Trading Glossary

Award-winning trading platform by Northvale. The platform includes a personalized, customizable trading interface and tools suitable for all levels of trading, from institutional traders who prefer their own API to private investors. For example, analysis and charts with built-in indicators, overlays and charting tools. Trading inspiration is provided by real-time news feeds and automatic pattern detection. Trade scan be completed using any of a number of order types, using any common computer or mobile OS (Windows, Mac, Linux, iOS, Android).

The practice of distributing cryptocurrency coins or tokens to a cryptocurrency wallet addresses at no cost. Airdrops are used by cryptocurrency projects to promote themselves and increase brand awareness. Recipients are often required to complete certain tasks, e.g. post on cosial media to raise awareness of the project,in order to receive the airdrop. It is best practice to use a secondary email address for airdrops and beware of airdrops that request personal information. Never share your private key.

The All Country World Index (ACWI) developed by Morgan Stanley Capital International (MSCI) provides a benchmark for global performance because it is based on more than 2,700 small-medium- and large cap stocks in 23 developed countries and 24 emerging markets. The index also enables investors to gauge their diversification.

A trading strategy's ability to outperform the market, named after the first letter of the Greek alphabet. Alpha can be calculated in several ways, taking various factors into consideration when benchmarking an investment's performance against the performance of a similar investment. Alpha is often used as one of several risk ratios to determine the risk-return profile of a potential investment.

A currency that rests on its own blockchain (i.e.distributed ledger) that registers transactions using the coin.

An option where the owner can exercise their option at any time before expiry (as opposed to European-style options, which can only be exercised on the expiration date). Stock options are American style; exchange-traded optoins are often American style; and many index options are European style. Both American and European style options are called "vanilla options", in contrast to "exotic options" for which the payoff is calculated differently.

An annual report presents information about a company's fiscal year. It generally includes an introduction, income statement, balance sheet and statement of cash flows. In short, it presents the company’s financial situation.

Exploiting market inefficiencies to make a profit from a price difference. For example, if the same (or similar) asset is traded at different prices in two markets, the trader can buy the cheaper one and instantly profit by selling it again in the higher-priced market. Arbitrage evens out market inefficiencies and ensures fair value pricing over time.

The selling price of your broker,i.e. the price at which you can buy something. The opposite is the broker's bid price.

A financial service. Asset managers invest on behalf of their clients, working to grow the assets while mitigating risk. This service is often available to high net-worth individuals, corporations etc. who wish to outsource the research that underlies strong investments.

Everything a company or person owns, including money, securities, equipment and real estate. Assets include everything that is owed to the company or person. Assets are listed on a company's balance sheet or an individual's net worth statement.

When an options exercise price is the same as the current trading price of the underlying commodity. If a contract expires exactly at the money, it is worthless.

Also called a Market order: buying or selling at the market price, i.e. at whatever price is obtainable when the order reaches the trading floor.

A peer-to-peer (P2P) exchange of cryptocurrency coins to exchange one currency for another without sharing private keys or involving third parties (e.g. an exchange). This is useful because not all cryptocurrencies are available on all exchanges.

The average basic hourly rate for major industries.

The central bank of the United Kingdom.

The central bank of Japan.

The futures contract delivery months with expiration or delivery dates furthest into the future; also used about futures contract delivery months other than the spot or nearby delivery month.

Testing a trading strategy on historic data to see how it would have performed and to optimise the strategy. It is important to test strategies on several sets of data to ensure the strategy is not "over fitted" to one particular data set, i.e. performs well on specific data but will not perform well on other data, incl. future data.

The condition in a futures market in which futures contracts trade at successively lower prices over a given time period, indicating low supply. Also called an inverted market.

The central bank of the United Kingdom.

The central bank of Japan.

The interest rate charged by a central bank when lending or advancing money to comercial banks.

A measure used to compare energy sources. A Barrel of Oil Equivalent is the energy of one barrel of crude oil; by calculating the BOE of various energy sources, investors are able to compare their prices. Also known as the Crude oil Equivalent (COE).

The first currency in a currency pair, and the one you are trading. The other currency is the quote currency. For example, in EURUSD, the Euro is the base currency, and you can buy 1 EUR by paying 0,9 USD.

The difference between the spot price of a commodity and the price of the nearest futures contract for the same commodity.

Down-trending market, a bearish market.

A measurement of the rate of return of a stock or portfolio in relation to the overall market. If the value of a stock moves 2 points every time the market as a whole moves 1 point, the beta coefficient of the stock is 2.

The price your broker is willing to pay, or offer, to buy something that you are selling. If you are trading in lots, remember to multiply the price by the number of units in the lot.

An indicator of the demand for US Treasury securities, the Bid-to-cover ratio is the dollar amount of bids received in a Treasury auction divided by the amount of securities sold.

An option pricing formula developed by F. Black and M. Scholes for securities options. It has since been refined and expanded to futures.

A blockchain is a distributed ledger made up of blocks of data. Each block records many transactions, and the chain of blocks grows continuously as transactions are recorded.

A certification, now called the Certified Estate and Trust Specialist (CES).

A technical analysis tool developed by John Bollinger. The standard Bollinger Bands are two lines plotted, respectively, two standard deviations above and below a Simple Moving Average (SMA) of the security's price. Promissory notes issued by a corporation or government to its lenders, usually with a specified amount of interest for a specified length of time

The record of all active buy and sell orders for a particular financial instrument, e.g. stock.

Orders that are not filled immediately. Also called outstanding orders.

The company that holds your trading account.

Up-trending market, a bullish market.

When you buy a currency, you are buying the base currency of the currency pair at the ask price of your broker.

Contract for Difference (CFD). A derivative that allows traders to trade on the movement of an underlying financial instrument (e.g. a stock, index, or commodity) instead of buying the underlying asset itself. If the underlying asset pays/receives dividend, the CFD trader will as well.

The nickname for the GBPUSD because the price used to arrive via the Atlantic cable connection.

A call option is a contract that gives the holder the right (but no obligation) to buy a specified number of securities at a stated price within a fixed time period

A chart graphic that shows the opening, closing, high and low price in a way that many find easier to read than a bar chart.

Consisting of four indices published monthly or quarterly, the index compares the prices houses are sold at over time in the USA. The index does not include new construction. The national index is published quarterly, the regional indices monthly.

Settling certain futures or options contracts in cash, i.e. by paying money instead of delivering the commodity.

A certification aimed at financial advisors and brokers whose clients are interested in estate planning. The certification is offered by the Global Academy of Finance and Management (GAFM)and requires continued education to uphold the certification.

Using graphs and charts to plot trends of price movements, trading volume and open interest in order to inspire and time trades. See Technical Analysis.

Excessive trading of an account by a broker or administrator of a trading account for the purpose of generating commissions, often while disregarding the interests of the customer.

The fee for a transaction (trade) charged by the clearing house of an exchange.

The entity (usually an exchange) that acts as counterparty to every transaction. The clearing house “clears” every transaction by becoming the buyer to the seller and the seller to the buyer. The purpose is to is to prevent defaults.

The time at which a stock exchange closes to trading(and after-hours trading is conducted).

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.

Taking crypto coins out of circulaiton by sending them to an ‘eater address’. The "transaction" recorded on the blockchain. Coin burning is used to increase and stabilise the value of a crypto coin and any tokens based on that coin.

A basic good (e.g. agricultural products and natural resources such as soy beans and oil) used for commerce that are traded on an authorized commodities exchange. Commodities are the underlying asset of exchange-traded options and futures contracts.

A technical analysis tool developed by Donald Lambert. The CCI is a timing indicator based on momentum that measures the difference between the current price and the historical average price. It is used to assess price trend direction and strength, and thus to time trades. The index is from -100 to +100.

Purchase and sales agreements for commodities for delivery in the future, under standardized terms(e.g. quantities, grades, delivery time, price basis, and delivery methods).

When an order trades all of its specified volume. The opposite is called a partial fill.

A calculation used to compare the average growth rates of different investments. The CAGR smooths out growth rates for a given amount of time and shows the rate that an investment would have grown if 1) it had grown at the same rate every year and 2) the profits were reinvested at the end of each year. This smoothing enables comparisons between securites, or e.g. between a security and an index.

Interest calculated on the initial principal and previously paid interest.

A conditional order specifies conditions that must be fulfilled before the order is placed for execution. The simplest conditional orders are Limit and Stop orders. The specified variables incorporate e.g. price, time, volume, margin cushion, percentage change etc.

The average change in prices (over time) that consumers pay for a predefined "basket" of goods and services. The change in price over time is used to identify inflation and deflation, and to assess the cost of living. The CPI includes housing, food, transportation, medical care, and often other elements depending on the country and calculation method.

The condition in a futures market in which futures contracts trade at successively higher prices over a given time period, indicating low demand.

The month in which delivery is to be made in accordance with the terms of a futures contract. Also called Delivery Month.

The number of the underlying asset that the contract is for. Remember to multiply the price with the number of underlying units; e.g. if an options contract is quoted at EUR 2 and the contract size is 100, then one contract costs EUR 200 (100 x EUR 2.

A derivative that allows traders to trade on the movement of an underlying financial instrument (e.g. a stock, index, or commodity) instead of buying the underlying asset itself. If the underlying asset pays/receives dividend, the CFD trader will as well. CFD trades are closed by making a reverse trade. Often in contrast to their underlying asset, CFDs can be traded using leverage, can be short-sold, day-traded and traded without fees (because the cost is built into the spread).

A corporate bond that may be converted into shares of another security(often the issuing company's common stock) under specific, stated terms.

the two parties necessary for the transaction.

A marketplace that trades only cryptocurrencies. Some accept only cryptocurrencies, others will exchange fiat currency into your chosen cryptocurrency. Bitcoin is offered on most crypto exchanges, and can be the used to buy other cryptocurrencies. Crypto exchanges can be peer to peer, fiat exchange, trading, and decentralised. Some have been known to close abruptly, so exercise due diligence.

Cryptocurrencies are digital or virtual currencies that are encrypted to secure and verify transactions.

In Forex, you are always trading one currency for another. The combination of currencies that you are trading is called a currency pair. For example, EUR USD, where buying Euro and selling US dollars is called "Buying EURUSD".

A kind of interest rate derivative that exchanges the interest (and sometimes principal) in one currency for the interest (and sometime principal) in another currency. Interest payments are exchanged at fixed dates for the duration of the contract. Note: this is different from a Foreign Exchange swap.

A stock index of the 30 largest and most traded German companies on the Frankfurt Exchange in Germany. The 30 companies comprise approximately 75% of the market capitalisation traded on the Frankfurt Exchange.

A chart where the time frame is set to 1 day. In other words, each entry in the chart is 1 trading day apart.

Opening and closing trades within a trading session, without "rolling over" the position to the next day.

A day order is good only for that trading day. If it is not filled during the standard trading session, the order is canceled. (Some platforms support a variation of day orders that are valid until the end of the extended trading session.)

A practice account with your broker where you can practice and become familiar with the trading platform while "trading" with imaginary money.

See Face value.

How much of a currency you can trade at a given price. More volume may be available for trade, but at a different price.

A financial instrument with a value that is based on (derived from) an underlying asset. The price changes of the derivative are based on the price changes of the underlying asset. The most common underlying assets are stocks, bonds, commodities, currencies, interest rates and market indexes. Derivatives can be exchange-traded or over-the-counter (OTC). The contract specifies conditions (especially the dates and values of the underlying commodities) under which payments are to be made between the two parties(buyer and seller)of the contract.

I mean, 1/10 of PIP

You can use the "digit" value in MetaTrader's MQL4 script to e.g. enhance your Expert Advisor. The digits to the right of the pip (i.e. 1/10th of a pip) shows the direction of price movement. For example, for a EURUSD price of 1.09876, where the "7" is a "pip", the "6" is a "digit" in MetaTrader lingo. For two-digit currency pairs such as the USDJPY, the third digit is the "digit". This digit is often shown as a superscript in the price window.

See Cryptocurrency

See Present value

An investment or trading account for which the owner has given written authorisation to someone else, usually a broker or trading advisor, to make transactions for the account without prior approval of the account owner. Also called Managed Account.

A ledger shared by many computers to replicate and validate all transactions using a given cryptocurrency. The record is "distributed" in that there is no central administrator.

Limiting investment risk by buying various types of securities from different companies, and/or representing different sectors of the economy.

The portion of a company’s profits that is paid to people who own that company’s stock. Dividends are paid quarterly or annually. Note that not all companies pay dividends.

Formally the Dow jones industrial Average, this index comprises 30 stocks that represent the market performance of the USA.

An indicator of the manufacturing industry of the USA. Durable goods are items expected to last at least three years, purchased by businesses or consumers. There are in fact two reports one shows new orders placed in the USA for durable goods, and the other shows the manufacturers' inventories, orders and shipments.

A company's after-taxnet income, or profit. Earning scan be used to assess a company's profitability over time, or to compare with other companies. Note that earnings can be defined and calculated in several ways, e.g. before and after tax (EBT and EBIT), interest, depreciation and a mortisation (EBITDA).When comparing, ensure that the same calculation is used for each company.

A short-hand way of comparing the profitability of companies, calculated by dividing a company's profit by the outstanding shares of common stock. The higher the result, the more profitable the company is considered. To compare fairly, ensure that the time period of the stocks are the same when making the calculations. EPS is also used to calculate price- to- earnings ratios (P/E) to compare stock prices.

A computer system that connects buyers and sellers in a market.

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 close the position. The profit/loss of a trade is calculated based on the difference between the opening and the closing trade prices.

Common and preferred stocks represent partial ownership of a company.

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.

The European Central Bank (ECB) is the central bank of the 19 European Union countries which have adopted the euro and administers monetary policy within the Eurozone.

An option where the owner can only exercise their option on the expiration date (as opposed to American-style options, which can be exercised at any time before the expiration date). Stock options are American style; exchange-traded options are often American style; and many index options are European style. Both American and European style options are called "vanilla options", in contrast to "exotic options" for which the payoff is calculated differently.

The first day a stock trades without the right to receive the dividend of the stock. Four dates are involved to explain ex-dividend: the Declaration Date when the company states that it will issue a dividend; the Record Date on which you must be registered as the owner of the stock to receive dividend; the Ex-dividend Date, which is the day after you should have bought the stock in order to be registered as owner on the Record Date (remember, it takes 1-3 days to settle the trade and change the ownership record);and finally, the Payable Date on which the dividend is paid to owners registered on the Record Date. On the ex-dividend date, the price of the stock usually falls by the amount of the announced dividend because the new owner will not receive the announced dividend.

A place in which securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading and the efficient dissemination of price information. They provide companies and governments a platform from which to sell securities to the investing public. In recent times, an exchange can be either a physical location where traders meet to conduct business or an electronic platform.

The value of one currency measured by another currency.