This is the 2nd part of the trading terms so before continue reading this click here if you haven’t read the previous part, in this part we will go through cross margin, order book and isolated margin and many more.
One of the trading terms commonly used is cross-margining is the process of setting positions whereby excess margin from a trader’s margin account is transferred to another one of their margin accounts to satisfy maintenance margin requirements. It is allowing the trader to use their available margin balance across all of their accounts.
Unlike using cross-margin mode which spreads a user’s full funds across their different positions, isolated margin mode will prevent the risk of liquidation across many positions. This is made possible due to independent margins (or separate wallets being created) for each position.
The term order book refers to an electronic list of buy and sell orders for a specific security or financial instrument organized by price level. An order book lists the number of shares being bid on or offered at each price point, or market depth. It also identifies the market participants behind the buy and sells orders, though some choose to remain anonymous. These lists help traders and also improve market transparency because they provide valuable trading information.
What is long position
The term long position describes what an investor has purchased when they buy a security or derivative with the expectation that it will rise in value.
What is short position
- Short selling is an investment or trading strategy that speculates on the decline in a stock or other security’s price. It is an advanced strategy that should only be undertaken by experienced traders and investors.
- Short-sellers bet on, and profit from, a drop in a security’s price. This can be contrasted with long investors who want the price to go up.