Leverage
The ability to control a large position in the market with a relatively small amount of capital.
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L · Trading glossary
10 termsLiquidity
The degree to which an asset or security can be quickly bought or sold in the market without significantly affecting its price.
Liquid and Illiquid Markets
The ability of a market to buy and sell at ease with no impact on price stability. A market is described as liquid if the spread between the bid and the offer is small. Another measure of liquidity is the presence of buyers and sellers, with more players creating tighter spreads. Illiquid markets have few players, hence, wider dealing spreads.
Liquid Assets
Assets that can be easily converted into cash. Examples include money market fund shares, US Treasury Bills, bank deposits, etc.
Long
A position to purchase more of an instrument than is sold, hence, an appreciation in value if market prices increase.
Leading Indicators
Statistics that are considered to precede changes in economic growth rates and total business activity, e.g., factory orders.
Liability
In terms of foreign exchange, the obligation to deliver to a counterparty an amount of currency either in respect of a balance sheet holding at a specified future date or in respect of an unmatured forward or spot transaction.
Limit order
A request to deal as a buyer or seller for a foreign currency transaction at a specified price, or at a better price, if obtainable.
Liquidation
Any transaction that offsets or closes out a previously established position.
Liquidity
The ability of a market to accept large transactions.
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