Margin

Margin, in the context of accountancy, refers to the difference between the cost of providing a good or service and the price received for that good or service. Gross margin is that simple calculation. Net margin is the same calculation but adjusted for the businesses other day-to-day running costs.

Margin, in the context of derivatives trading, refers to an amount the holder of the derivative is required to pay as collateral so that the person on the other side of the contract can be sure of getting at least some of the money due to them.

Margin Account

A margin account involves borrowing funds from your broker-dealer to purchase securities, using the account as collateral. You will also be required to pay a periodic interest rate to the broker. A margin account can increase your purchasing power however it can also expose you to greater losses.

Operational leverage

Operating Leverage measures the proportion of a company’s cost structure that consists of fixed costs rather than variable costs. Companies with high operating leverage can expand profit margins more quickly when revenues rise.

Day Trading

Day trading is a strategy which involves buying and selling shares of stocks within the same day with the intent of profiting from price movements. For example, a day trader may open a new position of a stock at 9 a.m., then close that same position at 2 p.m. These traders rarely hold positions overnight.

Whale

The term ‘whale’ is a nickname given to investors who have the potential to manipulate the market. A whale can be an individual or company with enough money or power to influence the price of a stock. These individuals usually make huge investments, with their actions causing a huge ‘splash’.

Averaging down

There is a common strategy which investors use when their investment decisions go against them. ‘Averaging down’ involves buying more shares after they fall in price, lowering the average cost of all the shares held, in the effort to add value to their portfolio.

Tanking

When you hear the phrase ‘tanking’ or ‘in the tank’, this typically means that a stock has encountered a poor quarterly performance, leading to a price decline shortly after. If someone says their assets are ‘tanking’, it means they aren’t doing great right now.

TRIAD

TRIAD – The Triad charging system is a charging mechanism adopted by National Grid in the early 1990’s to 1) recoup the Network Transmission costs and 2) manage demand. TRIADS are how energy storage can help businesses with charge avoidance. Energy storage is becoming a key part of energy storage. As one of the major challenges […]

Short investing

To go “Short” in the context of an investment refers to a negative holding of something (selling something you do not own). It is the opposite of long investing. “Net short” is where an investor has more short positions than long positions in a given asset, industry or market in his / her portfolio. EXAMPLE: When investment manager A does not own a […]

Future – as in futures contract

A future is similar to an option – a contract to buy or sell a specific quantity of a commodity or a financial instrument such as a currency or an interest rate at a specified time in the future and at a fixed price. Holders of futures may be required to post a margin.

Glossary

Margin