Glossary

Asset Classes

A financial asset class is a kind of financial instrument that may include both physical and financial assets. The instruments are classified into asset classes depending on whether they exhibit comparable features and market behaviour.

Assets

An asset is a financial resource that may be possessed or managed in order to generate a profit or provide a future benefit. The word asset in financial trading refers to what is traded on markets, such as stocks, bonds, currencies, or commodities.

Automated Trading

The use of algorithms for placing trade orders is known as automated trading, or algorithmic trading. 

Bid

The bid is the amount a party is prepared to pay to purchase a financial instrument in trading and investing.

Bear Market

A bear market is defined as a market that has been trending downhill for a long time with little hope from traders for a rebound.

Bond Trading

Bond trading is a method of profiting from changes in the value of corporate or government bonds. Many people consider it, along with stocks and cash, to be an important aspect of a balanced trading portfolio.

Bonds

Bonds are a kind of financial investment in which you lend money to a company for a certain length of time. Depending on the sort of organisation you are financing to, they normally come in two varieties: corporate bonds and government bonds.

Bull Market

A bull market is defined as an upward trending market, instrument, or sector.

Buy

Buying a financial instrument, whether it’s a commodity, stock, or other asset, entails gaining possession of it from someone else. 

Call Option

A call option is a contract that offers a buyer the right, but not the duty, to purchase a certain asset at a specified price on a specific date. If the asset’s market price rises, the value of a call option rises as well.

Cash Flow

As disclosed in earnings releases, cash flow is the amount of money moving in and out of a company’s accounts. It may be used to describe a single project or an entire company.

Closing Price

The final price at which an asset was exchanged before the market closed on any given day is known as the closing price. When looking at longer-term fluctuations, closing prices are sometimes utilised as a benchmark. To quantify an asset’s change over a single day, they may be compared to past closing prices or the beginning price.

Commission

An investment broker charges a commission for conducting transactions on a trader’s behalf.

Commodity

A commodity is a fundamental physical asset that is often utilised as a raw material in the manufacture of products or services.

Contracts For Difference

CFDs, or contracts for difference, are a sort of financial derivative that is utilised in CFD trading. They may be used to trade stocks, currencies, commodities, indices, and bonds, among other financial markets.

Current Ratio

The current ratio is a metric that determines a company’s capacity to sell physical assets to repay short-term debt. Because companies often have a limited time to settle short-term debt, the current ratio is significant in determining a company’s liquidity condition. 

Day Order

A day order is a sort of order that a trader sends to their broker to purchase or sell a certain asset.

Day Trading

Day trading is a short-term financial method in which all deals are closed before the market closes.

Dividend

A dividend is a part of a company’s earnings that it decides to pay to its shareholders as a percentage. 

Execution

In trading, execution refers to the fulfillment of a trader’s purchase or sell order. A broker is in charge of this.

Expiry Date

The expiry date is the day on which a trading position automatically terminates (or expiration date). 

Financial Instrument

A financial instrument is a monetary contract that may be exchanged and settled between two parties. For one side (the buyer), the contract is an asset, while for the other, it is a financial obligation (the seller).

Financial Market

Within the investing world, the term “market” may have a variety of connotations. It is described as a channel through which assets are exchanged, with supply and demand determining their value.

Fixed Costs

A fixed cost is a corporate expenditure that remains constant regardless of output volume. Rent, contractual agreements, and licences are examples of fixed expenditures that do not alter in price regardless of whether output rises or decreases. They are instead obligated for the duration of the contract or payment schedule.

Floating Exchange Rate

The price of a floating exchange rate currency is influenced by supply and demand forces in relation to other currencies. A floating exchange rate differs from a fixed – or pegged – exchange rate, which is solely regulated by the currency’s government.

Fundamental Analysis

Fundamental analysis is a technique for determining an asset’s inherent worth and examining the variables that may impact its price in the future. External events and effects, as well as financial statements and industry trends, are used in this kind of study.

Gross Margin

Gross margin, often known as gross profit margin, is a method of determining how much profit a firm has left after deducting the direct expenses of selling its products and services. It may show if a firm is profitable despite its expenses.

Guaranteed Stop

A guaranteed stop is a kind of stop loss that guarantees that your transaction will be executed at the level you select. 

Index

An index is a collection of financial assets used as a performance indicator for a certain sector in trading. Indexes is the plural form.

Indices Trading

Indices trading is the process of traders attempting to benefit on indices’ price changes.

Interest Rates

The fee a lender charges a borrower for borrowing an asset, commonly stated as a percentage of the loan amount. The annual percentage rate, or APR, normally refers to the amount paid each year, although it may also be used to indicate payments made on a more or less regular basis. 

Leverage

Leverage is a notion that allows you to increase your exposure to a financial market without having to spend more funds.

Leveraged Products

Leveraged products are financial tools that allow traders to increase their market exposure without raising their capital outlay. They do this by using leverage.

Limit Order

A limit order tells your broker to execute a deal at a price that is higher than the current market price.

Liquidity

Liquidity, often known as market liquidity, is a term used in finance to define how readily an asset may be purchased or sold in the market without impacting its price. When there is a strong demand for an asset, it is simpler to find a buyer (or seller) for that asset, resulting in high liquidity.

Long Position

Long in trading refers to a position that profits if the market price of an asset rises. ‘Taking a lengthy posture’ or ‘going long’ are common phrases.

Lot

Instead of trading a single asset, a lot is a standardised collection of assets. 

Margin Call

A margin call is when a broker asks a trader for more maintenance margins to keep a leveraged deal open.

Margin

The margin is the amount of money needed to initiate and maintain a leveraged position in trading.

Market Order

A market order instructs a broker to execute a deal at the best available price as soon as possible. 

Negative Balance Protection

Negative balance protection protects traders from losing more than their account balance, even if the market moves swiftly or gaps. 

Open Positions

A transaction that is still open for profit or loss is known as an open position. All gains and losses are realised when a position is closed, and the transaction is no longer active. Open positions may be long or short, allowing you to benefit from both rising and declining markets.

Option

An option is a financial instrument that gives you the right – but not the responsibility – to purchase or sell an asset if its price rises over a given level during a certain time period.

OTC Trading

Over-the-counter (OTC) refers to a transaction that is not done on a regulated exchange. Off-exchange trading is another term for this. 

Pip

In forex trading, a pip is a unit of measurement that represents the smallest change a currency may make.

Position

A trader’s position is the manifestation of his or her market commitment, or exposure. It is the financial word for a transaction that is now profitable or losing money (known as an open position) or has recently been terminated (known as a closed position). A position’s profit or loss can only be realised after it has been closed.

Profit And Loss Statement

A profit and loss statement (P&L) is a financial statement that summarises a company’s income, costs, and profit. It provides investors and other interested parties with information on how a business operates and if it is profitable. 

Ratio spread

A ratio spread is an option* trading technique in which a trader simultaneously holds an uneven number of buy and sell options contracts on the same underlying asset.

Rollover

A rollover is a process of keeping a position open beyond its expiration date in trading. 

Scalp

In trading, a scalp is when you initiate and close a position fast in the hopes of benefitting from slight price swings.

Share Price

A share price, often known as a stock price, is the cost of purchasing one share of a corporation. A share’s price is not set in stone, but changes with market circumstances. It will most likely rise if the firm is performing well and decrease if the company isn’t achieving expectations.

Shares

Shares are the units of a company’s ownership that are generally exchanged on the stock exchange. Stocks or equities are other terms for them.

Shares Trading

Buying and selling corporate stock – or derivative products based on company stock – in the hopes of generating a profit is known as share trading.

Short

Short in trading refers to a transaction that will benefit if the asset being traded decreases in value. Going short, shorting, or selling are other terms used to describe it.

Short-Selling

Short selling is the act of selling an asset that you do not own in the hopes that its value will fall and you may benefit from the deal. Shorting is another name for it.

Slippage

Slippage occurs when the price at which an order is executed differs from the price at which it was placed.

Spot

The price of an asset for immediate delivery, or the value of an asset at any given moment, is referred to as spot in trading. It is not to be confused with an asset’s futures price, which is the price for delivery at a future date, or its projected price.

Spot Price

The spot price, also known as the spot rate, is the current market value of an underlying item that may be purchased or sold with the expectation of immediate delivery. In commodities and FX markets, the phrase “spot price” is often used.

Spread Betting

A leveraged financial derivative is spread betting. When you spread bet, you’re betting on the direction of a market’s movement. When the trade is closed, the profit or loss is determined by the accuracy of your bet.

Spread

The spread is the price difference between the purchase (bid) and sale (offer) prices stated for an asset in finance.

Stop Order

Stop orders are orders that tell your broker to execute a transaction when it hits a certain price level, usually one that is lower than the current market price. Stop-loss orders are another name for them. 

Technical Analysis

Technical analysis uses historical price charts and market information to examine and anticipate price changes in the financial markets. It is founded on the concept that if a trader can recognise historical market trends, they may anticipate future price trajectories reasonably accurately.

Trading Plan

A trading plan is a strategy devised by an individual trader to systematise asset appraisal, risk management, trading kinds, and goal setting. Most trading strategies will be divided into two sections: long-term trading goals and the path to reaching them.

Trailing Step

The chance of a market producing big, unexpected short-term price moves at any particular moment is measured by its volatility.

Trend

A trend is defined as a clear, consistent rising or downward movement in a market. Identifying the start and end of trends is an important component of market research. Individual assets, industries, and even interest rates and bond yields may all be affected by trends.

Technical analysis uses historical price charts and market information to examine and anticipate price changes in the financial markets. It is founded on the concept that if a trader can recognise historical market trends, they may anticipate future price trajectories reasonably accurately.

Trading Plan

A trading plan is a strategy devised by an individual trader to systematise asset appraisal, risk management, trading kinds, and goal setting. Most trading strategies will be divided into two sections: long-term trading goals and the path to reaching them.

Trailing Step

The chance of a market producing big, unexpected short-term price moves at any particular moment is measured by its volatility.

Trend

A trend is defined as a clear, consistent rising or downward movement in a market. Identifying the start and end of trends is an important component of market research. Individual assets, industries, and even interest rates and bond yields may all be affected by trends. 

Volatility

The chance of a market producing big, unexpected short-term price moves at any particular moment is measured by its volatility.

Volume

Volume in trading refers to the quantity of a certain asset exchanged over a given period of time. It is often shown with price data because it adds another level to the analysis of an asset’s price history.