Glossary |
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Lagging Indicators
Market indicators showing the general direction of the economy and confirming or denying the trend implied by the leading indicators.
Last Trading Day
The final day when trading may occur in a given futures or options contract month. Futures contracts outstanding at the end of the last trading day must be settled by delivery of the underlying commodity or securities or by agreement for monetary settlement (in some cases by EFPs).
Leading Indicators
Market indicators that signal the state of the economy for the coming months. Some of the leading indicators include: average manufacturing workweek, initial claims for unemployment insurance, orders for consumer goods and material, percentage of companies reporting slower deliveries, change in manufacturers' unfilled orders for durable goods, plant and equipment orders, new building permits, index of consumer expectations, change in material prices, prices of stocks, change in money supply.
Lift
A trader is said to be "lifting" the offer when he/she initiates a trade that buys directly from the best offered price. This trade likely believes that the contract price will rise & is willing to give up the perceived edge to another trader by buying from his/her offer.
Limit Move
The increase or decrease of a price by the maximum amount allowed for any one product for any one trading session. These price limits are established by the exchanges, and approved by the CFTC. They vary from contract to contract. See price limit.
Limit Order
A customer sets a limit on price or time of execution of a trade, or both; for example, a "buy limit" order is placed below the market price. A "sell limit" order is placed above the market price. A sell limit is executed only at the limit price or higher (better), while the buy limit is executed at the limit price or lower (better).
Limits
See Position Limit, Price Limit, Limit Move, and Variable Limit.
Liquidity
A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price. Institutional investors are inclined to seek out markets with high amounts of liquidity so their trading activity does not influence the market price.
Liquidate
Selling (or purchasing) futures contracts of the same delivery month purchased (or sold) during an earlier transaction or making (or taking) delivery of the cash commodity represented by the futures contract.
Loan Rate
The amount lent per unit of a commodity to farmers.
Local
Floor & screen-based traders who trade primarily for their own account. Locals, like speculators, provide liquidity to the market so hedgers can transfer price risk.
Long
One who has bought futures contracts or owns a cash commodity. See Purchasing Hedge.
Long hedge
A hedger who is short the cash (needs the cash commodity) buys a futures contract to hedge his future needs. By buying a futures contract when he is short the cash, he is entering a long hedge. A long hedge is also known as a substitute purchase or an anticipatory hedge.
Low
The lowest price of the day for a particular futures contract.
