Page 180 - Ultimate Guide to Currency Trading

Investment grade bonds
Bonds that are issued from the highest quality lenders: used in a one-tenth solution portfolio.
See one-tenth solution.

Lagging indicators
A fundamental economic indicator that is measured and reported to the public that monitors
changes in the economy after the changes have already taken place (sometimes with a delay of
up to three months or more).

Leading indicators
A fundamental economic indicator that can be used to deter-mine the direction that an
economy will be heading in the next several months. See lagging indicators.

Leverage ratio
The multiplier to determine the amount of currency you are able to trade with a given cash
balance.

Liquidity
The ability to close out an asset quickly and go back into cash. Also when a central bank adds
money supply into the economic system.

M1
The total of the cash, coins, checking account balances, and traveler's checks circulating in a
particular economy.

M2
Everything included in the M1 plus savings account deposits, money market mutual funds held
at brokerage firms, certificates of deposit, and U.S. dollars on deposit in foreign banks.

M3
The M3 consists of everything included in M1 and M2 plus the cash products that large banks
and business have on deposit. It includes CDs and other structured time deposits in both
domestic and Eurodollars.

Macro fund
A hedge-fund trading idea that includes all forms of investments, including stock, options,
futures, and Forex.

Major FX pair
A currency pair that has a big four currency on one of its ends of the trade. See big four.

Margin call
A forced closing of your positions when the losses of the account have reached a point of
negative value.

Market risk appetite
The measure of how much traders and investors are adding stocks, commodities and other
risky assets to their portfolios.