Trade Forex with GFT

Adjusted Futures Price - The cash-price equivalent reflected in the current futures price.

Arbitrage - The simultaneous buying and selling of similar commodities in different markets to take benefit from a price discrepancy.

Arbitration - The process of settling disputes between members, or between members and customers.

Associated Person (AP) - A person who solicits orders, customers, or customer funds (or supervises others performing these duties) on behalf of a Futures Commission Merchant, an Introducing Broker, a Commodity Trading Adviser, or a Commodity Pool Operator.

Basis - The difference between the current cash price and the futures price of the same commodity. Unless otherwise specified, the price of the nearby futures contract month is typically used for the basis calculation.

Bear - An individual who believes market prices will decline.

Bear Market - A period of time when market prices decline.

Bear Spread - Refers to the selling of the nearby contract month and the buying of the dererred contract in order to profit from a change in the price relationship.

Bid - An expression indicating a desire to buy a commodity at a given price; opposite of offer.

Broker - A company or individual that carries out futures and options orders on behalf of financial and commercial institutions and/or the general public.

Brokerage Fee - A fee charged by a broker for carrying out a transaction.

Brokerage House - An individual or organization that solicits or accepts orders to buy or sell futures contracts or options on futures and accepts money or other assets from customers to support these orders.

Bull - An individual who believes market prices will rise.

Bull Market - A period when market prices rise.

Bull Spread - Refers to the buying the nearby month and selling the deferred month in order to profit from the change in the price relationship.

Butterfly Spread - The placing of two interdelivery spreads in opposite directions with the center delivery month common to both spreads.

Buy-On-Close - To buy at the end of the trading session at a price within the closing range.

Buy-On-Open - To buy at the beginning of the trading session at a price within the opening range.

Carryover - Grain and oilseed commodities not consumed during the marketing year and remaining in storage at year's end. These stocks are "carried over" into the next marketing year and added to the stocks produced during that crop year.

Cash Commodity - An actual physical commodity an individual buys or sells, e.g., soybeans, corn, gold, silver, Treasury bonds, etc. Also referred to as actuals.

Cash Contract - A sales agreement for either immediate or future delivery of the actual product.

Cash Market - A location where people buy and sell the actual commodities, i.e., grain elevator, bank, etc.

Cash Settlement - Transactions generally involving index-based futures contracts that are settled in cash based on the actual value of the index on the last trading day, in oppostion to those that detail the delivery of a commodity or financial instrument.

Certificate of Deposit (CD) - A time deposit with a specific maturity displayed by a certificate.

CFTC - Commodity Futures Trading Commission, established in 1975 to take over regulation of all U.S. futures and options trading.

Charting - Using charts to analyze market activity and anticipate future price movements.

Cheapest to Deliver - A method of determining which specific cash debt instrument is most profitable to deliver against a futures contract.

Clear - The process by which a clearinghouse keeps records of all trades and settles margin flow on a day-to-day mark-to-market basis for its clearing member.

Clearinghouse - A third-party agency or separate corporation of a futures exchange that is responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery and reporting trading information..

Clearing Margin - Financial safeguards to assure clearing members (usually companies or corporations) perform on their customers' open futures and options contracts. Clearing margins are distinct from customer margins that individual buyers and sellers of futures and options contracts are required to deposit with brokers.

Clearing Member - A member of an exchange clearinghouse, typically held by companies, and responsible for the financial commitments of customers that clear through their firm.

Closing Price - See Settlement Price.

Closing Range - A scope of prices at which buy and sell transactions took place during the market close.

Commission Fee - A fee charged by a broker for carrying out a transaction. Also referred to as a brokerage fee.

Commission House - An individual or organization that solicits or accepts orders to buy or sell futures contracts or options on futures and accepts money or other assets from customers to support these orders.

Commodity - Products traded on an authorized commodity exchange that can be used for commerce ,including agricultural products, metals, petroleum, foreign currencies and financial instruments and indexes, to name a few.

Commodity Futures Trading Commission (CFTC) - A federal regulatory agency established under the Commodity Futures Trading Commission Act, as amended in 1974, that oversees futures trading in the United States.

Commodity Pool An enterprise in which funds contributed by a number of persons are combined for trading futures contracts or commodity options.

Commodity Pool Operator (CPO) - An individual or organization that operates or solicits funds for a commodity pool.

Commodity Trading Adviser (CTA) - A person who, for compensation or profit, directly or indirectly advises others on the value or the advisability of buying or selling futures contracts or commodity options, including by way of exercising trading authority over a customer's account as well as providing recommendations through written publications or other media.

Consumer Price Index (CPI) - A major inflation measure computed by the U.S. Department of Commerce measuring the prices of a fixed market basket of some 385 goods and services in the previous month.

Contract Grades - The standard grades of commodities or instruments listed in the rules of the exchanges that must be met when delivering cash commodities against futures contracts. Grades are often accompanied by a schedule of discounts and premiums allowable for delivery of commodities of lesser or greater quality than the standard called for by the exchange

Contract Month - A specific month in which delivery may take place under the terms of a futures contract.

Convergence - Refers to cash and futures prices coming together as the futures contract nears expiration.

Conversion Factor - A factor used to equate the price of T-bond and T-note futures contracts with the various cash T-bonds and T-notes eligible for delivery, based on the relationship of the cash-instrument coupon to the required eight percent deliverable grade of a futures contract as well as taking into account the cash instrument's maturity or call.

Cost to Carry (or Carry) - For physical commodities such as grains and metals, the price of storage space, insurance and finance charges incurred by holding a physical commodity. In interest rate futures markets, it refers to the difference between the yield on a cash instrument and the cost of funds necessary to buy the instrument.

Crop (Marketing) Year - The time span from harvest to harvest for agricultural commodities. The crop marketing year varies slightly with each agricultural commodity, but usually begins at harvest and ends before the following year’s harvest.

Crop Reports - Reports compiled by the U.S. Department of Agriculture on a variety of agricultural commodities that are released throughout the year. Information in the reports includes estimates on planted acreage, yield, and expected production, as well as comparison of production from previous years.

Cross-Hedging - Hedging a cash commodity using a different but related futures contract when there is no futures contract for the cash commodity being hedged and the cash and futures markets follow similar price trends (e.g., using soybean meal futures to hedge fish meal).

Crush Spread - The purchase of soybean futures and the simultaneous sale of soybean oil and meal futures.

Customer Margin - Financial guarantees are required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfillment of contract obligations. FCMs are responsible for overseeing customer margin accounts. Margins are determined on the basis of market risk and contract value. Also referred to as performance-bond margin.

Deferred (Delivery) Month - The more distant month(s) that futures trading is happening, as distinguished from the nearby (delivery) month.

Deliverable Grades - The standard grades of commodities or instruments listed in the rules of the exchanges that must be met when delivering cash commodities against futures contracts. Grades are often accompanied by a schedule of discounts and premiums allowable for delivery of commodities of lesser or greater quality than the standard called for by the exchange. Also referred to as contract grades.

Delivery - The transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchange has specific procedures for delivery of a cash commodity. Some futures contracts, such as stock index contracts, are cash settled.

Delivery Month - A specific month in which delivery may take place under the terms of a futures contract. Also referred to as contract month.

Demand, Law of - The relationship between product demand and price.

Derivative - A financial instrument, traded on or off an exchange, the price of which is dependent upon the value an underlying security, commodity, other derivative instrument, or any agreed-upon pricing index or arrangement.

Differentials - Price differences between classes, grades, and delivery locations of various stocks of the same commodity.

Discount Rate - The interest rate charged on loans by the Federal Reserve to member banks.

Discretionary Account - An arrangement that the account holder gives written power of attorney to a person, often his broker, allowing them to make trading decisions. Also known as a controlled or managed account.

Eurodollars - U.S. dollars on deposit with a bank outside of the United States and, consequently, outside the jurisdiction of the United States. The bank could be either a foreign bank or a subsidiary of a U.S. bank.

European Terms - A method of quoting exchange rates, which measures the amount of foreign currency needed to buy one U.S. dollar, i.e., foreign currency unit per dollar. See Reciprocal of European Terms.

Exchange For Physicals (EFP) - A transaction generally used by two hedgers who want to exchange futures for cash positions. Also referred to as against actuals or versus cash.

Exercise - The action taken by the holder of a call option if he wishes to purchase the underlying futures contract or by the holder of a put option if he wishes to sell the underlying futures contract.

Expanded Trading Hours - Additional trading hours of specific futures and options contracts at the Chicago Board of Trade that overlap with business hours in other time zones.

Expiration Date - Options on futures generally expire on a specific date during the month preceding the futures contract delivery month. For example, an option on a March futures contract expires in February but is referred to as a March option because its exercise would result in a March futures contract position.

Extrinsic Value - See Time Value.

Federal Funds Rate - The rate of interest charged for the use of federal funds.

Federal Housing Administration (FHA) - A division of the U.S. Department of Housing and Urban Development that insures residential mortgage loans and sets construction standards.

Federal Reserve System - A central banking system in the United States, created by the Federal Reserve Act in 1913, designed to assist the nation in attaining its economic and financial goals. The structure of the Federal Reserve System includes a Board of Governors, the Federal Open Market Committee, and 12 Federal Reserve Banks.

Feed Ratio - A ratio used to express the relationship of feeding costs to the dollar value of livestock. See Hog/Corn Ratio and Steer/Corn Ratio.

Fill-or-Kill - A customer order that is a price limit order that must be filled immediately or canceled.

Financial Analysis Auditing Compliance Tracking System (FACTS) - The National Futures Association's computerized system of maintaining financial records of its member firms and monitoring their financial conditions.

Financial Instrument - There are two basic types: (1) a debt instrument, which is a loan with an agreement to pay back funds with interest; (2) an equity security, which is a share or stock in a company.

First Notice Day - According to Chicago Board of Trade rules, the first day on which a notice of intent to deliver a commodity in fulfillment of a given month's futures contract can be made by the clearinghouse to a buyer. The clearinghouse also informs the sellers who they have been matched up with.

Floor Broker (FB) - An individual who executes orders for the purchase or sale of any commodity futures or options contract on any contract market for any other person.

Floor Trader (FT) - An individual who executes trades for the purchase or sale of any commodity futures or options contract on any contract market for such individual's own account.

Foreign Exchange Market - See Forex Market.

Forex Market - An over-the-counter market where buyers and sellers conduct foreign exchange business by telephone and other means of communication. Also referred to as foreign exchange market.

Forward (Cash) Contract - A cash contract in which a seller agrees to deliver a specific cash commodity to a buyer sometime in the future. Forward contracts, in contrast to futures contracts, are privately negotiated and are not standardized.

Full Carrying Charge Market - A futures market where the price difference between delivery months reflects the total costs of interest, insurance, and storage.

Full Membership (CBOT) - A Chicago Board of Trade membership that allows an individual to trade all futures and options contracts listed by the exchange.

Fundamental Analysis - A method of anticipating future price movement using supply and demand information.

Futures Commission Merchant (FCM) - An individual or organization that solicits or accepts orders to buy or sell futures contracts or options on futures and accepts money or other assets from customers to support such orders. Also referred to as commission house or wire house.

Futures Contract - A legally binding agreement, made on the trading floor of a futures exchange, to buy or sell a commodity or financial instrument sometime in the future. Futures contracts are standardized according to the quality, quantity, and delivery time and location for each commodity. The only variable is price, which is discovered on an exchange trading floor.

Futures Exchange - A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts.

Gross Domestic Product (GDP) - The value of all final goods and services produced by an economy over a particular time period, normally a year.

Gross National Product (GNP) - Gross Domestic Product plus the income accruing to domestic residents as a result of investments abroad less income earned in domestic markets accruing to foreigners abroad.

Gross Processing Margin (GPM) - The difference between the cost of soybeans and the combined sales income of the processed soybean oil and meal.

High - The highest price of the day for a particular futures contract.

Holder - See Option Buyer.

Interdelivery Spread - The purchase of one delivery month of a given futures contract and simultaneous sale of another delivery month of the same commodity on the same exchange. Also referred to as an intramarket or calendar spread.

Interest Arbitrage - The operation of foreign debt instruments being purchased to profit from the higher interest rate in the foreign country over the home country. The operation is profitable only when the forward rate on the foreign currency is selling at a discount less than the premium on the interest rate.

Interest Rate Parity - The formal theory of interest rate parity holds that under normal conditions the forward premium or discount on a currency in terms of another is directly related to the interest differential between the two countries.

Intermarket Spread - The sale of a delivery month of a futures contract on one exchange and the simultaneous purchase of the same delivery month and futures contract on another exchange.

Intramarket Spread - The purchase of one delivery month of a given futures contract and simultaneous sale of another delivery month of the same commodity on the same exchange.

Introducing Broker (IB) - An individual or organization that solicits or accepts orders to buy or sell futures contracts or commodity options without accepting money or other assets.

Inverted Market - A type of futures market distinguished by an abnormal relationship between two delivery months of a common commodity is abnormal.

Invisible Supply - Uncounted stocks of a commodity in the hands of wholesalers, manufacturers and producers that cannot be identified accurately.

Leading Indicators - Market indicators that signal the state of the economy for the coming months. Some of the leading indicators include: average manufacturing workweek, initial claims for unemployment insurance, orders for consumer goods and material, percentage of companies reporting slower deliveries, change in manufacturers' unfilled orders for durable goods, plant and equipment orders, new building permits, index of consumer expectations, change in material prices, prices of stocks, change in money supply.

Leverage - The ability to control large dollar amounts of a commodity with a comparatively small amount of capital.

Limit Order - An order in which the customer sets a limit on the price and/or time of execution.

Linkage - The ability to buy (sell) contracts on one exchange (such as the Chicago Mercantile Exchange) and later sell (buy) them on another exchange (such as the Singapore International Monetary Exchange).

Liquid - A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price. Institutional investors are inclined to seek out liquid investments so that their trading activity will not influence the market price.

Liquidate - Selling (or purchasing) futures contracts of the same delivery month purchased (or sold) during an earlier transaction or making (or taking) delivery of the cash commodity represented by the futures contract. See Offset.

Long - One who has bought futures contracts or owns a cash commodity.

Long the basis - The purchase of a cash commodity and the sale of a futures against unsold inventory to provide protection against a price decline in the cash market.

Low - The lowest price of the day for a particular futures contract.

Margin - An amount of money deposited by buyers and sellers of futures contracts to ensure performance of the terms of the contract (the delivery of the commodity or the cancellation of the position by placing an offsetting trade). Margin in futures is not a down payment, but rather a performance bond.

Margin Call - : Typically a call from a brokerage firm to a customer, requiring the customer to deposit funds to bring margin deposits up to the required minimum level. GFT Futures conducts its margin calls electronically, with automatic e-mails.

Market Order - An order to buy or sell a futures contract of a given delivery month to be filled at the currently available price.

Mark-to-Market - To debit or credit on a daily basis a margin account based on the close of that day's trading session. In this way, buyers and sellers are protected against the possibility of contract default.

Minimum Price Fluctuation - Smallest increment of price movement possible in a futures contract, also known as a tick.

Money Supply - The amount of money in the economy, consisting primarily of currency in circulation plus deposits in banks.

Moving-Average Charts - A statistical price analysis method for identifying price trends calculated by summing the prices for a number of days and then dividing the result by the number of days.

Negative Yield Curve - When the current yields of short- and long-term US Treasury securities are plotted to create a graph, the result is a downtrending curve. The yield on short-term bills is higher than the yield on long-term bonds.

Nominal Price - Price quote on futures for a period in which no actual trading took place. Usually an average of bid and ask prices.

Notice Day - A day on which notices of intent to deliver on futures contracts may be issued.

Open Interest - The sum of all open futures contracts of a given commodity. Also known as commitments.

Open Market Operation - The buying and selling of government securities Treasury bills, notes, and bonds by the Federal Reserve.

Open Outcry - Method of public auction for making verbal bids and offers in the trading pits or rings of futures exchanges.

Opening Price or Range - A price or range of prices at which buy and sell transactions took place during the period designated by an exchange as the official opening.

Option - A contract that conveys the right, but not the obligation, to buy or sell a particular item at a certain price for a limited time. Only the seller of the option is obligated to perform.

Original Margin - The amount a futures market participant must deposit into his margin account at the time he places an order to buy or sell a futures contract. Also referred to as initial margin.

Out-of-the-Money Option - An option with no intrinsic value, i.e., a call whose strike price is above the current futures price or a put whose strike price is below the current futures price.

Over-the-Counter (OTC) Market - A market where products including stocks, currencies and other cash items are bought and sold.

Overbought - A technical opinion that states that the market price has risen too steeply and too quickly in relation to the underlying fundamental market factors.

Overnight Trade - A trade that is not liquidated on the same trading day that it was placed.

Oversold - A technical opinion that states that the market price has declined too steeply and too quickly in relation to the underlying fundamental market factors.

Performance Bond Margin - The amount of money deposited by both a buyer and seller of a futures contract to ensure performance of the term of the contract. Helps to ensure the financial integrity of brokers, clearing members and the exchange as a whole.

Pit - The area on the trading floor where futures and options on futures contracts are bought and sold in an open-outcry format.

Point - A measure of price change equal to 1/100 of one cent in most futures traded in decimal units. In grain futures it is one cent; in Treasury bonds, it is one percent of par.

Point-and-Figure Charts - Charts that display price changes of a minimum amount without regards to a time period.

Position - A futures market commitment. A buyer is said to have a long position, and a seller is said to have a short position.

Position Day - The first day in the process of making or taking delivery of the actual commodity on a futures contract.

Position Limit - The maximum number of futures contracts a speculator can hold, as determined by the CFTC and/or the exchange upon which the contract is traded. Also known as a trading limit.

Position Trader - A trader who either buys or sells contracts and holds them for an extended period of time.

Positive Yield Curve - When the current yields of short- and long-term US Treasury securities are plotted to create a graph, the result is an uptrending curve. The yield on short-term bills is lower than the yield on long-term bonds.

Premium - (1) the amount a price would be increased to purchase a better quality commodity; (2) a future delivery month selling at a higher price than another; or (3) cash prices that are above the futures price.

Price Discovery - The process of determining the price level of a commodity based on supply and demand.

Price Limit - The maximum advance or decline from the previous day's settlement price permitted for a contract in one trading session by the rules of the exchange.

Price Limit Order - An order placed by a customer that specifies the price at which a trade can be executed.

Primary Dealer - A designation given by the Federal Reserve System to commercial banks or broker/dealers who meet specific criteria,including capital requirements and meaningful participation in the Treasury auctions.

Primary Market - Market of new issues of securities.

Producer Price Index (PPI) - An index indicating the cost of resources required to produce manufactured goods during the previous month.

Purchasing Hedge (or Long Hedge) - Buying futures contracts to protect against a possible price increase of cash commodities. At the time the cash commodities are bought, the open futures position is closed by placing an offsetting trade.

Recovery - An upward price movement after a price decline.

Resistance - A technical price level above which prices have difficulty penetrating.

Resumption - The reopening the following day of specific futures markets that also traded during the evening session.

Reversal - A change in price direction.

Risk/Reward Ratio - The relationship between the probability of profit and loss.

Round-turn - A completed futures transaction involving a purchase and an offsetting sale, or a sale followed by a covering purchase.

Security - Common or preferred stock; a bond of a corporation, government or quasi-governmental body.

Segregated Account - An account used to hold and separate customer assets from broker assets.

Sell on Close - To sell a futures contract at the end of the trading session within the closing price range.

Sell on Open - To sell a futures contract at the beginning of a trading session within the open price range.

Selling Hedge (or Short Hedge) - Selling futures contracts to protect against possible declining commodity prices.

Settlement Price - The daily price at which the clearing house settles all accounts between clearing members for each contract month. Settlement prices are used to determine both margin calls and invoice prices for deliveries. The term also refers to a price established by the clearing organization to calculate account values and determine margins for those positions still held and not yet liquidated.

Short - To sell a futures contract.

Short Covering - Purchasing futures to offset a short position.

Soft - (1) A description of a price which is gradually weakening, or (2) Commodities such as sugar, cocoa and coffee.

Speculator - A market participant who tries to profit from buying and selling futures contracts by anticipating future price movements.

Spot Commodity - Usually refers to a cash market price for a physical commodity that is available for immediate delivery.

Spot Month - The futures contract that matures during the present month.

Spot Price - The price at which a physical commodity for immediate delivery is selling at a given time and place.

Spread - The purchase of one futures delivery month against the sale of another futures delivery month of the same commodity; the purchase of one delivery month of one commodity against the sale of that same delivery month of a different commodity; or the purchase of one commodity in one market against the sale of the commodity in another market.

Spreading - The simultaneous buying and selling of two related markets in the expectation that a profit will be made when the position is offset.

Stock Index - An indicator used to measure and report value changes in a specific group of stocks. Movement in a particular stock index is based on the composition of the included stocks, weighting of individual stocks, and the method of averaging used to establish an index.

Stock Market - A market in which shares of stock are bought and sold.

Stop Order - An order to buy or sell when the market reaches a specified point. A stop order to buy becomes a market order when the futures contract trades at or above the stop price. A stop order to sell becomes a market order when the futures contract trades (or is offered) at or below the stop price.

Supply, Law of - The relationship between product supply and its price.

Support - The place on a chart where the buying of futures contracts is sufficient to end a price decline.

Suspension - The end of the evening session for specific futures markets.

Time-Stamped - Part of the order-routing process in which the time of day is stamped on an order. An order is time-stamped when it is (1) received on the trading floor, and (2) completed.

Trade Balance - The difference between a nation's imports and exports of merchandise.

Trading Limit - The maximum number of futures contracts one can hold as determined by the CFTC and/or the relevant exchange.

Trend - The general upward or downward direction in which prices have been moving during a given time period.

U.S. Treasury Note - Government-debt security with a coupon and original maturity of one to 10 years.

Volatility - A measurement of a price change over a given time period.

Volume - The number of purchases or sales of a commodity futures contract made during a specified period of time, often the total transactions for one trading day.