Forex Glossary (L)

Commonly used forex terms and their definitions.


Leading Indicators - A statistic that is considered to precede changes in economic growth rates and total business activity, e.g. factory orders.

Leverage - (Gearing) The usage of a margin to trade on a larger capital base. In foreign exchange a trader's leverage is often represented as a percentage of margin requirements. For example a 1% margin will give a 100:1 leverage, and so a trader with a deposit of $10,000 will be able to hold open positions of $1,000,000 being 100 times his net equity. The high degree of leverage that is obtainable in the trading of off-exchange foreign currency transactions can work against you as well as for you. Leverage can lead to large losses as well as gains.

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.

Limit Order - 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. During times of extreme volatility it can be difficult or impossible to execute orders.

Line Chart - Price charts that connect periodical prices of a given market over a span of time that form a curving line on the chart. This type of chart is most useful with overlay or comparison charts that are commonly employed in intermarket analysis. It is also used for visual trend analysis of open-end mutual funds.

Liquidation - Any transaction that offsets or closes out a previously established position.

Liquidity - The ability of a market to accept large transactions.

Long - A market position where the client has bought a currency he previously did not hold. Normally expressed in base currency terms.

Looney - Slang for the Canadian Dollar.


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