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A
ATR
Average True Range. Is a tool used in technical analysis to measure volatility. It measures the range (high to low) for a given period.
Arbitrage
Arbitrage is the practice of profiting from the price differentials of two markets by striking deals that capitalise on the difference between them. For instance, selling an asset that is overpriced in one market in order to buy it in another market where it is cheaper.
Ask Price
The ask price, also known as the offer, is the price at which an underlying instrument is available for purchase. So when trading on a currency pair, for instance EUR/USD, the ask price represents how much of the quote currency (in this case USD) is required for a trader to purchase a unit of the base currency, (in this case the Euro).
Available
Available balance is balance + P&L of open positions – initial margins.
B
Bank interest Rate
The interest rate at which a nation's central bank lends money to domestic banks, often in the form of very short-term loans. Managing the bank rate is method by which central banks affect economic activity.
Base Currency
A bear market is characterized by pessimism, falling prices, and wide-spread selling of underlying assets. The situation is often self-perpetuating because falling prices cause investors to want to cut their losses and also sell, which cause a downward trend.
Bearish Sentiment
Bearish sentiment is the negative feeling surrounding the value and future prospects of underlying assets. Bearish sentiment precedes bear market entry and encourages investors to start selling.
Bid Ask Spread
Bid and ask prices are determined by the most a buyer is willing to pay for a unit of a given asset, and the least that a seller is willing to accept in order to sell it. The spread is the difference between these two figures.
Bid Price
Market prices are quoted in pairs known as bid/ask. The bid is the price at which an underlying instrument can be sold at. So when trading on a currency pair, for instance EUR/USD, the bid price represents how much of the quote currency (in this case USD) a trader is able to get when selling a unit of the base currency (in this case the Euro).
Blue Chip Stock
A blue-chip stock is the stock of a large, well-established and financially sound company that has operated for many years. A blue-chip stock typically has a market capitalization in the billions, is generally the market leader or among the top three companies in its sector. E.g. Dow Jones, S&P and NASDAQ in United States, Canada 60 in Canada or the FTSE index in the United Kingdom.
Bollinger Bands
Volatility indicator used to measure volatility. Volatility is based on the standard deviation using a moving average within two outer bands (standard-deviation based) which adjust to the volatility.
Breakout
Breakouts are more commonly used to refer to the occasion of an asset's price pushing through a confirmed level of resistance, though it can sometimes also be used to refer to a downward move through a known support level. When an asset breaks through a resistance level this mark then becomes the asset's new support. When it pushes through a support level this becomes its new resistance.
Bull Market
A bull market is characterized by optimism, rising prices, and wide-spread buying of underlying assets. The situation is often self-perpetuating because rising prices cause investors hoping to profit to also buy, which further reinforces the upward trend.
Bullish Market
Bullish sentiment is the positive feeling and growing investor confidence surrounding the value and future performance of an underlying asset or market. This positive feeling often precedes a bull market and encourages other investors to buy.
Buy Order
A pending order is an instruction to buy an instrument when certain preconditions specified by the trader are met.
Buy and Hold
Buy and hold is a passive investment strategy in which an investor buys stocks and holds them for a long period of time, regardless of fluctuations in the market. An investor who employs a buy-and-hold strategy actively selects stocks, but once in a position, is not concerned with short-term price movements and technical indicators.
C
CAC 40
The CAC 40 is used as a benchmark index for funds investing in the French stock market and also gives a general idea of the direction of the Paris Bourse. The CAC 40 is similar to the Dow Jones Industrial Average in that it is the most commonly used index that represents the overall level and direction of the market in France.
CFD
Contracts for Difference are derivative instruments that allow traders to speculate on the changing values of a host of underlying assets without having to take ownership of them. In a contract for difference a buyer and a seller agree that the seller will, upon expiration of the contract, pay the buyer the difference between the value of the asset at the time the contract is agreed and the value at the time it expires. If the difference is negative then the buyer must instead pay the difference to the seller. When trading CFDs traders buy (or go long) when forecasting a rise, and sell (or go short) when forecasting a drop in value.
CPI
Consumer Price Index. Measures inflation.
Cable
The Cable is the market nickname for both the Great British pound and the GBP/USD currency pair.
Call Option
Contract which gives the buyer of an option the right to exercise the right to buy at a fixed price and time.
Candlestick Charts
A candlestick chart is a style of financial chart used to describe price movements of a security, derivative, or currency and typically showing one day. It is like a combination of line-chart and a bar-chart: each bar represents all four important price pieces of information for that day: the open, the close, the high and the low. Candlestick charts are most often used in technical analysis of equity and currency price patterns.
Carry Trade
Is a strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates, which can often be substantial, depending on the amount of leverage used.
Central Bank
A national bank that provides financial and banking services for its country's government and commercial banking system, as well as implementing the government's monetary policy and issuing currency. E.g. European Central Bank, Bank of Japan and Bank of England.
Charts
Graph like, graphic depiction of market activity.
Closed Trade
When a trader closes (reverses) their open position.
Commission
Fee charged by a broker to execute a trade.
Commodities
Commodities are goods of standardised quality and quantity that are traded over an exchange. Commodities fall into two broad categories: hard commodities such as crude oil, gold, silver and platinum that are extracted from the earth, and soft commodities such as wheat, corn, coffee and sugar that are cultivated and harvested.
Correction
When a trend changes and pulls back in the opposite direction to readjust itself.
Cross Rates
Currency pair which does not include the US Dollar.
D
DAX 30
The DAX (Deutscher Aktienindex (German stock index)) is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange.
Day Trader
An intraday trader who opens and closes a position within one continuous market session.
Derivative
A derivative is a financial instrument that has no intrinsic value in and of itself; rather it derives its value from some other financial instrument.
Diversification
A central strategy of portfolio management that uncorrelated components vary differently, minimizing overall risk.
Doncian Channel
Technical indicator which helps identify resistance and support levels over a given time period.
Dow Jones Industrial Average (DOW)
Also called DJIA, or simply the Dow, is a US stock market index, is a price-weighted 30-stock index of large publicly owned companies.
E
ECB
European Central Bank manages the monetary policy of the Eurozone.
ECB
European Central Bank manages the monetary policy of the Eurozone.
ETFs
Exchange Traded Funds: Funds, traded on exchanges that track indices of stocks, industrial sectors, currencies and commodities, interest rates and volatility.
Equity
Your deposits – withdrawals + P&L of open positions; also stock or share representing an ownership interest in a corporate entity.
Exponential Moving Average
Technical indicator used to calculate an average price over a past time period, with more emphasis on the more recent price.
F
FTSE
Is an index composed of the 100 largest companies listed on the London Stock Exchange (LSE). These are often referred to as 'blue chip' companies, and the index is seen traditionally as a good indication of the performance of major companies listed in the UK.
Fed
The Federal Reserve is the central bank of the United States.
Fibonacci
A sequential mathematical pattern with correlative properties to established price movements. Named after mathematician Leonardo Fibonacci, the most popular Fibonacci tools are retracements and extensions.
Financing Costs
Administrative and other holding fees assessed by the platform provider to cover the associated costs with opening a (virtual) CFD position.
Forex
A decentralized global marketplace for the trading of currencies, also known as the FX or Forex market, it is the largest and most liquid market in the world, with a daily turnover of over $5 trillion.
Fundamentals
Factors based on news and economic data which have an effect on market prices.
G
Gann Fan
Is an analytical drawing tool used to indicate a time and price movements from important highs and lows and identify price breakouts. The angled lines fan from the selected point. They indicate a time to price relationship that may be relatively fast or relatively slow, depending on the size of the Gann angle.
H
Head and Shoulders
Technical candlestick pattern signaling a trend reversal.
Hedge
Is a way for investors to reduce risk exposure by opening positions in two instruments that are inversely correlated or that cancel each other out by some other means. Forwards and futures are popular among hedgers as they allow a price to be agreed with a buyer for an exchange that is deferred to a later date.
Holding Costs (Premium fees)
Keeping a position open after a specific hour (approximately 22:00GMT (21:00DST)), as shown in the Xtrade trading platform display screen "Details", subjects you to an Xtrade funding premium that is subtracted from your account. This premium covers the benefit/cost of the associated funding.
I
Indices (Indexes)
A measurement of the value of a section of the market, though each index has its own calculation methodology, Indices allow traders to take positions on economic phenomena larger than that of a single company.
K
Kiwi
A slang term often used to reference the New Zealand dollar (or NZD), which is New Zealand's base unit of currency.
L
Leverage
Magnification of margin capital such that a deposit results in outsized profit (and loss) from movement of the underlying financial instrument.
Limit Order
A given threshold price at which a trade is to be executed: a ceiling for a buy and a floor for a sale.
Long-term trading
In the context of CFDs, longer-term trading refers to strategies where the average duration of open positions would be between a week and several months.
Loonie
Slang for the Canadian Dollar.
M
MACD
Moving Average Convergence Divergence is a technical indicator used to identify momentum and potential bullish or bearish trend reversal, using moving averages.
Margin
Amount of funds (security deposit) that a trader needs to have in their account to open or maintain a trade.
Margin Call
A margin call is a broker's request that a trader deposit funds into their trading account in order to continue to be able to guarantee open positions.
Market Order
An order to buy or sell at the current price, ensuring speedy execution.
Moving Average
Technical indicator used to calculate an average price over a past, given time period. Of use in identifying a trend, points of entry and potential target levels for stops.
N
Nikkei 225
The Nikkei 225 more commonly called the Nikkei, the Nikkei index, or the Nikkei Stock Average is a stock market index for the Tokyo Stock Exchange consisting of the 225 leading companies.
Non-farm payrolls (NFP)
NFP is one of the most impactful economic indicators relating the U.S economy. It tracks the changes in the number of employed people excluding farm workers.
O
Open Position / Trade
When a trade has been initiated and is an open position and not yet closed
Overnight
A trade which carries over into the next trading day.
P
Parity
When two currencies are at equal value against each other.
Pip
Normally used in reference to forex rates, a 'percentage in point' is generally, though not always, the fourth decimal place, i.e. 0.0001. Traditionally a pip was the smallest point by which a forex rate could move, but this is no longer the case.
Position
The state of a trade, either open or closed.
Profit / Loss
The difference between your deposits (minus withdrawals) and your balance, with opened positions closed at market rates and all outstanding fees assessed.
Purchasing Managers Index (PMI)
Is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
Q
Quantitative Easing
A monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective.
Quote Currency
The second currency in a pair (for example USD is the counter currency in GBP/USD).
R
RSI
Relative Strength Index is a technical indicator which uses high and low prices to indicate when an instrument measures as overbought or oversold.
Re- quote
A re-quote takes place when a broker is unable to confirm a trade that is entered at a certain bid or ask price. Re-quotes tend to occur in volatile markets, especially when a highly impactful economic indicator is released.
Resistance
A term used in technical analysis indicating a threshold price level at which analysis suggests a predominance of selling – and hence a greater likelihood that the price will fail to break through the level.
Round Trip
When a trade has been opened and closed.
S
S&P 500
Standard and Poor's market-weighted index of 500 top companies in the US. A widely recognized proxy for the US economy.
Scalping
Scalping is a trading strategy in which traders look to profit from small changes in price by rapidly opening and closing a large number of positions in every trading session.
Sell Order
Instruction to sell at a price different from the current price; Often a sell limit order, which is a conditional trading order that indicates an instrument may be sold only at the designated price or higher; Also selling short, in which a trader sells a financial instrument he does not own for the purposes of gaining when the asset declines in value.
Simple Moving Average
Technical indicator used to calculate an average price over a past time period, with more equal emphasis on past prices.
Slippage
Slippage refers to the difference between the expected price of a trade and the price at which the trade is actually executed. Slippage often occurs during periods of higher volatility when market orders are used, and also when large orders are executed when there may not be enough interest at the desired price level to maintain the expected price of trade.
Spread
Difference between the buy and sell price.
Stochastic Oscillator
A technical indicator measuring momentum by comparing the current price with recent high and low ranges.
Stop Loss
A stop-loss order (also called a stop order or stop market order) is an order whereby the trader sets a conditional sell order to close an open position by selling an instrument if it drops to a certain price, thereby limiting his losses.
Support
A certain price that reflects the expected low point of the current price range, opposite of resistance.
Swissy
Slang for the Swiss Franc.
T
Take Profit
Same as a limit order where a trade is closed at a profit.
Technical Analysis
An evaluation methodology in which past prices have predictive value in assessment of future price movement.
Tick
A single price movement which can be either positive or negative.
V
Volatility
A Measurement of instrument price fluctuation over any given time period.
Y
Yield
The income return earned on an investment. There are a number of different types of yield, and in some cases different methods of calculating each type. Yield refers to the dividends received or interest on a security and is usually an annual figure.
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