TRADER'S DICTIONARY - L

Labor Productivity Type of economic indicator that measures the growth in labor efficiency for producing goods and services.

Ladder Option Type of Option that locks in gains as the underlying asset reaches predetermined price levels.

Lagging Indicator Any economic indicator that reacts slowly to economic changes, and therefore has little predictive value.

Lapse Refers to an option that has expired worthless.

Lay Off The act of carrying out a transaction in order to offset a previous transaction and return to a square position.

Lesser Developed Country (LDC) Term generally used to describe a nation with a low level of material well being. There is no single internationally-recognized definition of developed country.

Leading Indicators Economic indicators that are used to forecast economic activity because they change before the economy does.

Leads and Lags Effect on foreign trade payments of an anticipated move in the exchange rate, typically a devaluation, whereby importers and exporters speed up or slow down their payments to try to achieve the most favorable conversion rates.

Leverage (Margin) The ability to borrow money to fund trading/investing activity. The amount that can be borrowed varies between brokers, and is quoted as a multiple of maximum position size to deposited funds.

Liability Generally, a claim on a company’s assets. In forex, the obligation to deliver to a counterparty an amount of currency at a specified future date, in connection to a forward or spot transaction. 

Limit Order Type of buy/sell order which cannot be executed unless a specified minimum or maximum price, respectively, is satisfied.

Limit Price The specified price associated with a limit order.

Limited Convertibility The condition whereby a currency cannot be freely exchanged (especially by primary users of that currency) for other currency. 

Line Chart Most basic type of chart, which plots a series of price levels over time and connects them with lines.

Liquid Market When there are plenty of lots of a particular currency being bought and sold every day.

Liquidation Transaction that offsets or closes out a previous position. 

Liquidity Refers to the ability of an asset/currency to be easily converted through an act of buying or selling without causing a significant movement in the price and with minimum loss of value. 

London Interbank Offered Rate (LIBOR) Daily reference rate based on the interest rates at which banks borrow unsecured funds from other banks in the London interbank market. It is roughly comparable to the U.S. Federal funds rate. 

London International Financial Futures Exchange (LIFFE) Association composed of the three largest future exchanges in the UK. 

Long When transacting in a currency pair, the long currency is the one listed first. The goal of being long is to profit from currency appreciation.

Lookback Option Type of option that allows the holder to "look back" at the prices of the underlying asset during the life of the option in order to select an optimal exercise price.

Loonie Slang term for a Canadian Dollar. Lot Standardized quantity in forex, composed of 100,000 units of a particular currency pair.