Glossary of trading terms

Every 100 pips in the FX market starting with 000.

Hawkish is a term used in economics to describe a monetary policy that takes rigorous steps to control inflation, principally by means of raising interest rates. An inflation hawk will be less concerned with economic growth than they with reducing the likelihood of a recession.

Although hawkish individuals are often viewed negatively, as high interest rates reducing borrowing and investments, the monetary policies often encourage saving and can lead to imported goods becoming cheaper.

Hedging is an investment technique to offset potential investment losses by purchasing correlated investments that are expected to move in the opposite market direction.

Hedging techniques are popular methods for investors to protect themselves from risky positions; they hedge their bets. It’s like having investment insurance. If a sudden price reversal occurs, the damage gets limited due to the hedge position.

The phrase ‘hit the bid’ refers to the bid-ask spread, the price difference between the highest price a buyer is willing to purchase a security at and the lowest price the holder of that security is willing to sell at. A trader willing to sell immediately at the given bid price will ‘hit the bid.’

Names for the Hong Kong Hang Seng index.