Dictionary

A

Annual Percentage Rate (APR)

An annual percentage rate (APR) is the annual rate charged for borrowing or earned through an investment. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction but does not take compounding into account.

Artificial Intelligence (AI)

Artificial intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The term may also be applied to any machine that exhibits traits associated with a human mind such as learning and problem-solving.

Account Balance

Your account balance is the total value of all trading capital net of realized gains and losses.

Assets

An asset is a resource (financial or other) owned by an individual, company or country that has economic value or from which it expects to provide value in the future. Currencies, stocks, bonds, commodities, or any other kind of underlying asset available for CFD trading.

Account Equity

Your account equity is the total value of your account net of unrealized gains and losses.

Asset Management

Asset management is the direction of all or part of a client's portfolio by a financial services institution, usually an investment bank, or an individual. Institutions offer investment services along with a wide range of traditional and alternative product offerings that might not be available to the average investor.

Asset Turnover Ratio

The asset turnover ratio measures the value of a company's sales or revenues relative to the value of its assets. The asset turnover ratio can be used as an indicator of the efficiency with which a company is using its assets to generate revenue.

B

Base Currency

In forex currency pairs like EURUSD, the base currency is the one listed first. In this case, it’s EUR, or euros. The value of the base currency is equal to the value of the pair, which reflects the base currency’s value in relation to the counter currency — in this case USD or US dollars.

Basis

The difference between the price of an asset and the price of its futures contract.

Berkshire Hathaway

Berkshire Hathaway is a holding company for a multitude of businesses, including GEICO and Fruit of the Loom. It's run by chairman and CEO Warren Buffett. Berkshire Hathaway is headquartered in Omaha, Neb., and was originally a company comprised of a group of textile milling plants.

Bernie Madoff

Bernard Lawrence "Bernie" Madoff is an American financier who executed the largest Ponzi scheme in history, defrauding thousands of investors out of tens of billions of dollars over the course of at least 17 years, and possibly longer. He was also a pioneer in electronic trading and chairman of the Nasdaq in the early 1990s.

Blockchain

Blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”).

Bollinger Band

A Bollinger Band® is a technical analysis tool defined by a set of lines plotted two standard deviations (positively and negatively) away from a simple moving average (SMA) of the security's price, but can be adjusted to user preferences. Bollinger Bands® were developed and copyrighted by famous technical trader John Bollinger,

Business Ethics

Business ethics is the study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities. The law often guides business ethics, but at other times business ethics provide a basic guideline that businesses can choose to follow to gain public approval.

Bearish

Sentiment that the market or asset will decrease in price.

Bid/Ask Spread

The difference between the price of the Bid, or sell price of an asset, and that of its Ask or buying price.

Bullish

Sentiment expecting the market or asset to increase in price.

Buyer

The trader who takes a long position in a financial instrument.

C

CFDs

CFDs are the abbreviation of Contracts for Difference, which are financial instruments that allow traders to speculate on the value of any kind of asset — commodities, stocks, bonds and more — without owning the underlying asset itself.

Charts

A visual representation of numerical data over time. In finance, charts can illustrate how the price of an asset moves up and down over time.

Consumer Price Index (CPI)

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Customer Service

Customer service is the direct one-on-one interaction between a consumer making a purchase and a representative of the company that is selling it. Most retailers see this direct interaction as a critical factor in ensuring buyer satisfaction and encouraging repeat business.

 

Commission

The fee that traders pay their broker for executing an order.

Commodities

Any resource taken from the earth or grown naturally upon it and then commoditized — or standardized into divisible, tradeable units. These have intrinsic value for manufacturing and other uses. Popular commodities are oil, livestock, wheat, and gold.

Central Bank

A central bank is the institution that manages the currency, money supply, and interest rates of a state and oversees their commercial banking system. The central Bank of the US is the Federal Reserve and the whilst the German one is called Bundesbank.

Currency Pair

In forex, a pair of currencies that are being traded for one another. The currency pair is defined by the value of its base currency in relation to its counter, or quote currency.

Cryptocurrencies

Digital tokens created with blockchain technology that store value and can be used to transact with online.

D

Demand

In economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given period of time. The relationship between price and quantity demanded is also known as the demand curve.

Demand Elasticity

Price elasticity of demand is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to increase in its price when nothing but the price changes.

Diversification

 

In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. A common path towards diversification is to reduce risk or volatility by investing in a variety of assets.

Deposit


Transaction involving the transfer of funds from one party to another for a particular purpose.

Downtrend

Downward price movement of a security or the overall market over a period of time.

E

Economic Indicator

A report or announcement from a government or polling entity that indicates something about an economy and financial health. Common economic indicators are reports about unemployment, interest rates, GDP, and other metrics of economic performance.

Eurozone

The group of 19 of the 28 EU Member States that combined their coins into a single currency (euro). They still have separate sovereigns but also have a combined central bank (ECB), which manages economic policy issues for them, as a single group.

Earnings Per Share (EPS)

Earnings per share is a company's profit divided by the number of common stock shares it has outstanding. EPS shows how much money a company makes for each share of its stock. A higher EPS indicates more value because investors will pay more for a company with higher profits.

Entrepreneurship

Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business. The people who create these businesses are called entrepreneurs.

Exchange-Traded Fund (ETF)

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, although deviations can occasionally occur.

 

Execution

In trading: Making a Buy or Sale order on behalf of a trader by a broker.

Expiration

Expiration is when a contract ceases to offer the buyer his or her right to purchase the underlying asset.

F

Futures

A contract to exchange cash for assets at a specific time in the future, and at a specific price.

Fundamental Analysis

An analysis based on economic and political data used to determine the future evolution of a financial instrument.

Fiat Money

Fiat money has been defined variously as: Any money declared by a government to be legal tender. State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard. Intrinsically valueless money used as money because of government decree.

Four Ps

The term "marketing mix" is a foundation model for businesses, historically centered around product, price, place, and promotion. The marketing mix has been defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in the target market".

Free Market

In economics, a free market is a system in which the prices for goods and services are self-regulated by the open market and by consumers.

Free trade

Is a largely theoretical policy under which governments impose absolutely no tariffs, taxes, or duties on imports, or quotas on exports. In this sense, free trade is the opposite of protectionism, a defensive trade policy intended to eliminate the possibility of foreign competition

G

Generation X (Gen X)

Generation X is the demographic cohort following the baby boomers and preceding the Millennials. Researchers and popular media typically use birth years around 1965 to 1980 to define Generation Xers, although some sources use birth years beginning as early as 1960 and ending somewhere from 1977 to 1984.

Globalization

Globalization or globalization is the process of interaction and integration among people, companies, and governments worldwide.

Gold Standard

A monetary system that backs its currency with a reserve of gold, and allows currency holders to convert their currency into gold.

Gross Domestic Product - GDP

Measures the value of goods and services produced with in a country. GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.

GDP Deflator

A ratio that is used to account for the effect of inflation on the GDP figure.

GMT

Greenwich Mean Time – a time zone located in outer London that isn’t subject to daylight savings clock changes that is commonly associated with available trading hours.

H

Hedge

A position opened to reduce the risk of another open position, usually in the opposite direction.

Head And Shoulders Pattern

A head and shoulders pattern is a chart formation that resembles a baseline with three peaks, the outside two are close in height and the middle is highest. In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.

I

Index Fund

What Is an Index Fund? An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

Inflation

 

Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over a period of time. It is the constant rise in the general level of prices where a unit of currency buys less than it did in prior periods.

Insider Trading

Insider trading is the trading of a public company's stock or other securities based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information is illegal.

Internal Rate of Return (IRR)

Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero. ... If the IRR of a new project exceeds a company's required rate of return, that project is desirable.

Internal Revenue Service (IRS)

The Internal Revenue Service is the revenue service of the United States federal government. The government agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States.

 

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards (IFRS) set common rules so that financial statements can be consistent, transparent and comparable around the world. ... They specify how companies must maintain and report their accounts, defining types of transactions and other events with financial impact.

Intrinsic Value

The real, underlying value of an asset, and not necessarily its current price.

K

Keltner Channel

Is a volatility based technical indicator composed of three separate lines. 

 

Klinger Oscillator

The Klinger oscillator was developed by Stephen Klinger to determine the long-term trend of money flow while remaining sensitive enough to detect short-term fluctuations. The indicator compares the volume flowing through securities with the security's price movements and then converts the result into an oscillator.

Know Sure Thing (KST)

Know Sure Thing, or KST, is a momentum oscillator developed by Martin Pring to make rate-of-change readings easier for traders to interpret. In a 1992 Stocks and Commodities article, Mr. Pring referred to the indicator as "Summed Rate of Change (KST)," but the KST term stuck with technical analysts.

Know Your Client (KYC)

Know your customer, alternatively known as know your client or KYC, is the process whereby a business verifies the identity of its clients and assesses their suitability, along with the potential risks of illegal intentions towards the business relationship.

 

L

Law of Supply and Demand

The law of supply states that the quantity of a good supplied (i.e., the amount owners or producers offer for sale) rises as the market price rises, and falls as the price falls. Conversely, the law of demand (see demand) says that the quantity of a good demanded falls as the price rises, and vice versa.

Leverage

In finance, leverage is any technique involving the use of debt rather than fresh equity in the purchase of an asset, with the expectation that the after-tax profit to equity holders from the transaction.

Leading Indicator

A leading indicator is an economic gauge that records changes before the overall economy experiences them. They are used to forecast financial and economic trends.

Limit

A Limit, is an order to close a trade when the market moves a specified amount to the advantage of a position.

Liquid Market

Liquid Market - the degree to which market participants are willing to buy and sell at every price level.

Liquidation

The event that a trader’s position is closed out, either by themselves or forcibly, by margin call.

Long

When a trader is long, it means that they’re anticipating the price of an asset to rise, and have opened a position accordingly.

M

Margin

When a broker loans money to a trader so that they can use leverage, allowing them to control a larger amount of trading capital than what’s currently in their account. Traders typically use it to open positions that are many times larger than what would otherwise be possible, exposing themselves to greater potential for returns but also for losses.

Moving Average Convergence Divergence (MACD)

Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security's price. The MACD is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA.

 

Mutual Fund

A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities. Mutual funds give small or individual investors access to diversified, professionally managed portfolios at a low price.

M1

M1 is the narrowest definition of the money supply and includes all coins and currency held by the public, plus traveler’s checks, checking account balances, and other checkable deposits consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions.

M2

The M2 measure of the U.S. money supply consists of M1, plus certain overnight repurchase agreements and certain overnight Eurodollars, savings deposits (including money market deposit accounts), time deposits in amounts of less than $100,000 and balances in money market mutual funds (other than those restricted to institutional investors).

M3

M3 measure of the U.S. money supply consists of M2, plus large-denomination time deposits of $100,000 or more at all depository institutions, term repurchase agreements in amounts of $100,000 or more issued by all depository institutions, certain term Eurodollars (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom and Canada, and balances in money market mutual funds restricted to institutional investors (money funds with minimum initial investments of $50,000 or more).

N

O

Online Broker

A brokerage that provides trading services to its clients over the Internet.

Open Market Operation

The buying and selling of government securities by a central bank (i.e. the Federal Reserve Bank in the U.S.).

Option

The right, but not the obligation, to buy (call) or sell (put) a specific amount of a given stock, commodity, currency, index or debt at a specified price (the strike price) during a specified period of time.

OTC

Over-the-Counter - a security which is not traded on an exchange.

Operating Margin

Operating margin is a measure of profitability. It indicates how much of each dollar of revenues is left over after both costs of goods sold and operating expenses are considered. The formula is for calculating operating margin is: Operating Margin = Operating Earnings/Revenue.

Offset


Opening an equivalent position on the other side of another open trade, so that the asset moving in any direction produces neither a gain nor a loss.

P

Pending Order

A pending order is a position that has not yet been filled. Whether a limit order or a stop order, the position will only be filled when the financial instrument reaches a certain price and has found a buyer, or buyers.

Profit and Loss Statement (P&L)

An income statement or profit and loss account is one of the financial statements of a company and shows the company’s revenues and expenses during a particular period. It indicates how the revenues are transformed into the net income or net profit.

Pip

Pip or "percentage in point," refers to the very last digit of a currency price.

Producer Price Index

PPI; an inflationary indicator published by the U.S. Bureau of Labor Statistics to evaluate wholesale price levels in the economy.

Productivity

Producing or tending to produce goods and services having exchange value.

Q

Quote Currency

In forex currency pairs like USDCNY, the quote currency is the one listed second. In this case, it’s CNY, or Chinese yuan.

R

Rollover

Process of switching the duration of an open position in a contract that is set to expire by rolling the position over into the next contract period. The rollover may be accompanied by a charge when one of the contracts is closed and losses/gains are realized before the new position is opened.

Relative Strength Index (RSI)

The relative strength index is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength. 

 

Range

Range refers to the area between high and low prices a currency pair tends to trade between during a given period of time.

Ratio Spread

An options strategy in which some options are bought and a different amount are sold.

Resistance

The price level in which a currency pair has difficulty trading above. At resistance, price action tends to stall before breaking above, or reverse in the opposite direction.

S

Seller

The trader who takes a short position in a financial instrument.

Spread

The difference between the buy price and the sale price in a market quotation.

Short


Traders who believe that the price of an asset will fall and have opened positions accordingly.

Swap


A swap fee is charged when you keep a position open overnight.

T

Trend

A trend is a prolonged market state that indicates something about the market itself. Price trends, for example, tells traders how the asset’s price is behaving over a specific period.

Turnover

Turnover is another way of saying trading volume. It is the trading volume for an asset, an individual trader, or an entire market.

Technical Analysis

Technical analysis is a means of examining and predicting price movements in the financial markets, by using historical price charts and market statistics. It is based on the idea that if a trader can identify previous market patterns, they can form a fairly accurate prediction of future price trajectories.

V

Volume


Volume can refer to an individual trader’s account, or the entire market for an asset. It is the total dollar amount of investments into that asset made in the time specified.

X

XDXenocurrency

A Xenocurrency is a currency that trades in markets outside of its domestic borders. The term "Xenocurrency" is derived from the prefix "xeno," which literally means foreign or strange. A currency in use outside of the national borders of the issuing country

Y

Yield Curve

The yield curve describes the relation between the interest rates and the maturity dates of debt instruments for a given currency (such as bonds and other related securities.

Z

ZEW Survey - Euro Zone

A German Firm, the Center for European Economic Research (ZEW), queries financial experts throughout Europe every month in order to make a medium-term forecast about Germany 's economic situation