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Trading Jargons

BUY
To acquire a preset volume of product in speculation of a price hike or to liquidate a previous SELL position. Also described as a LONG position.

SELL
To dispose of a preset volume of product in speculation of a price drop or to liquidate a previous BUY position. Also described as a SHORT position.

NEW ORDER
To create an open position by buying or selling a preset volume of product in anticipation of an opportunity to liquidate the position for profit. Also described as a NEW POSITION.

OUNCE
The weight unit adopted in Loco London Gold/Silver and other precious metals trading is TROY OUNCE. One troy ounce = 1.09714 ounce = 31.1035 gram.

SPREAD
Refers to the difference between the buy price and the sell price quoted in respect of a certain product on the trading platform; making it the cost of entering into a new position. Normal spread is US$0.50 for LLG and US$0.05 for LLS.

LOT
Refers to the preset volume of a product in a standard buy or sell contract. One lot LLG equals 100 troy ounce and one lot LLS equals 5000 troy ounce.

MINIMUM FLUCTUATION
Minimum fluctuation (or minimum price tick) for LLG is 1 pips up or down, indicating a price change of US$0.10. Minimum fluctuation for LLS is 1 pip up or down, indicating a price change of US$0.01.

INITIAL MARGIN
Refers to the amount of money that needs to be available in the account as collateral for entering into a new position. Margin Requirement is 2% contract value.

COMMISSION
Handling fee collected from the Client by the Dealer for performing the trading instruction. Margin Requirement is 2% contract value.

PENDING ORDER
A pending order refers to a preset order by the Client placed at a preset price before the market price reaches the preset price. When the preset price is reached, the system will automatically enter a new position at the Client's preset price. The advantage of a pending order is that Client can preset the product, the volume and the price to be traded without having to monitor the market movement nor accessing the trading platform.

STOP LOSS ORDER
A stop loss order presets a liquidation price for a new order. When the market price reaches the preset price, the system will automatically liquidate the position to prevent further loss. The preset price should be set in the losing price zone (a price lower than the execution price of a buy order or a price higher than the execution price of a sell order). For LLG, the stop loss order must be placed at least US$2.00 away from the market running price and for LLS, at least US$0.20 away.

TAKE PROFIT ORDER
A take profit order presets a liquidation price for a new order. When the market price reaches the preset price, the system will automatically liquidate the position to consolidate profit. The preset price should be set in the profiting price zone (a price higher than the execution price of a buy order or a price lower than the execution price of a sell order). For LLG, the stop loss order must be placed at least US$2.00 away from the market running price and for LLS, at least US$0.20 away.

FORCED LIQUIDATION
Forced liquidation (Stop Out) is used by the Dealer to prevent Clients from exposure to higher risk of losing. When the Client's margin level becomes lower than or equal to 20% of the minimum margin requirement, the system will automatically liquidate part or all of the Client's open positions in the account until the margin level resumes above 20% of the minimum margin requirement.

OVERNIGHT POSITIONS
Overnight positions are not necessarily identified by the stroke of midnight but determined by US market closing. Due to the time difference of Daylight Saving Zone, open positions maintained pass 4:00 a.m. (Beijing Time) during Summer Time and open positions maintained pass 5:00 a.m. (Beijing Time) during Winter Time will be considered as positions held overnight.

SWAP
Refers to interest or fees incurred on positions held overnight. Based upon the product, the closing price and the interest difference, buy or sell open positions may receive or have to pay the swap. Currently, open buy positions in LLG and LLS have to pay a daily swap of US$9.00 while open sell positions in LLG and LLS have to pay a daily swap of US$2.00. The swap is collected on a daily basis from Monday to Thursday while a swap for 3 days will be calculated on open positions held overnight on Fridays. Please also note that the swap is subject to revision in accordance with market conditions without prior notice.

LEVERAGE
The leverage, or leverage ratio, refers to the ratio between the actual value of the contract and the margin required to maintain the contract.
Leverage Ratio = Product Price X Volume of Contract / Initial Margin Required
If the price of LLG is US$1,300.00/troy ounce and the initial margin requirement for trading 1 lot LLG is 2% contract value, then the actual value of 1 lot LLG is US$1,300.00 X 100 troy ounce = US$130,000.00. The leverage ratio will be US$130,000.00 / US$2,600.00 = 50, indicating that the actual value of the contract is 50 times the initial margin required.

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