Margin
Market Maker
Market Order
Money Markets
Money Supply
MPC - Monitary Policy Committee
OCO - One Calcels the Other
Open order
Open Position
Options
Order
Overnight Position
Points, Pips
Position
Premium
Profit/Loss (P&L)
Margin
The required equity that an investor must deposit to
collateralize a position.
Market Maker
A dealer who regularly quotes both bid and ask prices and is
ready to make a two-sided market for any financial instrument.
Market Order
An order to buy/sell at the best price available when the
order reaches the market.
Money Markets
Refers to investments that are short-term (i.e. under one
year) and whose participants include banks and other financial institutions.
Examples include Deposits, Certificates of Deposit, Repurchase Agreements,
Overnight Index Swaps and Commercial Paper. Short-term investments are safe and
highly liquid.
Money Supply
Money supply figures, and M1 specifically, once were the
most important release to watch in the Treasury market, as the Fed directly
targetted M1 growth in the early 1980s. The focus on money supply has long
since been abandoned, however. To the extent that money supply is still
monitored by the market, M2 is the favored monetary aggregate. The Fed still
targets both M2 and M3 in a rhetorical sense, but these targets mean little
when it comes to policy decisions. If the Fed misses its target, it is more
likely to change the target than it is to change policy. In 2000, the Fed
finally abandoned the targets altogether, thereby removing any remaining
emphasis on this one-time star release.
MPC - Monetary Policy Committee
A committee of the central bank that is responsible for the
monetary policy decisions.
OCO - One Cancels the Other
A contingent order where the execution of one part of the
order automatically cancels the other part.
Open order
An order that will be executed when a market moves to its
designated price. Normally associated with Good 'til Cancelled Orders.
Open Position
An active trade with corresponding unrealized P&L, which
has not been offset by an equal and opposite deal.
Options
An agreement that allows the holder to have the option to
buy/sell a specific security at a certain price within a certain time. Two
types of options – call and put. A call is the right to buy while a put is the
right to sell. One can write or buy call and put options.
Order
An order is an instruction, from a client to a broker to
trade. An order can be placed at a specific price or at the market price. Also,
it can be good until filled or until close of business.
Overnight Position
A trade that remains open until the next business day.
Points, Pips
The term used in currency market to represent the smallest
incremental move an exchange rate can make. Depending on context, normally one
basis point (0.0001 in the case of EUR/USD, GBD/USD, USD/CHF and .01 in the
case of USD/JPY).
Position
A position is a trading view expressed by buying or selling.
It can refer to the amount of a currency either owned or owed by an investor.
Premium
In the currency markets, it is the amount of points added to
the spot price to determine a forward or futures price.
Profit/Loss (P&L)
The actual "realized" gain or loss resulting from trading
activities on Closed Positions, plus the theoretical "unrealized" gain or loss
on Open Positions that have been Mark-to-Market.