Glossary

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Leading Indicators
Economic variables that are considered to predict future economic activity (i.e. Retail Sales, Personal Income, Prime Rate, Discount Rate, and Federal Funds Rate).

Leverage
Also called margin. The ratio of the amount used in a transaction to the required security deposit.

Liability
In terms of foreign exchange, the obligation to deliver to a counterparty an amount of currency either in respect of a balance sheet holding at a specified future date or in respect of an un-matured forward or spot transaction

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

Limit Order
An order to execute a transaction at a specified price (the limit) or better. A limit order to buy would be at the limit or lower, and a limit order to sell would be at the limit or higher.

Liquidity
Refers to the relationship between transaction size and price movements. For example, a market is "liquid" if large transactions can occur with only minimal price changes.

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

Long position
A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.Lot A unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.