Trading Glossary

The seller of an option contract who may be required to deliver (call option) or to buy (put option)the underlying asset.

The "name" of a specific option contract, given by a string of characters where the first three characters usually define the underlying security. The fourth character indicates the expiration month of the contract and the fifth relates to the strike price.

See Options chain

Any table in which a broker or trading platform lists information about an option contracts, i.e. symbol, price, contract size, expiration date etc.

The intent to trade a given amount of a financial instrument. There are many kinds of orders. For example, in Forex a Spot order is executed at the current market price. In contrast, many order types enable the trader to define the market price at which the order will be executed. Still other orders enable the trader to define more complex conditions before the order is active and executed. The most commonly used order types are Take profit and Stop orders (both close the trade at a predefined market price),where the Stop order is often a training stop that enables the trader to lock in profits.

The time interval during which an order is active. Once this limit is reached, the order is deleted if it has not been activated and filled.

A trade that cannot be cleared by a clearinghouse because the two participants in the trade have submitted differing information. Out trades must be resolved before the market opens again.

An options contract is out of the money when the underlying asset is trading at a price that is not favourable to the contract holder. (I.e. a call option is out of the money if the strike price is higher than the price of the underlying asset; and a put option is out of the money if the strike price is lower than the price of the underlying asset.) If an options contract expires when out of the money, it is worthless.

An option with no intrinsic value. I.e. a call option with a strike price higher than the current market value of the underlying asset (or a put option with a strike price lower than the current market value).

The market maintained by securities dealers for issues not listed on a stock exchange. Learn more about over the counter

When you keep a position open overnight (rollover), the position is closed at the daily close rate, and opened again at the new day's opening rate. You also pay (short)or earn (long) the rollover (interest) rate.

See Face value.

When only part of the volume of an order is traded. The opposite is a complete fill.

The central bank of China.

The fee paid to asset, fund or investment managers for their services. The fee can be defined in many ways, e.g. fixed fee, as a percentage of (realised or unrealised) profits, compared to baselines or indices, with or without triggering "hurdles", etc. The various methods aim to align the interest of the asset manager with that of the investor whose funds are being invested.

The smallest increment that the price changes in. Usually the 4th decimal of the quote.

The amount by which the price of a financial instrument exceeds its principal.

The price of an option contract.

The current value of a future payment(or several payments), given a specified interest rate.

A ratio calculated by dividing a company's market value per share with earnings per share. The aim is to enable comparison between companies, and thus to assess investment opportunities. This ratio is very commonly used, and variations exist that average performance over time and attempt to predict companies' future P/E ratios.

The par value of a bond, payable at maturity(excluding accrued interest).

A private key is never shared. It is a unique identifier code that is used as a digital signature for identification during transactions. The other part of an encrypted exchange is the Public Key, which is openly shared.

A public key is shared with others to complete encrypted interactions. To make a cryptocurrency transaction, you share your public key to conduct the transaction. The public key identifies you although your actual name or personal information is not shared.

A leading indicator based on a survey of US supply chain professionals in 19 manufacturing and service industries. Conditions are assessed for inventory, new orders, production, supplier deliveries and employment, and expressed on a scale from 0-100, where scores above 50 reflect an expansion. The greater the distance from 50, the greater the change.

A put option is a contract that gives the holder the right (but no obligation) to sell a specified number of securities at a stated price within a fixed time period. Learn more about put options

The second currency in a currency pair, the one that pays for the trade of the first currency of the pair, called the base currency. For example, in EURUSD, the Euro is the base currency, and you can buy 1 EUR by paying 0,9 USD. In this example, USD is the quote currency.

An assessment of a stock or bond. For stocks, analysts recommend buy/sell/hold. For bonds, rating agencies assess the issuing company's risk of default and assign a credit rating that varies between agencies, but generally goes from AAA to BBB for (low to medium risk) investment grade bonds.

A momentum indicator used by technical traders. This indicator is used to time trades and expresses whether a given financial instrument is deemed overbought or oversold on a scale from 0-100, where movements below 30 (oversold) or above 70 (overbought) might indicate an upcoming trend reversal.

The price at which a central bank repurchases government securities from commercial banks. The rate is used to control the money supply: by raising the repo rate and repurchasing more securities, the money supply is reduced and economic activity is dampened (and vice versa if the repo rate is lowered).

The central bank of Australia.

The central bank of New Zealand.

A price level that the price seems to stay below.

Retail sales are a measure of the total number of (durable and non-durable, including food and retail) sales in a given time period. The number of sales is an indicator of the health of the economy, since consumer spending is generally two-thirds of GDP. The report is a lagging indicator that is usually published within a few weeks of data gathering.

Protecting your capital and ensuring that good trades run long and losing trades are closed.

Robo-Advisor is an electronic asset manager that creates a bespoke investment portfolio for you and monitors it around the clock, continually optimising it to maintain your desired risk level. We develop robots to make our work easier, deliver precise results, increase our performance and, of course, to save time. We have created the Robo-Advisor to help you realise all these goals in your personal asset management activities. Simply specify your risk appetite, select your favourite securities or sectors (optional) and let your robo-advisor do the rest. Its advanced algorithms analyse thousands of securities and generate suggestions for your ideal portfolio. You only pay for the transactions you choose to enter into. Its efficient structure means that management fees, which are calculated by tranches, and on a downward sliding scale, allow you to reap the full benefits of your strategy’s performance. Our Robo- Advisor requires a smaller initial investment than traditional asset management services and is much more cost-effective. It is also fully transparent and gives you complete control on your investments.

When keeping a position open overnight (rollover), you pay or earn interest.

A futures transaction involving either both a purchase and a liquidating sale, or a (short)sale followed by a covering purchase.

An abbreviation of "Standard and Poor's", the S&P 500 is a weighted stock index of the 500 largest US companies by market capitalisation. It reaches across all sectors and thus provides a broad indication of the health of the US stock market. There exist several S&P indices, for example the S&P smallCap600 and the S&P Midcap 400.

Principal stock exchange in Switzerland

A trader who targets small, short-term profits during a trading session. Scalpers rarely hold a position overnight.

Also called "industry". Companies active in the same industry belong to the same sector and often share characteristics, and their stock prices often move in parallel.

A transferable certificate of ownership of investment products such as bonds, stocks and futures and options contracts.

When you sell a currency, you are selling the base currency of the currency pair at the bid price of your broker.

When the seller delivers a security to the buyer and the buyer pays the seller.

The date when a securities buyer pays for a purchase and a seller must deliver the securities. Settlement must usually be made on or before the third business day after the transaction date.

Shares, stocks and equity are three names for a security that represents partial ownership of a corporation. These securities are offered by corporations to raise money, and buyers are entitled to a proportion of the corporation's earnings and assets that corresponds to the buyer's investment. Note that there exist several classes of ownership, which affects what the buyer is entitled to.

To trade short or open a short position means to sell something in the expectation that the price will fall. I.e. when one is bearish, one trades short (sells).

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

Smart contracts are agreements or transactions with that are self-executing. They connect the blockchain database with users - they can be seen as an interface that, given a specific input, results in a specific outcome. Learn more about smart contracts

The current price in the marketplace at which a financial instrument can be bought or sold for immediate delivery.

The difference between the broker's bid price and their ask price, that is, the difference between your price to sell and to buy something. Learn more about spreads

A momentum indicator used by technical traders. The stochastic momentum index (SMI) is considered a refinement of the stochastic oscillator and expresses whether a given financial instrument is deemed overboughtor oversold on a scale from -100 to 100. The SMI can also be used as a bullish/bearish trend indicator.

A directional momentum indicator used by technical traders. The stochastic oscillator compares the closing price of a given financial instrument to the price over a period of time and expresses whether the security is deemed overbought or oversold on a range of 0-100

Shares, stocks and equity are three names for a security that represents partial ownership of a corporation. These securities are offered by corporations to raise money, and buyers are entitled to a proportion of the corporation's earnings and assets that corresponds to the buyer's investment. Note that there exist several classes of ownership, which affects what the buyer is entitled to..

An order placed in case the market does not move in the expected direction, in order to limit trading losses. See also Trailing stop order.

Electronic payment and settlement for e.g. money transfers and online trading.

The price at which the owner of an option can buy or sell (call or put) the underlying security. Also called Exercise price.

A price level that the price seems to stay above.

The exchange of one asset (or liability) for a similar, for example with a different maturity date or coupon rate.

Swiss Derivatives Over-the-Counter trading system.

An index of the 20 largest Swiss corporations publicly traded on the SIX Swiss Exchange in Zurich.

A stock symbol is a one- to four-character alphabetic root symbol that represents a publicly traded company on a stock exchange. Currencies are also indicated by symbols, i.e. EUR for Euro. See Option Symbols for a description of their construction.

US banks must maintain reserves at a Federal Reserve Bank. When banks have a surplus to requirements, they can lend funds to other banks who want to make up a shortfall. The US Federal Reserve sets a target rate for the interest rate applied by banks when they lend each other reserve balance funds, but the banks negotiate the actual rate for the loan between themselves.

Using calculations and graphic indications on price charts to inspire or time trades. Learn more about technical analysis

A calculated graphic indication on a price chart used to inspire or time trades.

The way the extrinsic value of a contract will diminish as the expiration date nears.

The difference between the premium and intrinsic value of an option

Tokens are "sub-currencies" that rest on top of a cryptocurrency blockchain. Tokens can represent anything of value. It is much easier for a project to create tokens (that represent coin value) than a new cryptocurrency (new blockchain and coins). Cryptocurrency blockchains normally offer templates (smart contracts) for creating tokens.

Implementing a trade, actually buying or selling(opening or closing a position).

The period during which an exchange is open for trading.

A trading system is a set of rules that state when and how to trade, also called algorithmic trading. Now that many trading systems are automated, they have become more complex. Automated trading systems (ATSs)can communicate directly with the market and place orders based on rules related to e.g. technical indicators, fundamentals, news and the prices of securities.

A stop order that automatically follows the current price in order to lock in profits. For example, for a long trade with a trailing stop, the level of the trailing stop rises along with the price as it climbs. When creating the order, the trader defines the distance between the market price and the trailing stop level.

A class of bonds in an offering that have the same characteristics.

The date on which the purchase or sale of a financial instrument takes place. This is often different from the settlement date.

The specific security, commodity, index or financial instrument that a derivative (CFD, option etc.)is based on. For example, Tesla is the underlying stock of a Tesla CFD.

A derivative is a financial instrument with a price that is based on a different asset. The underlying asset is the financial instrument on which a derivative's price is based. Underlying assets give derivatives their value, and movements in the price of the underlying asset affects trade in the derivative.

The percentage of a country's workforce that is without a job. The percentage may differ depending on how "workforce" is defined, for example whether it is all people of a given age, or only people who have, for example, actively applied for a job recently. The unemployment rate is a lagging indicator of a country's economic health; a low unemployment rate generally indicates a healthy economy.

A financial instrument that is not listed on an exchange; such instrument are traded in the so- called over-the-counter market.

A bond that is not secured by collateral.

When the a trade occurs at a higher price than the previous trade.

An option is a security that gives the buyer the right (but not obligation) to buy or sell an underlying security, for example an equity, at a given price called the "exercise price" on or before a given "expiry date". There are many different kinds of options, and "vanilla" options are simpler than e.g. exotic types of options.

The size and frequency of price changes.

The number of shares of stock, or currency units, or contracts traded during a particular time period, normally measured in average daily trading volume. Volume is another good indicator of liquidity - higher volume often indicates greater liquidity.

A document stating the existence and availability of a given quantity and quality of a commodity. This document is used to transfer of ownership of commodities in both cash and futures transactions.

A warrant is a derivative similar to an option that gives the buyer the right (but not the obligation) to buy (or sell) an underlying security (often a stock) at a given price called the "exercise price" on or before a given "expiry date". Warrants are issued by the company that is issuing (or buying back) the underlying stock.

A trader who makes trades so large that they affect the pricing of the market. The expression is used often in cryptocurrency trading, where trading volume in some currencies is sometimes limited and thus exposed to large trades.

Limit Orders placed in the market but not yet executed.

The seller of an option. The writer has an obligation associated with the contract to either purchase or sell a specified number of shares at the strike price on or before expiry.

The annual rate of return earned on a financial instrument, as a percentage. I.e. for a stock, divide the annual dividend amount by the price paid for the stock or by the current market price. Calculating a bond yield involves annual interest payments and amortizing the difference between the current market price and par value over the life of the bond.

A bond with no periodic interest payments. The investor receives one payment at maturity (equal to the principal invested plus compounded interest earned to maturity).