Glossary terms beginning with L

L

Long day. Watch for lows and/or support early in the session. The trading will often test the previous day’s low. If the price moves excessively below the lows, long trades should be scalps ONLY that are covered on the first rally. Successful tests of the low usually should be carried overnight. The market should close higher than the open and not make new lows in the afternoon.

Last Trading Day

Day on which trading ceases for the maturing (current) delivery month.

LC

Lower close.

Leading economic indicators

A composite of 11 economic measurements that tend to change in the economy as a whole. Leading indicators are believed to predict changes in the economy. The components are: average work week, unemployment claims, orders for consumer goods, slower deliveries, plant and equipment orders; building permits, durable order backlog, materials prices, stock prices, M2 money supply and consumer expectations.

Leverage

Essentially, it allows an investor to establish a position in the marketplace by depositing funds that are less than the value of the contract. The use of borrowed assets by a business to enhance the return to the owner's equity.

LH

Lower high.

Life of Contract

Period between the beginning of trading in a particular futures contract or other derivative and the expiration of trading in the delivery month.

Limit Move

A price that has advanced or declined the limit permitted during one trading session as fixed by the rules of a contract market.

Limit Order

An order in which the customer sets a limit on either price or time of execution, or both, as contrasted with a market order, which implies that the order should be filled at the most favorable price as soon as possible.

LL

Lower low.

Long Hedge

Buying futures contracts to protect against possible increased prices of commodities. See also Hedging.

Long position

An excess of assets (and/or forward purchase contracts) over liabilities (and/or forward sale contracts) in the same currency. A dealer's position when the net of his or her purchases and sales leave him or her in a net-purchased position. See also short position and net position.

Long

To own (buy) to a security, currency, futures contract, commodity, or derivative.

LD

Long Day – watch for lows and/or support early in the session. The trading will often test the previous day’s low. If the price moves excessively below the lows, long trades should be scalps ONLY that are covered on the first rally. Successful tests of the low usually should be carried overnight. The market should close higher than the open and not make new lows in the afternoon.

LEAPS®

Long-term Equity Anticipation Securities, or LEAPS®, are long-term stock or index options that expire more than 9 months in advance, and can last as long as 2 years. LEAPS trade like normal options but allow investors to benefit from the appreciation of equities while placing a lot less money at risk than is required to purchase stock.

Leg

Part of a larger position consisting of multiple options. By legging into a spread, a trader does part of the spread at one price and hopes the market will move so the rest of the spread can be completed at a better price.

Liquid Market

A high volume trading environment in which buyers and sellers benefit from narrow bid-ask spreads. Under these conditions, large orders can be executed without significantly impacting the market price.

Liquidity

A measure of how quickly a security can be sold at a fair price and converted to cash. Illiquid securities are ones that don't trade in high volume. For example, having too many shares of a stock that doesn't trade frequently would make for a position that cannot necessarily be sold.

Listed Option

An exchange traded put or call contract issued by the OCC with standardized strike prices and expiration dates.

Load

A sales commission paid when purchasing shares of a mutual fund (called a front-end load) or when redeeming shares of a mutual fund (called a back-end load). For example, if the fund has a front-end load of 5%, for every $100 you place into the fund, only $95 is invested, with $5 going to the salesperson and/or mutual fund company.

Lot

A unit of trading. In the futures market, one lot refers to one futures or options contract. In the forex market, one lot is equivalent to 100,000 units of a particular foreign currency.