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Lingo topic · 16 terms

Leverage and margin

Borrowed power, the deposit that backs it, and the call you never want.

A

Account ValueWhat your trading account is worth right now: your cash balance plus or minus the profit or loss on open trades.

C

CollateralSomething of value pledged to back a loan or trade, which the lender can keep if you cannot pay.
Cost of CarryThe total cost of holding a position over time: financing, storage and insurance, minus any income it earns.

F

Free MarginThe money in your account not tied up as margin, available to open new trades or absorb losses.

I

Initial MarginThe deposit you must put up to open a leveraged position.

L

M

N

Negative balance protectionA broker promise that you can't lose more than the money in your account, even if the market gaps past your stop.

O

Overnight PositionA trade held open past the daily cutoff, usually 5 p.m. New York time, so it gets rolled over and charged or paid swap.

T

Tom-NextA short swap that moves a currency position's settlement from tomorrow to the next day, used to roll positions overnight.

V

Variation MarginThe daily cash payments that move between parties to cover gains and losses on a derivatives position.

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