Trading Glossary – Your Guide to Key Terms

Get familiar with the essential trading terms to enhance your knowledge and trading skills. Our glossary covers everything from basic concepts to advanced strategies.

Ask Price

The price at which a seller is willing to sell an asset.

Arbitrage

The simultaneous purchase and sale of an asset to profit from differences in price.

Assets

Resources with economic value that can be traded or owned.

Bear Market

A market condition where asset prices are falling.

Bid Price

The price at which a buyer is willing to purchase an asset.

Carry Trade

A trading strategy that involves borrowing at a low interest rate and investing in an asset with a higher return.

Candlestick Chart

A type of chart used in technical analysis to display price movements of an asset.

Commodities

Raw materials or primary agricultural products that can be traded.

Day Trading

A strategy where traders buy and sell assets within a single trading day.

Drawdown

The reduction in the value of an investment from its peak to its trough.

Equity

The value of ownership in an asset or company.

Exponential Moving Average (EMA)

A type of moving average that gives more weight to recent prices.

Fibonacci Retracement

A tool used to predict potential reversal levels in a market based on the Fibonacci sequence.

Futures

Contracts obligating the buyer to purchase an asset at a set price at a future date.

Gap

A break in price levels, often due to news or earnings reports.

Gearing

The use of borrowed funds to amplify potential returns on investment.

Hedging

A strategy to reduce risk by taking an offsetting position in a related asset.

High-Frequency Trading (HFT)

Using algorithms to conduct a large number of trades at extremely fast speeds.

Indicator

A statistical tool used in technical analysis to predict market movements.

Inflation

The rate at which the general level of prices for goods and services is rising.

J-Curve

A graph showing a country's trade balance before and after a currency devaluation.

Jobless Claims

The number of individuals filing for unemployment benefits.

Keltner Channel

A volatility-based envelope used to identify overbought or oversold conditions.

Korean Won

The official currency of South Korea, often traded in Forex markets.

Leverage

The use of borrowed funds to increase the potential return of an investment.

Liquidity

The ease with which an asset can be bought or sold without affecting its price.

Margin

The amount of money required to open and maintain a leveraged position.

Moving Average

A commonly used technical indicator that smooths out price data to create a trend-following indicator.

Net Asset Value (NAV)

The value of an asset or investment fund, calculated by subtracting liabilities from assets.

Naked Options

A type of options strategy where the trader does not own the underlying asset.

Order Book

A record of all buy and sell orders for an asset at different price levels.

Options

A contract that grants the holder the right (but not the obligation) to buy or sell an asset at a predetermined price within a set time frame.

Pip

The smallest price movement in the Forex market, often used to measure changes in exchange rates.

Put Option

A financial contract that gives the holder the right to sell an asset at a specified price within a set time frame.

Quantitative Easing (QE)

A form of monetary policy used to increase money supply by central banks to stimulate the economy.

Quote

The latest price of an asset as quoted by an exchange or broker.

Rollover

The process of extending the settlement date of a trade to the next available period.

Risk Management

The practice of identifying, assessing, and controlling risks associated with trading or investments.

Slippage

The difference between the expected price of a trade and the actual price executed.

Spread

The difference between the buy (ask) and sell (bid) price of an asset.

Stop-Loss

An order to close a position at a specified price to limit losses.

Take Profit

An order placed to sell an asset when it reaches a certain price to lock in profits.

Technical Analysis

The study of price movements and historical data to predict future market behavior.

Unleveraged

A term referring to an investment or position that does not use borrowed money.

Underlying Asset

The asset that a derivative or option is based on.

Volatility

The degree of variation in the price of an asset over time.

Volume

The number of shares or contracts traded within a specified period.

Whipsaw

A term referring to a situation where a market moves in one direction and then quickly reverses.

Warrants

Financial instruments that allow holders to buy or sell an asset at a specific price before a certain date.

XAU/USD

The ticker symbol for the price of one ounce of gold in terms of U.S. dollars.

XRP

A popular cryptocurrency also known as Ripple.

Yield

The income return on an investment, often expressed as a percentage of the investment’s cost.

Yield Curve

A graphical representation of interest rates for bonds of varying maturities.

Zero-Coupon Bond

A bond that does not pay interest but is traded at a deep discount, maturing at its face value.

Z-Score

A statistical measurement used to predict the likelihood of a company’s bankruptcy.