PTI Trader's Glossary

Daily Range:	The daily range is the difference between the high price of the day and the low price of the day.
Day Order:	An order that, if not executed, expires automatically at the end of the trading session on the day it was entered.
Day Trader:	A speculator who will normally initiate and offset a position within a single trading session.
Default:	The failure to perform, for example, on a futures contract as required by exchange rules, such as a failure to meet a margin call or to make or take delivery.
Deferred Delivery Month:	The distant delivery months in which trading is taking place, as distinguished from the nearby delivery month.
Delta:	This is the theoretical rate of change of an option’s price relative to the price of its underlying, times the contract multiplier. Delta is positive for calls and negative for puts. An option with a delta of 25 will move 25% as much as the underlying asset. The delta of an option changes with the distance of the strike from the underlying. Delta also measures the equivalent unhedged position in the underlying asset.
Delivery:	For example, the transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchange has specific procedures for delivery of a cash commodity. Some futures contracts, such as stock index contracts, are cash settled.
Delivery Month:	*See Contract Month.*
Derivative:	A financial instrument, traded on or off an exchange, the price of which is directly dependent upon the value of one or more underlying securities, equity indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or arrangement. Derivatives involve the trading of rights or obligations based on the underlying product but do not directly transfer property. They are used to hedge risk or to exchange a floating rate of return for a fixed rate of return.
Designated Self-Regulatory Organization (DSRO):	When a Futures Commission Merchant (FCM) is a member of more than one Self-Regulatory Organization (SRO), the SROs may decide among themselves which of them will be primarily responsible for enforcing minimum financial and sales practice requirements. The SRO will be appointed DSRO for that particular FCM. NFA is the DSRO for all non-exchange member FCMs. See also Self-Regulatory Organization.
Disclosure Document:	The statement that must be provided to prospective customers that describes trading strategy, fees, performance, etc.
Discount:	With regards to Futures: (1) The amount a price would be reduced to purchase a commodity of lesser grade; (2) sometimes used to refer to the price differences between futures of different delivery months, as in the phrase "July is trading at a discount to May," indicating that the price of the July future is lower than that of May; (3) applied to cash grain prices that are below the futures price.
Discretionary Account:	An arrangement by which the owner of the account gives written power of attorney to someone else, usually the broker or advisor, to buy and sell without prior approval of the account owner. Also referred to as a Managed Account.
Divergence:	A divergence occurs when two markets, or a market and a benchmark index, or a market and an indicator move in opposite directions. Common examples include one stock index (e.g., the Dow Industrials) moving higher while another stock index (e.g., the Dow Transports) moves lower, or when price makes a new high and a momentum oscillator (like the RSI or stochastics) makes a lower high. The implication is that by moving in the opposite direction, the indicator (or secondary market or index) is not confirming the price move in the market from which it is diverging. Corrections or reversals sometimes result in such circumstances. Note: Oscillators often produce multiple divergence signals in strongly trending markets before the trend actually reverses; view such signals conservatively.
Double Bottom:	A double bottom is a reversal pattern consisting of two price troughs: The market declines to a new low, retraces, then falls again to the approximate price level of the first trough and retraces again. The implication is that by failing to break below the first price low, the market is hitting support and the down trend (especially if it has been an extended one) could reverse.
Double Top:	A double top is a reversal pattern consisting of two price peaks: The market rallies to a new high, retraces, then rallies again to the approximate price level of the first peak and retraces again. The implication is that by failing to penetrate the first price peak, the market is hitting resistance and the up trend (especially if it has been an extended one) could reverse.
Dual Trading:	Dual trading occurs when (1) a floor broker executes customer orders and, on the same day, trades for his own account or an account in which he has an interest; or (2) a Futures Commission Merchant carries customer accounts and also trades, or permits its employees to trade, in accounts in which it has a proprietary interest, also on the same day.