Glossary
P
Parities
The value of one currency in terms of another.
Points, Pips
The term used in currency market to represent the smallest incremental move an exchange rate can make. Depending on context, normally one basis point (0.0001 in the case of EUR/USD, GBD/USD, USD/CHF and .01 in the case of USD/JPY).
Position
The netted total commitments in a given currency. A position can be either flat or square (no exposure), long, (more currency bought than sold), or short (more currency sold than bought).
Political Risk
The potential for losses arising from a change in government policy or due to the risk of expropriation (nationalization by the government).
PPI
Producer Price Indices. See wholesale price indices.
Premium
In the currency markets, it is the amount of points added to the spot price to determine a forward or futures price.
Price
The price at which the underlying currency can be bought or sold.
Price Transparency
The ability of all market participants to "see" or deal at the same price.
Principal Value
The original amount invested by the client.
Profit Taking
The unwinding of a position to realize profits.
Purchasing Power Parity
Model of exchange rate determination stating that the price of a good in one country should equal the price of the same good in another country after adjusting for the changes in the price due to the change in exchange rate. Also known as the law of one price.
Put Option
A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period. | 
