Financial Dictionary

Look up the terms traders use every day, from forex and CFDs to indicators and chart patterns. Pick a letter to browse its terms, then open any term to read its definition.

Terms starting with L

  • A lagging indicator follows price and confirms a trend after it has started, such as a moving average. It gives fewer false signals but reacts late.

  • Large cap stocks are shares in companies with a very high market capitalisation. They tend to be more liquid and less volatile than smaller companies.

  • A leading indicator aims to signal moves before they happen, such as RSI or the stochastic oscillator. It reacts quickly but gives more false signals.

  • Leverage lets traders control a large position with a smaller deposit, called margin. It magnifies both profits and losses, so losses can exceed the deposit on a single trade.

  • A limit order is an instruction to buy or sell at a set price or better. It controls the price paid but may not fill if the market never reaches it.

  • A line chart joins closing prices over time with a single line. It shows the overall trend clearly but leaves out highs, lows and opening prices.

  • Liquidity is how easily an asset can be bought or sold without moving its price. Liquid markets have tight spreads and deep order books.

  • A liquidity provider is a bank or financial firm that offers buy and sell prices, allowing other participants to trade. Brokers often source their prices from several of them.

  • Litecoin is a cryptocurrency created in 2011 as a lighter, faster alternative to bitcoin. It uses proof of work and has a fixed supply of 84 million coins.

  • The London Metal Exchange is the world's main market for industrial metals such as copper, aluminium and nickel. Its prices are used as global benchmarks.

  • The London trading session is the most active period in the forex market, running from about 08:00 to 17:00 GMT. Its overlap with the New York session usually brings the highest volume of the day.

  • A long position is a trade that profits if the price rises. Going long means buying first and selling later.

  • Loss aversion is the tendency to feel losses more strongly than gains of the same size. It can lead traders to close winners too early and hold losers too long.

  • Lot size is the standard trade size in forex. A standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000.