A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z


      A

      Arbitrage

      The simultaneous purchase and sale of similar commodities in different markets to take advantage of a price discrepancy.

      Arbitration

      The process of settling disputes between parties. NFA's arbitration program provides a forum for resolving futures-related disputes between members or between members and customers.

      Ask

      Also called Offer. Indicates a willingness to sell a futures contract at a given price. See also Bid.

      At the Market

      An order to buy or sell a futures contract at whatever price is obtainable when the order reaches the trading floor. See also Market Order.

      At the Money

      An option with a strike price which is equal to, or approximately equal to, the current market price of the underlying futures contract.

      Audit Trail

      The record of trading information identifying, for example, the brokers participating in each transaction, the firms clearing the trade, the terms and time of the trade, and, ultimately, and when applicable, the customers involved.

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      B

      Bar Chart

      A chart that graphs the high, low, and settlement prices for a specific trading session over a given period of time.

      Basis

      The difference between the current cash price of a commodity and the futures price of the same commodity.

      Bear

      One who expects a decline in prices. The opposite of a Bull. A news item is considered bearish if it is expected to result in lower prices.

      Bear Market

      A market in which prices are declining.

      Beta

      A measure of the variability of rate of return or value of a stock portfolio compared to that of the overall market.

      Bid

      An expression indicating a desire to buy a commodity at a given price; the opposite of Offer.

      Block Order

      A futures or option order placed at the same time for more than one account.

      Bull

      One who expects a rise in prices. The opposite of Bear. A news item is considered bullish if it expected to raise prices.

      Bull Market

      A market in which prices are rising.

      Buy on Close

      To buy at the end of the trading session within the closing price range.

      Buy on Opening

      To buy at the beginning of a trading session within the open price range.

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      C

      Capital Gain

      The profit made from the sale of a capital asset, such as real estate, a house, jewelry or stocks and bonds.

      Carrying Broker

      A member of a futures exchange, usually a clearinghouse member, through whom another broker or customer chooses to clear all or some trades.

      Carrying Charge

      The cost of storing a physical commodity, such as grain or metals, over a period of time. Includes insurance, storage and interest on the invested funds as well as other incidental costs. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of the funds necessary to buy the instrument.

      Cash Commodity

      The actual physical commodity as distinguished from the futures contract based on the physical commodity

      Cash Settlement

      A method of settling certain futures or options contracts whereby the seller pays the buyer the cash value of the commodity traded according to a procedure specified in the contract.

      Clearing

      The procedure through which the clearing house or association becomes the buyer to each seller of a futures contract, and the seller to each buyer, and assumes responsibility for protecting buyers and sellers from financial loss by assuring performance on each contract.

      Clearing House

      An agency or separate corporation of a futures exchange that is responsible for settling trading accounts, collecting and maintaining margin monies, regulating delivery and reporting trade data.

      Clearing Margin

      Financial safeguards to ensure that clearing members (usually companies or corporations) perform on their customers' open futures and options contracts. Clearing margins are distinct from customer margins that individual buyers and sellers of futures and options contracts are required to deposit with brokers.

      Clearing Member

      A member of an exchange clearing house. All trades of a non-clearing member must be registered and eventually settled through a clearing member.

      Close

      The period at the end of the trading session, officially designated by the exchange, during which all transactions are considered made "at the close."

      Closing Price

      The price (or price range) recorded during trading that takes place in the final moments of a day's activity that is officially designated as the "close."

      Closing Range

      A high and low range of prices at which futures transactions took place during the close of the market.

      Commission

      A fee charged by a broker to a customer for performance of a specific duty, such as the buying or selling of futures contracts.

      Commodity

      An article of commerce or a product that can be used for commerce. In a narrow sense, products traded on authorized commodity exchanges. The types of commodities include agricultural products, metals, petroleum, foreign currencies and financial instruments and indexes to name a few.

      Commodity Futures Trading Commission (CFTC)

      The 1974-established federal regulatory agency that administers the Commodity Exchange Act. The federal oversight agency which monitors the futures and options on futures markets to detect and prevent price distortion and market manipulation and to protect the rights of customers who use the markets for either commercial or investment purposes.

      Commodity Pool

      An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures or options contracts.

      Commodity Pool Operator (CPO)

      An individual or organization which operates or solicits funds for a pool, that is, an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures or options contracts. Generally required to be registered with the Commodity Futures Trading Commission.

      Commodity Trading Advisor (CTA)

      An individual or organization that, for compensation or profit, directly or indirectly advises others as to the value of or the advisability of buying or selling futures or options contracts. Providing advice indirectly includes exercising trading authority over a customer's account. Registration with the Commodity Futures Trading Commission is generally required.

      Contract

      A term of reference describing a unit of trading for a commodity future or option.

      Contract Grades

      Those grades of a commodity which have been officially approved by an exchange as deliverable in settlement of a futures contract.

      Contract Market

      A board of trade designated by the Commodity Futures Trading Commission to trade futures or option contracts on a particular commodity. Commonly used to mean any exchange on which futures are traded.

      Contract Month

      The month in which delivery is to be made in accordance with a futures contract.

      Contract Unit

      The actual amount of a commodity represented in a contract.

      Controlled Account

      Any account for which trading is directed by someone other than the owner.

      Corner

      (1) Securing such relative control of a commodity or security that its price can be manipulated; (2) in the extreme situation, obtaining contracts requiring the delivery of more commodities or securities than are available for delivery.

      Customer Margin

      Within the futures industry, financial guarantees required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfilling of contract obligations. FCMs are responsible for overseeing customer margin accounts. Margins are determined on the basis of market risk and contract value.

      Customer Segregated Accounts

      A special account used to hold and separate customers' assets from those of the brokerage house or firm.

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      D

      Daily Price Limit

      The maximum price advance or decline from the previous day's settlement price permitted during one trading session, as fixed by the rules of an exchange.

      Daily Trading Limit

      The maximum price range set by the exchange each day for a contract.

      Day Order

      An order that if not executed expires automatically at the end of the trading session on the day it was entered.

      Day Trader

      A speculator who will normally initiate and offset a position within a single trading session.

      Day Trading

      Establishing and offsetting the same futures market position within one day.

      Default

      The failure to perform on a futures contract as required by exchange rules, such as a failure to meet a margin call or to make or take a delivery.

      Delivery

      The tender and receipt of an actual commodity or warehouse receipt or other negotiable instrument covering such commodity, in settlement of a futures contract.

      Delivery Date

      The date on which the commodity or instrument of delivery must be delivered to fulfill the terms of a contract.

      Delivery Instrument

      A document used to effect delivery on a futures contract, such as a warehouse receipt or shipping certificate.

      Delivery Month

      The specified month within which a futures contract matures and can be settled by delivery.

      Delivery Notice

      The written notice given by the seller of his intention to make a delivery against an open short futures position on a particular date. This notice, delivered through the clearing house, is separate and distinct from the warehouse receipt or other instrument that will be used to transfer title.

      Delivery Option

      A provision of a futures contract which provides the short with flexibility in regard to timing, location, quantity, or quality in the delivery process.

      Delivery Price

      The price fixed by the clearing house at which deliveries on futures are invoiced, generally the price at which the futures contract is settled when deliveries are made.

      Deposit

      The initial outlay required by a broker of a client to open a futures position, returnable upon liquidation of that position.

      Disclosure Document

      The document that must be provided to and signed by prospective customers of CPOs and CTAs that describes fees, performance, etc.

      Discretionary Account

      An arrangement by which the owner of the account gives written power of attorney to someone else, usually the broker or a commodity trading advisor, to buy and sell without prior approval of the account owner.

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      E

      Efficient Market

      A market in which new information is immediately available to all investors and potential investors. A market in which all information is instantaneously assimilated and therefore has no distortions.

      Electronic Order

      An order placed electronically (without the use of a broker) either via the Internet or an electronic trading system.

      Electronic Trading System

      Systems that allow participating exchanges to list their products for trading after the close of the exchange's open outcry trading hours (i.e., Chicago Board of Trade's Project A, Chicago Mercantile Exchange's GLOBEX and New York Mercantile Exchange's ACCESS.)

      Elliot Wave Theory

      (1) A theory named after Ralph Elliot, who contended that the stock market tends to move in discernible and predictable patterns reflecting the basic harmony of nature; or (2) in technical analysis, a charting method based on the belief that all prices act as wavers, rising and falling rhythmically.

      Equity

      The dollar value of a futures trading account if all open positions were offset at the going market price.

      Escrow Account

      A special account in which a lawyer or escrow agent deposits money or documents that do not belong to him or his firm.

      Eurodollar

      U.S. dollar deposits placed with banks outside the U.S. Holders may include individuals, companies, banks and central banks.

      Exchange Rate

      The price of one currency stated in terms of another currency.

      Exchange Risk Factor

      The delta value of an option as computed daily by the exchange on which it is traded.

      Exchange for Physicals

      A transaction generally used by two hedgers who want to exchange futures for cash positions.

      Exchange of Futures for Cash

      A transaction in which the buyer of a cash commodity transfers to the seller a corresponding amount of long futures contracts, or receives from the seller a corresponding amount of short futures, at a price difference mutually agreed upon. In this way, the opposite hedges in futures of both parties are closed out simultaneously.

      Exempt Foreign Firm

      Foreign firm that does business with U.S. customers only on foreign exchanges and is exempt from registration under CFTC regulations.

      Exercise

      Exercising a call means that you elect to purchase the underlying futures contract at the option strike price. Exercising a put means that you elect to sell the underlying futures contract at the option strike price.

      Exercise Price

      The price specified in the option contract at which the buyer of a call can purchase the commodity during the life of the option, and the price specified in the option contract at which the buyer of a put can sell the commodity during the life of the option.

      Expiration Date

      Generally the last date on which an option may be exercised. It is not uncommon for an option to expire on a specified date during the month prior to the delivery month for the underlying futures contracts.

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      F

      Fiduciary Duty

      An obligation to act solely in the best interest of another party. For instance, a corporation's board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust's beneficiaries, and an attorney has a fiduciary duty to a client.

      Financial Instrument

      As used by the CFTC, this term generally refers to any futures or option contract that is not based on an agricultural commodity or a natural resource. It includes currencies, securities, mortgages, commercial paper and stock indexes of various kinds.

      First Notice Day

      The first day on which the notice of intent to deliver a commodity in fulfillment of an expiring futures contract can be given by the clearing house to a buyer. Varies from contract to contract.

      Floor Broker (FB)

      An individual who executes orders on the trading floor of an exchange for any other person.

      Floor Trader (FT)

      Members of an exchange who are personally present, on the trading floors of exchanges, to make trades for themselves. Sometimes called Locals.

      Forced Liquidation

      The situation in which a customer's account is liquidated (open positions are offset) by the brokerage firm holding the account, usually after notification that the account is undercapitalized (margin calls).

      Foreign Exchange

      Foreign currency. On the foreign exchange market, foreign currency is bought and sold for immediate or future delivery.

      Foreign Exchange Market

      Forex market. An over-the-counter market where buyers and sellers conduct foreign exchange business by telephone and other means of communication.

      Forward Contract

      A contract on which a seller agrees to deliver a specified cash commodity to a buyer sometime in the future. In contrast to futures contracts, the terms of forward contracts are not standardized. Forward contracts are not traded on federally designated exchanges.

      Forward Market

      Refers to informal (non-exchange) trading of commodities to be delivered at a future date. Contracts for forward delivery are personalized (i.e., delivery time and amount are as determined between seller and customer).

      Frontrunning

      A process whereby a futures or options position is taken based on non-public information about an impending transaction in the same or related futures or options contracts.
      Fully Disclosed Account An account carried by a futures commission merchant in the name of the individual customer; the opposite of an Omnibus Account.

      Fund of Funds

      A commodity pool that invests in other commodity pools rather than directly in futures and options contracts.

      Fundamental Analysis

      The study of basic, underlying factors which will affect the supply and demand and hence the price of a futures contract.

      Futures Commission Merchant (FCM)

      An individual or organization which solicits or accepts orders to buy or sell futures or options contracts and accepts money or other assets from customers in connection with such orders. Must be registered with the Commodity Futures Trading Commission.

      Futures Contract

      A legally binding agreement to buy or sell a commodity or financial instrument at a later date. Futures contracts are standardized according to the quality, quantity and delivery time and location for each commodity.

      Futures Exchange

      A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts.

      Futures Industry Association (FIA)

      The national trade association for futures commission merchants.

      Futures Price

      (1) Commonly held to mean the price of a commodity for future delivery that is traded on a futures exchange; or (2) the price of any futures contract.

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      G

      Give Up

      A contract executed by one broker for the client of another broker that the client orders to be turned over to the second broker. The broker accepting the order from the customer collects a wire toll from the carrying broker for the use of the facilities. Often used to consolidate many small orders or to disperse large ones.

      Guaranteed Introducing Broker

      An introducing broker whose operations are guaranteed by an FCM. This type of IB has no minimum capital or financial reporting requirements. All of the accounts of a guaranteed introducing broker must be carried by the guaranteeing FCM.

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      H

      Hedger

      An individual or company owning or planning to own, or selling or planning to sell, a cash commodity and is concerned that the cost of the commodity may change before either buying or selling it in the cash market. A hedger achieves protection against changing cash prices by purchasing (selling) futures contracts of the same or similar commodity and later offsetting that position by selling (purchasing) futures contracts of the same quantity and type as the initial transaction.

      Hedging

      The practice of offsetting the price inherent in any cash market position by taking the opposite position in the futures market. Hedgers use the market to protect their businesses from adverse price changes.

      High

      The highest price of the day for a particular futures contract.

      Hypothetical Disclaimer

      Results of trading that was not actually executed in any account. For example, results of proposed trades generated by a trading system but not actually entered for execution.

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      I

      Independent Introducing Broker

      An introducing broker that is subject to minimum capital and financial reporting requirements. This type of IB may introduce accounts to any FCM.

      Index Arbitrage

      The simultaneous purchase (sale) of stock index futures and the sale (purchase) of some or all of the component stocks which make up the particular stock index to profit from sufficiently large intermarket spreads between the futures contract and the index itself.

      Initial Margin

      Customers' funds put up at the time a futures market position is established to act as security for a guarantee of contract fulfillment.

      Initial Performance Bond

      The funds required when a futures position (or a short options on futures position) is opened.

      Interest Rate Futures

      Futures contracts traded on fixed income securities such as U.S. Treasury issues, or CDs. Currencies are excluded from this category, even though interest rates are a factor in currency values.

      Introducing Broker (IB)

      A firm or individual that solicits and accepts futures orders from customers but does not accept money, securities or property from the customer. An IB must be registered with the Commodity Futures Trading Commission and must carry all of its accounts through a futures commission merchant on a fully disclosed basis.

      Inverted Market

      A futures market in which the nearer months are selling at premiums over the more distant months; characteristically, a market in which supplies are currently in shortage.

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      L

      Lagging Indicators

      Market indicators showing the general direction of the economy and confirming or denying the trend implied by the leading indicators.

      Large Traders

      A large trader is one who holds or controls a position in any one future or in any one option expiration series of a commodity on any one contract market equaling or exceeding the exchange or CFTC-specified reporting level.

      Last Notice Day

      The final day on which notices of intent to deliver on futures contracts may be issued.

      Last Trading Day

      The last day on which trading may occur in a given futures or options contract.

      Leading Indicators

      Market indicators that signal the state of the economy for the coming months. Some of the leading indicators include: average manufacturing workweek, initial claims for unemployment insurance, orders for consumer goods and material, percentage of companies reporting slower deliveries, changes in manufacturers' unfilled orders for durable goods, plant and equipment orders, new building permits, index of consumer expectations, change in material prices, prices of stocks and change in money supply.

      Leverage

      The ability to control large dollar amounts of a commodity with a comparatively small amount of capital.

      Life of Contract

      Period between the beginning of trading in a particular futures contract and the expiration of trading. In some cases this phrase denotes the period already passed in which trading has already occurred.

      Limit Down

      The maximum price advance from the previous day's settlement price permitted during one trading session, as fixed by the rules of an exchange.

      Limit Move

      A price that has advanced or declined the limit permitted during one trading session as fixed by the rules of a contract market.

      Limit Order

      An order in which the customer specifies a price limit or other condition, such as the time of an order, as contrasted with a market order which implies that the order should be filled as soon as possible.

      Limit Up

      The maximum price decline from the previous day's settlement price permitted during one trading session, as fixed by the rules of an exchange.

      Liquidate

      To sell (or purchase) futures contracts of the same delivery month purchased (or sold) during an earlier transaction or make (or take) delivery of the cash commodity represented by the futures contract.

      Liquidity

      A broadly traded market where buying and selling can be accomplished with small price changes and bid and offer price spreads are narrow.

      Local

      A member of an exchange who trades for his own account.

      Long

      One who has bought futures contracts or owns a cash commodity.

      Low

      The lowest price of the day for a particular futures contract.

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      M

      Maintenance Margin

      A set minimum margin (per outstanding futures contract) that a customer must maintain.

      Maintenance Performance Bond

      A sum, usually smaller than, but part of, the initial performance bond, which must be maintained on deposit in the customer's account at all times. If a customer's equity in any futures position drops to, or under, the maintenance performance bond level, a "performance bond call" is issued for the amount of money required to restore the customer's equity in the account to the initial margin level.

      Managed Futures

      Represents an industry comprised of professional money managers who manage client assets on a discretionary basis, using global futures markets as an investment medium.

      Margin

      An amount of money deposited by both buyers and sellers of futures contracts and by sellers of option contracts to ensure performance of the terms of the contract (the making or taking delivery of the commodity or the cancellation of the position by a subsequent offsetting trade). Margin in futures is not a down payment, as in securities, but rather a performance bond.

      Margin Call

      A call from a clearing house to a clearing member or from a broker or firm to a customer, to bring margin deposits up to a required minimum level.

      Mark to Market

      To debit or credit on a daily basis a margin account based on the close of that day's trading session.

      Market Correction

      In technical analysis, a small reversal in prices following a significant trending period.

      Market If Touched (MIT)

      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.

      Market Maker

      A professional securities dealer who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders. By maintaining an offering price sufficiently higher than their buying price, these firms are compensated for the risk involved in allowing their inventory of securities to act as a buffer against temporary order imbalances. In the commodities industry, this term is sometimes loosely used to refer to a floor trader or local who, in speculating for his own account, provides a market for commercial users of the market. See also Specialist System.

      Market Order

      An order to buy or sell a futures or options contract at whatever price is obtainable when the order reaches the trading floor.

      Money Laundering

      Conduct or acts designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of money (can be currency or equivalents, e.g., checks, electronic transfers, etc.) to avoid a transaction reporting requirement under state or federal law or to disguise the fact that the money was acquired by illegal means.

      Moving Average Charts

      A statistical price analysis method of recognizing different price trends. A moving average is calculated by adding the prices for a predetermined number of days and then dividing by the number of days.

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      N

      National Futures Association (NFA)

      Authorized by Congress in 1974 and designated by the CFTC in 1982 as a "registered futures association," NFA is the industrywide self-regulatory organization of the futures industry.

      National Introducing Brokers Association

      The trade association for the introducing broker community.

      Net Capital

      The amount by which Current Assets of an FCM or independent IB exceed its Liabilities.

      Net Position

      The difference between the open long contracts and the open short contracts held by a trader in any one commodity.

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      O

      Offer

      An expression indicating a desire to sell a commodity at a given price; the opposite of Bid.

      Omnibus Account

      An account of an originating FCM carried by a clearing FCM that combines the transactions of two or more accounts of the originating FCM in the name of the originating FCM rather than designating the accounts separately. The identity of the individual accounts is not disclosed to the carrying broker.

      Open Interest

      The sum of all long or short futures contracts in one delivery month to one market that have been entered into and not yet liquidated by an offsetting transaction or fulfilled by delivery.

      Open Order

      An order that remains in force until it is canceled or until the futures contracts expire. See also Good 'Til Canceled Order and Good This Week Order orders.

      Open Outcry

      A method of public auction for making bids and offers in the trading pits of futures exchanges.

      Open Trade Equity

      The unrealized gain or loss on open positions.

      Opening (The)

      The period at the beginning of the trading session officially designated by the exchange during which all transactions are considered made "at the opening."

      Opening Price (or Range)

      The price (or price range) recorded during the period designated by the exchange as the official opening.

      Original Margin

      Term applied to the initial deposit of margin money each clearing member firm is required to make according to clearing house rules based upon positions carried, determined separately for customer and proprietary positions; similar in concept to the initial margin or security deposit required of customers by exchange regulations.

      Overbought

      A technical opinion for which the market price has risen too steeply and too fast in relation to underlying fundamental factors.

      Overnight Trade

      A trade which is not liquidated on the same trading day in which it was established.

      Oversold

      A technical opinion for which the market price has declined too steeply and too fast in relation to underlying fundamental factors.

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      P

      Performance Bond

      Funds that must be deposited as a performance bond by a customer with his or her broker, by a broker with a clearing member or by a clearing member, with the Clearing House. The performance bond helps to ensure the financial integrity of brokers, clearing members and the exchange as a whole.

      Pit

      The area on the trading floor of some exchanges where trading in futures or options contracts is conducted by open outcry.

      Position Limit

      The maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange where the contract is traded.

      Position Trader

      A trader who either buys or sells contracts and holds them for an extended period of time, as distinguished from a day trader.

      Price Limit

      The maximum advance or decline from the previous day's settlement price permitted for a futures contract in one trading session.

      Price Limit Order

      A customer order that specifies the price at which a trade can be executed.

      Program Trading

      The purchase (or sale) of a large number of stocks contained in or comprising a portfolio. Originally called "program" trading when index funds and other institutional investors began to embark on large-scale buying or selling campaigns or "programs" to invest in a manner which replicated a target stock index, the term now also commonly includes computer aided stock market buying or selling programs, portfolio insurance, and index arbitrage.

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      Q

      Quotation

      The actual price or the bid or ask price of either cash commodities or futures or options contracts at a particular time.

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      R

      Range

      The difference between the high and low price of a commodity during a given trading session, week, month, year, etc.

      Registered Representative

      A person employed by, and soliciting business for, a commission house or futures commission merchant.

      Resting Order

      An order to buy at a price below or to sell at a price above the prevailing market that is being held by a floor broker. Such orders may either be day orders or open orders.

      Risk/Reward Ratio

      The relationship between the probability of loss and profit. This ratio is often used as a basis for trade selection or comparison.

      Roll-Over

      The process of lifting a futures or options position and re-establishing it in a more deferred delivery month.

      Round Lot

      A quantity of a commodity equal in size to the corresponding futures contract for the commodity.

      Round Turn

      A completed futures transaction involving both a purchase and a liquidating sale, or a sale followed by a covering purchase.

      Runners

      Messengers who rush orders they receive from phone clerks to floor brokers for execution in the pit or ring.

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      S

      Scalper

      A floor trader who trades for small, short-term profits during the course of a trading session, rarely carrying a position overnight.

      Segregated Funds

      The amount of money, securities and property due to commodity futures or options customers which is held in segregated accounts in compliance with Section 4d of the Commodity Exchange Act and CFTC Regulations. Such money, securities or property may not be commingled with the money, securities and property of the FCM.

      Settlement

      Parties resolve their differences without having a trial, commonly without any determination of the merits of the case.

      Settlement Price

      The daily price at which the clearing house settles all accounts between clearing members for each contract month. Settlement prices are used to determine both margin calls and invoice prices for deliveries. The term also refers to a price established by the clearing organization to calculate account values and determine margins for those positions still held and not yet liquidated.

      Short

      One who has sold futures contracts or the cash commodity. Opposite of Long.

      Short Covering

      Purchasing futures to offset a short position

      Short Selling

      Selling a futures contract with the idea of delivering on it or offsetting it at a later date.

      Short Squeeze

      A market situation in which the lack of supplies tends to force shorts to cover their positions by offset at higher prices.

      Spread

      The purchase of one futures delivery month against the sale of another futures delivery month of the same commodity; the purchase of one delivery month of one commodity against the sale of that same delivery month of a different commodity; or the purchase of one commodity in one market against the sale of the commodity in another market, to take advantage of a profit from a change in price relationships. The term spread is also used to refer to the difference between the price of a futures month and the price of another month of the same commodity. A spread can also apply to options.

      Stock Index

      An indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition; the sampling of stocks, the weighing of individual stocks, and the method of averaging used to establish an index.

      Stop Limit Order

      A stop limit order is an order that goes into force as soon as there is a trade at the specified price. However, the order can only be filled at the stop limit price or better.

      Stop Order

      An order that becomes a market order when the futures contract reaches a particular price level. A sell stop is placed below the market, a buy stop is placed above the market.

      Strike Price

      The price at which the buyer of a call (put) option may choose to exercise his right to purchase (sell) the underlying futures contract.

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      T

      Technical Analysis

      An approach to forecasting commodity prices which examines patterns of price change, rates of change, and changes in volume of trading and open interest, without regard to underlying fundamental market factors.

      Tick

      The smallest allowable increment of price movement for a contract.

      Traders

      Generally people who trade for their own account or employees or institutions who trade for their employer's accounts.

      Trend

      The general direction, either upward or downward, in which prices have been moving.

      Trendline

      In charting, a line drawn across the bottom or top of a price chart indicating the direction or trend of price movement. If up, the trendline is called bullish; if down, it is called bearish.

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      U

      Underlying Futures Contract

      The specific futures contract that the option conveys the right to buy (in case of a call) or sell (in the case of a put).

      Up Front Fees

      Fees charged to a pool or a managed account prior to commencement of trading for the pool or account.

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      V

      Volatility

      A measurement of the change in price over a given time period.

      Volume

      The number of purchases and sales of futures or options on futures contracts made during a specified period of time.

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