Forex Glossary (E)

Commonly used forex terms and their definitions.

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Exponential Moving Average (EMA) - A moving average that gives greater weight to more recent data in an attempt to reduce the lag of (or "smooth") the moving average.

Easing - Modest decline in price.

Economic Indicator - Statistics which indicate current economic growth rates, trends and health of the local economy such as retail sales and employment.

EFT - Electronic Fund Transfer.

EMS - Abbreviation for European Monetary System, an agreement between member nations of the European Union to maintain an alignment between the exchange rates of their respective currencies.

Entry Limit - An order to buy or sell a foreign currency against another at a specific price. As opposed to a market order, limit orders might not be filled if the market moves away from the specified price.

Entry Stop - An instruction to the dealer to buy or sell a currency pair when it trades beyond a specified price. A buy order is at a rate that is higher then the current market rate, a sell order is at a rate that is lower then the current market rate. They serve to either protect a trader's profits or limit your losses. Stops become markets orders when executed so the order may not be filled at desired price. As a result the initial risk can be estimated but not guranteed.

EUR - A single European currency called the Euro, which officially replaced the national currencies of the member EU countries.

European-Style Option - An option contract that can be exercised only on the day of expiration (see American Style Option).

Exchange Control - Rules used to preserve or protect the value of a countries currency.

Exotic Currency - A less broadly traded currency, lower liquidity.

Expiration - This is the last day on which an option may either be exercised.

Exposure - In foreign exchange this relates to a potential for gain or a loss because of a movement in a foreign exchange rate.


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