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Glossary - L, M



Lag

The number of data points that a filter, such as a moving average, follows or trails the input price data. 

Law of Demand

The relationship between product demand and price.

 Law of Supply

The relationship between product supply and its price.

 Leverage

Controlling large dollar amounts of a commodity with a comparatively small amount of capital.

Limit Order

An order to buy or sell above or below a fixed price.

Limit price Moves

A restriction on the maximum amount a futures price can fluctuate in a given period ( usually a day).

Liquidity

Being able to raise needed cash easily.  

Local

The trader in a pit of a commodity exchange who buys and sells for his/her own account.

Locked Limit

A market that, if not restricted, would seek price equilibrium outside the limit but, instead, moves to the limit and ceases to trade.

Long Position

That which entails ownership or effective ownership of an asset; holding securities in anticipation of a price increase in that security.

 

M

MACD

An indicator constructed by relating two exponentially smoothed moving averages. It is plotted above and below a zero line. The crossover, movement through the zero line, and divergences generate buy and sell signals. Alternatively, crossovers of a signal line, constructed from a smoothing of the MACD provide buy and sell signals.

Market Maker

A broker or bank continually prepared to make a two-way price to purchase or sell for a security or currency.

Margin

In stock trading, an account in which purchase of stock may be financed with borrowed money; in futures trading, the deposit placed with the clearinghouse to assure fulfillment of the contract. This amount varies daily and is settled in cash.

 Margin Call

The demand upon a customer to put up money or securities with a broker.  The call is made if a customer's equity in a margin account declines below a minimum standards set by the exchange or brokerage firm.  This happens when there is a drop in price of the securities being held as collateral.

 Market Order

Instructions to a broker to immediately sell to the best available bid or to buy from the best available offer.

Market Sentiment

A measurement of bullish or bearish attitudes among investors and traders. Market sentiment can be established in many ways. The two most common are from polling techniques or by observing specific indicators that reflect investor’s attitudes.  Examples might include put/call ratios, insider buying short interest ratios etc.

Market Value

The value that an asset trades or would trade in the market.  

Maximum Entropy Method (Spectrum Analysis)

A tool for spectrum analysis and a method of adaptive filtering and trend forecasting.

Members

Members of a stock exchange who are empowered to buy and sell securities on the floor of the exchange either for a client or for their own account.

 Mode

The most frequently occurring value in a set of data.

 Momentum

Measures the speed or velocity of a price move. It is a generic term embracing all types of oscillators. Examples include the rate-of-change, MACD, RSI, Stochastics etc. All oscillators, to some extent or another are subject to the same interpretive principles.

The most common are overbought/oversold readings and positive and negative divergences.

Money Supply

Consisting primarily of currency in circulation plus deposits in banks; the amount of money in the economy.

Monowave

In Elliott wave theory, a single wave within a range of waves.

Moving Average

A mathematical procedure to smooth or eliminate the fluctuations in data and to assist in determining the underlying trend. The principal varieties are simple, exponential, weighted, variable and triangular.  It is calculated by adding the prices for a predetermined number of days and then dividing by the number of days.

Moving Average Crossovers

Occur where the price crosses a moving average thereby triggering a buy or sell signal.

Moving Average Convergence/ Divergence (MACD)

An indicator constructed by relating two exponentially smoothed moving averages. It is plotted above and below a zero line. The crossover, movement through the zero line, and divergences generate buy and sell signals. Alternatively, crossovers of a signal line, constructed from a smoothing of the MACD provide buy and sell signals.

Municipal Bonds

Issued by state and local governments, and special districts and counties in the form of debt securities.

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