F First Notice Day According to Chicago Board of Trade rules, the first day on which a notice of intent to deliver a commodity in fulfillment of a given month's futures contract can be made by the clearinghouse to a buyer. The clearinghouse also informs the seller who they have been matched up with.
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Forex Futures A shortened term for foreign exchange futures, also known as FX or currency futures. Forex futures are exchange-traded contracts to buy or sell a specified amount of a currency on a set future date, at a specified price. Forward Cash Contract A cash contract in which a seller agrees to deliver a specific cash commodity to a buyer sometime in the future. Forward contracts, in contrast to futures contracts, are privately negotiated and are not standardized.
Front Month See Delivery Month Futures A term used to designate all contracts covering the purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange. Futures Commission Merchant A firm or person engaged in soliciting or accepting and handling orders for the purchase or sale of futures contracts, subject to the rules of a futures exchange and, who, in connection with solicitation or acceptance of orders, accepts any money or securities to margin any resulting trades or contracts.
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Futures Contract A legally binding agreement, made on the trading floor of a futures exchange, to buy or sell a commodity or financial instrument sometime in the future. Futures contracts are standardized according to the quality, quantity, and delivery time and location. Futures Exchange A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts.
Usually it involves opposite positions in the cash market and futures market at the same time. Hedger An individual or company owning or planning basic trading terms own a cash commodity corn, soybeans, wheat, U. Treasury bonds, notes, bills, etc.
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 basic trading terms futures contracts of the same quantity and type as the initial transaction.
Hedging The practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market.
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Hedgers use the futures markets to protect their businesses from adverse price changes. I Initial Margin The minimum value on deposit in your account to establish a new futures or options position, or to add to an existing position. Initial margin amount levels differ by contract.
Lind-Waldock sets the level of Initial Margin required, and it may change at any time at Lind-Waldock's discretion. Increases or decreases in Initial Margin levels reflect anticipated or actual changes in market volatility.
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Also called "Initial Performance Bond. Futures contracts outstanding at the end of the last trading day must be settled by delivery of the underlying commodity or securities or by agreement for monetary settlement in some cases by EFPs.
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Limit Order An order given for an options or mt4 for binary options trading trade specifying a certain maximum or minimum price, beyond which the order buy or sell is not to be executed.
This is an Order Type in LindConnect for some contracts. Leverage The ability to control large dollar amounts of a commodity with a comparatively small amount of capital.
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Liquid A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price. Institutional investors are inclined to seek out liquid investments so that their trading activity will not influence the market price. Liquidation Any transaction that offsets or closes out a long or short futures position.
Long 1 One who has bought a futures contract to establish a market position; 2 a market position that obligates the holder to take delivery; 3 one who owns an inventory of commodities. See Short. Long Hedge The purchase of a futures contract in anticipation of an actual purchase in the cash market. Used by processors or exporters as protection against an advance in the cash price.
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See hedge, short hedge. M Maintenance Margin The minimum value that you must keep in your account in order to continue to hold a position. The Maintenance Margin is typically less than the Initial Margin, and also differs by contract.
If your account falls below the Maintenance Margin requirement, you will receive a margin call.
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If you wish to continue to hold the position, you will be required to restore your account to the full Initial Margin level not to the Maintenance Margin level. Also known as the Maintenance Performance Bond. Managed Futures Represents an asset class comprised of basic trading terms money managers known as commodity trading advisors CTA's who manage client assets on a discretionary basis, using global futures markets as an investment medium. Margin See Performance Bond.
Margin Call A demand from a clearinghouse to a clearing member, or from a brokerage firm to a customer, to bring margin deposits up to a minimum level required to support the positions held. This can be done by either depositing more funds or offsetting some or all of the positions held. It's the end-of-day adjustment made to trading accounts to reflect profits and losses on existing positions.
In other words, winnings are credited and immediately available to the basic trading terms and losses are debited and immediately owed. This brings integrity to the marketplace because participants are basic trading terms allowed to trade unless funds are available to cover the positions.
Market Order MKT An order to buy or sell a specified commodity, including quantity and delivery month at the best possible prices available, as soon as possible. Market-If-Touched M. Order A price order that automatically becomes a market order if the price is reached.
Market on Close MOC An order to buy or sell at the end of the trading session at a price within the closing range of prices. O Offer Indicates a willingness to sell a futures contract at a given price. Also called "Ask" See Bid. Offset Taking a second futures or options position opposite to the initial or opening position.
This means selling, if one has bought, or buying, if one has sold, a futures or option on a futures contract. See Liquidate Open Order An order basic trading terms a broker that is good until it is canceled or executed.
See GTC Open Outcry Basic trading terms of public auction for making verbal bids and offers in the trading pits or rings of futures exchanges.
Or Better Order OB A type of a limit order in which the market is at or better than the limit specified. The term is often used to help clarify that the order was not mistakenly given as a Limit when it looks like it should be a Stop Order. P Performance Bond Margin 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 Basic trading terms House. The performance bond helps to ensure the financial integrity of brokers, clearing members and the Exchange as a whole.
Pit A specially constructed arena on the trading floor of some exchanges where trading in a futures contract is conducted. On some exchanges the term "ring" designates the trading area for a commodity. Position A market commitment. A buyer of an initial futures contract is said to have a long position and, conversely, basic trading terms seller of an initial futures contract is said to have a short position. Price Discovery The generation of information about "future'' cash market prices through the futures markets.
It has been said that futures markets are often the place of "original price discovery" because that's where the buyers and sellers are brought together to determine the price.
As in any auction, the last price is considered to reflect the sum total of opinions about what price an item should be valued.
Price Limit Order An order that specifies the highest price at which a bidder will pay for a contract, or the lowest price a seller will sell a contract. This type of order is used to "limit" how much the trader is willing to "give in" on price to get the order filled. S Settlement Price The last price paid for a commodity on any trading day. The exchange clearinghouse determines a firm's net gains or losses, margin requirements, and the next day's price limits, based on each futures and options contract settlement price.
If there is a closing range of prices, the settlement price is determined by averaging those prices.
Also referred to as Settle or Closing Price. Thinly traded options may be traded at a theoretical value. Scalp To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or even just a few minutes.
Short 1 The selling side of an open futures contract; 2 a trader whose net position in the futures market shows an excess of open sales over open purchases.
See Long. Speculator One who attempts to anticipate price changes and, through buying and selling futures contracts, aims to make profits. A speculator does not use the futures market in connection with the production, processing, marketing or handling of a product. Spot Market of immediate delivery of and payment for the product.
Spread The price difference between two related markets or commodities. Spreading The simultaneous buying and selling of two related markets in the expectation that a profit will be made when the position is offset. Examples include: buying one futures contract and selling another futures contract of the same commodity but different delivery month; buying and selling the same delivery month of the same commodity on different futures exchanges; buying a given delivery month of one futures market and selling the same delivery month of a different, but related, futures market.
Stop Order Sometimes called a Stop Loss Order, although it can be used to initiate a new position as well as offset an existing position. It's an order to buy or sell when the market reaches a specified point. A stop order to buy becomes a market order when the futures contract trades or is bid at or above the stop price. A stop order to sell becomes a market order when the futures contract trades basic trading terms is offered at or below the stop price.
An order to buy or sell at the market when and if a specified price is reached. Stop Limit A variation of a stop order. A stop with limit order to buy becomes a limit order at the stop price when the futures contract trades or is bid at or above the stop price.