Financial Dictionary

MACD, or moving average convergence divergence, plots the gap between a 12 period and a 26 period exponential moving average, with a 9 period signal line. Crosses of the signal line and the zero line are used as momentum signals.

Maintenance margin is the minimum equity needed to keep a position open. If equity falls below it, the provider may close the position.

Margin is the deposit needed to open and keep a leveraged position. It is a fraction of the position's full value, and the rest is effectively provided through leverage.

A margin call is a warning that an account's equity has fallen close to the level needed to keep positions open. The trader must add funds or reduce positions, or the provider may close them.

Margin level is account equity divided by used margin, shown as a percentage. Providers use it to decide when to issue a margin call or close positions.

Market capitalisation is the total value of a company's shares, calculated as the share price multiplied by the number of shares. It is used to group companies as large, mid or small cap.

Market hours are the times when an exchange or market is open for trading. Hours differ by asset and region, and some markets close for local holidays.

A market maker is a firm that quotes both buy and sell prices and stands ready to trade at them, earning the spread. Market makers provide liquidity, which helps keep spreads tight.

A market order is an instruction to buy or sell straight away at the best price available. It fills quickly, but in fast markets the price can differ from the one shown.

Market sentiment is the overall mood of traders towards a market or asset, whether optimistic or pessimistic. Extreme sentiment can come before a reversal.

A martingale strategy doubles the position size after each loss to win back previous losses with one winning trade. A long losing streak can wipe out an account, so it carries very high risk.

A marubozu is a candlestick with a full body and little or no wick. It shows that buyers or sellers controlled the whole period.

Mean reversion is the idea that prices tend to return to their average over time. Mean reversion strategies buy weakness and sell strength, but they can suffer in strong trends.

A merger is when two companies combine to form one. Share prices of both can move sharply when a deal is announced.

Mid cap stocks are shares in companies of medium market capitalisation. They often offer more growth than large caps with less risk than small caps.

Momentum is the speed at which price is changing. Strong momentum suggests a trend may continue, while fading momentum can warn of a turn.

Monetary policy is how a central bank manages interest rates and the money supply to control inflation and support growth. It is one of the strongest drivers of currency markets.

Monetary tightening is when a central bank raises interest rates or shrinks its balance sheet to slow inflation. It usually strengthens the currency and weighs on stocks and bonds.

The Money Flow Index is a momentum indicator that combines price and volume on a scale of 0 to 100. Readings above 80 suggest overbought conditions and below 20 suggest oversold.

Money management covers the rules a trader uses to protect capital, such as how much to risk per trade and how much leverage to use. It matters as much as choosing which trades to take.

A morning star is a three candle bullish reversal pattern: a strong falling candle, a small candle that gaps lower, then a strong rising candle. It suggests a downtrend may be ending.

A moving average is the average price over a set number of periods, updated as each new period closes. It smooths out noise and helps show the direction of the trend.