Trading knowledge
We offer comprehensive trading courses exclusively designed to cater everyone from novice beginners to experienced investors through the use of risk management trading fundamentals technical analysis.
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Actuals
An actual physical commodity someone is buying or selling, e.g., soybeans, corn, gold, silver, Treasury bonds, etc.
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Algorithmic trading
Algorithmic trading is a method of executing orders using automated pre-programmed trading instructions accounting for variables such as time, price, and volume. This type of trading was developed to make use of the speed and data processing advantages that computers have over human traders.
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Arbitrage
Arbitrage in trading is the practice of simultaneously buying and selling an asset to take advantage of a difference in price. The asset will usually be sold in a different market, different form or with a different financial product, depending on how the discrepancy in the price occurs.
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Ask
A motion to sell (offer), indicating a willingness to sell a futures contract at a given price.
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Asian Session
Trading activity between 11:00 pm (GMT+2) and 08:00 am (GMT+2).
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Asset
An asset is an economic resource which can be owned or controlled to return a profit, or a future benefit. In financial trading, the term asset relates to what is being exchanged on markets, such as stocks, bonds, currencies or commodities.
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Argentine peso
The peso (established as the peso convertible) is the currency of Argentina, identified by the symbol $ preceding the amount in the same way as many countries using dollar currencies. It is subdivided into 100 centavos. Its ISO 4217 code is ARS.
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Aussie
The "Aussie" is common forex trader slang for the Australian dollar, the official currency of the commonwealth of Australia. Sometimes the term is used to specifically refer to the AUD/USD currency pair.
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AUD
The ISO 4217 currency code for the Australian dollar - the official currency of the commonwealth of Australia.
Currency Name: Australian dollar
Currency symbol or sign: $
Country: Australia
Commonly called: The Aussie
ISO 4217 Currency Code: AUD
Relevant Central Bank: Reserve Bank of Australia -
Australian Dollar
The official currency of the commonwealth of Australia is the Australian dollar.
Currency Name: Australian dollar
Currency symbol or sign: $
Country: Australia
Commonly called: The Aussie
ISO 4217 Currency Code: AUD
Relevant Central Bank: Reserve Bank of Australia -
Appreciation
The rise in value of one currency relative to another currency, or a basket of currencies.
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Average Daily Volume
Equals volume for a specified time period divided by the number of business days within that same time period.
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Bar chart
A graph of prices, volume and open interest for a specified time period used by the chartist to forecast market trends. A daily bar chart plots each trading session's high, low and settlement prices.
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Basis
The difference between the spot or cash price of a commodity and the futures price of the same or a related commodity. Basis is usually computed to the near future, and may represent different time periods, product forms, qualities and locations.
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Broker
An intermediary between the traders and the liquidity providers. It facilitates in the execution of clients' orders.
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Bid (or buy)
An offer to buy a specific quantity of a commodity at a stated price. The price that the market participants are willing to pay.
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Bear
One who expects price to decline.
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Bear market (bear/bearish)
A market in which prices are declining.
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Bull
One who expects prices to rise.
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Bull Market
A market in which prices are rising.
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Bundle
The simultaneous sale or purchase of one each of a series of consecutive futures contracts. Bundles provide a readily available, widely accepted method for executing multiple futures contracts with a single transaction.
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Balance
The amount of money a trader currently has available in his trading account.
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Breakeven
The point at which an option buyer or seller experiences no loss and no profit on an option. Call breakeven equals the strike price plus the premium. Put breakeven equals the strike price minus the premium.
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Brokerage
The fee charged by a broker for execution of a transaction. May be a flat amount or a percentage; usually referred to as a commission.
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Bond
Instrument traded on the cash market-representing a debt of the government or of a company.
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Cable
It is the nickname used for the currency pair of GBPUSD. It is also used to refer to the British pound itself. Communication between Europe and North America was conducted through a transatlantic cable in the Atlantic Ocean.
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Carrying Charge (Cost of Carry)
For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost necessary to buy the instrument. (See Basis.)
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Cash Commodity
An actual physical commodity someone is buying or selling, e.g., soybeans, corn, gold, silver, Treasury bonds, etc. Also referred to as Actuals.
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Cash price
Current market price of the actual physical commodity. Also called "spot price".
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Cash settlement
Final disposition of open positions on the last trading day of a contract month. Occurs in markets where there is no actual delivery.
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Clearing
The procedure through which the Clearing House becomes buyer to each seller of a futures contract, and seller to each buyer, and assumes responsibility for protecting buyers and sellers from financial loss by assuring performance on each contract.
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Clearing margin
Financial safeguards to ensure that clearing members (usually companies or corporations) perform on their customers' open futures and options contracts.
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Clearing trade transaction
Each matched trade between a buyer and a seller generates two clearing trade transactions: one for the buyer and one for the seller.
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Closing range
The high and low prices or bids and offers recorded during the period designated by the Exchange as the official close (the final 60 seconds of trading in currencies and 30 seconds in all other contracts).
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Commodity Futures Trading Commission
Also known as the CFTC, this is the independent governmental organization that oversees futures and options trading in the United States.
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Commodity
Any product approved and designated for trading or clearing in accordance with the rules of an exchange. Also may refer to a physical commodity.
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Contract
Unit of trading for a financial or commodity future. Also, actual bilateral agreement between the parties (buyer and seller) of a futures or options on futures transaction as defined by an futures exchange.
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Contract Size
Defines the number of units of the underlying market represented by one futures contract.
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Contract Month
Expiration months in which trading is available. Typically driven by underlying market seasonality and fundamentals.
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Counterparty
The individual or company (i.e., the buyer or seller) on the opposite side of any trade.
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Commission
An amount the trader is charged by the broker for facilitating a trade.
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Current delivery month
The futures contract which matures and becomes deliverable during the present month.
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Currency Pair
The pair formed by two different currencies which are traded in a forex transaction. For example: EUR/USD.
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Currency appreciation
Currency appreciation is an increase in the value of one currency in relation to another currency. Currencies appreciate against each other for a variety of reasons, including government policy, interest rates, trade balances and business cycles.
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Customer Margin
Within the futures industry, financial guarantees required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfillment of contract obligations.
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Cross Rate
The exchange rate between two currencies that do not involve the US Dollar.
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Crude Oil Inventories
A weekly report that measures the change in Crude Oil stocks (i.e. barrels). It includes domestic and Customs-cleared foreign crude oil stocks held at refineries, in pipelines, in lease tanks and in transit to refineries.
Released by the Energy Information Administration. -
Cryptocurrency
Digital currency in which encryption is used to regulate the generation of units of currency. It operates independently of the traditional banking system. Bitcoin, Ethereum and Litecoin are the most popular cryptocurrencies.
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Daily Trading Limit
The maximum price range set by the exchange each day for a contract. A Trading Limit does not halt trading, but rather, limits how far the price can move in a given day.
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Day Order
An order that is placed for execution during only one trading session. If the order cannot be executed (filled) that day, it automatically expires at the close of the trading session.
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Day Trade/Trading
Refers to establishing and liquidating the same position or positions within one day's trading, thus ending the day with no established position in the market.
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Day Traders
Speculators who take positions in futures or options contracts and liquidate them prior to the close of the same trading day.
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Daily trading limits
The maximum price fluctuations permitted a contract during one trading session as set by the Exchange. These exist on certain contracts.
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DAX
Deutscher Aktien Index (German Stock Index) is an index of 30 large German company shares.
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Deferred Month (AKA: Back Months)
The more distant month(s) in which futures trading is taking place, as distinguished from the nearby (delivery) month.
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Depth of Market
The number of open buy and sell orders placed for a financial instrument at varying prices.
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Delivery
The tender and receipt of an actual commodity or financial instrument in settlement of a futures contract.
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Derivative
A financial instrument, such as a futures or options contract, whose value is based upon a physical commodity or other financial instruments.
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Differentials
Price differences between classes, grades, and delivery locations of various stocks of the same commodity.
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DJIA (Dow Jones Industrial Average)
The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow, is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.
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Electronic Trading
The computerized processes and platforms that carry out a trade, including order placement, bid-and-offer posting and trade execution.
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Equity Index
A measure of a group of stocks, also called equities, used to describe the market and analyze the return on specific stock investment.
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Equilibrium Price
The market price at which the quantity supplied of a commodity equals the quantity demanded.
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Exercise or strike price
The price at which the buyer of a call can purchase the commodity during the life of the option, and the price at which the buyer of a put can sell the commodity during the life of the option.
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Exercise
Exercise refers to the process whereby the option buyer asserts his or hers right and goes long the underlying futures (in the case of exercising a call) or short the underlying futures (in the case of exercising a put).
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Exercise Price
Also known as the strike price, the exercise price is the price at which the option buyer may buy or sell the underlying futures contracts. Exercising the option results in a futures position at the designated strike price. For example, by exercising a December Crude Oil (WTI) 9400 call, the buyer of the option would then be long a December Crude Oil (WTI) contract at$94.00. If the holder of an August CME Live Cattle 120 put were to exercise his or her option, the result would be a short futures position, at 120.000, in August CME Live Cattle. Strike prices are set by the exchange and have different intervals depending on the underlying contract. Strike prices are set above and below the existing futures price and additional strikes are added if the futures move significantly up or down.
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Execution
The completion of an order to buy or sell a futures contract.
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Expiration Date/Last Trading Day
This is the last day on which an option can be exercised into the underlying futures contract. After this point the option will cease to exist; the buyer cannot exercise and the seller has no obligation. Note that some options expire prior to the final settlement or expiration of the underlying futures contract. For example, a September 2012 Wheat 900 call option will expire August 24, 2012. However, the underlying futures will expire September 14, 2012. The last trading day is the last day on which an option can be offset.
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Federal Funds Rate
The rate of interest charged for the use of federal funds.
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Fill Or Kill (FOK) Order
A designation, added to an order, instructing the broker to fill the order immediately in its entirety or not all. If the order is not filled immediately in its entirety, it is cancelled.
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Forex
Foreign exchange, or Forex for short, is the "place" where currencies are traded. In the forex market, currencies are traded in pairs. When a trader buys a currency, he or she is selling another currency at the same time. Currency trading is the exchange of one type of currency for another. The forex market has no physical location or central exchange as it is a global, decentralized market and trades 24 hours a day, 5 days a week.
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Financial Futures
A future contract whose value is based upon financial instruments such as a stock index, interest rates or foreign currency exchange rates.
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Financial Instrument
There are two basic types: (1) a debt instrument, which is a loan with an agreement to pay back funds with interest; (2) an equity security, which is a share or stock in a company.
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First Notice Day
The first day that a notice of intent to deliver a commodity can be made by a clearinghouse to a buyer in fulfillment of a given month's futures contract. Fundamental Analysis The impact economic, political and environmental events have on prices in financial markets (interest rate announcements, unemployment rate, elections, etc.)
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Futures
A term used to designate all contracts covering the purchase and sale of financial instruments or physical commodities for future delivery on a commodity futures exchange.
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Futures contract
An agreement between two parties - a buyer and a seller- where the seller agrees to sell an asset to the buyer at a predetermined price, date, quantity and quality.
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Futures Exchange
A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options on futures contracts.
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Foreign Exchange Rate
The price of a country's currency when converted from another country's currency.
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FSA
Financial Services Authority Seychelles.
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Gap
A price area at which the market didn't trade from one day to the next.
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GDP
Gross domestic product (GDP) is the total value of goods and services a country produces in a one year period. GDP is calculated annually but it can also be calculated quarterly. A GDP Economic report that shows the annualized change in total value of goods and services produced in a country and is an indicator of a country’s economic health.
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Good till Canceled (GTC)
A pending order that remains in effect until it is executed or cancelled by the trader.
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Give up
An order to be given to another member firm in clearing system, an allocation. An order executed by clearing firm A and given to clearing firm B where it will be cleared and processed.
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G7
The Group of Seven (G7) is an international intergovernmental economic organization consisting of the seven largest IMF- advanced economies in the world: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
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G20 Meeting
A group of 20 countries represented at the highest level by heads of state/government and at the ministerial level by ministers of finance and central banks governors.
They meet to discuss global and economic issues.
The group consists of the following countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, South Africa, Saudi Arabia, South Korea, Turkey, United Kingdom, United States of America, The European Union (represented by the European Council).
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Hedge
Investors use hedging to protect themselves by reducing the risk that may be caused by adverse market movements. Hedging means making two opposing investments, minimizing the losses which could be incurred by price fluctuations.
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Hedger
A person or firm who uses the futures market to offset price risk when intending to sell or buy the actual commodity.
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Hedge Funds
Investment funds that invest in a wide range of assets to reduce risk.
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Head and shoulders
A sideways price formation at the top or bottom of the market that indicates a major market reversal.
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Hidden quantity
Order qualifier: indicates that the total quantity will not be displayed to the market, but only per increments as indicated. Difference between order quantity and displayed quantity is hidden.
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House
Clearing member or a firm.
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Hammer
The hammer line is a common technical analysis indicator, indicating that the price is in a downward trend. The characteristic of the hammer-shaped line is that the candle entity is short and the lower shadow line is particularly long.
When a hammer line appears, it means that the price will soon reverse. But it does not mean that as soon as the hammer line appears, it turns to the bulls. You should confirm the price trend first. -
HKD
Hong Kong Dollar. The currency of Hong Kong. It is subdivided into 100 cents.
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Index
A number that is representative of a whole market or market segment, usually computed by a sum product of a list of instruments' current prices and a list of weights assigned to these instruments.
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Initial margin
The minimum performance bond deposit required from customers for each contract in accordance with the rules of the Exchange.
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Inverted Market
A futures market in which the relationship between two delivery months of the same commodity is abnormal.
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Institutional Trader
A person or entity employed to trade on behalf of entities, including institutions, investment banks, pension funds, hedge funds and mutual funds.
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Intrinsic value
The relationship of an option's in-the-money strike price to the current futures price. For a put: strike price - futures price. For a call: futures price - strike price.
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Ichimoku Indicator
A technical indicator rather than a complete system that is used to identify with "one look" at the chart, the direction of the market, entries (buy and sell) and support and resistance levels. It consists of 5 lines: Among them, Senkou span A (first-line A line) and Senkou Span B (first-line B line) constitute a "cloud", showing the trend of prices. When the cloud fluctuates, it is regarded as an upward trend. When the cloud fluctuates, it is regarded as a downward trend. When the cloud fluctuates inside, it is regarded as a sideways trend.
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Investments
Investment refers to an economic activity in which investors invest a certain amount of money in a certain business in order to obtain the expected value appreciation in the future. However, investment results are not always profitable, and it is important to weigh potential risks. Generally speaking, the higher the investment risk, the higher the return.
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Industrial Production Index
The Industrial Production Index reflects the real output of the US manufacturing, mining, and public utilities. The measure is output rather than market value. Industrial production index is an important indicator to measure the level of American industry. The index reflects the overall health of US industry and also indicates to investors which industries are experiencing growth. Given that industrial production accounts for about 40% of total economic activity, monthly data changes have attracted close attention from investors.
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IPO (Initial Public Offering)
An IPO refers to the first time a company or company (a joint stock company) sells its shares publicly. Generally speaking, after the IPO is completed, the company can be listed. There are certain risks in investing in such stocks.
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Instant Execution
The order will be executed at the specified price or will not be executed due to dramatic price changes during the order. Orders will no longer be opened or closed without reaching the specific price agreed by the trader. In other words, there may be requotes. For novice traders who believe that the execution details of the exact person are very obvious, this type of execution is usually preferred.
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Initial jobless claims
Initial jobless claims are a data point issued by the U.S. Department of Labor as part of its weekly Unemployment Insurance Weekly Claims Report. Initial jobless claims refer to claims for unemployment benefits filed by unemployed individuals with state unemployment agencies.
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JPY
Yen. The currency of Japan.
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Japanese Candlesticks
A charting method that has gained a lot of popularity recently, because the charts are more visually appealing than bar charts that reflect the same information. They are also generally easier to read and interpret. The chart makes it easier to see the relationship between the open and close and the high and low of price movements. They also give a more accurate depiction of market sentiment.
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Kiwi
It is the nickname of the New Zealand Dollar (NZD). Flightless bird and national symbol of New Zealand.
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Krona
The krona is the official currency of Sweden.
SEK is the currency code for the Swedish krona, the currency for Sweden. The Swedish krona is made up of 100 öre and is often presented with the symbol kr. The krona, which means "crown" in English, is also known in Sweden as the "spänn" or "kosing".
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Leading Indicators
Market indicators that signal the state of the economy for the coming months. Some of the leading indicators include: average manufacturing workweek, initial claims for unemployment insurance, orders for consumer goods and material, percentage of companies.
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Lagging Indicators
Market indicators showing the general direction of the economy and confirming or denying the trend implied by the leading indicators. Also referred to as concurrent indicators.
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LIBOR (London Interbank Offered Rate)
The London Inter-bank Offered Rate is an interest-rate average calculated from estimates submitted by the leading banks in London. Each bank estimates what it would be charged were it to borrow from other banks. The resulting rate is usually abbreviated to Libor or LIBOR, or more officially to ICE LIBOR.
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Limit
The maximum price advance or decline from the previous day's settlement price permitted in one trading session, as determined by the Exchange.
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Limit order
Usually equivalent to "price". An order in which the customer sets a limit on price or other condition, as contrasted with the trading floor definition of a market order, which implies that the order should be filled as soon as possible.
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Leverage
The use of a small amount of assets to control a greater amount of assets.
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Liquid
A characteristic of a security or commodity market with enough units outstanding to allow large transactions without a substantial change in price.
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Liquidate
Selling (or purchasing) futures contracts of the same delivery month purchased (or sold) during an earlier transaction or making (or taking) delivery of the cash commodity represented by the futures contract. See Offset.
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Liquidity
The volume available in the market for a specific currency pair.
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Litecoin
Litecoin is a peer-to-peer cryptocurrency and open-source software project released under the MIT/X11 license. Creation and transfer of coins is based on an open source cryptographic protocol and is not managed by any central authority. Litecoin was an early bitcoin spinoff or altcoin, starting in October 2011.
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Long
One who has bought a futures or options on futures contract to establish a market position and who has not yet closed out this position through an offsetting procedure.
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Long hedge
The purchase of a futures contract in anticipation of an actual purchase in the cash market. Used by processors or exporters as protection against an advance in the cash price. See hedge.
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Long position
A position in which the trader has bought a futures contract that does not offset a previously established short position.
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Lot
A lot is a standardized quantity of the instrument you are trading. In forex, one lot is 100,000 units of a particular currency.
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Loonie
The nickname of the Canadian Dollar (CAD).
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Low Price
The lowest price that a financial instrument is traded during a specific timeframe.
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Maintenance Margin
The minimum value that you must keep in your account in order to continue to hold a position. The Maintenance Margin is typically less than the Initial Margin, and also differs by contract. If your account falls below the Maintenance Margin requirement, you will receive a margin call. If you wish to continue to hold the position, you will be required to restore your account to the full Initial Margin level (not to the Maintenance Margin level).
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Managed Futures
Represents an industry comprised of professional money managers known as commodity trading advisors who manage client assets on a discretionary basis, using global futures markets as an investment medium.
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Margin
The amount of money or collateral deposited by a client with his or her broker, or by a clearing member with the Clearing House, for the purpose of insuring the broker or Clearing House against loss on open futures or options contracts.
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Margin Call
This is a notification which alerts you that you need to deposit more money in your trading account, to ensure that there is sufficient margin to keep existing positions open.
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Margin Level
It is the ratio of Equity to Margin used for your open positions and indicated as a percentage. It indicates the "health" of your account. The margin level shows the risk level of the account, it can promptly remind the trader that the account is excessively losing and the possibility of being margined. The formula for calculating the margin level is: Margin Level = (Equity-Necessary Margin) × 100%.
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Market Maker
A broker who is willing to buy and sell financial instruments in order to facilitate trading and liquidity.
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Market Opening
Opening refers to the time when the financial market starts trading or resumes trading after a holiday. Due to differences in the opening time of different regions (Asia starts first), the foreign exchange market can be said to be an all-weather market.
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Market order
An order filled immediately at the best price available.
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Market value
The current value of all commodities held in a margin account.
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Maximum price fluctuation
The maximum amount the contract price can change up or down during one trading session, as stipulated by Exchange rules.
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Minimum Tick
Minimum price fluctuation per contract unit. Also known as tick size or tick value.
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Minimum price fluctuation
The smallest increment of price movement possible in trading a given contract, often referred to as a tick. The minimum unit by which the price of a commodity can fluctuate, as established by the Exchange.
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Momentum
It measures the speed of price changes rather price itself. The power indicator is a commonly used reference indicator in technical analysis and is composed of moving averages at 34 time points. Founded by Bill Williamson, this system can monitor market dynamics and is of great significance for predicting price trends.
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Notice Day
According to Chicago Board of Trade rules, the second day of the three-day delivery process when the clearing corporation matches the buyer with the oldest reported long position to the delivering seller and notifies both parties.
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Nasdaq
A large stock exchange in New York.
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Nasdaq Composite Index
The Nasdaq Composite Index is a large market-cap-weighted index of more than 2,500 stocks, American depositary receipts (ADRs), and real estate investment trusts (REITs), among others. A stock market index of all shares traded on Nasdaq. It is weighted index according to the stocks’ capitalization.
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Nikkei
A stock market index for the Tokyo Stock Exchange, composed of 225 stocks of large Japanese companies.
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NYSE
The New York Stock Exchange (NYSE) is a stock exchange located in New York City that is the largest equities-based exchange in the world, based on the total market capitalization of its listed securities. Formerly run as a private organization, the NYSE became a public entity in 2005 following the acquisition of electronic trading exchange Archipelago. In 2007 a merger with Euronext, the largest stock exchange in Europe, led to the creation of NYSE Euronext, which was later acquired by Intercontinental Exchange, the current parent of the New York Stock Exchange.
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No Dealing Desk
When traders have direct access to the interbank market and there is no dealing desk involved in their transactions.
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Notice Day
According to Chicago Board of Trade rules, the second day of the three-day delivery process when the clearing corporation matches the buyer with the oldest reported long position to the delivering seller and notifies both parties.
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NFP/Non-Farm Payroll
High impact, monthly report presenting the change of US employed people, excluding the farming and the government sector. Released, usually, the first Friday of the month by the Bureau of Labor Statistics.
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NZD
New Zealand Dollar. The currency of New Zealand, the Cook Islands, Niue, Pitcairn and Tokelau. It is subdivided into 100 cents.
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Offset
The buyer is under no obligation to exercise an option on a futures contract. As a matter of fact, many traders choose to offset their position prior to expiration. Traders will offset their position if they wish to take profits before expiration or limit losses on the downside. Buyers can offset their options by instructing their broker to sell their option before expiration. An option seller can offset a position by buying back or "covering" a short position.
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OPEC
Organization of Petroleum Exporting Countries. OPEC’s mission is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry. The twelve-member states are: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
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Option
An option on a futures contract is the right, but not the obligation, to buy or sell a particular futures contract at a specific price on or before a certain expiration date. There are two types of options: call options and put options. Each offers an opportunity to take advantage of futures price moves without actually having a futures position.
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Options Available
Signifies whether an options on futures contract is available for this futures contract.
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Open order
An order that remains good until filled, cancelled or eliminated. See good-til-canceled.
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Open interest
Total number of futures or options on futures contracts that have not yet been offset or fulfilled for delivery.
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Opening range
The range of prices at which the first bids and offers were made or first transactions were completed. Must be initiated by at least one trade.
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Opening price
The first price of an instrument at the beginning of the trade session.
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Opening
The beginning of the trading session.
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Order
A request –usually passed by a trader to the host –for buying or selling a given instrument at certain conditions more or less defined (conditions being price, quantity, type of order, etc.).
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Out-of-the-money
When the futures price is below the strike price (for calls) and above the strike price (for puts) the option is said to be out-of-the-money. An option that has no intrinsic value, but only time value, is out-of-the-money. If Crude Oil (WTI) futures are trading at 93.95, a 95.00 call would be out-of-the-money.
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Over the Counter Derivative
Futures and options contracts with terms that do not necessarily adhere to those of a standardized futures contract.
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Over the Counter Trading
Trades that take place outside of a formal futures exchange.
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Oversold
When the market drops too far oscillators will reflect that decline with extreme low readings below the middle/equilibrium line, hence identifying oversold conditions. An oscillator at extreme low conditions can be an alert for a reversal. Oscillators usually give false signals in the beginning of a trend as they move too fast in the oversold area.
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Overnight Rate
The overnight rate is the interest rate at which a depository institution (generally banks) lends or borrows funds with another depository institution in the overnight market. In many countries, the overnight rate is the interest rate the central bank sets to target monetary policy.
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Over the Counter/OTC
The traditional way of trading forex was ‘over the counter’, meaning traders made forex transactions over the telephone or on electronic devices.
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Performance Bond (Margin)
An option buyer must only put up the amount of the premium, in full, at the time of the trade. However, because option selling involves more risk, an option seller or writer will be required to post performance bond. Your broker can discuss the performance bond requirement associated with selling options (see section regarding risks in selling options). Once an options position is exercised into a futures position, performance bond is required, just as for any other futures position.
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Position
A long or short trade taken by a trader.
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Price Discovery
The generation of information about "future" cash market prices through the futures markets.
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Pending Orders
Orders to buy or sell a financial instrument in the future when certain conditions are met. They consist of limit orders and stop orders.
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Point and Figure Chart
A graph of prices charted with x's for price increases and o's for price decreases, used by the chartist for buy and sell signals.
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Position Limit
The maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange upon which the contract is traded. Also referred to as trading limit.
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Position Trader
A trader who takes a position in the market and might hold that position over a long period of time.
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Position
A market commitment. A buyer of a futures contract is said to have a long position and, conversely, a seller of futures contracts is said to have a short position. See "Open Interest".
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Price Limit
The maximum advance or decline from the previous day's settlement price permitted for a contract in one trading session by the rules of the exchange. See also Variable Limit, Maximum Price Fluctuation.
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Price Limit Order
An order that specifies the highest price at which a bidder will pay for a contract, or the lowest price a seller will sell a contract. This type of order is used to "limit" how much the trader is willing to "give in" on price to get the order filled.
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Price Quotation
Price per contract unit. Note placement of decimal. Numeral after ‘ in grains is in quarter-cents, e.g. 2 = 0.25; 4 = 0.50; in interest rates = points & half-points of 1/32.
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Price order
An order to sell or buy at a certain price or better.
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Premium
The premium is the price that the buyer of an option pays and the seller of an option receives for the rights conveyed by an option. Thus, ultimately the cost of an option is determined by supply and demand. Various factors affect options premiums, including strike price level in relation to the futures price level; time remaining to expiration; and market volatility —all of which will be discussed further.
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Producer Price Index (PPI)
An index that shows the cost of resources needed to produce manufactured goods during the previous month.
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Product Symbol
Identifies both market and trading venue for trading and clearing purposes. Symbols used by brokers and quote services might differ from exchange symbol.
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Point
It is the smallest increment of an exchange rate.
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Physical money market
The physical currency market scale foreign exchange market, cash transactions occur directly between buyers and sellers. Foreign exchange agrees in advance, and transactions are generally completed in two transactions. Commercial banks and investment banks are also involved in this business. The physical currency market can be classified as a spot market.
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Pattern
Price patterns or technical analysis indicators show the overall situation of the market and can guide traders to make the next trading decision. The price patterns can be easily found in technical analysis charts. They have different structures and names (for example: triangle, double bottom, wedges, etc.). After the price pattern appears on the chart, traders get the relevant signals and can determine the next operation-buy, sell or adjust appropriately.
There are two types of price patterns, one is to continue the current trend, and the other is to reverse.
In view of the cyclical nature of the market, price patterns tend to recur. The price pattern is one of the most important technical analysis methods.
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Quantity
Number of instrument units (e.g. lots) to be traded, in order or a trade. Sometimes also called "size".
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Quantitative Easing
Monetary policy to stimulate economic growth and lift the economy out of stagnation. Central Banks increase money supply in the market by "printing money", lowering interest rates and making money available to consumers to spend and businesses to invest.
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Quote
It’s the price that a financial instrument may be bought (Ask price) or sold (Bid price).
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Quote Currency
The second currency of a currency pair is called the Quote currency. In EUR/USD for example, USD is the quote currency
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Range
The high and low prices or high and low bids and offers recorded during a specified time.
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Rally
An upward movement of prices following a decline. The opposite of a reaction.
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Recession
A contraction in economic activity. A period of two consecutive quarters of declining Gross Domestic Product (GDP).
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Reserve Requirements
The minimum amount of cash and liquid assets as a percentage of demand deposits and time deposits that member banks of the Federal Reserve are required to maintain. ve Requirements.
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Requote
When a broker is not able to fill a trader’s order at the specific price due to an unusually rapid price movement. The broker would then quote the next best available price, seeking the trader’s confirmation to fill the order.
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Risk Management
Identifying, analyzing and either mitigating or absorbing the price risk in investing or business planning.
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Resistance line
A price level above which prices tend not to rise due to selling pressure.
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RUB
Russian Ruble. The currency of the Russian Federation. It is subdivided into 100 kopeks.
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Runaway gap
A gap in prices after a trend has begun that signals the halfway point of a market move.
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Reference price
The price of an instrument used as "reference" –e.g., for determining an opening price, starting an algorithm, or figuring into an index –and is usually the settlement price or last closing price.
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Retracement
A price move in the opposite direction of a recent trend.
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Registered representative
A person employed by, and soliciting business for, a commission house or futures commission merchant.
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Repurchase Agreements (or Repo)
An agreement between a seller and a buyer, usually in U.S. government securities, in which the seller agrees to buy back the security at a later date.
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Risk Appetite
The amount of risk a trader is willing to take.
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Risk Aversion
Refers to the level of tolerance of uncertainty. Traders with risk aversion prefer lower returns with known risks (usually low risk) over higher returns with unknown/uncertain risks (usually high risk).
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Rollover Rate
In forex, the rollover rate is the interest rate that traders pay or earn when they hold (rollover) a position open overnight.
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Settlement price
A figure determined by the closing range that is used to calculate gains and losses in futures market accounts, performance bond calls and invoice prices for deliveries. See "closing range".
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Selling climax
An extraordinarily high volume occurring suddenly in a downtrend signaling the end of the trend.
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Sell (Sell Order)
An offer. This transaction type indicates to sell or to go short. Opposite of buy or go long.
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Scalping
To trade for small gains. A trading strategy that benefits from small price movements.
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Slippage
This is when a trader executes an order at a price which is very different to the price they expected the trade to be executed at. This usually happens during periods of high volatility, when traders use market orders and stop loss orders.
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Short
The sale of a financial instrument to be bought later at a lower price.
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Short hedge
The sale of a futures contract in anticipation of a later cash market sale. Used to eliminate or lessen the possible decline in value of ownership of an approximately equal amount of the cash financial instrument or physical commodity. See "hedge".
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Spike
A sudden upward or downward movement in price that happens in a short time period.
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Speculator
One who attempts to anticipate price changes and, through buying and selling futures contracts, aims to make profits. Does not use the futures market in connection with the production, processing, marketing or handling of a product.
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Spot
Usually refers to a cash market price for a physical commodity that is available for immediate delivery.
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Spread
An options position established by purchasing one option and selling another option of the same class, but of a different series.
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Swap
In foreign exchange transactions, positions held will generate overnight interest. While other currencies have their own interest rates, and each foreign exchange transaction involves two currencies, and therefore involves two different interest rates. If the interest rate of the purchased currency is lower than the interest rate of the sold currency, you will need to pay overnight interest (negative overnight interest).
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Stop Order
An order which becomes a market order when the price designated on the order (the "Stop Price") is elected as described below.
A "Buy Stop" order is placed above the market, and is elected only when the market trades at or above, or is bid at or above, the Stop Price. A "Sell Stop" order is placed below the market, and is elected only when the market trades at or below, or is offered at or below, the Stop Price. -
Stop Limit Order
An order which becomes eligible for execution at its limit price or better when the market trades at or above the stop price in the case of a buy stop limit order or at or below the stop price in the case of a sell stop limit order.
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Stop loss
Order type: Same as stop limit, but with no limit indication: when triggered, will execute like an MBF.
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Scalp
To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or even just a few minutes.
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Strike (price)
The price at which the option buyer may purchase or sell the underlying futures contract upon exercise.
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Support
The place on a chart where the buying of futures contracts is sufficient to halt a price decline.
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SWIFT (Society for Worldwide Interbank Financial Telecommunications)-Global Banking Financial Telecommunications Association
The Global Banking Financial Telecommunications Association (SWIFT) is an international inter-bank non-profit international cooperation organization that provides fast, accurate, and excellent services for international financial services. It operates a world-class financial message network. Banks and other financial institutions use it Exchange messages with peers to complete financial transactions.
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Target price
An expected selling or buying price. For long and short hedges with futures: futures price + expected basis. For puts: futures price - premium + expected basis. For calls: futures price + premium + expected basis.
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Take Profit
An order placed to close a position so as to lock profits once it hits a specific price.
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Technical Analysis
The study of market action mainly through price charts for the purpose of identifying future price trends in early stages.
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Tick
Smallest increment of price movement possible in trading a given contract.
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Time Value
The amount by which an option's premium exceeds the intrinsic value of the option. Usually relative to the time left to expiration.
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Transparency
The amount of access a market openly offers about its activities and financial information.
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Trading Hours
When the contracts are available for trading on a certain trading venue.
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Trend
The direction of successive tops and bottoms:
Uptrend – Successive higher tops and higher bottoms
Downtrend - Successive lower tops and lower bottoms
Trendless (Range, Sideways) – Equal tops and equal bottoms -
Trading day
(Should actually be called 'Clearing Day') –Period within which all executed trades for a given class are cleared on the same day. This period may very well exceed 24 hours. One or more sessions could take place.
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Transaction
Operation records of any type of financial assets (currency pairs, stocks, etc.). For example, buying or selling stocks.
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Trailing Stop Loss
A stop loss order that is applied on profitable positions to lock in profits. It follows the market price at a distance equal to a predetermined number of points. It is set on the Client Terminal as opposed to the Stop Loss order that is set on the Server.
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Uptrend
A price trend characterized by a series of higher highs and higher lows.
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U.S. Treasury Bill
A short-term U.S. government debt instrument with an original maturity of one year or less. Bills are sold at a discount from par with the interest earned being the difference between the face value received at maturity and the price paid.
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U.S. Treasury Note
Government-debt security with a coupon and original maturity of one to 10 years.
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Underlying Futures Contract
The underlying is the corresponding futures contract that is purchased or sold upon the exercise of the option. For example, an option on an August CME Live Cattle futures contract is the right to buy or sell one such contract. An option on September Wheat futures gives the right to buy or sell one September Wheat futures contract.
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U.S. Dollar Index
DescriptionThe U.S. Dollar Index is an index of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies. The Index goes up when the U.S. dollar gains "strength" when compared to other currencies.
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Value Date
The date that the transaction actually takes place.
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Volatile
A measurement of the change in price over a given time period.
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Volatility
This refers to the level of uncertainty surrounding price fluctuations of financial instruments. Volatility is usually characterized by rapid, random price movements.
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Volume
The number of contracts in futures or options on futures made during a specified period of time.
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VPS （Virtual Private Server）
A server that runs 24/7 without any downtime due to internet connectivity, electricity cutoffs or hardware faults. Ideal for automated trading (expert advisors).
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WTI
West Texas Intermediate: WTI is considered one of the major benchmarks for crude oil pricing globally. It has a low Sulphur content (sweet) and it has a relatively low density (light). Hence, it is also known as Texas Light Sweet. It is listed in the New York Mercantile Exchange's oil futures.
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WTO (World Trade Organization)
The World Trade Organization is an intergovernmental organization that is concerned with the regulation of international trade between nations。 It is one of the most important international economic organizations in the contemporary era. It has 162 members, and its total member trade reaches 98% of the world. It is known as the "Economic United Nations".
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Warrant
Warrants are a derivative that give the right, but not the obligation, to buy or sell a security—most commonly an equity—at a certain price before expiration. The price at which the underlying security can be bought or sold is referred to as the exercise price or strike price.
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XAU
Gold.
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XPD
Palladium.
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XPT
Platinum.
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Yield Curve
A chart in which the yield level is plotted on the vertical axis and the term to maturity of debt instruments of similar creditworthiness is plotted on the horizontal axis. The yield curve is positive when long-term rates are higher than short-term rates.
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Yield
A measure of the annual return on an investment.
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Yield to Maturity
The rate of return an investor receives if a fixed-income security is held to maturity.
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ZAR
Rand. The currency of South Africa. It is subdivided into 100 cents.
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ZigZag
A technical indicator that draws tops and bottoms - filtering out noise. The zig zag indicator is a basic tool that analysts use to find out when a security's trend is reversing. By determining the support and resistance areas, it helps to identify significant changes in price while filtering out short-term fluctuations, thus eliminating the noise of everyday market conditions.
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ZWL
Zimbabwe Dollar. The currency of Zimbabwe. It is subdivided into 100 cents.