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Forex Dictionary

Term Equivalent terms Definition
M1 Money supply component which consists of all cash in circulation, plus all of the money held in checking accounts, as well as all the money in travelers checks.
M2 Money supply component which consists of M1 plus all of the money held in money market funds, savings accounts, and small Certificates of Deposits.
M3 Money supply component which consists of M2 plus all of the large Certificates of Deposits.
Maintenance Margin The minimum margin that must be available in an account to support all open trades.
Managed Float Also known as a “dirty” float, this is an Exchange rate policy where central banks regularly intervene to stabilize and/or steer the direction of their currency.
Manual Trader A trader that inputs his/her trades manually without an API.
Margin The required equity that an investor must deposit to maintain an open position. For example, with an open position of $50,000 and a leverage of 50:1, the required margin would be $1000.
Margin Account An account that allows leverage buying and short selling on credit.
Margin Call A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the client and the equity has fallen below the margin requirement. Positions are automatically liquidated till equity moves above margin requirement.
Market Close In the 24-hour forex market, the market never closes. For administrative purposes, many banks institute 5pm EST as the market close in order to differentiate between value dates, as well as mark delivery dates.
Market Maker A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.
Market Order An order for immediate execution at the best available price.
Market Rate The most current quote for a currency pair.
Market Risk Risk that cannot be diversified away.
Mark-To-Market For an open position, what its value would be if it were closed out at the current market rates.
Martingale A betting strategy where the gambler / trader doubles his/her bet after every loss, so that the first win recovers all previous losses plus wins a profit equal to the original stake. In forex, the doubling can occur after a predefined pip loss level, and the martingale can be hitched to a technical entry mechanism more accurate than flipping a coin. Nevertheless, no matter how well defined and back tested the pip loss level and entry mechanism, it will eventually bust an account, even though it might dramatically increase the balance for some time.
Masked Inflation Masked inflation occurs when a productive economy can cause business costs to fall and globalization of the labor market can bring in cheap goods from low labor cost countries.
Maturity The date for settlement or expiry of a financial instrument.
Maximum Leverage The biggest position that a margin deposit would cover. At a leverage of 50, one could enter a maximum leveraged position of $100,000 by depositing $2,000 worth of margin.
Mean Reversion A theory suggesting that prices and returns eventually move back towards the mean or average. Hence, a shock in prices will return or revert eventually to the level before the shock and the time it takes to revert is called the time to reversion.
MetaTrader MT4 A popular online trading platform with over 250+ supporting brokers to trade Forex, CFD, and Futures markets, it has a user-friendly front-end trading interface that provides technical analysis, charting and expert advisors to help with developing automated trading strategies.
Middle Rate The price halfway between the bid and ask quote offered by dealers.
Mini Account A special type of trading account where traders can trade partial lot sizes, such as 1000 units or 10,000 units.
Mobile Trading Trading that can be conducted via mobile devices such a cellular phone or smart phone on the go, using wireless interest.
Momentum The tendency of the market to continue moving in the same direction in which it is currently moving. There are various ways of measuring momentum, some involving volume and others measuring how price has increased over the price of X bars ago.
Monetarists Macroeconomic theory, inspired by the work of Milton Friedman, that is concerned with the sources of national income and causes of inflation. The theory states that the amount of money issued by government should be kept steady to match economic growth and inflation is directly determined by the money supply. Monetarists believe that a government ought to set target interest rates to encourage or slow growth in the supply. For example, when an economy is growing rapidly, monetarists recommend raising interest rates; and when in a recession, they recommend lowering interest rates.
Monetary Base Required and non-required deposits made at the central bank by member banks and the currency in circulation (see M1).
Monetary Easing When a central bank encourages spending by easing monetary controls, such as lowering interest rates.
Monetary Policy Central bank actions to influence the economy through money supply levels, generally through the setting of interest rates. In a sluggish economy, the central bank will try to lower interest rates to increases the money supply by easing the availability of credit, which is thought to promote economic growth short term and inflation long term. Monetary policy may also refer to the printing of money to lend to troubled, over-indebted banks or governments, which also cause inflation. If there is fear of an economy growing to quickly or overheating, a restrictive monetary policy will try to high interest rates to constrict credit and slow down growth while reducing inflation.
Monetary Policy Committee MPC Is a committee of the Bank of England that meets every month to decide the official interest rate in the United Kingdom.
Money Manager A person who is responsible for the entire financial portfolio of an individual or other entity and receives payment in exchange for choosing and monitoring appropriate investments for the client.
Moving Average The average price of a currency over a certain period of time, calculated continuously; for example, in a 10 day simple moving average, the closing prices of the last 10 days are added up and divided by 10. Moving averages help smooth out the noise of a currency pair in order to better discover trends.
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