146 terms

Dictionary: E

E-mini: A reduced-size electronically traded futures contract, originally launched as a fraction of a full-size floor contract.
Early assignment: Being assigned on a short option before expiration, which converts the leg into stock and can leave the rest of a spread unhedged.
Early exercise: Exercising an American option before expiration; rational only when the remaining extrinsic value is worth less than what exercising captures.
Early exercise boundary: The price level at which exercising an American option immediately becomes worth more than holding it; the line a lattice model computes at every step.
Earnings beat: Reported results above consensus estimates, which is the normal outcome rather than a surprise, because expectations are usually managed downward first.
Earnings call: The conference call after an earnings release where management discusses results and takes analyst questions.
Earnings miss: Reported results below consensus estimates; rarer than a beat and usually punished harder, because it breaks the assumption that management controls the outcome.
Earnings play: A position built around a scheduled announcement, where implied volatility is inflated beforehand and collapses immediately afterwards.
Earnings quality: How well reported profit reflects sustainable, cash-backed economic performance rather than accounting choices, one-off items and optimistic estimates.
Earnings report: A company's quarterly release of revenue, profit, and outlook; the most important scheduled event for an individual stock.
Earnings yield: Earnings per share divided by price, the inverse of the price-to-earnings ratio, expressed as a percentage so it can be compared with bond yields.
Easy to borrow: A broker's list of stocks with ample lendable supply, which can be shorted immediately at a negligible fee without a specific locate.
EBITDA: Operating income with depreciation and amortisation added back; a rough cash-earnings proxy used heavily in leveraged and capital-intensive situations.
EBITDA margin: EBITDA divided by revenue; a margin measure that ignores capital intensity, useful for comparing leveraged or asset-heavy companies.
Echo chamber: An information environment where every source repeats the same view, so agreement feels like verification.
ECN (electronic communication network): An electronic venue that matches displayed orders anonymously, historically the first real competitor to traditional exchange floors.
ECN broker: A broker that routes client orders into a shared pool of prices from banks, funds and other clients, charging a commission rather than marking up the spread.
Economic calendar: A schedule of upcoming data releases and central-bank events with their consensus forecasts and impact ratings.
Economic profit: After-tax operating profit less a charge for the capital employed at the cost of capital; profit measured after paying for the money used to make it.
EDGAR: The SEC's public electronic filing system, where every registrant's filings are posted free of charge, usually within moments of submission.
EDGAR: The SEC's free filing archive where US public companies, funds and large holders post registration statements, periodic reports and ownership filings.
Edge: A repeatable reason your trades should have positive expectancy over many attempts; without one, trading is paying spread to gamble.
Edge ratio: Average favourable excursion divided by average adverse excursion, both volatility-normalised, measuring whether an entry signal has any predictive power at all.
Effective duration: Duration calculated by actually repricing a bond under small up and down rate shifts, used when embedded options make the cash flows uncertain.
Effective leverage: Total notional exposure divided by account equity: the leverage you are actually using, which is usually far below the maximum the broker allows.
Effective number of bets: How many genuinely independent positions a portfolio behaves like, which is almost always far fewer than the number of tickers.
Effective spread: Twice the distance between your execution price and the midpoint at the time of the trade, measuring what the spread actually cost you rather than what was quoted.
Effective tax rate: Income tax expense divided by pre-tax income; what the company actually books as tax, usually different from the statutory headline rate.
Efficient frontier: The set of portfolios offering the highest expected return for each level of risk; anything below the curve is dominated by a better mix.
Efficient market hypothesis: The claim that prices already reflect available information. Stated in three strengths: weak (past prices), semi-strong (all public information), and strong (all information including private).
Effort versus result: Wyckoff's principle that volume is effort and price movement is result, and that a mismatch between the two is informative.
EFFR (effective federal funds rate): The volume-weighted median rate at which banks actually lend reserves to each other overnight, published daily and expected to sit inside the target range.
EFRP (exchange for related position): The umbrella category for privately negotiated futures transactions swapped against a cash, swap or option position, of which the EFP is one type.
EIA Petroleum Status Report: The US Energy Information Administration's weekly release of crude and product stocks, production and refinery runs, published Wednesdays at 10:30 New York time.
Electronic market making: Continuously quoting two-sided prices with automated systems, earning the spread and any rebates while managing inventory and adverse selection.
Elliott Wave criticism: The main objections to Elliott Wave: counts are subjective, alternative labels are always available, and the framework is hard to test or falsify.
Elliott Wave theory: A framework claiming markets move in repeating five-wave advances and three-wave corrections at every degree of scale.
Embargo: A gap of dropped observations immediately after a test fold, preventing serial correlation from leaking test information into later training data.
Embedded option: An option contained inside another instrument rather than traded on its own, as in callable bonds, convertibles and structured notes; you hold it whether or not you meant to.
Emerging market currency: The currency of a developing economy, typically offering a high interest rate alongside wider spreads, thinner liquidity, event risk and the possibility of capital controls.
EMIR: The European regulation on OTC derivatives requiring central clearing of standardised contracts, reporting of all derivative trades, and risk mitigation and margin for uncleared trades.
Emissions: The rate at which a protocol issues new tokens as rewards; a continuous supply stream that yield figures usually ignore.
Emotional regulation: The set of skills for changing how strongly you feel something and how it drives behaviour - not for removing emotion, which is neither possible nor useful.
Employee stock options: Contracts giving staff the right to buy company shares at a fixed strike price after vesting; exercise creates new shares.
Employment cost index (ECI): A quarterly measure of total labour compensation including benefits, holding the mix of jobs constant so that composition shifts do not distort it.
Endowment effect: Valuing something more once you own it, which makes closing a position feel like a loss even when the trade no longer makes sense.
Engulfing candle: A candle whose body completely covers the prior candle's body in the opposite direction, often read as a shift in control.
Enhanced due diligence (EDD): Deeper investigation applied to higher-risk customers and relationships, including source of wealth verification, senior management approval and more frequent review.
Enterprise value: Market cap plus debt and preferred stock, minus cash: what it would cost to buy the whole business free of its balance sheet.
Epoch: A fixed batch of blocks or time slots that a proof-of-stake chain uses to schedule duties, rewards and finality.
EPS (earnings per share): A company's net profit divided by its shares outstanding; the number most earnings headlines compare against estimates.
Equal dollar weighting: Allocating the same notional amount to each position, which equalises capital but not risk.
Equal highs: Two or more highs that stop at nearly the same price, creating an obvious level where protective stop orders cluster above.
Equal lows: Two or more lows that stop at nearly the same price, creating an obvious level where protective sell stops cluster below.
Equal risk contribution: The formal objective behind risk parity: choose weights so that every holding's marginal contribution to portfolio volatility is identical.
Equal risk weighting: Sizing each position so every holding contributes a similar amount of expected loss or volatility.
Equal-weight index: An index that gives every constituent the same weight regardless of size, which tilts the exposure toward smaller members and requires regular rebalancing trades.
Equal-weighted index: An index giving every constituent the same weight regardless of company size, producing a structural tilt toward smaller members and higher turnover.
Equity carve-out: A parent sells a minority stake in a subsidiary through an IPO while keeping control, often as a first step toward a full separation.
Equity curve: The running account value over the life of a strategy. The most-shown and least-informative single chart in trading, unless you know what to look for.
Equity curve trading: Adjusting size or participation based on your own recent results rather than on market conditions - sometimes systematic, often just mood.
Equity index futures: Cash-settled contracts on a stock index, used to trade or hedge the whole market in one ticket without touching a single share.
Equity line of credit: A committed facility under which an investor agrees to buy shares from a company on demand at a discount to market, over months or years.
Equity method investment: A stake of roughly 20% to 50% in another company, carried as one asset line with the investor's share of the target's profit shown as one income line.
Equity option: An option on an individual stock; American style, physically settled into 100 shares, and exposed to dividend and early-assignment risk.
Equity REIT: A REIT that owns and operates physical property, earning rent from tenants across sectors such as offices, industrial, retail, residential, healthcare and data centres.
Equity risk premium: The extra annual return investors demand for owning stocks rather than government bonds; the largest and least certain input in most valuations.
Equity swap: A swap exchanging the return on a stock, basket or index for a floating financing rate, used for synthetic exposure, hedging and cross-border access.
Equivolume: A chart where each bar's width is proportional to its volume, making high-participation bars visually wide.
ERC-1155: A standard that lets one contract hold both fungible and non-fungible token types, with efficient batch transfers.
ERC-20: The common interface for interchangeable tokens on Ethereum-style chains, which is why any wallet or DEX can handle almost any token.
ERC-721: The standard for non-fungible tokens, where each token ID is unique and individually owned rather than interchangeable.
ES (E-mini S&P 500): The CME E-mini S&P 500 futures contract, worth $50 times the index and one of the most liquid instruments in the world.
Escalation of commitment: Increasing your investment in a failing course of action because you have already invested in it.
ESMA CFD leverage limits: European retail restrictions on contracts for difference: tiered leverage caps by asset class, 50% margin close-out, negative balance protection, no bonuses and a standard risk warning.
ESMA leverage caps: The 2018 European measures limiting retail leverage by asset class, from 30:1 on major currency pairs down to 2:1 on crypto, alongside close-out, negative balance and disclosure requirements.
Establishment survey: The monthly survey of about 120,000 businesses that produces non-farm payrolls, average hourly earnings and hours worked; larger sample and lower noise than the household survey.
Estimate revision: Analysts changing their forecasts after new information; the direction and breadth of revisions often matters more than the level of the estimate.
Estimated quarterly taxes: US taxpayers with income not subject to withholding must pay tax in four instalments through the year, or face an underpayment penalty even if the balance is settled by April.
Estimated tax safe harbour: Paying at least 100% of last year's US tax liability, or 110% for higher incomes, generally avoids underpayment penalties however large this year's gains turn out to be.
ETF (exchange-traded fund): A fund that holds a basket of assets and trades on an exchange like a stock, tracking an index, sector, commodity, or strategy.
ETF arbitrage: The creation and redemption activity that keeps an ETF's market price near the value of its underlying basket, performed by authorised participants when the gap exceeds their costs.
ETF option: An option on an exchange-traded fund; it behaves like an equity option — American style and physically settled — even when the ETF tracks an index.
ETH (electronic trading hours): The full nearly-24-hour futures session, including everything outside regular trading hours.
Ether futures (ETH): CME contracts on 50 ether, cash settled to a daily reference rate, listed in 2021 alongside a micro contract of 0.1 ether.
Euphoria: The elated, invincible state after a run of wins, in which risk feels theoretical and size decisions get made by mood.
Euro cross: A pair with the euro as base and a non-dollar currency as quote, such as EUR/GBP, EUR/CHF, EUR/JPY or EUR/PLN.
Euro FX futures (6E): The CME contract on 125,000 euros quoted in US dollars per euro, the most liquid listed currency future.
Eurodollar futures: The three-month LIBOR contract that was for decades the world's most traded futures product, retired in 2023 and converted into SOFR futures.
Eurodollar market: The market in US dollar deposits and loans held at banks outside the United States, which sets much of the world's dollar funding cost and has nothing to do with the euro.
European Securities and Markets Authority (ESMA): The EU securities authority that coordinates national regulators, writes technical standards under MiFID II, and imposed the EU retail leverage caps.
European-style option: An option that can only be exercised at expiration, which removes early assignment risk for the seller.
EV/EBIT: Enterprise value divided by operating income; like EV/EBITDA but with depreciation left in, so capital intensity is not hidden.
EV/EBITDA: Enterprise value divided by EBITDA; the standard multiple for comparing companies with different debt loads and tax positions.
EV/Gross profit: Enterprise value divided by gross profit; a revenue multiple corrected for the fact that not all revenue dollars are worth the same.
EV/Sales: Enterprise value divided by revenue; the fallback multiple for companies with no profit yet, and a blunt one for anything else.
Evaluation (challenge): The paid test a prop firm uses to screen traders: hit a profit target within the drawdown and rule limits to earn a funded account.
Evening star: A three-candle topping pattern: a large green candle, a small indecisive candle, then a large red candle closing well into the first body.
Event-driven backtest: A backtest that replays market events in order through the same components that will run live: data handler, strategy, order manager, execution simulator, portfolio.
Event-driven investing: Strategies whose payoff depends on a corporate event completing or failing, such as a merger, spin-off, restructuring, index change or capital raise.
EWMA: A weighted average that gives geometrically declining weight to older observations, so recent data matters most without a hard cut-off at the window edge.
Ex-dividend date: The first day a stock trades without the right to the upcoming dividend; buy on or after it and the seller keeps the payment.
Ex-dividend price adjustment: The automatic reduction of a stock's reference price by the dividend amount on the ex-date, because that cash has left the company.
Excess equity: Account equity above the total margin requirement, which is what you can actually use to add positions or absorb losses.
Excess return: Return above a stated reference - the risk-free rate or a benchmark - which is the only part of performance that required you to do anything.
Excess SIPC insurance: Private insurance some brokers buy to top up SIPC protection above the statutory limits, subject to an aggregate cap shared across all customers.
Exchange: A regulated venue that publicly displays quotes, matches orders under published rules, and contributes those quotes to the consolidated tape.
Exchange fee: The per-contract charge the exchange levies on each side of a futures trade, separate from broker commission.
Exchange for physical (EFP): A privately negotiated swap of a futures position for an equivalent cash-market position, reported to the exchange but not traded on the screen.
Exchange insolvency risk: The chance that a custodian holding your coins cannot return them, because it lent them out, lost them, or never segregated them in the first place.
Exchange netflow: Coins moving onto exchanges minus coins moving off, over a period. Inflows are often read as potential selling, outflows as coins going to custody.
Exchange ratio: The number of acquirer shares a target shareholder receives for each target share in a stock-based merger.
Exchange reserves: The total holdings sitting in identified exchange wallets. Falling reserves are usually framed as supply leaving the market.
Exchange-traded derivative: A standardised futures or options contract traded on an organised exchange, with a clearing house as counterparty to every trade and daily margin settlement.
Exchange-traded note: An unsecured debt obligation of a bank that promises an index return. It trades like an ETF but is a claim on the issuer rather than on a pool of assets.
Exchange-traded note: An unsecured debt obligation of a bank that promises the return of an index, so it tracks perfectly in theory but carries the issuer's credit risk and can be shut down.
Execution algorithm: An automated schedule for working a large order into the market over time, trading off market impact against the risk that the price moves while you wait.
Execution management system (EMS): The trader-facing system for working orders in the market: algorithm selection, venue routing, real-time analytics and low-latency connectivity.
Execution quality: How good your fills actually were, measured against defined benchmarks such as the midpoint at arrival, the quote at execution or the interval VWAP.
Execution report: The message a venue or broker sends for every change in an order's state — acknowledged, partially filled, filled, replaced, cancelled or rejected.
Exercise: Using the right in an option to buy (call) or sell (put) the underlying at the strike price.
Exercise and trading: Regular physical activity improves stress tolerance, sleep, and attention, which are the three inputs most directly connected to execution quality.
Exercise by exception: The clearing house rule that automatically exercises options finishing in the money by a threshold amount, unless the holder instructs otherwise.
Exercise limit: An exchange cap on how many contracts of one class a trader may exercise within a rolling period, usually matching the position limit.
Exercise settlement value: The official number a cash-settled contract is measured against at expiration, published by the exchange rather than taken from the screen.
Exhaustion gap: A gap near the end of an extended move, often on very high volume, where the last buyers or sellers pile in just before the turn.
Existing and new home sales: Monthly measures of housing transactions; existing sales are counted at closing and new sales at contract signing, which makes new home sales roughly a month more timely.
Exit liquidity: The buyers an early holder needs in order to sell. Used as an accusation: the retail flow arriving late exists so that insiders can get out.
Exit multiple method: Setting terminal value by applying a valuation multiple to the final forecast year, as if the business were sold at that point.
Exotic pairs: Pairs matching a major currency with an emerging-market currency, such as USD/TRY or USD/ZAR; wide spreads and sharp moves.
Expanded limits: A widened daily price limit that takes effect the session after a market settles at limit, letting price find its level.
Expanding window: A window that starts at the first observation and grows with each new data point, so every estimate uses all history to date.
Expectancy: The average amount you expect to make or lose per trade over many trades, combining win rate and average win and loss.
Expectancy per trade: The average result of a single trade in R units, which is the cleanest statement of whether an edge exists.
Expectancy per unit time: Edge per trade multiplied by how many trades you get, which is the figure that actually determines account growth.
Expectations hypothesis: The theory that long-term yields are simply the average of expected future short-term rates, implying forward rates are unbiased forecasts.
Expected move: The size of move the option market is pricing for a given period, usually approximated by the at-the-money straddle price.
Expense ratio: The annual percentage of assets a fund charges, deducted daily from net asset value rather than billed, so it never appears as a line item on your statement.
Expert advisor (EA): An automated trading program that runs on a retail platform and places orders according to coded rules without manual intervention.
Expiration cycle: The pattern by which exchanges list expirations for an underlying: near-term months always, then a fixed rotation of further-out months.
Expiration date: The last day an option can be exercised; after it the contract ceases to exist.
Exponential moving average: A moving average that weights recent prices more heavily, reacting faster than a simple average but at the cost of more false turns.
Exposure: How much of your capital is committed to market risk at a given moment, by asset, direction, sector or factor.
Extended hours (pre-market and after-hours): Trading sessions outside the regular 9:30 to 4:00 Eastern US equity session, with thinner liquidity and wider spreads.
Extension risk: The risk that prepayments slow when rates rise, lengthening a mortgage bond's average life just as higher yields make the longer exposure most painful.
Extrinsic value (time value): The part of an option's price above its intrinsic value, reflecting time remaining and expected volatility.

Missing a term? Tell us and we will write it.