Explore our comprehensive Glossary — a dedicated resource to help you understand key trading terms and concepts. Perfect for traders at all levels, the glossary simplifies complex jargon and ensures you’re equipped with the knowledge needed to navigate the trading world with confidence.

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A
Accrued Interest
Interest that has been earned but not yet paid.
Alpha
A measure of an investment’s performance compared to a benchmark, often indicating excess returns.
Altcoin
Any cryptocurrency other than Bitcoin (Alternative Coin).
Arbitrage
Simultaneous purchase and sale of an asset to profit from a difference in the price.
Ask Price
The lowest price a seller is willing to accept for a security.
Asset Allocation
The process of dividing investments among different kinds of assets to balance risk and reward.
At the Money (ATM)
An option with a strike price that is equal to the current market price of the underlying asset.
B
Backtesting
Testing a trading strategy on historical data to see how it would have performed.
Balance Sheet
A financial statement that summarizes a company’s assets, liabilities, and shareholders’ equity.
Bar Chart
A chart that displays the open, high, low, and close prices for a security over a specific period.
Bear Market
A market condition where prices are falling.
Beta
A measure of a stock’s volatility in relation to the overall market.
Bid Price
The highest price a buyer is willing to pay for a security.
Bitcoin
A decentralized digital currency without a central bank or single administrator.
Black-Scholes Model
A mathematical model for pricing an options contract.
Block Trade
A large transaction of securities executed outside of the open market.
Bollinger Bands
A technical analysis tool that plots standard deviation levels above and below a moving average.
Breakout
A price movement through an identified level of support or resistance.
Broker
An individual or firm that acts as an intermediary between buyers and sellers.
Bull Market
A market condition where prices are rising.
Buy Limit Order
An order to purchase a security at or below a specified price.
C
CFD (Contract for Difference)
A financial contract that pays the differences in the settlement price between the open and closing trades.
Candlestick Chart
A chart that shows the open, high, low, and close prices in a candlestick format.
Capital Gains
The profit realized from the sale of a security.
Commodity
A basic good used in commerce that is interchangeable with other goods of the same type.
Correction
A decline of 10% or more in the price of a security or market index.
Cross Rate
The exchange rate between two currencies, both of which are not the official currencies of the country in which the quote is given.
Cryptocurrency
A digital or virtual currency that uses cryptography for security.
Cup and Handle
A bullish continuation pattern on a price chart.
Currency Pair
The quotation of two different currencies, with the value of one currency being quoted against the other.
D
Day Trading
Buying and selling financial instruments within the same trading day.
Debt-to-Equity Ratio
A measure of a company’s financial leverage calculated by dividing its total liabilities by stockholders’ equity.
Decentralized Finance (DeFi)
Financial systems and services built on blockchain technology that operate without a central authority.
Derivative
A security whose price is dependent upon or derived from one or more underlying assets.
Dividend
A distribution of a portion of a company’s earnings to its shareholders.
Drawdown
The peak-to-trough decline during a specific recorded period of an investment or fund.
Duration
A measure of the sensitivity of the price of a bond to a change in interest rates.
Dynamic Hedging
A strategy that involves continuously adjusting the hedge ratio to remain market neutral.
E
EBITDA
Earnings before interest, taxes, depreciation, and amortization.
ECN (Electronic Communication Network)
A computerized system that matches buy and sell orders for securities.
ETF (Exchange-Traded Fund)
A type of investment fund and exchange-traded product, meaning they are traded on stock exchanges.
Earnings Per Share (EPS)
The portion of a company’s profit allocated to each outstanding share of common stock.
Equity
The value of the shares issued by a company.
Ex-Dividend Date
The date on which a stock begins trading without the value of its next dividend payment.
Exchange Rate
The value of one currency for the purpose of conversion to another.
Exponential Moving Average (EMA)
A type of moving average that places a greater weight and significance on the most recent data points.
F
FOMC (Federal Open Market Committee)
The branch of the Federal Reserve Board that determines the direction of monetary policy.
Fibonacci Retracement
A method of technical analysis for determining support and resistance levels.
Forex (Foreign Exchange)
The global marketplace for exchanging national currencies.
Forward Contract
A customized contract between two parties to buy or sell an asset at a specified price on a future date.
Futures Contract
A legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future.
G
GDP (Gross Domestic Product)
The total value of goods produced and services provided in a country during one year.
Go Long
Buying a security such as a stock, commodity, or currency with the expectation that the asset will rise in value.
Go Short
Selling a security with the intention of buying it back at a lower price in the future.
Gross Margin
The difference between revenue and cost of goods sold divided by revenue.
H
Hedge
An investment made to reduce the risk of adverse price movements in an asset.
High-Frequency Trading (HFT)
A type of trading that uses powerful computer programs to transact a large number of orders in fractions of a second.
Historical Volatility
The rate at which the price of a security has moved up or down in the past.
Horizontal Integration
The acquisition of a business operating at the same level of the value chain in a similar or different industry.
I
Index
A statistical measure of change in a securities market.
Initial Coin Offering (ICO)
A type of funding using cryptocurrencies.
Initial Public Offering (IPO)
The process by which a private company can go public by sale of its stocks to the general public.
Intraday
Refers to price movements of a given security within a single trading day.
Intrinsic Value
The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business.
Inverted Yield Curve
An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments.
J
J-Curve
A theory stating that a country’s trade deficit will initially worsen after the depreciation of its currency before improving.
Junk Bond
A high-yield, high-risk security, typically issued by a company seeking to raise capital quickly.
K
Kagi Chart
A type of chart developed in Japan that is used for tracking price movements and to make decisions based on the relationship between supply and demand.
Keltner Channel
A volatility-based technical indicator composed of three separate lines.
Kiwi
Slang for the New Zealand dollar (NZD).
L
LIBOR (London Interbank Offered Rate)
The benchmark interest rate at which major global banks lend to one another.
Leverage
The use of various financial instruments or borrowed capital to increase the potential return of an investment.
Limit Order
An order to buy or sell a security at a specific price or better.
Liquidity
The availability of liquid assets to a market or company.
Long Position
Buying a security such as a stock, commodity, or currency with the expectation that the asset will rise in value.
Lot Size
The quantity of an asset or security to be bought or sold in one transaction.
M
MACD (Moving Average Convergence Divergence)
A trend-following momentum indicator that shows the relationship between two moving averages of a security’s price.
MT4 (MetaTrader 4)
A popular trading platform used by retail forex traders.
MT5 (MetaTrader 5)
An updated version of the MetaTrader platform, offering additional features and tools.
Margin
The money borrowed from a broker to purchase an investment.
Market Capitalization
The total market value of a company’s outstanding shares of stock.
Market Order
An order to buy or sell a security immediately at the current market prices.
Moving Average
A stock indicator commonly used in technical analysis to help smooth out price action by filtering out the noise from random price fluctuations.
N
NAV (Net Asset Value)
The value per share of a mutual fund or an ETF on a specific date or time.
NFP (Non-Farm Payrolls)
A key economic indicator for the United States economy.
No-Touch Option
A type of binary option that pays out if the underlying asset does not touch a predetermined price level.
O
Option
A financial derivative that represents a contract sold by one party to another, offering the buyer the right, but not the obligation, to buy or sell a security or other financial asset at an agreed-upon price during a certain period of time.
Order Book
An electronic list of buy and sell orders for a specific security or financial instrument.
Over-the-Counter (OTC)
The process of how securities are traded for companies that are not listed on a formal exchange.
Overbought
A condition in which the price of a security has risen to such a degree that an oscillator has reached an upper bound.
Oversold
A condition in which the price of a security has fallen to such a degree that an oscillator has reached a lower bound.
P
Pairing
The selection of two securities for the purpose of comparison
Paper Trading
Simulating trading strategies using fake money to practice without financial risk.
Penny Stock
A stock that trades at a relatively low price and market capitalization, often outside of the major market exchanges.
Pip
The smallest price move that a given exchange rate makes based on market convention.
Portfolio:
A range of investments held by a person or organization.
Position Trading:
A trading style where the trader holds a position in an asset for an extended period of time.
Premium
The price of an option contract.
Price Action
The movement of a security’s price plotted over time
Put Option
A financial contract that gives the option buyer the right, but not the obligation, to sell a stock, bond, commodity, or other instrument at a specified price within a specific time period.
Q
Quote
The last price at which a security or commodity traded, as well as the most recent bid and ask prices.
R
RSI (Relative Strength Index)
A momentum oscillator that measures the speed and change of price movements.
Resistance Level
A price point on a chart where a security has historically had difficulty breaking above.
Retracement
A temporary reversal in the direction of a stock’s price that goes against the prevailing trend.
Risk Management
The process of identification, analysis, and acceptance or mitigation of uncertainty in investment decisions.
S
SEC (Securities and Exchange Commission)
A U.S. government oversight agency responsible for regulating the securities markets and protecting investors.
Scalping
A trading strategy that attempts to profit from small price changes in a security.
Short Selling
The sale of a security that the seller has borrowed, intending to buy it back later at a lower price.
Slippage
The difference between the expected price of a trade and the price at which the trade is executed.
Spread
The difference between the bid and the ask price of a security or asset.
Stop-Loss Order
An order placed with a broker to buy or sell once the stock reaches a certain price.
Support Level
A price level at which a security tends to stop falling because there is more demand than supply.
Swing Trading
A style of trading that attempts to capture gains in a stock (or any financial instrument) within an overnight hold to several weeks.
T
Take-Profit Order
An order placed with a broker to buy or sell once the stock reaches a certain price.
Technical Analysis
The analysis of price and volume data through the use of charts and other tools to make trading decisions.
Ticker Symbol
An abbreviation used to uniquely identify publicly traded shares of a particular stock on a particular stock market.
Trailing Stop
A stop order that can be set at a defined percentage away from a security’s current market price.
Trend Line
A line drawn over pivot highs or under pivot lows to show the prevailing direction of price.
U
Underlying Asset
The financial instrument upon which a derivative’s price is based.
Unrealized Profit/Loss
The profit or loss that would be realized if an open position were closed at the current market price.
V
Volatility
A statistical measure of the dispersion of returns for a given security or market index.
Volume
The number of shares or contracts traded in a security or an entire market during a given period.
W
Whipsaw
A condition where a security’s price heads in one direction, but then is followed quickly by a movement in the opposite direction.
Withdrawal
The act of taking money out of a bank account or investment account.
X
XAG/USD
The symbol for the price of one ounce of silver in U.S. dollars.
XAU/USD
The symbol for the price of one ounce of gold in U.S. dollars.
Y
Yen (JPY)
The official currency of Japan.
Yield
The income return on an investment, such as the interest or dividends received from holding a particular security.
Yield Curve
A line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates.
Z
Zero-Coupon Bond
A debt security that does not pay interest but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.
Zig Zag Indicator
A trend-following indicator used to determine the general direction of a security’s price movement.