Modules for Traders
Executing Futures Trading
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Glossary of Executing Futures Trading
1. Margin: It is the money borrowed from a broker to purchase an investment and is the difference between the total value of investment and the loan amount.
2. Margin Intraday Square off (MIS): MIS is a product type which as per RMS system is for intraday trade.
3. The stop loss: What is the amount of loss you will have to incur as a stop loss in case the trade moves against your goals.
4. The Cost of Carry Model: It assumes that markets are perfectly efficient and removes the opportunity for traders to take advantage of price differences in two or more markets which is also called arbitrage.
5. Expectancy Model of futures: It explains the future price of an asset is technically the spot price of the asset which is expected to be in the future.
6. Initial margin: the minimum amount which is calculated as a percentage of total investment is called initial margin the broken will use initial margin to fulfil the full settlement obligation.
7. Maintenance margin: the minimum amount which the client is required to maintain in the margin account is called the maintenance margin. It is calculated as the percentage of market value as per the latest closing price of the securities which are forwarded as collaterals.
8. Open interest: It is the total of outstanding derivative contracts which are not settled for an asset.
9. Hedging: It acts as a fundamental way by which you can save your investment portfolio. To counterbalance the potential losses in an investment, hedging works as a risk management strategy.
10. Index futures: They are contracts to buy or sell a financial index at a set price today, to be settled at a date in the future.
11. Futures contracts: They are financial derivatives that oblige the buyer to purchase some underlying asset (or the seller to sell that asset) at a predetermined future price and date.
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