Margin The required equity that an investor must deposit to collateralize a position.
Margin Deposit The margin deposit is not a down payment on a purchase of equity, as many perceive margins to be in the stock markets. Rather, the margin is a performance bond, or good faith deposit, to ensure against trading losses. The margin requirement allows traders to hold a position much larger than the account value, which allow for this high leverage.
In the event that funds in the account fall below margin requirements, brokerage firms will automatically close all open positions. Margin call A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the client. If the equity balance in your account falls below the margin requirement, a margin call will be generated. In the event that an account exceeds its maximum allowable leverage, ALL open positions are liquidated immediately, regardless of the size or the nature of positions held within the account.
Market Maker A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.
Market Risk - Exposure to changes in market prices.
Mark-to-Market Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.
Maturity The date for settlement or expiry of a financial instrument. |
