A
Acquisition – The process of obtaining or taking over another company by purchasing most of the company or the entirety of the ownership stake.
Aggregate Demand – Total amount of goods and services demanded in the economy at a given overall price level at a given time.
Aggregate Supply – Total supply of goods and services produced within an economy at a given overall price level at a given time.
Alpha – The benchmark index of a portfolio, when the alpha is greater than zero, it means that an investment outperformed, when the alpha is lower than zero, it means that the investment has underperformed.
Amortisation – The action or process of gradually writing off the initial cost of an asset. It is a form of loan repayment schedule with a specific maturity date.
Arbitrage – The simultaneous purchase and sale of the same asset (stock, commodity, or currency) in different markets to profit from differences in the asset’s listed price.
Ask – The ask price is the minimum price that a seller is willing to take for security.
Asset Classes – Asset classes are groups of investments that possess similar properties or behave in a similar manner in the marketplace. (Commodity, futures, financial derivatives, real estate)
Asset – Securities are held by a firm for the purpose of reselling to make a profit.
At The Money – A situation where the strike price and underlying security price are identical.
Auction Market – Markets where buyers enter competitive bids and sellers submit competitive offers at the same time. Upon agreement bids and offers are matched.
Automated Trading – Automated trading allows traders to establish specific rules for both trade entries and exits that, once programmed, can be automatically executed via a computer.
B
Balance – The amount of money held in an account
Bar Chart – A visual or graphical depiction of open, high, low, and close prices of a security over time.
Base Currency – A term for forex pairs, the base currency is the first currency that appears and is quoted in relation to another.
Base Rate – The base rate refers to a reference interest rate that a central bank uses when lending to a borrower, it is also the amount they will charge to lend money to commercial banks.
Basis Point – Basis point (BPS) refers to a common unit of measure for interest rates and other percentages, it is equal to 1/100th of 1% or 0.01% in decimal point.
Bear Market – Bearish markets are used to describe a declining market price in stocks, forex, or other markets.
Beige Book – The Beige Book is a report published by the Federal Reserve Bank eight times per year.
Benchmark Interest Rate – Benchmark interest rates are publicly accessible rates that reflect the cost of borrowing money in different markets.
Bid – The bid is also known as the ask, a price that a seller is willing to accept on the trade.
Bilateral Netting – Bilateral netting is when two parties combine their swaps into one master swap instead of many across the parties.
Blue-Chip Stocks – A Stock corporation with a strong history of performance, it usually consists of highly respectable and esteemed companies.
BOE – An acronym for the Bank of England
Bollinger Bands – A statistical chart characterizing the prices and volatility over time of a financial instrument or commodity.
Bond Trading – OTC traded treasury, savings, municipal, corporate, and agency are considered bond trading.
Bonds – Unit of corporate debt issued by companies and securitized as tradeable assets.
Book Value – The value of an asset according to its balance sheet account balance
Book-To-Market Ratio – The comparison of a company’s book value to its market value. It is calculated by dividing the company’s stock price per share by its book value per share.
Bottom Line – A company’s earnings, profit, net income, or earnings per share, it describes the relative location of the net income figure on a company’s income statement.
Brent Crude – Brent Crude is a type of crude oil made from a blend of crudes. It is usually used to refer to ICE (Intercontinental Exchange) Brent Crude Oil futures contract.
Brexit – Brexit refers to the exit of Britain from the European Union, it is the combination of the words Britain and Exit.
Broker – A broker is an individual or firm that acts as an intermediary between an investor and a securities exchange.
Bullish Market – Bearish markets are used to describe an increasing market price in stocks, forex, or other markets.
C
Cable – “Cable” is a slang term for the exchange rate between the U.S dollar (USD) and the British pound sterling (GBP)
Call Option – For a buyer, the call option buyer has the right, without any obligation, to buy the underlying asset at a contracted strike price, within a specific period of time.
Cash Flow – The movement of money through the taking in or withdrawing out of a company.
Central Bank – A financial institution that regulates the monetary policy of a country.
Chargeable Gain – A British term for the increase in an asset’s value between the time it is purchased and the time it is sold, which becomes subject to capital gains tax.
Chartist – A job title for someone who is a technical analyst using overall patterns instead of fundamentals. They look for patterns such as support and resistance levels in securities to trade and profit from them.
Closing Price – The last price at which a stock trades during a regular trading session.
Commission – The charge levied by an investment broker for making trades on a trader’s behalf.
Commodity – A raw material or economic good, usually used to refer to the underlying asset of a future.
Contango and backwardation – Contango is used to explain a situation where the futures price of the commodity is higher than the spot price. Backwardation is where the forward price of a futures contract is lower than the spot price.
Contracts for difference – A contract for difference is also known as a CFD, it is a financial contract where the settlement between the open and closing trade prices is cash-settled. The buyer will pay if the closing prices are lower and the seller will profit if the closing price is higher, one party of the CFD will profit from the price difference.
Convexity – The measure of curvature in the relationship between bond prices and bond yields.
Cost of carry – The amount of additional money or the cost that a trader will incur from maintaining a position.
Covered call – A covered call position involves the simultaneous purchase of the underlying share with the sale of a call option. The call writer has covered or hedged his position by buying the underlying asset.
CPI – The consumer price index (CPI) is a percentage value that shows the overall change in consumer prices of a certain set amount of goods and services over time. It is used to track inflation or deflation.
Credit default swap – A contract or agreement between two parties, in which a buyer purchases protection from a seller, and the seller insures the losses from the borrower for an agreed period of time.
Credit spread – The difference between bonds and another debt security of the same maturity but different credit quality.
Crystallization – The selling of security to realize capital gains or losses.
Currency appreciation – The increase in the value of one currency against another foreign currency.
Currency depreciation – The decrease in the value of one currency against another foreign currency.
Currency futures – Currency futures (also called forex, foreign exchange, or FX futures) are exchange-traded futures contracts to buy or sell a specified amount of a particular currency at a set price and at a future date.
Currency options – Options contract that gives the buyer the right, but not the obligation, to buy or sell a certain currency at a specified exchange rate on or before a specified date.
Currency peg – A policy in which a national government or central bank sets a fixed exchange rate for its currency with a foreign currency or a basket of currencies to stabilize the exchange rates.
Current ratio – A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.
D
Day order – An instruction or stipulation placed by a buyer on an order to buy or sell an asset at a specific time of the day.
Day trading – The buying and selling of a financial instrument on the same day.
Dealer – An individual who engages in dealer trade buys and sells securities as part of their regular business.
Dealing Center – A company that provides access to financial markets by creating clients’ applications for opening currency position
Debentures – An unsecured bond in American terms OR a bond secured by company assets in British terms.
Delta – A ratio that compares the change in the price of an underlying asset with the change in the price of a derivative or option.
Deposit – The amount of money put into an account to open a position.
Derivative – A contract between two or more parties that is based on an underlying financial asset.
Divergence – A divergence is used to describe a situation where the price and indicators show different things.
Downtick – A decrease in stock by at least 1 percent or the sale of a currency at a price lower than the previous sale.
Double Top – A pattern of technical analysis, displaying the situation when the rate goes up to a certain level twice and then descends.
Double Bottom – A pattern of technical analysis indicating the situation when the rate goes down to a certain level twice and then goes up.
DFB – Daily funded bet (DFB) is a term used in spread betting to describe a position that remains open until an individual decides to close it.
Digital options – A form of option that allows traders to manually set a strike price.
Dividend – The distribution of a company’s earnings to its shareholders and is determined by the company’s board of directors.
E
Earnings per share – Also known as EPS, it is a company’s net profit divided by the number of common shares it has outstanding.
EBITDAR – An acronym for earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs.
ECB – Acronym for the Europe Central Bank
Economic Indicator – Measures of macroeconomic performance such as gross domestic product, consumption, investment, and international trade.
Euro Short-Term Rate (ESTR) – The euro short-term rate (€STR)
Exchange – A fair and orderly marketplace where securities, commodities, derivatives, and other financial instruments are traded.
Exchange Rate – The rate at which one currency is exchanged for another currency.
Exchange delivery settlement price (EDSP) – The price at which exchange-traded derivative contracts are settled.
Execution – The fulfilment of a buy or sell order.
Expiry date – The point in a trade in which a position automatically closes.
Exposure in finance – Exposures are the amounts that an investor stands to lose in an investment.
F
Fair value – The sale price agreed upon by a willing buyer and seller.
FCA – Financial Conduct Authority is a financial regulatory and legal authority in the United Kingdom.
Federal Reserve – The Federal Reserve is a U.S central banking system in charge of setting interest rates, managing the money supply, and regulating financial markets. It is also named “the Fed”.
Fiat currency – Fiat currency or fiat money is a government-issued currency that is not backed by a physical commodity, it derives its value based on the government that issued it. For example, modern paper currencies such as the Sing dollar, and the euro are all examples of such currencies.
Fibonacci retracement – A technical analysis method for determining support and resistance levels.
Fill – A report of the buying or the selling of securities in the market, which includes the prices, timestamps, and volume of order.
Financial instrument – A real or virtual document representing a legal agreement involving any kind of monetary value.
Financial market – The marketplace where the trading of securities such as commodity futures occurs.
Fixed costs – Any number of expenses, including rental lease payments, salaries, insurance, utility bills, and loan repayments.
Float Profit/Loss – Amount of profit or loss on currently opened positions that is not fixed and is subject to change.
Floor Broker – An independent member of an exchange who is authorized to execute trades for clients on the exchange floor.
FOMC – The Federal Open Market Committee, a 12-member committee (board of governors of the federal reserve system, president of the federal reserve bank, and reserve bank presidents.) that makes key decisions about interest rates and the growth of the United States money supply.
Forex – Forex is a shorter form of the term Foreign Exchange; it is the location for the trading of currencies and the comparing of a certain currency against another.
Forward contract – A contract signed between two parties to buy or sell an asset at a specified price on a future date.
Fundamental analysis – A method of determining a stock’s real or “fair market” value.
Funding charges – The fees levied on leveraged positions that are held open overnight.
Futures – The derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price.
Futures contract – A contract between two parties where both parties agree to buy and sell a particular asset of a specific quantity at a predetermined price in the future.
G
G7 – A political forum consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The group is in charge of discussing major global issues in vast areas from trade to economics and climate change.
Gamma in trading – The rate of change in an option’s delta per 1-point move in the underlying asset’s price
GDP – Gross Domestic Product is the monetary measure of the market value of all the final goods and services produced in a specific time by countries.
Gearing ratio – A group of financial metrics that compare shareholders’ inquiry to company debt in various ways to assess the company’s amount of leverage and financial stability.
Greeks – A set of calculations to measure different factors that might affect the price of an options contract.
Greenback – Dealer’s slang for the U.S dollar
Grey market – An unofficial market for financial securities that are not illegal.
Gross margin – Gross margin is net sales less the cost of goods sold (COGS). In other words, it is the amount of money a company retains after incurring direct costs associated with producing the goods it sells and the services it provides.
Guaranteed loss order – Protect your positions by guaranteeing to exit your trades at the exact price you specify, regardless of market volatility.
H
Handle – The whole number of a quote price, without the decimals included.
Hawks and doves – “Hawks” are used to refer to advocates of an aggressive foreign policy based on strong military power, while “doves” try to resolve international conflicts without the threat of force.
Hedging – A risk management strategy employed to offset losses in investments by taking an opposite position in a related asset.
Hedge Ratio – A hedge ratio compares the value of a position protected using a hedge with the size of the entire position itself.
Heikin Ashi – “Average bar” in Japanese, it is used in conjunction with candlestick charts when trading securities to spot market trends and predict future prices.
Helicopter money – An unconventional monetary policy tool aimed at bringing the economy back on track.
High/Low – Used to represent the highest and lowest currency prices during the current trading day.
High-frequency trading – A type of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools.
I
Ichimoku Cloud – A collection of technical indicators that show support and resistance levels, as well as momentum and trend direction.
IFO- Institute of Economic Research from Munich, a German economic think-tank that analyses economic policy.
In The Money – ITM refers to an option that possesses intrinsic value.
Index – A measurement of the price performance of a group of shares from an exchange
Indicator Only – Quotes that contain information which is not used for opening currency positions.
Indices trading – An indicator or measure of something. A statistical measure of change in a securities market.
Industrial Production – The real output or levels of production and capacity in the manufacturing, mining, electric, and gas industries, relative to a base year.
Inflation – The general increase or rise of prices of goods and services in an economy over time.
Initial Margin – The initial margin is the percentage of the purchase price of a security that must be covered by cash or collateral when using a margin account.
Instant Execution – The execution of an order at a trader’s requested price, or not at all.
Intraday – Buying and selling of securities on the same day before the market closes.
Interest – Any interest incurred in connection with acquiring or holding financial instruments that provide equity-like exposure to the Company.
Interest Rates Derivatives – Standardised contract traded on a recognized stock exchange.
Intrinsic value – The measure of what an asset is worth.
Investment appraisal – Used by firms and investors primarily to determine whether an investment is profit-making or not.
IPO – Initial public offering is the process by which a private company can go public by sale of its stock to general public.
K
Knock-In Option – A type of contract that is not an option until a certain price is met.
Knock-Out Option – A type of contract that expires when the underlying asset price exceeds or falls below a specified price
L
Leading Indicators – A future indicator of positive trends for traders.
Leverage – The use of borrowed capital to undertake an investment in securities.
Leveraged products – Financial instruments that enable traders to gain greater exposure to the market without increasing their capital investment
Liabilities – A financial obligation of a company that results in the company’s future sacrifices of economic benefit to other entities.
Limit order – An order from a client to buy or sell at a specific price.
Limit up / limit down – A limit up or limit down is used by regulators of the securities market to set a maximum or minimum on prices so that volatility will not reach extreme levels.
Liquidity – The level of efficiency or ease with which an asset or security can be converted into ready cash.
London Interbank Offered Rate (LIBOR) – A benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.
Long position – Holding a long position refers to holding on to security for sale over a longer period, it is usually done when prices are anticipated to increase.
Lot – A unit of measurement of a financial instrument, usually represented as 100,000 units.
M
M2 Money supply – The measure of the money supply that includes cash checking deposits, and easily convertible near money.
Maintenance margin – The minimum equity an investor must hold in the margin account after the purchase has been made.
Margin call – A margin call is initiated by the broker when the value of an investor’s margin account falls below the broker’s required amount.
Margin – Trading on margin means borrowing money from a brokerage firm to carry out trades.
Margin deposit – The initial amount of money a trader needs to put down to open a leveraged trading position.
Market capitalization – The total value of all a company’s share of stock
Market data – Data on a range of information including the price, bid/ask, and market volume.
Market maker – An individual participant or member firm of an exchange that buys or sells securities for its own account.
Market order – An order to buy or sell a stock at the market’s current best available price.
Market value – Calculated by multiplying the number of its outstanding shares by the current share price.
Merger – An agreement that unites two existing companies into one new company.
MetaTrader – A platform for traders to perform technical analysis and trading operations.
Modified internal rate of return (MIRR) – A financial measure of an investment’s attractiveness.
Moving average convergence/divergence (MACD) – A tool or an indicator used in technical analysis to show the relationship between two moving averages of a security.
Moving average – A simple technical analysis tool that smooths out price data by creating a constantly updated average price
Multilateral trading facilities – A European term for a trading system that facilitates the exchange of financial instruments between multiple parties.
Multiplier effect – A phenomenon whereby a given change in a particular input such as government spending causes a larger change in output, such as gross domestic product.
N
Negative balance protection – A safety net that ensures that traders do not lose more than the balance on the account.
Net position – The value of the current position subtracting the initial cost of setting up the position.
Net change – The difference between a prior trading period’s closing price and the current trading period’s closing price for given security.
Net income – The excess or sales minus the cost of purchase, expenses, taxes, interests, or costs incurred from certain security.
Non-current assets – A company’s long-term investment that reinvestments are not easily converted to cash or are not expected to become cash within an accounting year.
O
Offer – A buyer’s price.
Old Lady – Dealer’s slang name for the Bank Of England.
On Exchange – A trade that is taking place directly on the order book of an exchange.
On-balance volume – A technical indicator of momentum, using volume changes to make price predictions.
OPEC – Organization of the Petroleum Exporting Countries is an intergovernmental organization that consists of 15 member countries.
Open – A transaction that is ongoing is an open trade.
Open position – Investing in any established or entered trade that has yet to close with an opposing trade.
Options – A form of security where it gives the buyer the right – but not the obligation – to buy or sell the underlying asset at a specific price on or before a certain date.
Options spread – Options spread is an options trading strategy in which a trader will buy or sell multiple options of the same type – either call or put – with same underlying asset.
Order book – An e-list of buy and sell orders for traders to check the price levels of certain security or financial instrument.
Order – A set of instructions or a request to buy or sell an asset by a trader.
OTC trading – Securities that are not listed on a major exchange but rather, traded through two parties, without the supervision of an exchange.
Out of the money – OTM is a way to describe an options contract that only possesses extrinsic value.
Overexposure – Overexposure refers to taking on a high risk of losing money from putting in too much of it.
P
P/E ratio – The dollar amount an investor can expect to invest in a company to receive $1 of that company’s earnings.
Parent company – A company with subsidiaries that are wholly or partially owned by the parent.
Parity – The equal value of two currencies or an exchange rate of 1.
Pip – Percentage in point is usually used in the forex market which is the smallest whole unit price move that an exchange rate can make.
Position – The amount of a security, asset, or property that is owned by some individual or other entity.
Power of attorney – The legal acknowledgment to pass another person the ability to act on your behalf including taking over your trading accounts.
PPI – Producer Price Index, which measures the change in the price of finished goods and services sold by producers.
Price Quotation – The recent sale price of any asset traded on the market.
Profit and loss statement – P and L is a commonly used term in finance as a statement that summarizes revenue, costs, expenses, and other values during a specified period usually in a fiscal year.
Pullback – A pause or moderate drop in a stock or commodities pricing chart from recent peaks that occur within a continuing trend.
Purchasing managers index – PMI is a measure of the prevailing direction of economic trends in manufacturing.
Put option – A contract giving the option buyer the right, but not the obligation, to sell a specified amount of an underlying security at a predetermined price within a specified time frame.
Q
Quantitative easing – A technique that uses mathematical and statistical modeling, measurement, and research to understand behaviour.
Quote currency – Also known as the counter currency, it is the second currency in both a direct and indirect currency pair and is used to determine the value of the base currency.
Quote price – The price at which an asset was last traded.
R
Rally – A sustained increase in the price of bonds or indexes.
Random walk theory – A mathematical model of the stock market that posits that the price of the securities moves randomly.
Range – A trading range occurs when a security trades between consistent high and low prices of a security within a given period of time.
Rate of return – A rate of return is the net gain or loss of an investment over a specified time, expressed as a percentage of the investment’s initial cost.
Ratio spread – A strategy to hold an unequal number of long and short or written options.
Reserves – The liquid assets set aside for future use by an individual.
Return on equity (ROE) – The measure of a company’s net income divided by its shareholders’ equity.
Reversal – The change of the price trend from going up to down or vice versa
Rho – The rate at which the price of derivative changes relative to a change in the risk-free rate of interest.
Rights issue – An invitation to existing shareholders to purchase additional new shares in the company
Risk management – The processes that are put into place when trading to help keep losses under control and keep a good risk/reward ration.
Risks – Risk is the potential that your chosen investments may fail to deliver your anticipated outcome.
RNS – The RNS publishes company results, shares issues and any changes in a company’s board of directors.
ROCE – A financial ratio that can be used to assess a company’s profitability and capital efficiency.
Roll-over – A rollover is an action taking place at end of the day, where all open positions with value date equal SPOT, will be rolled over to the next business day.
RSI (Relative Strength Index) – A momentum oscillator that measures the speed and change of price movements.
Run on the pound – A situation of increased nervousness towards the value of sterling and sterling-linked assets, including UK government bonds.
S
Scalping – A trading style that specializes in profiting off of small price changes and making a fast profit off reselling.
SEC – U.S Securities and Exchange Commission which is an independent agency of the United States federal government, it is in charge of the nation’s securities industry and it monitors transactions as well as the activities of financial professionals.
Sectors definition – An area of the economy in which businesses share the same or related business activity
Secured Overnight Financing Rate (SOFR) – The benchmark interest rate for dollar-denominated derivatives and loans that is replacing the London Interbank Offered Rate (LIBOR)
Share buyback – When a company buys its own outstanding shares to reduce the number of shares available on the open market.
Short – A short position is the selling of security on the open market and purchasing it later at a lower price.
Slippage – The difference between the expected price of a trade and the price at which the trade is expected.
Smart order router – SOR is an automated process used in online trading, which follows a set of rules that look for and assess trading liquidity.
Socially responsible investing – A form of investing that aims to generate both social change and financial returns for an investor.
Spot – Purchase or sale of a foreign currency, financial instrument, or commodity for instant delivery on a specified spot date.
Spot price – The spot price is the current price in the marketplace at which a given asset – such as a security, commodity, or currency – can be bought or sold for immediate delivery.
Spread betting – A bet based on the prices of an index or commodity.
Spread – A spread is an act of purchasing one security and selling another related security as a unit.
Sterling Overnight Interbank Average rate (SONIA) – The average of the interest rates that banks pay to borrow sterling overnight from other financial institutions and other institutional investors.
STIBOR – Stockholm Interbank Offered Rate is a reference rate that shows the average of rates at which Swedish banks are willing to lend to one another without collateral.
Stop order – A basic order by a trader to trigger a limit order when a certain price is reached.
Straddle – An options strategy involving the purchase of both a put and call option for the same expiration date and strike price on the same underlying security.
Strike price – A set price at which a derivative contract can be bought or sold when it is exercised.
Super-contango – This is when the spot piece for a commodity is trading dramatically below the futures price.
Support level – A support level is a price at which the price of an asset decreases and heads a downtrend, it eventually reaches a point where prices do not fall below for a period of time.
T
Tangible assets – An asset that has physical substance such as machines, and office furniture.
Technical analysis – A trading discipline employed to evaluate investments and identify trading opportunities in price trends and patterns seen on charts.
Tick – A minimum movement up or down of the price of a security.
Time decay (theta) – The theta measure is part of a group known as the Greeks, it is used in options pricing to quantify the risk that time poses for traders trading an option as time passes.
Time value – The portion of an options’ premium that is attributable to the amount of time remaining until the expiration of the options contract.
Tom-next – A short form for tomorrow-next usually used in forex to describe the simultaneous buying and selling over two separate business days.
Trade Balance – The net sum of a country’s exports and imports of goods without considering all financial transfers, investments and other financial components.
Trading floor – A literal floor or an area of a business where assets are bought and sold.
Trading plan – A clear trading plan for how and when to trade is a crucial component for professional and institutional traders.
Trailing stop orders – Modification of a typical stop order that can be set to follow a percentage or amount to enhance the efficiency in comparison to a typical stop loss order.
U
Uptick – An uptick is an increase in a stock’s price by at least 1 cent from the previous trade.
V
Value at risk (VaR) – A statistic that quantifies the extent of possible financial losses within a firm, portfolio or position over a specific time frame
Variable cost – A corporate expense that changes in relation to either production volume or the amount of services provided.
Vega – Another member of the Greeks that is used to measure the amount of increase or decrease in an option based on the change in implied volatility.
Volatility – Prices or returns that are scattered over time for a particular asset or financial product.
Volume – Usually used in the futures and forex market to refer to the total number of contracts exchanged between all parties during trading hours of a given day.
VWAP – The measurement that shows the average price of a security adjusted for its volume.
W
West Texas Intermediate (WTI) – A crude oil that is thought to be one of the main global oil benchmarks.
Working Order – An order used by traders for brokers to execute a trade when an underlying asset reaches a specific price.
Y
Yield – The earnings generated and realized on an investment over a particular period of time.
