“The quote my LP is giving me has a much different bid and ask than your quote, maybe I should short the pair and hope to make up some lost margin if the market goes on a bear trend towards your quote.” This type of conversation goes on daily, probably not in your living room. It’s happening somewhere. Knowing the jargon of the trading world, and even more so, the specific security you're trading, will help you understand exactly what's happening and how it affects what you're doing in the markets. Trader on the Street is one of the best ways to quickly pick up on different jargon terms and how to appropriately use them. They go through live trading discussions and discuss what they mean.
A few of the terms you’ll hear are:
Margin is the portion of the money for the trade the trader puts down. One benefit to margin trading is you can invest $1,000 with $50 of your own money, or even $20 sometimes depending on your broker. Margin allows for larger trades to be made with less money and can be beneficial as long as the trader doesn’t lose all their money AND the borrowed money.
Margin Calls go in line with Margin trading. What the Margin call does is sets the account so that once all the money the trader has available to trade with (Free Margin) has been lost, instead of putting the trader in debt, it closes the trades so that the trader has some capital left and doesn’t have to write a check to make up for losses.
Leverage is borrowed money in a trade. Different brokers have different leverage options available. This is why places such as Trader on the Street will place a trade for $10,000 and you will only see $100 of their money in play. Leverage strongly coincides with the Margin and is used heavily for certain strategies.
Apiary Fund uses the live trading sessions it has to teach jargon like this to individuals who wish to learn trading terminology and how trading works in general. Via the education classes and the live trading sessions that occur, there's always something to learn, whether a new phrase you’d heard but never understood or a new strategy that you’ll be able to use in your own trading. Education stays and grows with you, so why not get a trading education in a hands-on approach where the learning comes easy and you can potentially be making money while still learning?