Glossary - E

ELECTRONIC TRADING
Trading via computer through an automated order entry and matching system.
 
EFSF
The European Financial Stability Facility (EFSF) was created as a temporary crisis resolution mechanism by the euro area Member States in June 2010. The assistance is financed by the EFSF through the issuance of bonds and other debt instruments on capital markets.
 
EQUITY SWAP
An equity swap is a financial derivative contract where a set of future cash flows are agreed to be exchanged between two counterparties at set dates in the future.
 
EUROPEAN CENTRAL BANK (ECB)
This is the central bank for the euro zone of the European Union.
 
EURO ZONE
The eurozone is an economic and monetary union (EMU) of 17 European Union (EU) member states that have adopted the euro (€) as their common currency and sole legal tender.
 
EXCHANGE RATES
An exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies is the rate at which one currency will be exchanged for another.
 
EXCHANGE TRADED FUND
An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. ETF‟s can also be based on and track an index such as the S&P500.
 
EXCHANGE TRADED PRODUCT
An exchange-traded product (ETP) is a derivatively-priced security which trades on a national stock exchange. ETPs are typically benchmarked to indices, stocks, commodities, or may be actively managed.
An example of an ETP is an ETF.
 
EXPECTED PAYOFF
This is used to calculate the average profit or loss factor of one trade and also show the expected profit/loss of next trade. Calculation for Expected Payoff = (Profit Trades / Total Trades) * (Gross Profit / Profit Trades) - (Loss Trades / Total Trades) * (Gross Loss / Loss Trades) where:
        •Total Trades - total amount of trades;
        •Profit Trades -amount of profitable transactions;
        •Loss Trades - amount of losing transactions;
        •Gross Profit - the summed up profit;
        •Gross Loss - the summed up loss.
 
EXPIRATION DATE
Last date that a futures or option contract may be traded.
 
EXPIRE
Letting a futures or option contract expire without closing the trade. The contract will be closed out and settled at the end of day settlement price (EDSP).
 
EXPOSURE
Market exposure is a financial term which measures the proportion of money invested in the markets at any given time.