Online Forex Trading Words | Forex Dictionary | Definition | Forex Alphabet & Terminology

M

Macro Fund

A hedge fund that specializes in strategies designed to profit from expected macroeconomic events.

Maintenance Margin

The minimum margin, which an investor must keep at FXDirectDealer to maintain an open position.

Maintenance Margin Excess/Deficit

Remaining funds against which a customer can maintain/hold a position(s) until a Margin Call is triggered. Maintenance Margin Excess/Deficit = Account Value - Maintenance % * Margin. It is represented graphically as the top of the "red" level in the FXDD Margin Monitor.

Make a market

A dealer is said to "make a market" when a quoted bid and ask price is given to a client. The price represents the firm prices that the dealer is ready to buy or sell.

Margin

The aggregate amount of customer cash pledged against the aggregate Open Position(s). The margin pledged is a function of Maximum Trading Leverage Ratio. The higher the leverage, the lower the pledged Margin. The lower the leverage, the higher the Margin needed to carry the position.
Mathematically, Margin = Open Position Amount / Maximum Trading Leverage Ratio. For example, a USD/CHF 100,000 USD position at Maximum Trading Leverage Ratio 100:1 will require pledged Margin equal to 100,000/100 or $1,000.
Note: To calculate margins for currency pairs, where USD is NOT the Base (First) Currency (e.g. EUR/USD, GBP/USD…) and crosses (EUR/JPY, GBP/JPY…), the Counter Currency amount is first converted into USD using the average exchange rate(s).
Example: Customer buys 1 lot of EUR/USD when the price is 1.30. The average exchange rate is 1.30. Therefore, 100,000 EUR equals 130,000 USD. $130,000 / 100 Leverage Ratio = $1,300

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 customer.

Mark to Market

Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.

Market maker

A professional securities dealer or person with trading privileges on an exchange who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders. By maintaining an offering price sufficiently higher than their buying price, these firms are compensated for the risk involved in allowing their inventory of securities to act as a buffer against temporary order imbalances.

Market-on-Close

An order to buy or sell at the end of the trading session at a price within the closing range of prices.

Market-on-Opening

An order to buy or sell at the beginning of the trading session at a price within the opening range of prices.

Market order

Market Order is an order to buy or sell a chosen currency pair at the current market price. A Market Order will be executed at the price displayed at the moment user clicks the "Place" button, but only if the currency price remains within a price range (for example, 5 pips) set by the FXDD.

Marubozu Candlestick

On a Japanese Candlestick chart, a candlestick with no shadow or wick extending from the body at either the open, the close or at both. Also known as a shaven or bald candlestick.

Maturity

The date for settlement or expiry of a financial instrument.

Maximum Trading Leverage Ratio

Leverage expressed as a ratio, available to open a new position(s). For example, a leverage ratio of 100:1 allows a client the ability to control a $100,000 lot position with $1,000 of margin ($100,000 / 100 = $1,000).

Maximum Trading Power

Mathematically, the Maximum Trading Power = Account Value * Maximum Trading Leverage Ratio.

Momentum

In technical analysis, the relative change in price over a specific time interval. Often equated with speed or velocity and considered in terms of relative strength.

Money Flow Index(MFI)

The MFI is a volume-weighted momentum indicator that compares positive money flow to negative money flow. When compared with price it can gauge the strength of a trend.

Money Market

The market for short-term debt instruments.

Moving Average

A way of smoothing a set of price/rate data by taking the average price of data range of values.
The moving average is one of the most useful and objective tools available to the technical analyst. Moving averages show the average value of a security's price over a certain number of time periods. The most commonly used moving averages are the 20, 30, 50, 100, and 200 day averages. Moving averages smooth a data series and make it easier to spot trends and smooth out price and volume fluctuations or noise that can confuse interpretation. It moves because for each calculation, the latest x number of time periods' data are used. Using the data from prior time periods, a moving average lags the market. An exponentially smoothed moving average (EMA) gives greater weight to the more recent data, in an attempt to reduce the lag. The shorter the time span, the more sensitive the moving average will be to price changes. The longer the time span, the less sensitive or the more smoothed the moving average will be.

Moving Average Convergence/Divergence(MACD)

A trend following momentum indicator developed by Gerald Appel. MACD shows the relationship between two moving averages of prices and is calculated by subtracting the 26-period exponential moving average of a given security from its 12-period exponential moving average. By comparing moving averages, MACD illustrates trend following characteristics, and by tracking the difference of the moving averages as an oscillator, MACD displays momentum characteristics.
Chart courtesy of Prophet Financial Systems.