After-Hours Trading
Trading activities conducted outside regular market hours, typically between
16:00 and 20:00 ET in the U.S.
Arbitrage
A strategy where traders exploit market price differences to achieve risk-free
profits.
Ask / Offer
The price at which a trader enters a long position or closes a short position.
Asset
A valuable economic resource owned by individuals, corporations, or governments
capable of generating future benefits.
Asset Class
A category of financial instruments with similar characteristics, such as stocks,
bonds or commodities are governed by the same regulatory framework.
Aussie (Ozzie)
AUD/USD
A commonly used term for the AUD/USD currency pair, known for its liquidity and
connection to commodity markets.
Acquisition
The process by which one company takes control of another, often as part of a
growth or expansion strategy.
ADR (American Depositary Receipt)
A financial instrument enabling U.S. investors to trade shares in foreign
companies
on American stock exchanges.
Alerts
Notifications or reminders set by traders to inform them about a specific price
movements, market conditions, or news events.
Alpha
A measure of an investment’s performance relative to a benchmark, representing
the
value added by active management.
Amortization
The gradual repayment of a loan or the systematic allocation of the cost of an
intangible asset over its useful life.
Annual General Meeting (AGM)
A yearly meeting of a company’s shareholders to discuss financial performance,
elect
board members and vote on key issues.
At the Money
A term in options trading indicating that the option’s strike price is equal to
the
current market price of the underlying asset.
Auction
A trading process where buyers and sellers submit competitive bids and offers,
with
transactions occurring at the most favorable prices.
Automated Trading
A trading method using computer algorithms to execute trades based on predefined
criteria, eliminating the need for manual input.
Averaging Down
An investment strategy where an investor buys additional shares of a declining
stock
to lower the average cost per share of their position.
Back Testing
The process of evaluating a trading strategy using historical chart data to
assess
its performance.
Balance
The total amount of money available in a trader’s account.
Base Currency
The first currency in a currency pair. For example, in EUR/USD, the EUR is the
base
currency.
Basis Point
A unit of measure for interest rates or financial percentages, equal to 1/100th
of
1%, or 0.01%.
Bear
An investor or trader who believes the market or a specific asset will decline.
Bear Market
A market characterized by falling prices, indicating a period of pessimism among
investors.
Bearish
A term used to describe a negative market sentiment or expectation of declining
prices.
Beta
A measure of an asset’s volatility relative to the overall market, used to assess
its
risk compared to the market average.
Bid
The price at which a trader can sell an asset (enter a short position) or close
an
extended position.
Blue Chip Stocks
Shares of well-established, financially stable companies with a long history of
reliable performance.
Bollinger Bands
A technical analysis tool using a moving average and two standard deviations to
identify price volatility and potential overbought or oversold conditions.
Bond Trading
The buying and selling of debt securities, typically issued by governments or
corporations, in exchange for fixed interest payments.
Bonds
Fixed-income instruments representing a loan made by an investor to a borrower,
usually a corporation or government, with periodic interest payments.
Book Value
The net asset value of a company, calculated as total assets minus liabilities,
often
used to assess its intrinsic value.
Bottom Line
A company’s net income or profit after all expenses, taxes, and costs have been
deducted from revenue.
Brent Crude
A benchmark for oil prices, representing crude oil extracted from the North Sea,
widely used to price global oil markets.
Broker
An intermediary facilitating trading by connecting buyers and sellers, typically
earning a commission.
Bull
An investor or trader who believes the market or a specific asset will rise in
value.
Bull Market
A market characterized by rising prices, indicating a period of optimism among
investors.
Buy
Purchasing a financial asset with the expectation that its price will increase.
Buy and Sell
Fundamental trading actions where traders purchase (go long) or sell (go short)
financial assets based on market outlook.
Buy-and-Hold
A long-term investment strategy where securities are purchased and held for
extended
periods, often ignoring short-term price fluctuations.
Buy Limit
An order to purchase an asset lower than the current market price, triggered when
the
market falls to the specified level.
Buy Stop
An order to purchase an asset higher than the current market price, triggered
when
the market rises to the specified level.
Cable GBP/USD
The commonly used term for the GBP/USD currency pair, historically named after
the
transatlantic telegraph cable connecting London and New York.
Candlestick
A graphical representation of price movements showing the open, close, high, and
low
prices within a specified time frame.
Cash Conversion Cycle (CCC)
A metric measuring the time it takes for a company to turn investments in
inventory
into cash flow from sales.
Cash Flow Statement (CFS)
A financial document summarising a company’s cash inflows and outflows over a
specific period.
Call Option
A contract giving the holder the right, but not the obligation, to buy an asset
at a
specified price within a set time frame.
Capital Expenditure (CapEx)
Funds a company uses to acquire, upgrade, or maintain physical assets such as
property or equipment.
Capital Gains
Profits from selling an asset for more than its purchase price.
Capital Gains Tax
A tax levied on the profit from the sale of an asset.
Capital Loss
A loss incurred when selling an asset for less than its purchase price.
Cash Flow
The net amount of cash moving in and out of a business.
Cash Rate
The benchmark interest rate set by a central bank, used as a reference for
monetary
policy and interbank lending.
Chargeable Gain
The taxable profit realized from the sale of an asset.
Chartist
An analyst who predicts market trends by studying historical price charts and
patterns.
Closing Price
The final price of a security at the end of a trading session.
Commodities
Raw materials or agricultural products traded on markets, classified as hard
commodities (e.g., oil, metals) or soft commodities (e.g., wheat, coffee).
Commission
A fee brokers charge for executing trades, typically in addition to the spread.
Concentration Ratio
A measure of market dominance, showing the combined market share of the largest
firms
in an industry.
Contracts for Difference (CFD)
Financial derivatives allowing traders to speculate on price changes without
owning
the underlying asset.
Convexity
A measure of a bond’s price sensitivity to interest rate changes, reflecting how
its
duration changes as rates fluctuate.
Cost of Carry
Expenses associated with holding a financial position over time, such as interest
or
storage costs.
Covered Call
An options strategy combining a long position in an asset with the writing of
call
options on the same asset to generate additional income.
CPI (Consumer Price Index)
An index tracking the average price change consumers pay for goods and services,
used
to measure inflation.
Crystallization
The process of realizing a profit or loss by selling an asset.
Currency Pair
A quotation of two currencies indicating how much of the quote currency is needed
to
purchase one unit of the base currency (e.g., EUR/USD).
Currency Appreciation
An increase in the value of one currency relative to another.
Currency Depreciation
A decrease in the value of one currency relative to another.
Currency Peg
A policy fixing a currency’s value relative to another currency or a basket of
currencies.
Custodian
A financial institution responsible for safeguarding financial assets on behalf
of
firms or individuals.
Dark Pools
Private trading venues where large institutional investors trade securities away
from public exchanges, providing anonymity and minimizing market impact.
Day Order
A type of order that remains active only during the trading day it was placed; if
not executed by the market close, it is automatically canceled.
Day Trader
A trader who executes multiple transactions within the same trading day, aiming
to profit from short-term price movements.
Day Trading
A trading strategy where positions are opened and closed within the same trading
day, with no positions held overnight.
Debt Ratio
A financial metric showing the proportion of a company’s total debt to its
assets, used to assess financial leverage.
Delta
A measure of an option’s sensitivity to price changes in the underlying asset,
expressed as a ratio between 0 and 1 for call options and 0 and -1 for put options.
Depreciation
The gradual reduction in the value of an asset over time due to wear and tear,
obsolescence, or usage.
Derivative
A financial instrument deriving its value from an underlying asset, such as
stocks, bonds, currencies, or commodities.
Digital Options
A type of options contract with fixed payouts, where the trader predicts whether
the price of an asset will reach a specified level at expiry.
Direct Market Access (DMA)
A trading system allowing investors to execute trades directly on financial
markets, bypassing intermediaries like brokers.
Diversification
A risk management strategy spreading investments across various asset classes,
industries, or regions to reduce exposure to market volatility.
Dividend
A portion of a company’s earnings distributed to shareholders as cash or
additional shares, rewarding their investment.
Dow Jones Industrial Average (DJIA)
A benchmark index tracking the performance of 30 major U.S. companies across
various sectors, used as an economic indicator.
Earnings Per Share (EPS)
A company’s net income divided by its number of outstanding shares used to
measure profitability per share.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortisation; a financial
metric showing a company’s profitability before accounting for these expenses.
EBITDAR
Earnings Before Interest, Taxes, Depreciation, Amortisation, and Rent; a
variation of EBITDA that excludes rent expenses to provide insight into operational performance.
ECB (European Central Bank)
The central bank of the Eurozone, responsible for managing monetary policy and
maintaining financial stability for the euro currency.
EDSP
The Exchange Delivery Settlement Price at which a futures contract is settled at
expiry, determined by the exchange.
Economic Calendar
A schedule listing upcoming economic events, news releases, and indicators that
could impact financial markets.
ECN (Electronic Communication Network)
A digital trading platform that connects liquidity providers, such as banks,
brokers, and traders, to facilitate transparent and efficient trade execution.
Equity
The value of a trader’s funds in an account, including unrealized profits or
losses from open positions.
Equity Options
Financial derivatives that give the holder the right, but not the obligation, to
buy or sell a stock at a specified price within a set period.
ETF (Exchange-Traded Fund)
A tradable security that tracks an index, sector, commodity, or asset, offering
diversification and flexibility like a stock.
ETP (Exchange-Traded Product)
A broad category of securities traded on exchanges, including ETFs, ETNs, and
ETCs.
Exchange
A regulated marketplace where financial instruments, such as stocks, currencies,
and commodities, are traded.
Execution
Completing a trade by matching buy and sell orders in the market.
Expiry Date
The date when a financial contract, such as an option or futures contract,
expires and ceases to be valid.
Exotics
Currency pairs that involve at least one less-traded or emerging-market currency,
excluding major currencies like USD, EUR, GBP, JPY, AUD, CAD, CHF, and NZD.
Expert Advisors (EAs)
Automated trading software that analyses market conditions and executes trades
based on pre-set algorithms. TMGM supports third-party EAs on MT4 accounts.
Exposure
The amount of money or capital at risk in an investment or trade, typically
measured by the position size.
Fair Value
The estimated worth of a financial instrument derived from its current market
price, expected future cash flows, and other fundamental factors.
Federal Reserve
The central bank of the United States, responsible for monetary policy, financial
stability, and managing inflation and employment.
Fiat Currency
A government-issued currency not backed by a physical commodity like gold but
rather by the trust and credit of the economy.
Fibonacci Retracement
A technical analysis tool using horizontal lines to indicate potential support or
resistance levels based on key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, and 100%).
Fill
The process of completing a buy or sell order by matching it with a counterparty
in the market.
Financial Instrument
A tradable asset, such as stocks, bonds, derivatives, or currencies, used for
investment or hedging purposes.
Financial Market
A marketplace where assets like stocks, bonds, and currencies are traded,
facilitating economic activity and capital allocation.
Fixed Costs
Business expenses that remain constant regardless of production levels, such as
rent, salaries, and insurance.
Floating Exchange Rate
A currency valuation system where the exchange rate is determined by supply and
demand in the forex market rather than being pegged to another currency.
FOMC (Federal Open Market Committee)
A branch of the Federal Reserve that sets U.S. monetary policy by managing
interest rates and open market operations.
Force Open
A trading option that forces a new position to open, even if an existing position
is in the opposite direction.
Forex (Foreign Exchange)
The decentralized global currency trading market offering high liquidity and
24-hour operation.
Forward Contract
A customized agreement between two parties to buy or sell an asset at a specified
price on a future date.
Fibre EUR/USD
A term used for the EUR/USD currency pair, known for its liquidity and popularity
among forex traders.
Flat
A trading term describing a situation where a trader has no open positions in the
market.
Float
Money temporarily present in two banking system locations due to processing
delays.
Floating Profit/Loss
The unrealized profit or loss of open trading positions based on current market
values.
Fungibility
The property of a financial asset that allows it to be exchanged for another
identical asset without losing value.
Free Margin
The available funds in a trading account for opening new positions, calculated as
Equity minus Used Margin.
Fundamental Analysis
An asset’s intrinsic value evaluated by examining economic, financial, and other
qualitative and quantitative factors.
Futures Contract
A standardized agreement to buy or sell an asset at a predetermined price on a
specified future date, traded on regulated exchanges.
Gamma
A measure of the rate of change in an option’s delta relative to changes in the
underlying asset’s price, indicating the stability of an option’s delta.
GDP (Gross Domestic Product)
The total monetary value of all goods and services produced within a country over
a specific period, used to gauge economic performance.
Gearing Ratio
A financial metric comparing a company’s debt to its equity, indicating its
financial leverage and risk level.
Grey Market
A market where financial instruments, such as stocks or bonds, are traded before
their official issuance or listing on an exchange.
Gross Margin
The percentage of revenue remaining after deducting the cost of goods sold,
calculated as Gross Margin = (Revenue – Cost of Goods Sold) / Revenue × 100.
Gap
A chart pattern indicating a sudden price movement between two trading sessions
with no trading activity.
Gopher USD/JPY
The commonly used term for the USD/JPY currency pair, known for its volatility
and ties to the U.S. and Japanese economies.
Going Long
The act of purchasing an asset with the expectation that its price will increase,
reflecting a bullish market sentiment.
Gross Profit Margin
A measure of profitability showing the percentage of revenue remaining after
accounting for direct production costs.
Growth Rate
The percentage increase of a specific variable, such as sales or earnings, over a
given period, used to assess economic or business expansion.
Handle
A rounded number in a financial quote, representing the whole part of a price,
such as 1.20 in EUR/USD 1.2050, used by traders to discuss price levels easily.
Hawks and Doves
Terms used to describe central bank policymakers. Hawks favor tightening monetary
policy to control inflation. Doves support looser monetary policy to encourage growth and employment.
Hedge
A strategy where a trader holds opposing positions in the same instrument to
reduce risk. For example, holding a buy and sell position in EUR/USD. A fully hedged position means
equal volumes, such as 1 lot Buy EUR/USD and 1 lot Sell EUR/USD.
Heikin-Ashi
A charting method that smooths price fluctuations, making it easier to identify
market trends and potential reversals.
Helicopter Money
An unconventional monetary policy where central banks distribute money directly
to the public to stimulate the economy and increase consumer spending.
High-Frequency Trading (HFT)
A trading method that uses powerful algorithms to execute large orders at
extremely high speeds, often exploiting small price differences for profit.
Hammer Candlestick
A bullish reversal pattern with a small body and a long lower wick, signaling
potential price recovery after a downtrend.
Hanging Man Candlestick
A bearish reversal pattern with a small body and a long upper wick, often
signalling a potential price decline after an uptrend.
In the Money
A term in options trading referring to an option with intrinsic value, such as a
call option with a strike price below the current market price or a put option with a strike price above
the current market price.
Ichimoku Cloud
A technical analysis tool combining multiple indicators to identify trends,
support, and resistance levels, offering a comprehensive view of market conditions.
Index
A measurement of the price performance of a group of shares or assets from an
exchange. For example, the FTSE 100 represents the largest 100 companies on the London Stock Exchange.
Indices
Groups of stocks or other financial instruments used to measure the performance
of specific market segments, industries, or economies.
Indices Trading
The practice of speculating on the price movements of stock indices like the S&P
500 or FTSE 100, often through derivatives such as CFDs or futures.
Inflation
The rate at which the general price levels of goods and services increase over
time, reducing the purchasing power of money.
Instant Order / Execution
A trade execution method in which a trader enters the market at the current
bid/ask price. If the requested price is unavailable, a requote is issued, requiring trader confirmation
to execute at the new price.
Interest
The cost of borrowing money or the earnings from lending it, usually expressed as
a percentage of the principal amount.
Interest Rates
The percentage charged on borrowed money or paid on savings, set by central banks
to influence economic activity and inflation.
Intrinsic Value
The actual worth of an asset or financial instrument based on fundamental
analysis, often used to evaluate options or undervalued securities.
Investment Capital
Funds allocated to generate returns through investment in assets such as stocks,
bonds, or real estate.
Investor
An individual or institution that allocates capital to assets or ventures with
the expectation of earning a profit or income.
IPO (Initial Public Offering)
The process by which a private company offers shares to the public for the first
time, often to raise capital for growth.
January Effect
A market phenomenon where stock prices tend to rise in January, attributed to
increased investor activity after year-end.
Japanese Government Bond (JGB)
A debt security issued by Japan’s government to raise capital.
JPY (Japanese Yen)
The official currency of Japan, or ¥, widely traded and considered a safe-haven
asset. It is the third-most traded currency in the foreign exchange market, after the United States
dollar and the euro.
Key Currency
A dominant global currency used as a reference in exchange rate systems.
Key Interest Rate
The benchmark interest rate a central bank sets, influencing economic activity
and monetary policy.
Kiwi NZD/USD
The commonly used term for the NZD/USD currency pair, named after New Zealand’s
national bird and symbol.
Klinger Oscillator
A technical indicator combining price movements and volume to measure money flow
into or out of an asset.
Knock-In Option
A barrier option that activates only when the underlying asset hits a specified
price level, allowing traders to take advantage of price thresholds while managing risk.
Knock-Out Option
A financial derivative that expires automatically if the underlying asset reaches
a predetermined barrier price, limiting potential losses but also capping gains once the barrier is
breached.
Latency
The time taken between placing an order and its execution. Lower latency is
preferred as it reduces the risk of market movements affecting the trade before execution.
Leverage
A tool that allows traders to control larger positions with a smaller margin
requirement, effectively borrowing funds from the broker. For example, with 100:1 leverage, a trader
only needs €1,000 to trade a 1-lot (€100,000) EUR/USD position. While leverage increases profit
potential, it also magnifies losses.
Liquidity
A measure of how easily a financial instrument can be bought or sold without
impacting its market price. High liquidity indicates strong market volume and ease of trading, while low
liquidity makes trading more difficult and price-sensitive.
Long
A position where a trader is a net buyer of a specific instrument, anticipating
its price will rise.
Loonie CAD/USD
The commonly used name for the CAD/USD currency pair, reflecting Canada’s
national symbol, the loon bird.
Lot
A standardized trading unit for financial instruments. In forex, one lot
typically represents 100,000 units of the base currency. For example, 1 lot long EUR/USD equals buying
€100,000 worth of U.S. dollars.
Majors
The most heavily traded currency pairs in the forex market, considered to drive
global forex activity. These pairs always include the USD and one of the other seven major currencies
(CAD, EUR, GBP, CHF, JPY, AUD, NZD).
Margin
The amount of money required to open and maintain a position. The margin depends
on the type of contract, trade volume, and leverage the trader applies.
Margin Call
A warning issued by a broker when the value of open trades drops below the
required margin. Traders must deposit more funds, close positions, or risk a stop-out, where trades are
forcibly closed.
Margin Level
A percentage measure of how much equity exceeds margin requirements, calculated
as Margin Level = (Equity / Used Margin) × 100.
Market Maker
An individual or entity that provides liquidity by quoting both bid and ask
prices for a financial instrument, ensuring a two-sided market.
Market Order / Execution
A trade at the current bid/ask price. If the requested price is unavailable, the
system executes the trade at the next best price, potentially resulting in negative slippage (worse
price) or positive slippage (better price).
Market Price
The current bid or ask price at which a financial instrument can be traded.
Micro Lot
A trade size equal to 1/100th of a standard lot, or 0.01 lots on trading
platforms, offering greater precision for smaller trades.
Mini Lot
A trade size equal to 1/10th of a standard lot, or 0.1 lots on trading platforms,
suitable for mid-sized trades.
MT4 (MetaTrader 4)
A popular electronic trading platform used by forex brokers, offering advanced
charting, technical analysis, and automated trading tools.
MT5 (MetaTrader 5)
The successor to MT4, offering additional features like multi-asset trading,
improved analytical tools, and expanded timeframes designed for advanced trading needs.
Nano Lot
A smaller lot size in forex trading, representing 100 units of a currency.
NDD (No Dealing Desk) Intervention
A trading execution model where trades are processed automatically without manual
intervention from a dealing desk, ensuring faster and more transparent execution.
Net Income Growth
The change in a company’s net income over a specific period. It indicates
financial health and performance, with positive growth signaling profitability improvements.
Net Profit Margin
A profitability metric calculated as Net Profit Margin = (Net Income / Total
Revenue) × 100. Expressed as a percentage, it shows how efficiently a company converts revenue into
profit.
Net Working Capital
The difference between a company’s current assets and liabilities: Net Working
Capital = Current Assets – Current Liabilities. Measures a company’s ability to cover short-term
obligations and maintain liquidity.
Non-Deliverable Forward (NDF)
A cash-settled forward contract often used in restricted currency trading
markets. Commonly applied in forex trading to manage exchange rate risk in less liquid currencies.
Notional Volume
Represents the total monetary value of a derivative based on its underlying
asset. Used to assess the size and scale of financial instruments in a portfolio or market.
Off Book
Trades conducted outside a regulated exchange, often negotiated directly between
parties, such as over-the-counter (OTC) trades.
Offer
The price at which a trader can buy an asset, also known as the ask price in a
bid-ask quote.
On Exchange
Trades conducted through a regulated exchange where transactions are transparent
and standardized.
On-Balance Volume (OBV)
A momentum indicator that uses volume flow to predict changes in stock prices,
calculated by adding or subtracting volume based on price direction.
OPEC
Organization of the Petroleum Exporting Countries; a group of oil-producing
nations coordinating production policies to stabilize oil markets and influence prices.
Open
The starting price of a financial instrument at the beginning of a trading
session.
Open Positions
Active trades that have not yet been closed or settled, exposing a trader to
market risk.
Option
A financial derivative that gives the holder the right, but not the obligation,
to buy or sell an asset at a predetermined price before or on a specified expiration date.
Options Spread
A strategy involving the simultaneous buying and selling of options on the same
asset with different strike prices or expiration dates to hedge risk or enhance profit potential.
Order Book
A real-time list of buy and sell orders for a financial instrument, showing the
number of shares, lots, or contracts at each price level.
Order
An instruction from a trader to a broker or platform to buy or sell a financial
instrument at a specific price or under certain conditions.
OTC (Over-the-Counter)
A decentralized marketplace where financial instruments are traded directly
between parties through broker-dealer networks, bypassing centralized exchanges.
Out of the Money
An option with no intrinsic value, such as a call option with a strike price
above the current market price or a put option with a strike price below the current market price.
Overexposure
A condition where a trader or portfolio is excessively weighted in a particular
asset or market, increasing risk from adverse price movements.
Operating Income
A company’s earnings after deducting operating expenses such as salaries,
utilities, and rent before accounting for taxes or interest.
Operating Margin
A profitability metric that shows the percentage of revenue remaining after
covering operating costs, used to assess financial health and operational efficiency.
Overbought
A condition where an asset’s price exceeds its fundamental value or typical
trading range due to prolonged buying, often signaling a potential price correction.
Oversold
A condition where an asset is undervalued due to prolonged selling pressure,
potentially indicating a price rebound or upward trend.
Pending Order
An order set to execute at a specified future price. Types include Buy Limit, Buy
Stop, Sell Limit, and Sell Stop. Traders can attach stop loss and take profit levels to pending orders.
Pips
The smallest price movement in forex trading. They represent a standardized unit
of change in a currency pair, typically 0.0001 for most pairs.
Pip Value
The monetary value of a 1-pip movement in a trade. For example, a 1 Lot EUR/USD
trade has a pip value of 10 USD.
Point
A unit equal to 1/10th of a pip. For most forex pairs, it represents the 5th
decimal place (e.g., 0.00001), and for JPY pairs, the 3rd decimal place (e.g., 0.001).
Pre-Market Trading
Trading securities before the official market opens, usually for 1.5 hours before
the opening bell, allowing investors to react to news and events.
Pullback
A temporary decline in asset prices after a period of gains, often viewed as a
healthy market correction within an ongoing trend.
Quantitative Easing (QE)
A monetary policy tool central banks use to stimulate the economy by purchasing
government bonds or other financial assets to increase money supply and lower interest rates.
Quote Currency
The second currency in a currency pair quotation representing the amount required
to purchase one unit of the base currency. For example, in EUR/USD, the USD is the quote currency.
Quote
The most recent price at which an asset was traded, reflecting the agreed-upon
value between buyers and sellers.
Quick Ratio
A liquidity metric measuring a company’s ability to cover short-term liabilities
using its most liquid assets. Formula: Quick Ratio = (Current Assets – Inventory) / Current Liabilities.
Rally
A rapid increase in the price of an asset or market after a period of decline,
often driven by strong buying momentum.
Random Walk Theory
A financial theory suggesting that asset prices move unpredictably and are
unaffected by past movements, making them impossible to consistently predict.
Range
The difference between an asset’s highest and lowest prices within a specific
period, often used to assess market volatility.
Rate of Return
The percentage gain or loss on an investment over a specific period. Formula:
Rate of Return = (Current Value – Initial Value) / Initial Value × 100.
Ratio Spread
An options trading strategy involving an unequal number of long and short
positions to capitalize on expected price movements while limiting risk.
Reserves
Funds or assets set aside by businesses or governments to cover future
obligations, stabilize operations, or meet unexpected expenses.
Resistance Level
A price level in technical analysis where strong selling pressure prevents
further upward movement in the market price.
Reversal
A change in the direction of a trend, where an upward trend turns downward or a
downward trend turns upward, indicating a potential shift in market sentiment.
Rights Issue
A fundraising method where a company offers additional shares to existing
shareholders at a discounted price, often to raise capital.
Risk Assessment
Identifying and analyzing potential risks in an investment or portfolio to
understand their impact and develop mitigation strategies.
Risk Management
A systematic approach to minimizing potential losses in trading through
techniques like stop-loss orders, diversification, and proper position sizing.
Risk Mitigation
Strategies such as hedging or diversifying investments are implemented to reduce
the likelihood and severity of potential losses.
Risk Monitoring
The ongoing process of tracking and evaluating risks in an investment or
portfolio to ensure they remain within acceptable levels.
Rollover
The extension of a financial instrument’s maturity date by closing and reopening
the same position at a future date, commonly used in forex trading.
RNS (Regulatory News Service)
A platform companies listed on the London Stock Exchange use to release
regulatory and financial updates to investors.
ROCE (Return on Capital Employed)
A profitability metric evaluating how efficiently a company uses its capital to
generate profits. Formula: ROCE = EBIT / Capital Employed × 100.
RSI (Relative Strength Index)
A momentum indicator in technical analysis measuring the speed and change of
price movements to identify overbought or oversold conditions.
Scalping
A high-frequency trading strategy focused on making small profits from short-term
price movements.
Sell Limit
An order to enter a short position at a price higher than the current market
price, triggered when the bid price reaches the specified level.
Sell Stop
An order to enter a short position at a price lower than the current market
price, triggered when the bid price reaches the specified level.
Short
A position where a trader is a net seller of a specific instrument, expecting its
price to fall.
Short Selling
A strategy where an investor borrows and sells an asset, aiming to repurchase it
at a lower price to profit from the decline.
Slippage
The difference between the requested price and the actual execution price of a
trade, which can result in negative or positive slippage.
Spike
A sudden and significant market movement over a short period.
Spot
The current market price of a financial instrument, such as a currency or
commodity, for immediate delivery and settlement.
Spread
The difference between a financial instrument’s bid (sell) and ask (buy) prices.
Stop Loss
A tool to limit losses by automatically closing a trade at a pre-set level.
Stop Out
An automated system that closes trades when the Margin Level Percentage falls to
or below 40% to prevent the account balance from going negative.
Stock Splits
A corporate action that increases the number of a company’s shares by reducing
their price per share without changing the overall market value.
Stock Symbol
A unique identifier for a publicly traded company’s stock consisting of letters
or a combination of letters and numbers.
Support Level
A price level where strong buying demand prevents the market price from dropping
further.
Swap Rates
Interest fees charged or earned for holding a trading position overnight, based
on the interest rate differential between the two currencies in a forex pair or underlying assets.
Swissy
The commonly used term for the CHF/USD currency pair.
Take Profit
A tool automatically closing a profitable trade at a pre-set price, executed
using Limit Execution.
Term / Quoted Currency
The second currency in a currency pair quotation. For example, in EUR/USD, the
term currency is USD.
Tick
The smallest price movement for a non-FX instrument. For example, if XAU/USD
moves from 100.00 to 100.01, it has increased by 1 tick.
Trailing Stop
A dynamic stop loss that adjusts with the market while moving in the trade’s
favor but locks in gains if the market reverses.
Technical Analysis
A method of evaluating securities by analyzing price movements, patterns, and
trading volumes to predict future trends.
Time Value of Money
A financial principle stating that money available today is worth more than the
same amount in the future due to its earning potential.
Trading Time Zones
The operational hours of financial markets in different regions, affecting global
trading activity and liquidity.
Trading Hours
Refers to when financial markets are open for trading activities. These hours
vary depending on the asset class and global markets involved.
Trading Volume
The total number of shares or contracts traded for a specific security within a
given period, used to gauge market activity and sentiment.
Trendline
A technical analysis tool that connects significant price points on a chart to
determine the direction and strength of a trend.
Underlying Asset
The primary financial instrument or security that determines the value of a
derivative, such as a stock, bond, or commodity.
Unborrowable Stock
Shares unavailable for lending to short sellers, making traditional short selling
impossible when a company’s stock becomes unborrowable.
Upside
The potential for a positive or favorable price movement in a security, trade, or
market trend.
Uptrend
A market condition characterized by higher highs and higher lows, indicating
bullish sentiment.
Value at Risk (VaR)
A statistical measure estimating the potential loss in value of an investment or
portfolio over a defined period, given a specific confidence level.
Valuation
The process of determining the current worth of an asset or company using methods
such as market comparisons, discounted cash flow, or projected income.
Variable Costs
Expenses that change directly with a company’s production levels, increasing with
higher output and decreasing when production slows.
VIX (Cboe Volatility Index)
A real-time index measuring market expectations for volatility over the next 30
days, commonly called the “fear gauge.”
Volatility
The degree of variation in the price of a financial instrument or market over
time, often used to assess risk.
Volume
The total number of shares, contracts, or lots traded for a financial instrument
during a specific period, indicating market activity and liquidity.
Wall Street
The historic financial district in New York City, home to major stock exchanges
such as the NYSE and NASDAQ, and a symbol of the U.S. financial industry.
Warrant
A financial instrument granting the holder the right, but not the obligation, to
buy or sell an underlying asset at a specified price before expiration.
Weighted Average
A calculation assigning varying levels of importance to data points, ensuring
that more significant values contribute more to the final result.
West Texas Intermediate (WTI)
A grade of crude oil used as a benchmark for oil prices, primarily sourced and
traded in the U.S., known for its high quality and low sulfur content.
Withholding Tax
A tax deducted at the source of income payment, commonly applied to dividends,
interest, or other earnings paid to recipients.
Working Order
A pending trade instruction set to execute when specific conditions, such as a
target price, are met in the market.
XCD (Eastern Caribbean Dollar)
The official currency of eight Eastern Caribbean countries, represented by the
symbol EC$.
Xenocurrency
A foreign currency traded in markets outside its country of issuance, commonly
referred to as a “foreign currency.”
XRT
The ticker symbol for the SPDR S&P Retail ETF, which tracks the performance of
stocks in the retail sector.
Year to Date (YTD)
The period beginning on the first day of the calendar or fiscal year and
continuing up to the current date, often used for performance comparisons.
Year-Over-Year (YOY)
A comparison of financial performance or data between the same periods in
consecutive years, typically expressed as a percentage change.
Yield Basis
A measure of return on an investment relative to its cost or current market
value, expressed as a percentage.
Z-Score
A statistical measure assessing how far a data point is from the mean in a data
set, commonly used to evaluate volatility and risk in trading.
Zakat
An Islamic financial obligation requiring eligible individuals to donate a
portion of their wealth annually to charitable causes, promoting social equity.
Zero Uptick
A scenario where a security is bought at the same price as the previous trade but
higher than before, reflecting incremental price increases.
