Forex glossary of terms
Forex glossary - M
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.
Maturity - a bond's expiration date, or when the borrower must pay back the principal and any outstanding interest MACD (Moving Averages Difference Oscillator) - The MACD indicator relies primarily on plotting two moving average lines - typically 12 and 26 day EMAs - and plots the rate of change between the two. If the signal line - the line used to denote the rate of change - is rising upward; this suggests that momentum is bullish; if downward, the indication is that momentum is bearish.
Maintenance performance bond - A sum, usually smaller than the initial performance bond, which must remain on deposit in the customer's account for any position. A drop in funds below this level requires a deposit back to initial performance bond levels. Previously referred to as maintenance margin. See Performance bond call.
Managed Float - When the monetary authorities intervene regularly in the market to stabilise the rates or to push the exchange rate in a required direction. It is also called the dirty float which we have in India.
Margin - (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.
Margin Call - A demand for additional funds to cover positions Marginal Risk - The 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 case there has been a favorable movement in the prices.
Market-if-touched (MIT) - An price order that becomes a market order when the market trades at a specified price at least once.
Market Maker - A broker-dealer firm that owns shares of a security and is willing to buy and sell at the quoted bid and ask prices. The firm lists buy and sell prices to attract customers.
Market-on-close (MOC) - A market order filled during the close of a trading session.
Market order - An order filled immediately at the best price available.
Market Risk - The risk associated with investing in the market and cannot be hedged or avoided.
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.
Mark-to-market - The daily adjustment of performance bond accounts to reflect profits and losses.
Maturity - Date for settlement of the transaction which is decided at the time of entering into the contract.
Maximum price fluctuation - The maximum amount the contract price can change up or down during one trading session, as stipulated by Exchange rules.
Mine and Yours - Terms used to signal when a trader wants to buy (mine) and sell (yours).
Minimum price fluctuation - The smallest increment of price movement possible in trading a given contract, often referred to as a tick.
MITI - Japanese ministry of International Trade & Industry.
MM - Money Markets
Momentum - The term has two meanings - (1) a trading style by which traders go with the direction of the current trend; and (2) a technical indicator which measures the rate of change of an asset over a given time frame. The formula for the momentum indicator is as follows - Money Market - Highly liquid markets for short-term investing in monetary instruments and debts, typically maturing in less than one year. Because of large transaction cost relative to potential interest, transactions occur in large amounts and thus participants are mainly banks and other large financial institutions.
Money Supply - The amount of money in the economy, which can be measured in a number of ways. In India we have four measures of money supply i.e M1, M2, M3, M4.
Moving Averages - An average of a number of specified historical time periods from the point on the chart. Moving averages offer an indication of the clear direction and slope of the trend in the market. Since moving averages measure historical data, they are a lagging indicator; in other words, the information they reveal is not predictive, but rather can be used to gauge momentum in the marketplace. Exponential moving averages (EMAs) work to reduce the lag of the overall moving average by placing a greater premium on more recent data when calculating the average.
Moving average chart - A chart recording moving averages (3-day, 10-day, etc.) of market prices.
Mutual fund - An open-end investment company. Equivalent to unit trust.
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