EURO.uz -The Forex quick guide for beginners and private traders

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The Forex quick guide for beginners and private traders

M0 Cash in circulation. Only used by the UK .

M1

Cash in circulation plus demand deposits at commercial

banks. There are variations between the precise definitions

used by national financial authorities.

M2 Includes demand deposits, time deposits and money market

mutual funds excluding large CDs.

M3 In the UK , it is M1 plus public and private sector time

deposits and sight deposits held by the public sector.

M4 In the US , it is M2 plus negotiable CDs.

Maintenance Margin

The minimum margin which an investor must keep on

deposit in a margin account at all times in regards to each

open contract.

Make a Market

A dealer is said to make a market when he quotes both the

bid and offer prices at which he stands ready to buy and

sell.

Managed Float

When the monetary authorities intervene regularly in the

market to stabilize the rates or to push the exchange rate in

a required direction. It is also called the "dirty float", as in

India .

Margin

Collateral that the holder of a position in securities,

options, Forex or futures contracts, has to deposit to cover

the credit risk of his counterparty. Other definitions to

MARGIN, used in other areas are: (1) Difference between

the buying and selling rates, also used to indicate the

discount or premium between spot or forward. (2) For

options, the sum required as collateral from the writer of

an option. (3) For futures, a deposit made to the clearing

house on establishing a futures position account. (4) The

percentage reserve required by the US Federal Reserve to

make an initial credit transaction.

page 95 of 110

Value Definition

Margin Call

A demand for additional funds to cover positions. A demand

for additional funds to be deposited in a margin account to

meet margin requirements because of adverse future price

movements.

Marginal Risk

The possibility that a customer goes bankrupt after entering

into a forward contract. In such an event, the issuer must

close the commitment, running the risk of having to pay the

marginal movement on the contract.

Mark-to-Market

The profits and/or losses are tallied at the end of the

session according to the closing prices of the security, and

the account is "marked to the market" daily. The party will

be called upon to make good the losses if there has been an

adverse movement in the prices, and it can book the profits

in the event there has been a favorable movement in the

prices.

Mark Up Premium.

Market Amount The minimum amount conventionally dealt for between

banks.

Market Maker A market maker is a person or firm authorized to create and

maintain a market in an instrument.

Market Order An order to buy or sell a financial instrument immediately

at the best possible price.

Market Value

Market value of a Forex position at any time is the amount

of the domestic currency that could be purchased at the

then market rate in exchange for the amount of foreign

currency to be delivered under the Forex Contract.

MATIF Marche a Terme International de France.

Maturity Date for settlement of the transaction which is decided at

the time of entering into the contract.

Maturity Date

(1) The last trading day of a futures contract. (2) Date on

which a bond matures, at which time the face value will be

returned to the purchaser. Sometimes the maturity date is

not one specified date, but a range of dates during which

the bond may be repaid.

Micro Economics

The study of economic activity as it applies to individual

firms or well defined small groups of individuals or

economic sectors.

Mid Office The control of the trading activity including position

keeping.

Mid-Price or Middle Rate

The price half-way between the two prices, or the average

of both buying and selling prices offered by the market

makers.

Milliard European term for 1,000 million.

Mine Expression used to indicate that the contacting party is

willing to buy at the rate offered by the quoting bank.

Minimum Price

Fluctuation

The smallest increment of market price movement possible

in a given futures contract.

page 96 of 110

Value Definition

Minimum Reserve

Reserves required to be deposited at central banks by

commercial banks and other financial institutions,

sometimes referred to as Registered Reserves.

Mio Million.

MITI Japanese ministry of International Trade & Industry.

MM Money Markets.

Money Market A market consisting of financial institutions and dealers in

money or in credit, who wish to either borrow or lend.

Money Market Operations Comprises the acceptance and re-lending of deposits on the

money market.

Money Supply

The amount of money in the economy, which can be

measured in a number of ways. In India there are four

measures of money supply i.e. M1, M2, M3, M4.

Moving Average A way of smoothing a set of data, widely used in price time

series.

Multiple Exchange Rates Different exchange rates for different types of transaction.

The South African Rand is an example.

Mutual Fund An open-end investment company. Equivalent to unit trust.

Nearby Month The nearest actively traded delivery month, a.k.a. current

delivery month, lead month.

Net Position The number of futures contracts bought or sold which have

not yet been offset by opposite transactions.

Nickel US term for five basis points.

Nostro Account

A foreign currency current account maintained with another

bank. The account is used to receive and pay currency

assets and liabilities denominated in the currency of the

country in which the bank is resident.

Not Held Basis Order

An order whereby the price may trade through or better

than the client's desired level, but the principal is not held

responsible if the order is not executed.

Note A financial instrument consisting of a promise to pay rather

than an order to pay, or a certificate of indebtedness.

 


 

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