Trading Glossary

When an order to buy or sell has been completed, the trade has been executed, and the trader has executed the transaction.

See Strike price

When you have bought (or sold) something, you have "entered a trade" and have an open position. When you make the opposite trade, that is, sell (or buy), you are said to "exit", or close, the position. The profit/loss of a trade is calculated based on the difference between the opening and the closing trade prices.

Exotic options are non-standard options traded in an over-the-counter (OTC) market. They differ from standard (vanilla) options in e.g. their underlying securities, expiration dates, payments or strike prices. They can be used to hedge specific risks and to diversify risk.

An automated trading system (trading robot) that you instruct (program) yourself.

The date at which an option contract expires, i.e. after which the option cannot be exercised.

The Federal Reserve System, also called the Federal Reserve, is the central banking system of the USA. It consists of 12 regional Federal Reserve Banks and a Board of Governors in Washington D.C. Its three main objectives are maximising employment, stabilising prices and moderating long-term interest rates for the USA.

Pronounced "footsie", "FTSE" is often short for the FTSE 100, a weighted stock index of the 100 companies on the London Stock Exchange that have the highest market capitalisation. There exist several FTSE indices, for example the FTSE 250, the FTSE 350 and the FTSE Small Cap. These indices are all maintained by the Financial Times Stock Exchange group, which is owned by the London Stock Exchange.

An index of the 40 most traded stocks on the Milan exchange, accounting for approximately 80% of Italian domestic market capitalisation. The acronym stands for "Financial Times Stock Exchange Milano Indice di Borsa" and is maintained by the Financial Times Stock Exchange group, which is owned by the London Stock Exchange.

The nominal value of a security. The same as Par value and denomination.

Also known as Constant Leverage Certificate, they allow investors to participate disproportionately (with leverage) in the positive(long) or negative(short) development of the underlying. Investors bear the risk of the Factor Certificates expiring worthless if the price of the Underlying does at any time reach the selected strike price (also called Knock Out Level).

Currencies issued by a government; "normal" money backed by central banks.

The nickname for the EURUSD because the price arrives via the Atlantic fiber optic cable connection.

An asset that can be traded, for example currency, bonds, stocks or contracts for futures or options.

Simultaneously buying and selling identical amounts of a currency pair; such swaps can be used to pay a trade in a foreign currency at a future date without taking on foreign exchange risk. One leg of the trade is always a Forward; the other leg can be a Spot trade or another Forward. Note: this is different from a currency swap.

A chart based on trading prices. For example, the hourly bid price.

Very short-term trades.

The current marketvalue of a given currency.

Forex is traded 24 hours a day from Monday morning in the Pacific to Friday evening in New York. This market is one of the largest and most liquid in the world. Learn more about the forex market

See "Expert advisor"

Also called FX, Forex is short for "Foreign Exchange", which is the exchange of two currencies.

A contract that gives the buyer the right, but not the obligation, to either buy or sell a given currency at a specified exchange rate (the strike price) on or before a specified date (the expiration date). Forex options are used by financial institutions, corporations and individuals to hedge against adverse movements in exchange rates. As with other options, both simple (vanilla) and complex (exotic)options are available.

A situation where a blockchain splits into two separate chains. Forks generally happen in the crypto-world when new ‘governance rules’ are built into the blockchain’s code. Sometimes this is planned(hard fork or soft fork),sometimes not (hard fork with new chain).

Graph showing the future price of a futures contract. Forward curves may show backwardation, contango or both.

Analysis of anything that can affect the value of a financial instrument, for example economic, financial and industry conditions.

General term for "Futures contracts", which are an agreement to make a trade in the future on standardised terms decided now. The buyer is obligated to buy the underlying asset upon expiry, and the seller is obligated to provide the underlying asset at that time. Futures contracts are used to guarantee prices, hedge and speculative trading. Futures are a derivative, and the underlying assets can be e.g. stocks, indices, or commodities. Most futures traders close out their positions before the contract expires since few retail traders and hedge funds need, for example, containers of soy beans.

The transfer of commodity ownership from the the seller to the the buyer during the delivery period. Ownership is transferred by the handover of warehouse receipts or as specified in the contract.

The last trading day of a futures contract.

This order type is valid until you cancel it. In other words, you do not specify the order duration when you create your order. Note that some brokers automatically cancel GTC orders if they are not filled in e.g. 30 or 60 days.

A measure of the increase in market value of a country's aggregate production of both final goods and services over a period of time. GDP is measured in currency, e.g. dollars.

To neutralise a position by taking a new position. For example, if you have a long position but expect the price to temporarily fall, you can take a separate, short position for the duration of the price dip.

Limited partnerships for private investment that require a large minimum initial investment. Trading strategies vary widely, as do the investment vehicles. Fees usually include both a management fee and a percentage of any gains. Usually, investments are locked for the first year, and withdrawal periods may be limited. The name "hedge" fund is historical, based on early hedge funds that focused on stock investments with careful hedging.

High-yield bonds offer high yields to attract investors despite being at greater risk of default than than corporate bonds with higher credit ratings. The credit rating scale varies between rating agencies, but in general, bonds rated from AAA to BBB are "investment grade" bonds of low to medium credit risk; high-yield bonds carry greater credit risk and are thus below investment grade. Some high-yield bonds are offered by companies that used to be of investment grade, but for which the risk of default has increased; other high-yield bonds are offered by start-up companies or companies with high debt ratios. Some traders prefer high- yield bond indices to individual bonds.

An abbreviation of "non-manufacturing business activity index", which is published by the Institute for Supply Management(ISM). The index covers the US service economy; a score of 50 means "unchanged", and a score over 50 means there has been an increase in business activity. ISM publishes several monthly indices.

An options contract is in the money when the underlying asset is trading at a price that is favourable to the contract holder. (I.e. a call option is in the money if the strike price is lower than the price of the underlying asset; and a put option is in the money if the strike price is higher than the price of the underlying asset.) I.e. in the money options are contracts that can be exercised at a profit.

A benchmark, or reference, for traders and portfolio managers. A 5 percent return may sound good, but if the index rose 8 percent, then you could have just invested in an index fund and saved yourself the effort

The real production output of the manufacturing, mining(incl. oil and gas), gas and electric industries.

An initial coin offering (ICO)is the first sale or offering of a new cryptocurrency, or blockchain. Learn more about ICO

The first sale or offering of a stock by a company to the public. Learn more about IPO

The initial offering of tokens to fund a project. Tokens are a means of measuring value based on an existing cryptocurrency. Note that many people use Initial Coin Offering(ICO) and Initial Token Offering(ITO) interchangeably. See also: Tokens.

Trading a publicly traded stock on the basis of non-public material information that would affect other investors' desire to trade the stock. In order to maintain a fair marketplace, insider trading is illegal in many jurisdictions.

The market between banks where financial institutions lend and borrow money among themselves.

The difference between the current market value of the underlying interest and the strike price of an option. When the intrinsic value is positive, the option is "in the money".

The purchase or ownership of something in order to earn income, capital or both. In addition to financial instruments, investments may also include artwork, antiques and real estate.

See Candlesticks

A colloquial term for a high-value bond issue, generally more than € 500 million.(The size of the issue depends on the market: in developed markets, a jumbo bond issue can be in the billions of dollars, while it is often less in emerging markets.) These large issues of straight bonds improve the liquidity of the bond and make the issue more cost-effective.

See High-yield bonds

A warrant that expires immediately if the underlying security is traded at the predefined knock-out price before the expiry date. The pointis to limit the potential liability of the seller (and thus the potential upside for the buyer).

A technical indicator that lags - i.e. appears after- changes in a price trend.

The last day on which a futures or option contract can be traded.

A technical indicator that leads- i.e. appears before - changes in a price trend.

Borrowing money in order to command a larger position. Holding larger positions means that profits/losses are amplified. Learn more about leverage

Purchasing a company without using much capital, by using the assets of the target company as collateral for the loan used to buy the target company. The ratio of equity to debt can be as much as 10% to 90%.

The debts and obligations of a company. Current liabilities are debts due and payable within one year. Long-term liabilities are those payable after one year. Liabilities are stated in a company's balance sheet.

An order type used to guarantee a price. A limit order allows precise order entry, and is appropriate if getting a specific price is more important than getting filled. A buy limit order (a limit order to buy) is executed at the specified limit price or lower (i.e., better).Conversely, a sell limit order (a limit order to sell) is executed at the specified limit price or higher (i.e., better). Limit order prevent negative slippage, but do not guarantee a fill.

How easy it is to buy or sell something when desired. In general, greater liquidity is mirrored by narrower spreads.

A Lombard loan is a fixed loan or overdraft agreement secured by marketable deposits such as securities, life insurance policies or cash. You still own your portfolio and benefit from any gains while creating opportunity for further investments.

To trade long or open a long position means to buy something in the expectation that the price will rise. I.e. when one is bullish, one trades long (buys).

A position that was opened by buying. The position is closed by selling the same amount of the currency or security.

A unit of trade. For currencies, 1 lot is normally 100,000of the base currency. For example, trading1 lot of EURUSD means buying or selling 100,000Euro. For stock options, 1 lot is normally 100 shares. Futures and commodities are traded in lots, as well.

See All Country World Index (ACWI)

Maintenance margin is the minimum amount of equity that must be available in a margin account in order to maintain your open positions.

A trading account managed by somebody different from the owner of the invested funds. The investor can be an institutional or retail investor; the manager is hired to manage the account and is given authority to trade within given guidelines, e.g. regarding goals and risk appetite.

The fee paid to asset, fund or investment managers for their services. The fee can be defined in various ways, but are often a percentage of profits.

A loan from a broker that is used to purchase a financial instrument, e.g. Forex or CFDs. The difference between the amount of the loan and the price of the asset is called the margin. Trading on margin has the possibility for both great upsides and downsides. If the market moves, you may be required to add funds to your account in order to hold your positions (see Maintenance margin).

A notification that you need to deposit more money into your account to ensure sufficient margin to maintain your open positions. If you do not deposit money or close positions, your broker might close positions for you.

A process whereby long and short positions are revalued to reflect their settlement price.

Also called "market capitalisation", this number is the total market value of a publicly traded company's outstanding shares, calculated by multiplying the number of outstanding shares by the current market price of one share. Market capitalisation is used to determine a company's size.

Also called "market cap", this number is the total market value of a publicly traded company's outstanding shares, calculated by multiplying the number of outstanding shares by the current market price of one share. Market capitalisation is used to determine a company's size.

A market maker makes firm bids or offers up to a specified minimum guaranteed fill. Learn more about market makers

An order to buy or sell at the best available current price. As long as there is adequate liquidity, this type of order is executed immediately. Market orders are used when it is more important to fill the order than to trade at a certain price. Note that for financial instruments traded on a spread, a market order to buy is filled at the ask price, and a market order to sell is filled at the bid price.

The difference between the cost of a security and the price the dealer is willing to sell the security for. A dealer might widen - i.e. mark up - the "spread" in order to make a profit. An alternative method to fees.

MetaTrader is an electronic trading platform used by many individual traders. It has a highly customisable user interface, and supports many institutional offers such as automated trading and trading robots. The platform is offered and maintained by Metaquotes Software Corporation.

The most popular trading platform o the market, developed by MetaQuotes SoftwareCorp.

The latest generation of MetaTrader software, developed by MetaQuotes Software Corp., for experienced traders seeking more comprehensive technology.

Established in 2000, MetaQuotes Software Corp. is considered as one of the leading developers of software applications for brokerages, banks, and exchanges. The MetaTrader platform features advanced tools for the development, testing, and optimization of trading robots and is used by traders worldwide on both desktop and mobile devices.

A unit of trade. In forex, a full lot is normally 100,000 of the base currency. One mini lot is 10,000. For example, trading 1 mini lot of EURUSD means buying or selling 10,000 Euro. For options, a lot os normally 100 units of the underlying asset.

Futures contracts a fraction of the size of a standard futures contract, which makes futures accessible to many more traders and investors. The greater audience often means better liquidity and thus narrower spreads. The first such contract was the S&P 500's e-mini contract in 1997, and small futures contracts now exist for many indices, commodities and currencies.

The amount of money necessary to open a trading account.

The relative position of the current price of an underlying asset and the strike price of a derivative. The term is often used about options contracts. The moneyness of an options contract is one of three states: in the money, at the money and out of the money. The price of a contract is governed by its state of moneyness.

A lagging momentum indicator used by technical traders. The MACD uses two moving averages set to different time periods to gauge a security's price trend direction and momentum. A basic MACD subtracts a 26-period exponential moving average (EMA) from a 12-period EMA, but the periods may be adjusted. The exponential moving average is used because it weights prices so that newer price information weighs more heavily.

A technical indicator used by traders to smooth price movements when charting or adjusting technical indicators, e.g. the MACD indicator. The longer the period chosen for the average, the smoother the line - and the greater the lag compared to the real-time price.

A tool on the MetaTrader4 electronic trading platform that enables traders to manage multiple trading accounts, for example to run several trading strategies or to trade on behalf of others.

A US stock exchange, the world's first electronic stock market and now the world's second- largest stock exchange by market capitalisation (after the New York Stock Exchange).

A stock index that includes the 103 largest(by market capitalisation) non-financial securities listed on the NASDAQ stock exchange i.e. not necessarily US based companies. These two factors differentiate the index from the DOW 30 and S&P 500.

The difference between the previous day's closing price and the last traded price.

The difference between a company's total assets and its total liabilities.

An index of the 225 largest Japanese corporations publicly traded on the Tokyo Stock Exchange.

A computer that holds a copy of a given blockchain and participates in maintenance of the distributed ledger.

Part of the US Bureau of Labor Statistics' monthly Employment Situation Report ("Jobs Report"), the nonfarm payroll reports the total number of jobs added or lost. The report reflects the economic health and counts payrolls except farm work, self-employment, non- for- profit organisations and a few other categories.

See Ask price

Orders where the filling of one cancels the other. For example, when opening a trade, place the two parts of an OCO above and below the current trading price. That way, regardless of which way the market moves, you will either take profit or limit the loss.

The time an exchange opens for trading. Pre-market trading hours begin earlier.

When you have bought (or sold) something, you have an open position. When you make the opposite trade, that is, sell (or buy), you are said to close the position. The profit/loss of a trade is calculated based on the difference between the opening and the closing trade prices.

The number of options or futures contracts that exist on the book of the clearing house (one count involves two parties to the contract, i.e., the buyer and the seller). The number of open positions involving a given contract is useful for determining liquidity, as high open interest usually indicates high liquidity.

An option contract is the option - but not obligation - to either buy or sell an underlying asset. Specifically, the option writer must either buy or sell the underlying asset to the buyer on the specified date at the agreed-upon price IF the buyer chooses to exercise their option. If the option is about to expire, and the price of the underlying asset has not moved favourably to the buyer, the buyer can let the contract expire. The buyer will lose the amount they paid for the option, which is called the "premium". A "put" option gives the holder the right to sell the underlying asset, and a "call" option gives the holder the right to buy the underlying asset. The buy/sell price defined in the contract is called the "strike" price.

Options of the same type (call or put) based on the same underlying asset.

A set time pattern of months when a class of options expires.

The buyer of an option contract.

A call or put option contract