Futures and Forex Glossary Dictionary M2

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Margin Call

A Margin Call happens when a broker asks for the trader to fund his account with more cash or securities (or sell securities), so the minimum maintenance margin can be met. A margin call will happen once the value of the trading account dips below a predetermined level set by the broker. If the margin call is not met, the account may be liquidated. See Also: Maintenance Margin

Market Close

The forex market is open 24 hours a day, so it essentially never closes, though there are different trading sessions (US Session, London Session, Asian Session). For accounting purposes, banks still set the market close time as 5 pm. EST.

Market Cycle

The time between two low points or two high points in a time period, where there is both a low point and high point. Market cycles can be short term, medium term or long term depending on the scope used.

Market Maker

A broker-dealer company that holds an inventory of the securities that its clients want to trade and displays buy and sell quotes for them. Essentially making a market. When an order is made, the broker sells or buys directly to/from the client and then seeks to offset the trade in the market. See Also: Make A Market

Market Manipulation

A deliberate attempt at manipulating the free determination of market prices by using price manipulation or other methods of spreading false information. Because of the size and liquidity of the forex market, there is less manipulation taking place than in other markets.

Market Order

An order placed to be executed at the first and best available price instead of at a predetermined fixed price.

Market Rate

The newest and current quote for a certain currency pair.

Market Risk

The inherent risk in all investments that arise from supply and demand pressures on the value of the investment, causing the price to fluctuate. Market risk is also defined as risk that cannot be eliminated trough diversification.
Mark-To-Market

Accounting standard where the value of an account or position is set by what the value would be, if the position were to be closed at current market prices.

Martingale System

Famous betting and gambling strategy where the bettor doubles the bets after every loss, so that the first win will recoup all losses in addition to making a profit. Though mathematically feasible, this would require an infinite bankroll as the betting amount from doubling bets grows exponentially.

Maturity

The date where the financial obligation (such as the principal) of a security must be repaid.

Maximum leverage

The biggest position that the margin in an account can sustain. If the maximum leverage for an account is 100 and the margin amount is $3,000, then the maximum leveraged position would be $300,000. See Also: Margin, Leverage

Mean Reversion

The theory that prices and returns eventually gravitate towards a mean (average). This implies that prices or returns that deviate from the mean are a result of natural market variation.