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Glossary of Terms
As the commerce and industry have evolved, each sector has developed a vocabulary that uniquely describes its products,
technology, and business practices, known as a jargon of respective domain. Often, these words seem incomprehensible to
the layman. This short lexicon is not meant to be a comprehensive dictionary of markets; nevertheless it would be a useful
guide for the beginners who are keen to no more about financial markets and futures industry.
M
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Major :-
A term broadly applied to the currnacies
which are highly trade, i.e US dollar, British Pound, Euro, Japanese Yen,
Swiss Franc, etc.
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Margin :-
The amount of money or collateral deposited
by a customer with his broker, or deposited by a broker with a clearing
member, or by a clearing member with the clearinghouse, for the purpose
of insuring the broker or clearinghouse against adverse price movement
on open futures contracts. The margin is not partial payment on a purchase.
1) Initial margin is the minimum deposit per contract required by the
broker when a futures position is opened. 2) Maintenance margin is a sum
which must be maintained on deposit at all times. If the equity in a customers'
account drops to, or under, that level because of an adverse price movement,
the broker must issue a margin call to restore the customers' equity.
Margins are set by the Exchange based on its analysis of price risk volatility
in the market at that time. See variation margin.
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Margin Call :-
A demand for additional margin funds when
futures prices move adverse to a trader's position, or if margin requirements
are increased. Buyers of options are not subject to margin calls.
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Marked-to-Market :-
Daily cash flow system used by U.S. futures
exchanges to maintain a minimum level of margin equity for a given futures
or options contract position by calculating the gain or loss in each contract
position resulting from changes in the price of the futures or options
contracts at the end of each trading day.
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Market Correction :-
In technical analysis, a small reversal in
prices following a significant trending period.
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Market-if-Touched Order :-
An order that becomes a market order when
a particular price is reached. A sell MIT is placed above the market;
a buy MIT is placed below the market.
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Market Maker :-
An independent trader or trading firm which
is prepared to buy and sell futures or options contracts in a designated
market. Market makers provide a two-sided (bid and ask) market and greater
liquidity.
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Market-on-Close :-
An order to buy or sell at the end of the
trading session at a price within the closing range of prices.
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Market Order :-
An order to be filled immediately at the
current market price.
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Maximum Price Fluctuation :-
A commodity exchange's established maximum
limits for fluctuations in futures prices during any one trading session.
Also known as a daily price limit.
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Minimum Price Fluctuation :-
Minimum unit by which a futures price or
an options premium can fluctuate per trade, also known as tick size. ricating
oil, usually containing additives, used in internal combustion engines.
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