currency ($10 per pip), mini lots represent 10,000 units ($1 per pip), and micro lots represent 1,000 units ($0.10 per pip).
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