TRADER'S DICTIONARY - H

Hard Currency

Any "major" currency that investors have confidence in.

Head and Shoulders

Refers to a technical analysis pattern resembling two peaks (the shoulders) with a higher peak between the two shoulders (the head). The bottom boundary that both shoulders reach, is regarded as a key point traders can use to enter/exit positions.

Hedge/Hedging

Trading strategy implemented with the goal of reducing risk from adverse price movements that surrounds one’s primary position. Typically involves taking an offsetting position in another security/currency, and/or using derivatives to limit downside.

Hedge Fund

A private investment fund, usually open to a limited number of investors. Subject to fewer restrictions and regulations, hedge funds can use aggressive, often speculative and leveraged investment strategies in pursuit of higher returns.

High/Low

Refers to the day’s high and low prices, respectively.

Historical Volatility

Volatility in the underlying asset price, rate or return over a specific period in the past. It is used to check whether the implied volatility of an option is expensive by historical standards.

Hit the Bid

Acceptance by one buyer/seller of another’s price.

Horizontal Spread

Options strategy which involves the purchase of one option and simultaneously selling the same type of option with the same strike price but a different expiration.

Housing Starts

Economic Indicator that measures the number of new residential buildings that began construction during the previous month.

Hyperinflation

Inflation that is very high and difficult to control,whereby prices increase rapidly as a currency loses its value. Definitions vary, but one standard is inflation exceeding 50% in one month, and/or 100% in one year.