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Finance GlossaryForward Market
Forward Market
Definition of Forward Market
The forward market is a place where forward contracts are traded. A forward is an over-the-counter derivative that carries a pre-agreed expiration date and price on which the contract must be exercised. It carries a right and an obligation.
Forwards are similar to futures but there is one major difference - forwards are unregulated instruments. Any entity writing a forward contract can customize the lot size and other details to fit their needs.
The forward market, as a whole, is an unregulated market whose typical participants include banks, vendors, and other large financial players.
Forwards are similar to futures but there is one major difference - forwards are unregulated instruments. Any entity writing a forward contract can customize the lot size and other details to fit their needs.
The forward market, as a whole, is an unregulated market whose typical participants include banks, vendors, and other large financial players.
Related Terms
Ask Size
The ask size is the number of units of a security that an investor is willing to sell at the ask or offer price.
Accumulation/Distribution Indicator (A/D)
An Accumulation/Distribution Indicator is used to figure out the trend of a stock based on the relationship between the price and volume. There are two parts to the name Accumulation Distribution Indicator:
- Accumulation: Denotes demand or the buying levels of a particular stock
- Distribution: Denotes the supply or the selling levels of a particular stock
Long story short, A/D tells you whether a stock is facing buying or selling pressure. A rising A/D depicts an upward trend while a falling A/D depicts a downward trend.
Annual Net Profit Margin
A Net Profit Margin is the ratio of a company’s net profits to revenues. The formula to calculate Net Profit Margin is:
Net Profit Margin = Net Profit* / Revenue * 100
*Net profit = Revenue - Cost of goods - Operating Cost - Other Expenses - Interest - Taxes
Net Profit Margin is expressed as a percentage, which means that you can compare the financial health of multiple companies.
A company can use its Net Profit Margin to understand whether its strategies and business models are effective.
Net Profit Margin = Net Profit* / Revenue * 100
*Net profit = Revenue - Cost of goods - Operating Cost - Other Expenses - Interest - Taxes
Net Profit Margin is expressed as a percentage, which means that you can compare the financial health of multiple companies.
A company can use its Net Profit Margin to understand whether its strategies and business models are effective.
Authorized Capital
Authorized capital or authorized share capital is the maximum amount of capital for which shares can be issued by a company to its shareholders.
Or in other words, authorized capital denotes all the shares across all the categories that a company could issue if it wanted to raise money.
Or in other words, authorized capital denotes all the shares across all the categories that a company could issue if it wanted to raise money.
Leverage In Stock Market
Leverage is a loan that a broker offers to allow traders to take up bigger positions by paying lesser capital. This feature is known as Margin Trading Facility (MTF) or simply margin funding. Leverage is often represented as a multiple like 2X, 3X, 4X, 5X and so on. For example, getting 5X leverage on a trade worth ₹1,00,000 means you’ll pay ₹20,000 and the broker will cover the rest of the ₹80,000.
Capped Style Option
Capital is the total amount of money that a trader can use to buy and sell securities. There are variations of the term, the most common one is “starting capital”. This is the amount of money a trader starts their journey with.
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