Financial Glossary - M to P

The Financial Glossary has been developed to give quick access to definitions of terms and concepts used in the foreign exchange, money, equity, commodity and debt markets.


The amount of equity (collateral) required for an investment position, as a percentage of the current value.

When trading on margin (also called 'gearing', or 'leverage'), you need only deposit a fraction of the current value of the instrument you are investing in.

For example, if the commodity you are trading in requires a margin of 5%, you are able to gear (or leverage) your investment 20 times. In other words, a deposit of USD 10,000 can hold a position of USD 200,000.

Margin call

When you have exceeded your allowed operating margin, you are subject to a margin call to remedy the situation.

To avoid having your positions closed for you (being stopped out), you must either close or reduce open positions, or send additional funds to cover your positions.

Margin deposit

Funds that a trader must have in a margin account that represent a percentage of the current market value of the securities held by the trader.

Sellers of Options must have additional funds in their accounts, besides the Option premium, to protect against possible losses incurred by the market moving against the Options position.

The required margin will vary according to the Option type and whether the seller also has a position in the underlying asset.

For more information on the trading conditions at Saxo, go to the Account Summary on your Client Station and open the Trading Conditions section found in the top right-hand corner of the Account Summary.

Margin utilisation

The percentage of the available margin that you are utilising.

Market maker

A recognised institution or individual willing to trade certain securities any time that a trader wants to buy or sell. The incentive for the market maker to buy or sell at all times is the spread, or difference, between the bid and ask prices.

Market order

An order to buy or sell a specified instrument as soon as possible at the price obtainable in the market.

Mid price

The mid-price is halfway between the bid and the ask (offer) prices. For example, if the bid is 1.4426 and the ask is 1.4430, the mid-price is 1.4428.


A functional component of the platform such as the Open Orders Module, the Chart Module, etc. Modules are opened from the Menu bar.

Moving average convergence/divergence (MACD) technical study

A trend indicator chart study following the relationship between two moving average prices (usually 26-day and 12-day averages). On top of this, a 9-day average of the MACD line is plotted as a control or signal line. In its conjunctions with the MACD line, the signal line may show buy and sell opportunities.

Net Exposure

Your net exposure is the sum of the nominal value of your current positions converted into the base currency of your account.

For Forex, this is the total value of all your Forex positions converted to the base currency of your account.

Non-margin position

The current market value of any securities (for example, equities, bonds, and so on) held as collateral for margin requirements. The market value is calculated using bid price.

Not available as margin collateral

A percentage of your current investments that is not available as margin collateral. This line states the amount that is not available as margin collateral.

Offer price

The price at which you can buy a specified instrument.

For Forex trading, it is the price at which you can buy the trade/base currency (quoted first) by selling the price currency of the pair.

For example, if you buy EURUSD 100,000, you are buying Euro 100,000 against US dollars.

One-cancels-other (O.C.O.) order

One-cancels-other orders really consist of two orders. If either of the orders is executed because its market conditions have been met, the related order is automatically cancelled.

Open position

A position in a currency that has not yet been offset.

For example, if you buy USDJPY 100,000, you have an open position in USDJPY until you offset it by selling USDJPY 100,000.


An option gives the buyer (holder) the right, but not the obligation, to buy (in the case of a call option) or sell (in the case of a put option) a set quantity of the underlying asset at a specified price (strike price) for a given period of time.


A trade order to buy or sell a specified instrument. Limit and Stop orders are the main types.

Order duration

The duration for which the order is valid. See Day Order (DO) and Good till Cancelled (GTC) for details.

Other collateral

Instruments that are not tradable online. For example, bonds and other positions that are transferred from another bank.

Out of the money

A call option is out of the money when the market price of the underlying is below the option strike price. A put option is out of the money when its strike price is below the market price of the underlying.


A particular price level that, if hit during the life of an Option, immediately invalidates the Option.

Over the counter (OTC)

A trade that is negotiated between two parties without the use of an exchange.

For example, a security that is not traded on an exchange is known as an OTC security. It is a market where commodities and instruments are traded directly between two parties, for example, between an investment bank and a client.

This is different from trading on a public exchange, which is an open market place.

Over-the-counter products can be tailored to individual clients whereas exchanges trade standardised contracts.

A large over-the-counter market has grown up in, for example, Forex and Forex Options.


Pip stands for percentage in point, the smallest increment by which a Forex cross price changes.

Most currency pairs are quoted to four decimal places, meaning that a movement from 1.1850 to 1.1851 for a currency pair would constitute one pip.

For a particular position, you can calculate the value of a single pip using the above formula.

For instance, you know that the EUR/USD is quoted with four decimals, so for a given position you can multiply the position amount by the value of one pip, or USD 0.0001.

So, on a EUR/USD 100,000 contract, one pip would equal USD 10. On a USD/JPY 100,000 contract, one pip is equal to JPY 1000 because USD/JPY is quoted with only two decimals (meaning one pip = JPY 0.01).


An investment portfolio is the total range of financial instruments owned, such as company shares, fixed interest securities or money-market instruments.

An investment portfolio should have a range of relatively unrelated, or uncorrelated, investments in order to minimise risk—brokers and investment advisers warn against 'putting all your eggs in one basket'.


An investment in an instrument.

For example, when you trade (say, buy) USDJPY, you open a USDJPY position.

When you then execute the opposite trade (in this case, sell) USDJPY, you close the position.

Position can also refer to a trader's cash/securities/currencies balance, whether he or she is short of cash, has money to lend, is overbought or oversold in a currency, etc.

Posting date

The date a transaction is posted as a credit or debit in your account.


The option price resulting from matching of buy and sell orders submitted to the market.

Price-to-earnings (PE) ratio

The Price/Earnings ratio is the price of the stock divided by the earnings per share.

Primary order

The primary order of a three-way or If Done contingent order. Related (secondary) orders will not become active market orders unless this order is executed.

Profit taking

Closing a position to take profits. Typically done using a limit order to close a position and take profits automatically when the market breaches a defined level.


A proxy is a device that acts as an intermediary between a computer and the Internet.

Proxies often have a cache built in to make Web surfing faster, and some also allow the filtering of Web content for security purposes.


An option contract granting the purchaser the right to sell the underlying asset at the agreed strike price. A put obliges the seller to purchase the underlying at the agreed strike price if he is assigned against.