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The industry’s
most important terms explained.

Discover a wealth of financial terms and definitions that every trader should know.

Forex Glossary

P

Purchasing Managers Index Services (Eurozone, UK)

Measures an outlook of purchasing managers in the service sector. Such managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Readings above 50 generally indicate expansion, while reading below 50 suggest economic contraction.

Profit/Loss

The actual “realized” gain or loss resulting from trading activities on Closed Positions, plus the theoretical “unrealized” gain or loss on Open Positions that have been Mark-to-Market.

Price Transparency

Describes quotes to which every market participant has equal access.

Premium

In the currency markets, describes the amount by which the forward or futures price exceed the spot price.

Position

The netted total holdings of a given currency.

Political Risk

Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.

Pips

The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.

Personal Income

Measures an individuals’ total annual gross earnings from wages, business enterprises and various investments. Personal income is the key to personal spending, which accounts for 2/3 of GDP in the major economies.