TRADER'S DICTIONARY - E

Easing

Refers to the use of monetary policy to expand the money supply, either by lowering interest rates or through open market operations.

Econometrics

A branch of economics which seeks to develop and apply quantitative or statistical methods to the study and elucidation of economic/financial principles.

Economic Calendar

Type of calendar that is intended to inform financiers and traders about the scheduled major economic indicators, government reports and speeches by influential people.

Economic Indicator

Statistic that seeks to proxy current economic growth and stability. Economic indicators fall into three categories: leading, lagging and coincident.

Effective Exchange Rate

Use of trade/current account balance to derive a country’s "fair" exchange rate

Efficient Market Theory

Notion that financial markets are "informationally efficient", or that prices on traded assets already reflect all known information and past prices, and instantly change to reflect new information.

EFT

Electronic Funds Transfer.

Elliot Wave Theory

Principle that collective investor psychology (or crowd psychology) moves from optimism to pessimism and back again. These swings create patterns, as evidenced in the price movements of a market at every degree of trend, over durations that range from minutes to decades.

Envelopes

While Bollinger Bands place boundary lines based on standard deviations, envelopes place lines at fixed percentage points above and below a moving average line, designating entry and exit points for trades.

End of the Day (Mark to Market)

Type of accounting process, whereby the value of asset(s) are recorded at the end of each trading day based on the closing rate/price.

Equilibrium

Price level/range that seems to represent a balance between demand and supply for a given currency pair.

Escrow Account

Segregated account which seeks to separate customer deposits from dealer operating funds.

Euro

Official currency of 16 of the 27 member states of the European Union. The states, known collectively as the Eurozone, are Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. The euro is the second largest reserve currency and the second most traded currency in the world after the US Dollar.

Euro Interbank Offered Rate (Euribor)

Rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank.

Eurobond

Bond in US dollars or other currency that is sold to investors who don’t reside in the country whose currency is used.

Eurocurrency

Currency that is deposited in a financial institution located outside the region where the currency is primarily used.

Eurodollar Bonds

Type of Eurobond that pays both interest and principal in euros, whose most salient feature is that they are not regulated by the SEC.

European Central Bank (ECB)

Central Bank for the new European Monetary Union.

European-style Option

An option or covered warrant that may be exercised only on the date of expiration.

European Union

Economic and political union of 27 member states, located primarily in Western Europe.

Excess Margin Deposits

Deposited funds in a trading account above and beyond basic margin requirements.

Execution

Completion of a trade.

Exercise

Action by a holder taking advantage of a privilege or right (to buy a security/asset) offered by a company or other financial institution. This includes warrants, options, and other financial instruments.

Exotics

Currencies that are not actively traded; used in contradistinction to "major currencies."

Exotic Option

Derivative which has features making it more complex than commonly traded products (vanilla options). These products are usually traded over-the-counter (OTC), or are embedded in structured notes.

Expiration Date

Date after which a financial contract or derivative is no longer valid.

Exponential Moving Average (EMA)

Compared to a simple moving average, which distributes weight equally across a data series, exponential moving averages afford greater weight to recent prices/data.

Exposure

Net of all long and short positions for a particular currency (pair).