Depth of Market Depth of Market, aka the Order Book, is a window that shows how many open buy and sell orders there are at different prices for a security. Let’s say the current price is $1, the DOM will show how many orders there are at $0.90, $1.10, etc. It’s a great tool to…
Basic Earnings Per Share (EPS) Earnings per share (EPS) is a key metric that determines the common shareholder’s portion of the company’s profit. EPS measures each common share’s profit allocation about the company’s total profit. IFRS uses the term “ordinary shares” to refer to common shares. The EPS figure is important because it is used…
Asset Management Asset management refers to the process of developing, operating, maintaining, and cost-effectively selling assets. Most commonly used in finance, the term is used about individuals or firms that manage assets on behalf of individuals or other entities. Importance There are several reasons why businesses should be concerned about it, including: 1. Enables a…
Futures market To understand fully what a futures market is, it’s important to understand the basics of futures contracts, the assets traded in these markets. Futures contracts are made in an attempt by producers and suppliers of commodities to avoid market volatility. These producers and suppliers negotiate contracts with an investor who agrees to take on both…
Spot market A spot market is where financial instruments are exchanged for immediate delivery, such as commodities, currencies, and securities. Delivery, here, means cash exchange for a financial tool. In comparison, a futures contract is based on the delivery of the underlying asset at a future date. Over-the-counter (OTC) markets and exchanges may provide spot trading and/or futures trading. How Spot Markets Work Spot markets are also referred…
Variation Margin The variation margin is a variable margin payment made by clearing members, such as a futures broker, to their respective clearing houses based on adverse price movements of the futures contracts these members hold. Variation margin is paid by clearing members on a daily. Or intraday basis to reduce the exposure created by…
Margin Call To understand a forex margin call, it is essential to know about the interrelated concepts of margin and leverage. Margin and leverage are two sides of the same coin. Margin is the minimum amount of money required to place a leveraged trade. Leverage provides traders with greater exposure to markets without having to fund the…
Currency Depreciation Understanding Currency Depreciation Countries with weak economic fundamentals, such as chronic current account deficits and high rates of inflation, generally have depreciating currencies. Currency depreciation, if orderly and gradual, improves a nation’s export competitiveness and may improve its trade deficit over time. But an abrupt and sizable currency depreciation may scare foreign investors…
Currency Appreciation Currency appreciation in the same context is an increase in the value of the currency. Short-term changes in the value of a currency are reflected in changes in the exchange rate. Basics of Currency Appreciation In a floating rate exchange system, the value of a currency constantly changes based on supply and demand. Therefore, the…
How is forex profit calculated Calculating Profit and Loss How forex profit is calculated? The actual calculation of profit and loss in a position is quite straightforward. To calculate the P&L of a position, what you need is the position size and the number of pips the price has moved. Therefore, the actual profit or…