Hedging
Refers to the practice of entering in to a transaction on one instrument, in order to protect against loss in another. As hedges reduce potential losses, they also tend to reduce potential profits.
High/Low
Characterized as the highest traded price and the lowest traded price for the underlying instrument for the trading day or time frame.
Initial Margin
Known as the required initial deposit of money to enter into a position as a guarantee on future performance.
Limit Order
An order given where the client may specify a price where an order can be executed only if the market reaches that price.
Long
A market position where the Client has bought an instrument he/ she previously did not own.
Margin Call
A demand for additional funds. A requirement by a clearing house that a clearing member (or by a brokerage firm that a client) brings margin deposits up to a required minimum level to cover an adverse movement in price in the market.
Over The Counter (OTC)
A term generally used to describe any transaction that is not conducted by an exchange, but done directly between two counter parties.
Offer
Refers to the rate at which a Dealer is willing to sell the instrument.
Political Risk
This refers to the uncertainty of return on an investment due to the possibility that a government might implement actions which are detrimental to the investor's investments.
Resistance
A price level, which prohibits price movements to the upside as one expects selling to take place at these areas.
Risk Capital
This is usually the amount of money that an individual can afford to invest, which, would not affect their lifestyle if the capital was lost.
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