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Futures Trading Terms
A B C D E F G H I L M N O P Q R S T U V W Y
selected terms: 173 page 3 of 9

41. Cost of Carry Synonym: Carrying Charge =National Futures Association
42. Covered Option A short call or put option position which is covered by the sale or purchase of the underlying futures contract or physical commodity. =National Futures Association
43. 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 market follow similar More…
44. Customer Segregated Funds See also: Segregated Account =National Futures Association
45. Day Order An order that if not executed expires automatically at the end of the trading session on the day it was entered. =National Futures Association
46. Day Trader A speculator who will normally initiate and offset a position within a single trading session. =National Futures Association
47. Default Default The failure to perform on a futures contract as required by exchange rules, such as a failure to meet a margin call or to make or take delivery. The failure to perform on a futures More…
48. Deferred Delivery Month The distant delivery months in which futures trading is taking place, as distinguished from the nearby futures delivery month. =National Futures Association
49. Delivery Month See also: Contract Month =National Futures Association
50. Derivative A financial instrument, traded on or off an exchange, the price of which is directly dependent upon the value of one or more underlying securities, equity indices, debt instruments, More…
51. Designated Self-Regulatory Organization (DSRO) When a Futures Commission Merchant (FCM) is a member of more than one Self-Regulatory Organization (SRO), the SROs may decide among themselves which of them will be primarily responsible More…
52. Disclosure Document The statement that must be provided to prospective customers that describes trading strategy, fees, erformance, etc. =National Futures Association
53. Discount (1) The amount a price would be reduced to purchase a commodity of lesser grade; (2) sometimes used to refer to the price differences between futures of different delivery months, as in the More…
54. Discretionary Account An arrangement by which the owner of the account gives written power of attorney to someone else, usually the broker or a Commodity Trading Advisor, to buy and sell without prior approval More…
55. Dual Trading Dual trading occurs when (1) a floor broker executes customer orders and, on the same day, trades for his own account or an account in which he has an interest; or (2) a Futures Commission More…
56. Electronic Order An order placed electronically (without the use of a broker) either via the Internet or an electronic trading system. =National Futures Association
57. Electronic Trading Systems Systems that allow participating exchanges to list their products for trading after the close of the exchange’s open outcry trading hours (i.e., Chicago Board of Trade’s Project A, Chicago More…
58. Equity The value of a futures trading account if all open positions were offset at the current market price. =National Futures Association
59. Exchange See also: Contract Market =National Futures Association
60. 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. =National Futures Association

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