Ask Price
The price at which the market sells a currency or asset.
Asset
A financial or tangible item with value that can be owned or controlled and has the potential to generate future economic benefits.
Asset Index
A list of all the underlying assets available for trading, often provided by a broker or financial institution.
Bar Chart
A type of financial chart that displays the open, high, low, and close prices for a specific time period as vertical bars.
Bear Market
A market condition characterized by declining prices, pessimism, and a general downward trend in the financial markets.
Bid Price
The price at which the market is willing to buy a currency or asset. It is the price a seller can expect to receive when selling the asset.
Bitcoin
A decentralized digital currency that was created in 2009. It operates on a peer-to-peer network and uses blockchain technology to secure transactions and control the creation of new units.
Bitcoin Cash
A decentralized digital currency that relies on cryptography for security. It operates on a peer-to-peer network and is not controlled by any central authority.
Blockchain
A cryptocurrency that emerged as a result of a hard fork from the Bitcoin blockchain. It has a larger block size capacity, allowing for faster transactions.
Bollinger Bands
A decentralized and distributed digital ledger that records transactions across multiple computers. It is the underlying technology behind cryptocurrencies and provides transparency and security.
Breakout
In technical analysis, a breakout occurs when the price of an asset moves through a previously established support or resistance level, often accompanied by increased volume and volatility. It may indicate a potential change in the direction of the price trend.
Broker
An individual or company that facilitates the buying and selling of financial instruments, such as stocks, currencies, or commodities, on behalf of clients. Brokers earn commissions or fees for their services.
Bull Market
A market condition characterized by rising prices, optimism, and a general upward trend in the financial markets.
Buy Order
An instruction given by a trader to purchase a financial instrument at a specified price or better. It is executed when the market reaches the specified price.
Candlestick Chart
A type of financial chart used to represent the price movement of an asset over a specific time period. It displays the open, high, low, and close prices as well as the relationship between them. The chart is composed of individual “candlesticks” that provide information about the buying and selling pressure in the market.
Carry Trade
A trading strategy in which an investor borrows funds in a low-interest-rate currency to invest in a higher-yielding currency. The goal is to profit from the interest rate differential between the two currencies.
Central Bank
A financial institution responsible for managing a country’s money supply, controlling interest rates, and ensuring the stability of the financial system. It plays a key role in formulating and implementing monetary policies.
Chart
A graphical representation of price or data that illustrates the historical and current performance of a financial instrument or market. Charts help traders analyze trends, identify patterns, and make informed trading decisions.
Close
The final price at which a financial instrument or market is traded during a specific time period. It is often used as a reference point for calculating price changes and determining the performance of an asset.
Commission
A fee or charge paid to a broker or financial institution for executing a trade or providing investment-related services.
Commodities
Marketable goods or primary products, such as agricultural products, energy resources, and metals, that are traded on commodity exchanges.
Consumer Price Index
An index that measures the average change in prices of a basket of goods and services commonly purchased by households. It is used to monitor inflation and assess the purchasing power of a currency.
Contract
Contracts in the commodities market are investment vehicles for trading assets. They serve to standardize assets and simplify speculation.
Contract For Difference (CFD)
A derivative contract between a buyer and a seller that allows them to speculate on the price movements of an underlying asset without owning the asset itself. The buyer pays the seller the difference between the current value of the asset and its value at contract expiration. CFDs provide leverage, allowing traders to gain exposure to larger positions with a smaller initial investment.
Correlation
Correlation, within the realm of trading, quantifies the relationship between two assets. A positive correlation indicates that Security B tends to move in alignment with Security A.
Crude Oil Inventories
Crude oil inventories refer to the quantities of crude oil, gasoline, and distillate stored within a particular country.
Cryptocurrency
A digital or virtual currency that uses cryptography for security and operates independently of a central bank. Cryptocurrencies leverage blockchain technology to secure transactions, control the creation of new units, and verify the transfer of assets. Examples include Bitcoin, Ethereum, and Ripple.
Currency Pair
A currency pair comprises a base currency and a quote currency. It represents the relative value of one currency against another, facilitating currency trading.
Currency Risk
Currency risk pertains to the potential negative impact arising from fluctuations in exchange rates. It introduces uncertainties in financial transactions involving different currencies.
Day Trading
A trading strategy in which positions are opened and closed within the same trading day, with no overnight exposure. Day traders aim to profit from short-term price fluctuations and usually employ technical analysis tools and chart patterns to identify trading opportunities.
Deflation
A sustained decrease in the general price level of goods and services in an economy, resulting in increased purchasing power. Deflation is often accompanied by reduced consumer spending and economic contraction.
Demo
In most cases a demo account is a risk free trading account that uses demo money, not real money and allows a trader to test the platform and learn to understand how to execute a trade. Demo accounts are also used by experienced traders to back test strategy and to develop new strategies in a risk free environment.
Derivative
A financial instrument whose value is derived from an underlying asset or group of assets. Derivatives enable traders to speculate on price movements without owning the underlying asset. Common types of derivatives include futures contracts, options, and swaps.
Dollar Cost Averaging
A strategy where an investor regularly invests a fixed amount of money into an asset or portfolio at predetermined intervals, regardless of the asset’s price. This approach aims to reduce the impact of short-term market fluctuations by buying more shares when prices are low and fewer shares when prices are high.
Double Bottom
Technical analysis chart pattern.
Dow Jones Industrial Average (DJIA)
A stock market index that represents the performance of 30 large, publicly-traded companies in the United States. It is one of the most widely recognized and frequently quoted stock market indices.
Economic Indicators
Economic indicators serve as measurements or data points that provide insights into the overall health of an economy. They act as indicators, influencing the valuation of assets by reflecting the country’s performance.
Elliott Wave Theory
A technical analysis approach that attempts to predict future price movements by identifying recurring wave patterns in financial markets. It suggests that prices move in a series of alternating upward and downward waves, with specific rules governing their structure and relationships.
Ethereum
A decentralized, open-source blockchain platform that enables the creation and execution of smart contracts and decentralized applications (DApps). It has its own cryptocurrency called Ether (ETH), which is used to facilitate transactions and incentivize participants on the network. Ethereum aims to provide a platform for building decentralized applications with a focus on programmable “smart contracts.”
European Central Bank
The European Central Bank (ECB) acts as the central bank for the euro, Europe’s single currency. It is responsible for maintaining the purchasing power of the euro and ensuring price stability within the eurozone. The eurozone comprises 17 European Union and 5 non-European Union countries that have adopted the euro since 1999.
Exchange
A platform or marketplace where various financial instruments, such as currencies, stocks, or commodities, are traded. It provides a centralized location for buyers and sellers to meet and execute transactions. Examples include stock exchanges, foreign exchange markets, and cryptocurrency exchanges.
Exchange Rate Risk
Exchange rate risk entails the potential financial loss resulting from unfavorable fluctuations in exchange rates.
Exotic Currency
Exotic currency refers to a lesser-traded currency that falls outside the category of major currencies. These currencies are not widely popular in trading activities.
Expiry Price
The time and day at which your CFD will be closed and settled automatically, i.e. the end of the contract period. If you want to extend your position you can specify that you want it to rollover. There is no expiry date/time if your position is a Rolling Contract. Most CFD contracts do not have an expiry unless designed or requested.
Fibonacci Channel
Fibonacci channels serve as a methodology for predicting support and resistance levels in a given market. They utilize the identification of peak and valley formations in the market to make informed projections about major changes in trend directions. The key to effectively utilizing Fibonacci channels is correctly identifying the relevant peaks and valleys to work with. Once the appropriate tops and bottoms have been identified, support and resistance lines can be projected into future weeks and months. It is important to consider only significant tops and bottoms as the base line for a channel, incorporating one or more prominent side swings. The widest swing within the time frame of the base line is used as a trigger line.
Forex
Short for “foreign exchange,” referring to the global decentralized market where currencies are bought and sold. Forex trading involves speculating on the price movements of currency pairs, such as EUR/USD or GBP/JPY. It is the largest and most liquid financial market in the world, with high trading volume and continuous operation 24 hours a day, five days a week.
Forward Deal
A deal with a value date greater than the spot value date.
Fundamental Analysis
A method of evaluating investments by analyzing economic, financial, and qualitative factors that can affect an asset’s value. It involves examining company financial statements, industry trends, macroeconomic indicators, and other relevant information to determine the intrinsic value of an asset and assess its potential for future growth or decline.
Futures Contract
A standardized derivative contract that obligates the buyer to purchase or sell an underlying asset at a predetermined price and future date. Futures contracts are commonly used in commodities, currencies, and stock indexes to hedge against price fluctuations or speculate on future price movements.
Gap
A gap occurs when a market swiftly transitions from one accurately quoted price to another significantly different and correctly quoted price. Gaps can arise due to various factors, such as economic data, company announcements, political events, natural disasters, etc. However, as a result, the execution of a stop loss, limit, or new order may take place at a level that differs from the trader’s requested price.
Gas
Transaction fee associated with every operation in the Ethereum network. It acts as a measurement unit for computations performed on the EVM. Gas units have fixed values determined by the complexity of the task and are paid in ether using GWei as the unit of measurement.
Gold
Valuable commodity utilized in the production of jewelry, electronics, and diverse equipment due to its conductivity, malleability, and durability. Historically, it functioned as a standard for monetary exchange, which was discontinued following the implementation of the fiat system in the US in 1971.
Gross Domestic Product
The total worth of goods and services produced within the United States’ boundaries, regardless of asset ownership or labor nationality. GDP growth is measured in real terms, excluding inflationary effects on output increases.
Hedge Funds
Hedge funds are investment funds managed by professional portfolio managers. They utilize aggressive investment strategies to generate significant returns for investors. Contrary to their name, hedge funds strive to optimize investor profits. They have the flexibility to invest in a wide range of financial instruments in the foreign exchange market, such as spot contracts, futures contracts, and swaps.
Hedging
A risk management strategy used to offset potential losses by taking an opposing position in another related asset. Hedging aims to protect against adverse price movements and reduce the impact of market volatility. It is commonly used by traders and investors to manage risk in their portfolios.
Hyperinflation
A severe economic state marked by a swift rise in prices as a country’s currency rapidly depreciates in value. This often occurs when the money supply experiences a substantial expansion that surpasses the growth of the gross domestic product (GDP), causing an imbalance in the supply and demand for money.
Index
An index is a statistical measure that tracks the performance of a portfolio of stocks representing a specific market segment. It serves as a benchmark to evaluate market trends. Examples include DAX, ASX200, and Dow Jones. Essentially, an index is a list of stocks that anyone can create, providing insights into overall market movements and serving as a reference point for investors and analysts.
Inflation
A sustained increase in the general price level of goods and services in an economy over time. Inflation erodes the purchasing power of money, as the same amount of currency buys fewer goods and services. It is influenced by factors such as money supply, demand, production costs, and economic conditions. Moderate inflation is generally considered desirable as it promotes economic growth, while high inflation can lead to instability and reduced consumer purchasing power.
Initial Coin Offering (ICO)
A fundraising method used by cryptocurrency startups to raise capital. It involves issuing and selling tokens or coins to investors in exchange for established cryptocurrencies, such as Bitcoin or Ethereum. ICOs are typically conducted in the early stages of a project to finance development and create a community of token holders.
Initial Margin
Initial margin refers to the initial collateral deposit required to enter a trade. It acts as a form of protection for both parties involved. By ensuring sufficient funds or assets are available, initial margin mitigates the risk of potential losses due to adverse price movements. It promotes the stability and integrity of the trading system, reducing the likelihood of defaults. The specific amount of initial margin is determined by factors such as instrument volatility and liquidity, helping to safeguard the interests of market participants.
Interest Rate
The cost of borrowing money or the return earned on an investment, expressed as a percentage. Interest rates are set by central banks and influenced by various economic factors, such as inflation, monetary policy, and market conditions. They play a crucial role in determining the cost of credit and can impact investment decisions and economic growth.
Interest Rate Differential
Interest rate differential (IRD) represents the difference in interest rates between two similar interest-bearing currencies in the foreign exchange market. It plays a crucial role in currency valuation and influences capital flows between countries. Traders and investors closely monitor the IRD to identify potential arbitrage opportunities and speculate on currency movements. Changes in the interest rate differential can impact the relative attractiveness of different currencies and affect exchange rates. By analyzing the IRD, market participants can gain insights into interest rate dynamics and make informed decisions regarding currency trading and investments.
Interest Rate Risk
Interest rate risk refers to the potential for financial losses resulting from changes in interest rates. It primarily affects fixed-income securities such as bonds and loans. When interest rates fluctuate, the value of these instruments tends to move in the opposite direction. For instance, rising interest rates can lead to a decline in bond prices, causing capital losses for bondholders. The level of interest rate risk depends on factors such as the duration of the instrument, the magnitude of interest rate changes, and the sensitivity of the security to interest rate movements. Investors and financial institutions employ risk management strategies, such as hedging and diversification, to mitigate the adverse effects of interest rate fluctuations and safeguard their investment portfolios.
Investment
Process of investing money in the economic market.
Japanese Yen
Currency of Japan, major traded currency (JPY).
Key Pair
Pair of private and public keys used in cryptography.
Leverage
Ratio of transaction amount to required deposit, amplifying investment.
Limit Order
An instruction given by a trader to buy or sell a financial instrument at a specified price or better. The order will only be executed if the market reaches the specified price or offers a more favorable price. Limit orders allow traders to control the price at which they enter or exit a trade.
Liquidity
The degree to which an asset or market can be bought or sold quickly without causing significant price movements. It reflects the ease of converting an asset into cash without incurring substantial transaction costs. High liquidity provides better trading opportunities and typically indicates a more efficient market.
Litecoin
Cryptocurrency similar to bitcoin, created by Charlie Lee in 2011.
Long Position
Beneficial position as market price rises.
Long-term
This is a type of investment that looks at making trades that will stay open over a number of days. These positions may have an expiry time of weeks or even months.
Lot
Unit of measurement for transaction amount.
MACD
Moving Average Convergence/Divergence, indicator used in technical analysis.
Margin
Initial collateral deposit for a position or forex trade.
Margin Call
Demand for additional funds to cover open trade positions.
Market Order
An instruction given by a trader to buy or sell a financial instrument at the prevailing market price. The order is executed as quickly as possible at the current available price. Market orders prioritize speed of execution over price, and the final execution price may differ from the expected price due to market fluctuations.
Momentum
Rate of change in asset price, used in technical analysis.
Monetary Policy
Process by which a monetary authority controls money supply.
Moving Average
A commonly used technical analysis indicator that calculates the average price of an asset over a specific period. It smooths out price fluctuations and helps identify trends and potential support or resistance levels. Moving averages are calculated by adding the prices over the selected period and dividing by the number of periods. Different types of moving averages, such as simple moving averages (SMA) and exponential moving averages (EMA), can be used depending on the trader’s preferences and analysis goals.
NEM
Cryptocurrency and asset management platform.
Net Position
Unsettled currency bought or sold without offsetting transactions.
Nonfarm Payroll Employment
Estimate of payroll jobs at nonfarm businesses and government agencies.
Open
In finance, there are two definitions of open, it is when a market opens each day or time segment but it is also when you buy or sell an asset or open your CFD position.
Open Position
Active trade that has not been closed.
Options
Financial derivatives that give the holder the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a predetermined price and future date. Options provide flexibility and can be used for speculation, hedging, or income generation through strategies such as covered calls or protective puts.
Oscillator
Oscillators are a technical analysis tool which denotes overbought and oversold conditions in the market. Some of the most well-known oscillators are RSI, Stochastics and MACD.
Over The Counter
Market conducted directly between dealers without a regulated exchange.
Overnight Position
Position held until the next trading day.
Penny Stocks
Stocks of small companies with low market capitalization and relatively low prices per share. Penny stocks are considered highly speculative and can be volatile. They are often traded over-the-counter (OTC) or on specialized exchanges and may carry higher risks due to limited liquidity and lower regulatory requirements.
Pip
Smallest value change in a currency pair’s exchange rate.
Portfolio
A collection of financial investments, such as stocks, bonds, mutual funds, or other assets, held by an individual or institution. Portfolios are constructed to achieve specific investment objectives, diversify risk, and balance returns. They are regularly reviewed and adjusted based on market conditions and investment goals.
Position
Net exposure in a currency, either flat, long, or short.
Price Action
Price movement of a security represented in charts and graphs.
Producer Price Index
Monthly report detailing purchasing price of consumer goods.
Quote Currency
Second currency in a currency pair.
Real Estate Investment Trust (REIT)
A company or trust that owns and operates income-generating real estate properties, such as residential buildings, commercial offices, or shopping malls. REITs allow individual investors to invest in real estate assets without directly owning or managing properties. They provide opportunities for regular income through dividends and can offer diversification within an investment portfolio.
Relative Strength Index
Price oscillator used in technical analysis to measure strength of prices.
Resistance Level
A price level at which an asset has historically encountered selling pressure and struggled to break through. Resistance levels are considered psychological or technical barriers that may cause the price to reverse or consolidate. Traders often monitor resistance levels to assess potential areas of price resistance and make trading decisions accordingly.
Retail Sales
Estimate of total sales of goods by retail establishments.
Reward-To-Risk Ratio
Ratio of expected returns to predetermined risk of loss.
Ripple
Cryptocurrency and real-time payment platform.
Risk Capital
Amount of money one is willing to lose.
Risk Management
The process of identifying, assessing, and controlling potential risks to minimize losses and protect investments. Risk management involves developing strategies, diversifying portfolios, setting stop-loss orders, and employing risk mitigation techniques to manage exposure to market volatility, economic events, and other uncertainties. It is a crucial aspect of successful trading and investment.
Scalping
Short-term trading strategy aiming for small profits.
Securities and Exchange Commission (SEC)
A regulatory agency in the United States responsible for enforcing securities laws and protecting investors. The SEC oversees the securities industry, promotes fair and transparent markets, and provides investors with accurate and reliable information. It regulates various entities, including stock exchanges, brokers, investment advisers, and public companies, ensuring compliance with disclosure requirements and preventing fraudulent practices.
Sell Order
Order to sell an asset at a downward price direction.
Short
Is the opposite of long, it means selling an asset or a falling market. An investment position that benefits from a fall in market price. When the base currency in the pair is sold, the position is said to be short. You are hoping that the market falls.
Short Position
Position where the base currency is sold, benefiting from price declines.
Short Selling
A trading strategy where an investor borrows and sells an asset, such as a stock, with the expectation that its price will decline. The investor aims to buy back the asset at a lower price in the future to repay the borrowed shares and profit from the price difference. Short selling involves selling an asset one does not own, and it carries additional risks, such as unlimited potential losses if the price rises instead of falling.
Slippage
Difference between expected and actual fill price.
Spread
Difference between the bid and ask price of an asset.
Stochastic
Indicator comparing closing prices to high and low prices over a period.
Stock Market
A marketplace where shares of publicly traded companies are bought and sold. The stock market provides a platform for companies to raise capital by issuing shares to investors and for investors to trade those shares. It plays a crucial role in capital formation and serves as a barometer of economic conditions and investor sentiment. Examples of stock markets include the New York Stock Exchange (NYSE) and NASDAQ in the United States, the London Stock Exchange (LSE), and the Tokyo Stock Exchange (TSE).
Stop-Loss Order
An order placed by a trader to automatically sell a security if its price falls to a specified level. Stop-loss orders are used to limit potential losses and manage risk. When the market price reaches or falls below the stop-loss price, the order is triggered, and the security is sold at the prevailing market price. It allows traders to define their maximum acceptable loss on a position and helps protect against adverse price movements.
Strike Price
Price at which an option is opened in the market.
Swap
Simultaneous buying and selling of the same currency amount at a forward exchange rate.
Swing Trading
Short-term trading strategy holding positions for more than a day.
Take Profit
Order to automatically close a position once a certain profit level is reached.
Technical Analysis
A method of analyzing financial markets based on historical price and volume data. Technical analysts use charts, patterns, indicators, and other tools to identify trends, support and resistance levels, and potential trading opportunities. Technical analysis assumes that past price patterns can provide insights into future price movements and helps traders make buy or sell decisions based on market behavior and price action.
Tick
Minimum price change, up or down.
Trading Alerts
Suggestions or signals indicating profitable underlying assets and directions.
Trading Volume
Total amount traded during a specific period.
Trendline
Line connecting high or low prices on an asset’s chart, representing a trend.
U.S. Department Of The Treasury
Government agency managing money resources of the United States.
Unemployment Rate
Percentage of unemployed people in the workforce.
Volatility
A statistical measure of the dispersion or variability of an asset’s price over time. Volatility reflects the degree of price fluctuations and market uncertainty. High volatility indicates larger price swings, while low volatility suggests relatively stable price movements. Volatility is a key factor in risk assessment, option pricing, and determining trading strategies. Traders may seek volatile markets for higher profit potential, but it also entails increased risks.
Wallet
Storage method for cryptocurrencies.
World Bank
Group of international financial organizations providing assistance to member countries.
Yield
The return on an investment, usually expressed as a percentage of the investment’s cost or current value. Yield can refer to various types of returns, such as dividend yield (for stocks), coupon yield (for bonds), or rental yield (for real estate). It provides an indication of the income generated by an investment relative to its price or value. Yield is often used to compare the attractiveness of different investment opportunities.
Yield Curve
A graphical representation of interest rates or yields of bonds with different maturities. The yield curve plots the relationship between the interest rate (vertical axis) and the time to maturity (horizontal axis) of bonds. It can be upward-sloping (normal yield curve), flat (flat yield curve), or downward-sloping (inverted yield curve). The yield curve is closely monitored as it provides insights into market expectations, economic conditions, and potential shifts in monetary policy.
Zig Zag
A technical analysis tool used to filter out market noise and identify significant price reversals or trends. The zigzag indicator connects significant price highs and lows with straight lines, ignoring minor fluctuations. It helps traders visualize the overall price structure and identify potential support and resistance levels. The zigzag indicator can be customized based on the desired sensitivity to price movements.
