Forex Glossary (E)

Here are some terms that used in FOREX trading with series of E. Economic Exposur: Reflects the impact of foreign exchange changes on the future competitive position of a company in the sense of the impact it can have on the future cash flows of the company.

Economic Indicator: A statistic which indicates current economic growth rates and trends such as retail sales and employment.

ECU - European Currency Unit: A basket of the member currencies. As a composite unit, the ECU consists of all the European Community currencies, which are individually weighted. It was created by the European Monetary System with the eventual goal of replacing the individual European member currencies.

Effective Exchange Rate: An attempt to summarize the effects on a country's trade balance of its currency's changes against other currencies.

EFT: Electronic Fund Transfer.

Either Way Market: In the Euro Interbank deposit market where both bid and offer rates for a particular period are the same.

EMS: European Monetary System.

EMU: European Monetary Union.

EOE: European Options Exchange.

Epsilon: The change in the price of an option associated with a 1% change in implied volatility (technically the first derivative of the option price with respect to volatility). Also referred to as eta, vega, omega and kappa.

ERM: Exchange Rate Mechanism.

Euro Clear: A computerized settlement and depository system for safe custody, delivery of, and payment for Eurobonds.

European Union: The group formerly known as the European Community.

Exchange Rate Risk: The potential loss that could be incurred from an adverse movement in exchange rates.

Exercise Price (Strike Price): The price at which an option can be exercised.

Exotic: A less broadly traded currency.

Expiration Date: (1) Options - the last date after which the option can no longer be exercised. (2) Bonds - the date on which a bond matures.

Expiration Month: The month in which an option expires.

Expiry Date: The last date on which an option can be bought or sold.

Expiry Date: The last day on which the holder of an option can exercise his right to buy or sell the underlying security.

Exposure: The total amount of money loaned to a borrower or country. Banks set rules to prevent overexposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.