Ask
The lowest price a seller is willing to accept for an asset.
A
Asset
Anything that has value or can generate future economic benefit, such as cash, stocks, or property.
At the Money (ATM)
An option whose strike price is equal to or close to the market price of the underlying asset.
B
Balance Sheet
A financial statement showing a company’s assets, liabilities, and equity at a specific point in time.
Basis Point (bps)
A unit representing one-hundredth of a percent (0.01%).
Bear/Bear Market/Bearish
A bear expects prices to fall. A bear market is a prolonged decline in prices. Bearish means having a negative outlook.
Bid
The highest price a buyer is willing to pay for an asset.
Blue-Chip Stock
Shares of large, reputable companies with a history of stable earnings.
Bond
A fixed-income investment representing a loan made by an investor to a borrower.
Broker
A person or firm that executes trades on behalf of clients, often charging a fee or commission.
Bull/Bull Market/Bullish
A bull expects prices to rise. A bull market is a prolonged increase in prices. Bullish means having a positive outlook.
C
Capital
Wealth in the form of money or assets available for investment or business use
CFD (Contract for Difference)
A derivative contract that allows traders to speculate on price movements without owning the underlying asset
Closing/Close
Ending a trading position or the final price of a market at the end of a trading day
Commission
A broker’s fee for executing a trade
Contango
A futures market condition where futures prices are higher than the current spot price
Correction
A short-term decline (typically 10% or more) in a market or stock after a rally
Cryptocurrency
A digital currency secured by cryptography, operating independently of central banks
D
Day Trading
Buying and selling assets on the same trading day
Derivative
A financial instrument whose value depends on an underlying asset or index
Diversification
Spreading investments across different assets to reduce risk
Dividend
A portion of a company’s profits that is paid to shareholders
Drawdown
The decline in portfolio value from its peak to its lowest point
E
Earnings
A company’s profits after expenses
Equity
Ownership interest in a company or asset
ETC (Exchange-Traded Commodity)
A product that tracks the price of a commodity. Like ETFs, ETCs trade like stocks on an exchange. Collectively, they are known as ETP or Exchange-Traded Products.
ETF (Exchange-Traded Fund)
A fund that tracks an index or sector, and trades like a stock on an exchange
Execution
The process of completing a trade order
F
Fair Value
An estimated price that reflects an asset’s true worth based on supply, demand, and fundamentals
Forex (Foreign Exchange)
The global marketplace for exchanging national currencies
Futures Contract
An agreement to buy or sell an asset at a set price on a specific future date
G
Gross Domestic Product (GDP)
The total monetary value of goods and services produced within a country during a specific period
H
Hedging
A strategy used to offset or reduce risk from another position
High-Frequency Trading (HFT)
Automated trading that uses algorithms to execute large numbers of orders quickly
I
Inflation
The rate at which the general price level of goods and services rises over time
Interest Rate
The cost of borrowing money, expressed as a percentage
IPO (Initial Public Offering)
When a company offers its shares to the public for the first time
ITM (In the Money)
An option that currently has intrinsic value
L
Leverage
Borrowed capital used to increase the potential return of an investment
Limit Order
An order to buy or sell at a specified price or better
Liquidity
How easily an asset can be bought or sold without affecting its price
Long Position
Buying an asset expecting its price to rise
M
Margin
The collateral required to open and maintain leveraged trades
Margin Call
A broker’s demand for an investor to deposit additional funds when account equity falls below required levels
Market Maker
A firm that provides liquidity by quoting both buy and sell prices for an asset
Market Order
An instruction to buy or sell an asset immediately at the best available price
Maturity
The date when a debt instrument or contract ends, and repayment is due
Moving Average (MA)
A technical indicator that smooths price data to identify trends
O
Open Position
An active trade that has not yet been closed or settled
Option
Contracts giving the right, but not the obligation, to buy or sell an asset at a set price before expiry
OTC (Over-the-Counter)
Trading directly between parties without using a centralized exchange
P
P&L (Profit and Loss)
The difference between revenue and expenses or gains and losses from trading
Pip
The smallest price move in a currency pair, typically 0.0001
Portfolio
A collection of financial investments held by an individual or institution
Position
The exposure held in a market, either long or short
Price Action
The movement of a security’s price plotted over time, often used in technical analysis
R
Resistance
A price level where selling pressure typically prevents further price increases
Return on Investment (ROI)
The percentage gain or loss relative to the original investment
Risk
The possibility of losing part or all of your investment
Risk-Reward Ratio
A measure comparing potential profit to possible loss in a trade
S
Scalping
A trading strategy that targets small, frequent profits by making numerous quick trades
Security
A tradable financial asset, such as a stock, bond, or derivative
Short Selling
Selling borrowed assets in anticipation of buying them back later at a lower price
Slippage
The difference between the expected price and the actual price at which a trade is executed
Spread
The difference between the bid and ask price of an asset
Stop-Loss Order
An order to automatically close a trade at a specified loss level to limit further downside
Swing Trading
A medium-term trading strategy focused on capturing price swings over several days or weeks
T
Technical Analysis
The study of past price movements and patterns to forecast future trends
Tick
The minimum price movement of an asset
Trend
The general direction in which a market or asset price is moving
Turnover
The total volume or value of shares traded during a period
V
Volatility
The degree of variation in an asset’s price over time
Volume
The total number of shares, contracts, or units traded in a given period
W
Warrant
A warrant is a security that gives the holder the right to buy shares at a fixed price before a set expiry date
Y
Yield
The income return on an investment, usually expressed as an annual percentage