Trading Industry Definitions

Bear Market Rally

A temporary rise in prices during a bear market. Also see: Correction, Bear Spread, Bear Vertical Spread, Bear Trap

Bear Market

A market in which prices generally are declining over a period of months or years. Opposite of Bull Market. See also: Bear Market Rally, Bear Spread, Bear Vertical Spread, Bear Trap

Locked Limit

A price that has advanced or declined the permissible limit during one trading session, as fixed by the rules of an exchange. Also called Limit Move

Locked-In

A hedged position that cannot be lifted without offsetting both sides of the hedge (spread). See Hedging. Also refers to being caught in a limit price move

Speculative Limit

See Speculative Position Limit.

Local

An individual with exchange trading privileges who trades for his own account on an exchange floor and whose activities provide market liquidity. See also: Floor Trader

Equity

As used on a trading account statement, refers to the residual dollar value of a futures or option trading account, assuming it was liquidated at current prices.

Liquidation

The closing out of a long position. The term is sometimes used to denote closing out a short position, but this is more often referred to as covering. See also: Cover, Offset.

SPAN (Standard Portfolio Analysis of Risk)

As developed by the Chicago Mercantile Exchange, the industry standard for calculating performance bond requirements (margins) on the basis of overall portfolio risk. SPAN calculates risk for all enterprise levels on derivative and non-derivative instruments at numerous exchanges and clearing organi

Liquid Market

A market in which selling and buying can be accomplished with minimal effect on price.