Ask Rate – the lowest price at which a seller agrees to sell a financial asset.
Asset – the underlying instrument essential for determining a contract. It can be a precious metal, stock, currency pair or bond.
Asset Allocation – a strategy that segregates investment portfolio over various asset classes with the intention of maximizing returns and also minimizing risks.
At the Money – when a trade reaches the break-even point, the trader neither profits nor loses.
Base Currency – the first currency in a currency pair quotation. The base currency always equals ‘1’ while the quote or counter currency reflects the value of the base currency.
Bear – a trader who believes that the price of an asset will fall.
Bear Market – the financial market in which asset prices are falling.
Bid – the selling price of a particular financial asset.
Blockchain – is essentially a ledger of transactions. Unlike the ledgers kept by banks, they are public and distributed. They are the underlying technology of all cryptocurrencies and allow users to transact with each other without the need for trusted third parties (like banks, PayPal, Western Union etc.).
Broker – an individual or an organization that works as the middleman between retail traders and large, established financial corporations.
Bull – a trader who believes that the price of an asset will rise.
Bull Market – the financial market, in which asset prices are rising.
Call Option – also known as a “High Option”. When a trader believes that an asset price will rise, he purchases a Call option.
CFD – Contract for Difference. It’s an agreement between an investor and an investment institution. When the agreement expires, the parties exchange the difference between the opening and the closing prices of a particular financial asset through cash payments.
Commission – the fee paid to a brokerage firm for the service rendered in facilitating transactions.
Commodities – a general name that refers to basic physical items that are either grown or mined (coffee, precious metals, oil).
Commodity Pairs – the three pairs of currencies in the foreign exchange market that are from countries with the most extensive quantities of commodities. These pairs are USD/CAD, AUD/USD and NZD/USD.
Counter Currency – also called ‘Quote Currency’ is the second currency in a currency pair quotation. This reflects the value of one unit of the first currency in the pair (Base Currency).
CPI – Consumer Price Index – is a statistical measure that tracks the changes in the purchasing power of a currency as well as the rate of inflation.
Cross Currency Transaction – a type of transaction in which two or more currencies are traded at the same time.
Currency Trading – the act of participating in the exchange of one currency for another currency.
Day Trading – the opening and closing of positions in the market on the same day without holding them overnight.
Derivative – a financial contract whose worth relies upon or is derived from the performance of one or more underlying assets. Examples of underlying assets are stocks, bonds or indices.
Dividend – a portion of a company’s profits paid to every shareholder.
EPS – Earnings per Share – the fraction of an organization’s earnings apportioned to every outstanding share of common stock.
Expiry Time – time and date when a trade of a financial instrument expires.
Financial Instrument – any type of a tradable asset – currencies, futures, options and CFDs.
Forex – short form of foreign exchange.
Fundamental Analysis – a type of market analysis that evaluates the related economic, financial and other qualitative and quantitative aspects that affect the performance of a particular financial instrument.
In the Money – a phrase used to illustrate when a trader makes a profit.
Index – represents a group of representative stocks within a stock exchange. Some of the most popular indices are the S&P 500, NASDAQ and the FTSE 100.
Leverage – a financial tool that enables an investor to amplify his/her market exposure to a level that surpasses his or her initial capital.
Liquidity – the extent to which a financial instrument can be bought or sold with minimal or no effect on its price.
Market Price – the present price at which a financial instrument is being traded in the market.
Out of the Money – a phrase that is used to illustrate a loss in a trade.
Overnight Position – a trading position that continues to run until the next trading day.
Payout – the amount of money earned from a successful trade.
Pip – the smallest unit of measurement used in determining exchange rates between currencies.
Platform – the system or technology provided by brokers.
Quote Currency – also called counter currency is the second currency in a currency pair quotation. This reflects the value of one unit of the first currency in the pair (Base Currency).
Rate – also referred to as the exchange rate is the price of one currency compared to another one.
RSI – Relative Strength Index – a technical oscillating indicator used to measure the overbought and oversold conditions of a financial instrument.
Rollover – the act of prolonging the settlement date of a running position in the market.
Stock – representation of a share in the ownership of a company that is available for trading on the financial markets.
Stop Loss Order – an order designed to limit an investor’s loss by buying (or selling) a financial instrument once its price sails above (or falls below) a certain stop price.
Trader – an investor engaging in transactions in the financial markets.
Under-Valuation – an exchange rate that is usually regarded to be undervalued. This happens if it doesn’t exceed its purchasing power parity.
Volatility – a measure of the rate of fluctuation of the price of a financial instrument over a period of time.
Wire Transfer – the electronic transfer of money from one financial institution to another.
Yield Curve – a graph that illustrates the correlation between the interest rate and the time to maturity of the debt instrument for a particular borrower using a particular currency.
Zero-Bound – a situation whereby interest rates are very low (close to zero percent), making it difficult for central banks to institute measures for stimulating the expansion of the economy.