Trading Definitions

Square Position

To have a square position is to be out of the market, with no exposure to risk. Also known as being flat. Position squaring refers to closing out your existing positions.

Bear

One who expects a decline in prices. The opposite of a bull. A news item is considered bearish if it is expected to result in lower prices. See also: Bear Market, Bear Market Rally, Bear Spread, Bear Vertical Spread, Bear Trap.

Spot Price

The price at which a physical commodity for immediate delivery is selling at a given time and place. See also: Cash Price.

Exchange

A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options contracts or securities. Exchanges include designated contract markets and derivatives transaction execution facilities.

Long

(1) One who has bought a security to establish a market position; (2) a market position that obligates the holder to take delivery; (3) one who owns an inventory of commodities. See also: Short

Spot

Market of immediate delivery of and payment for the product. See also: Cash Market

Split Close

A condition that refers to price differences in transactions at the close of any market session.

Speculator

An individual who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements.

Liquidity

Describes the level to which a security can be traded without significantly affecting price. A liquid security can undergo a high volume of trading without a signifcant change in price.

Speculative Bubble

A rapid run-up in prices caused by excessive buying that is unrelated to any of the basic, underlying factors affecting the supply or demand for a commodity or other asset. Speculative bubbles are usually associated with a “bandwagon” effect in which s