Glossary

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A

Stop-loss is a set to an advance order to sell an asset when it reaches a particular price point. Traders use it to limit loss or gain in a trade.

The ask price is the minimum price that the seller is willing to take for a particular security.

B

A bear market is the phenomenon of prolonged price drops, usually 20% or more from recent events.

The bid price is the maximum price that a buyer is willing to pay for a security. A trade occurs when a buyer is willing to pay the best offer available or a seller is willing to sell at the highest bid.

A bonus is a sum of money added to a person’s wallet as a welcoming reward.

A bull market is a condition of a financial market in which prices are increasing or will probably increase.

Buy and sell trading always involves buying one asset to sell later, hopefully with a higher price. A trader can buy and sell different assets like forex pairs, digital currencies, shares, indices, and commodities. For this trading way, a trader can use several strategies like day trading, position trading, trend trading, scalping trading, and more.

C

A commodity is a physical good that everyone can buy and sell or exchange for products of similar value. Natural resources like oil and essential foods like corn are two common types of commodities. Like other classes of assets such as stocks, they have value and you can trade them on open markets. And like other assets, they can fluctuate in price according to their supply and demand.

D

Day trading is a strategy traders follow where they open and close positions within the same day. That means that each open position will be closed every evening and reopen the following day. This strategy intends to profit from small price fluctuations during a day instead of longer-term market changes.
Digital currency, from the name itself, means it is a currency available only in digital form.
The dividend is the amount of money paid periodically (usually annually) by a company to its shareholders out of its profits.

E

The end-of-day trading strategy is the act of trading near the close of markets. End-of-day dealers become active when it becomes clear that the price will ‘settle’ or close.
An exchange traded fund (ETF) is a type of investment fund that contains a group of securities that tracks an underlying index.
The exchange rate is the report of prices of two currencies.

F

Foreign Exchange or Forex is the act of trading two currencies with each other. For instance, someone can exchange the Euro for the British Pound. Forex transactions take place on the forex market.
Financial derivatives are financial instruments whose value is determined by the price of another asset.
Futures are financial derivative contracts that bind the investors to trade a security at a set future price and date. The contract’s actors must sell and/or buy the particular security at the set price, no matter the security’s price at the closing date.

I

An index fund is an ETF or mutual fund created to track the components of a particular financial market or security.
Indices funds are the plural form of an Index fund.
Inflation is the phenomenon of a continued increase in the average price level of a basic group of goods and services over a certain period.

L

Leverage in the financial trading industry is the act of using borrowed money to increase the potential return of a certain investment. Leverage is the amount of money that a broker lends you to increase the potential return of a particular investment. Leverage trading can enhance your profits but also increase your risk.
A limit order is an order where traders have set a minimum price limit to purchase or sell a security. They can buy or sell the security at the price limit level or above.
Financial liquidity is an indicator that shows how fast a company or individual can change their assets into cash.
In the forex market, investors trade currencies in lots, called micro, mini, and standard. A micro lot of a given currency is 1,000 worth, a mini lot is 10,000, and a standard lot is 100,000.

M

Margin is like collateral that traders need to deposit in their trading account to cover some of the risks they pose for the counterparty. Margin is the amount of money traders invest, and leverage is the amount of money brokers invest.
A mutual fund is a company that pulls together money from many people and invests it in bonds, stocks, or other assets. The combined holdings of different assets the fund owns are known as its portfolio. Each trader in the fund owns shares, which represent a part of these holdings.

N

A news trading strategy​​ is the act of trading based on news and market expectations, both before and after news releases. Trading on news announcements requires a skilled mindset because news can travel very fast on digital media.

P

Pairs are sets of two currencies used together or regarded as a unit in the forex market.
“Pip (percentage in point) is the slightest price move that an exchange rate can make based on foreign exchange market rules. Most pairs are priced out to four decimal places, and the pip change is the last decimal point. ”
Position trading is the act of trading where a trader holds a position for a long time, usually months or years, overlooking minor price changes favoring profiting from long-term trends. Position traders don’t focus on short-term price movements but prefer to rely on more precise fundamental analysis​​ and long-term trends.
Price alert is a tool that helps you stay in touch with the financial market by notifying you when particular security reaches a specified buy or sell price.
A profit target is a set point placed by traders that will alert them to exit a trade when they are in a profitable position.

R

The risk level in the financial trading market shows the uncertainty level or possible financial loss that comes from an investment decision.

S

Scalping refers to a trading strategy where traders profit from small price fluctuations and make a fast and small profit from reselling. In day trading, scalping is a term for a strategy that makes high volumes of small gains.
Shares are small equal units of a company’s capital. A share determines the percentage of ownership in a company or a financial asset. Traders who hold shares of any company are known as shareholders.
Share trading means buying and selling the shares of companies listed on the stock market for a profit.
Spread betting means making a bet on the direction of a security without owning them. Simply put, traders make a bet based on whether they think the market will rise or fall from the time their bet is accepted. Also, Spread Betting enables investors to profit from both bear and bull markets.
The term ‘swing trading’ refers to trading on both sides of any financial market movement. Swing traders buy a security when they suspect that the price will rise. On the other hand, they can sell an asset when they suspect that the price will fall.

T

A trading platform is a software used for trading actions such as opening, closing, and managing market positions through a financial intermediary like an online broker.
A trading strategy is a well-organized strategy used for buying and selling in the financial markets.
A trailing stop is the act of modifying a stop order. Investors can set it at a certain percentage or dollar amount that differs from a security’s current market price.
Trend trading is a trading strategy that aims to profit by analyzing an asset’s momentum in a particular direction. When the price is moving in one specific direction, like up or down, that is called a trend. In this strategy, a trader uses technical analysis to define a trend and only enters trades in the direction of the predetermined trend.

V

Volatility refers to the ability to change rapidly and unpredictably. It is a trait usually related to prices.