Glossary

Bearish - A market in which prices are declining. A "bear" believes prices will move lower.

Bullish - A market in which prices are rising. A "bull" believes prices will move higher.

Close - The last price paid for a given futures contract on a given day. When futures prices close within a price range, the closing price represents an average of prices that occurred when the market closed.

Futures Contract - A standardized binding agreement made through a futures exchange, to buy or sell a specified quantity of a specified commodity (or financial instrument) during a specified month for cash settlement (or delivery) at a specified future date. (99% of futures contracts are cash settled)

Futures Exchange - A central marketplace with established rules and regulations where buyers and sellers meet to trade futures contracts (e.g. The Chicago Board of Trade)

High - The highest price paid for a particular futures contract on a given day.

Initial Margin - The minimum amount of margin required of a speculator to initiate a futures position.

Limit Order - An order to enter a new position or to exit an open position at a specified price or "better". A buy limit order is placed below the market price and a sell limit is placed above the market price.

Long - One who has bought a futures contract and has not offset that position.

Low - The lowest price paid for a particular futures contract on a given day.

Margin - An amount of money deposited by both buyers and sellers of futures contracts to ensure performance of the terms of the contract.

Market Order - An order for immediate execution at the best available price.

Maintenance Margin - The minimum amount of margin required to continue holding a futures position. If a speculator’s margin account falls below the maintenance level as a result of market changes, he or she must post enough margin to bring his or her account back up to the initial maintenance level.

Offset - Taking a second futures position opposite to the initial position to "close it out" (e.g. selling a long position - to take profit or buying a short position - to take profit).

Open - The first price paid for a particular futures contract on a given day. When futures prices open within a price range, the open price quoted represents an average of prices that occurred when the market opened.

Open Interest - The number of futures contracts of a given commodity that have not yet been offset by an opposite futures transaction.

Price Limit - The maximum fluctuation in price of a futures contract permitted during one trading session as fixed by the rules of the contract market (known as a limit move).

Short - One who has sold a futures contract and has not yet offset that position.

Speculate - Buying and selling futures contracts in hopes of making profit.

Stop Order - An order that is placed above or below the current market price. A sell stop is placed below the current market price and a buy stop above the current market price. The buy/sell stop order is filled and becomes an active order once the specified price is hit.

Volume - Number of purchases and sales of a given futures contract made during a specified period of time.