Glossary: G-L

– G –

Give up: A brokerage firm that has not performed he service is credited with the execution of any order at the request of the customer.

Globex: An international electronic trading system for futures and options that permits participating exchanges to list their products for trading after the close of the exchanges’ open outcry trading hours.

Gold Certificate: A certificate confirming a person’s ownership of a specific amount of gold bullion.

Gold/Silver Ratio: The number of ounces of silver required to buy one ounce of gold at current spot prices.

Good This Week Order (GTW): Order which is valid only for the week in which it is placed.

Good Til Cancelled Order (GTC): A type of order that ensures a position will remain open indefinitely until it is actively cancelled by the trader. This means that the position will remain open beyond the close of the immediate trading day. Contrast with a ‘day order’.

Grades: Various qualities of a commodity.

Grading certificates: A paper setting forth the quality of a commodity as determined by authorised inspectors or graders.

Gross Processing Margin (GPM): Refers to the difference between the cost of a commodity and the combined sales income of the finished products which result from processing the commodity.

– H –

Hardening: This describes a price which is gradually becoming steady.

Heavy: A description of a market in which prices are demonstrating either an inability to advance or a slight tendency to decline.

Hedging: The process designed to cut the risk of trading by adopting complimentary, offsetting positions. Hedging is often used as a core technique by institutional investors to double up earnings and mitigate against any losing positions, effectively building in a guaranteed component of loss to guard against unmatched positions.

Hybrid Instruments: Financial instruments that possess, in varying combinations, characteristics of forward contracts, futures contracts, option contracts, debt instruments, bank depository interests, and other interests. Certain hybrid instruments are exempt from CFTC regulation.

– I –

Initial Margin: Customers’ funds put up as security for a guarantee of contract fulfilment at the time a futures market position is established.

In Sight: The amount of a particular commodity that arrives at terminal or central locations is or near producing areas.

Interest Arbitrage: Switching into another currency by buying spot and selling forward, and investing proceeds in order to obtain a higher interest yield. Interest arbitrage can be inward, i.e. from foreign currency into the local one or outward, i.e. from the local currency to the foreign one.

International Monetary Fund (IMF): is an intergovernmental organization that oversees the global financial system by monitoring the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. Its objectives are to stabilize international exchange rates and facilitate development through the encouragement of liberalising economic policies in other countries as a condition of loans, debt relief, and aid.

Inverted Market: A futures market in which the nearer months are selling at premiums to the more distant months.

Invisible Supply: Generally refers to the uncounted stocks of a commodity in the hands of wholesalers, manufacturers, ultimate consumers and producers which cannot be identified accurately.

– L –

Last Notice Day: The final day on which notices of intent to deliver on futures contracts may be issued.

Last Trading Day: A final Day on which trading ceases for the maturing (current) delivery month. Futures contracts outstanding at the end of the last trading day must be settled by delivery or an exchange of cash value differences in case of cash settlement.

Leaps: Long-dated, exchange-traded options.

Leverage: The ability to trade transactions of a size far in excess of trading capital, relying on funding supplied by the broker, to deliver larger returns on smaller proportionate investments. Leverage allows traders to trade more heavily than they can afford.

Limit (Up or Down): The maximum price advance or decline from the previous day’s settlement price allowed during one trading session, as fixed by the rules of an exchange.

Liquidity: Liquidity is the ease with which instruments can be bought and sold in a market, and more generally the ease with which given assets can be turned into cash. Futures are an example of a particularly liquid market in which buyers and sellers can constantly change their positions, by virtue of the high transaction levels.

Local: Floor broker who normally executes trades for his or her personal account.

Long (Going Long): Going long is the strategy of taking a positive trading position in a market, forecasting that prices will rise with time. Going long is the most basic, foundational strategy employed by price speculators, and in the futures market represents buying contracts with a view to their resultant price increase over time.

Lot: A unit of trading.

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