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- AgreementEntails all the Terms and Conditions for the Services offered by the Company.
- Ask PriceThis is a price that a seller is willing to accept for a specific asset or security, or the price at which an investor can purchase an asset or security.
- AssetAn asset is a trading product, or financial instrument, it is a resource that holds economic value. Examples include: Commodities: (e.g. Gold, Silver, Coffee, Corn, and Oil etc.) Stocks: (e.g. Microsoft, Google, Amazon, and BMW etc.) Currency pairs: (e.g. Euro-Yen, Dollar-Yen and Euro-Dollar etc.) Or Indices: (e.g. Dow Jones, Nikkei 225, and S&P 500 etc.)
- At the MoneyThere is a unique occurrence in Binary Options that is called an ‘at-the-money’ close on a trade. This means that the purchase price of the trade ends up being the same as the price at the close of the trade. In other words, the option does not close above or below the contract price. An ‘at the money’ close is considered a breakeven position and you will be refunded your initial investment.
- AussieThe Aussie is a market nickname for the Australian dollar.
- Base CurrencyThe base currency is the first currency in a pair. The given exchange rate refers to how much of the second currency in a pair (the quote currency) is required to purchase a unit of the base currency.
- Bear MarketA 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 exacerbates the downward trend.
- Bearish ReversalA bearish reversal occurs when an upward-trending, or bullish, market begins to move in the opposite direction.
- Bearish SentimentBearish 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 PriceThis is the price at which an investor is able to sell an asset or security, or the price at which a bank or brokerage is willing to purchase an asset from a private investor
- BinaryIn finance, a binary option is a type of option in which the payoff can take only two possible outcomes, either some fixed monetary amount (or a precise predefined quantity or units of some asset) or nothing at all (in contrast to ordinary financial options that typically have a continuous spectrum of payoff).
- Binary OptionsAlso known as digital options, these are trading options that behave like fixed-odds-return investments. They have two possible absolute outcomes, with a structured reward and risk. The trader predicts the direction of the trade for the underlying asset and the potential payouts are predetermined at the time of purchase.
- Black Swan EventCoined by Nassim Nicholas Taleb, the term refers to surprise events that have large knock-on effects. The idea being that these outlier events have historically had a disproportionate influence on global affairs and are nearly impossible to foresee.
- BonusA bonus is an extra credit amount that BullMarkets.com credits to your trading account, giving you additional leverage and liquidity. A bonus may not be suitable for all traders, so please make sure that you understand all the Terms and Conditions involved prior to accepting a Bonus.
- CableThe Cable is the market nickname for both the Great British pound and the GBP/USD currency pair. The term is derived from the telegraph cable that was laid under the Atlantic Ocean in 1858, which was used to synchronise GBP/USD exchange rates.
- Candlestick ChartDeveloped by Japanese rice traders in the 19th century, candlestick charts are a method of plotting price action that has been widely adopted by contemporary traders. Essentially candlestick charts are a hybrid of line and bar graphs. Each candlestick represents a unit of the timeframe an asset is being monitored at; it is composed of a bar-shaped body and a line-shaped wick (or shadow) above and below the body. The body represents the opening and closing prices for the given duration, the wicks either side of it represent the highest and lowest prices the asset reached within that timeframe. Candlesticks are coloured differently to represent a higher closing than opening (indicating an upward price movement), and a lower closing than opening (indicating a downward price movement.) Traditionally bullish candlesticks were coloured white and bearish ones were coloured black, but nowadays traders can set their charting platforms to observe their own user-defined colour schemes.
- Chart PatternIn technical analysis chart patterns are certain formalised shapes that traders try to identify when charting an asset’s ever-changing market price. These patterns are thought to be reliable indicators of future price movement.
- CommodityCommodities are goods of standardized 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. The standardization of commodities, also known as a basis grade, ensures that regardless of where a commodity originates from, it will be of a standard quantity and above a minimum quality so as to make it interchangeable with the same product from all other producers trading on a given exchange.
- CPIConsumer price index is a monthly economic indicator that tracks the changes in the price of goods and services purchased by consumers. Consumer prices account for most of the inflation a country experiences. CPI is therefore an important indicator of changing currency values because rising prices can lead to central banks raising interest rates in order to counter-balance inflationary pressures. When CPI comes in lower than expected this tends to be good for the currency in question.
- Currency CalculatorCurrency calculators allow users to convert a set amount of one currency into another. BullMarkets.com offers a currency converter that allows users to calculate foreign exchange conversions between twenty-three different currencies. Using the calculator couldn’t be easier; traders select their currency, the currency to be converted into, and the amount to be converted. Clicking the calculate button performs the calculation using live market rates.
- Day TradingDay trading is the practice of buying and selling an underlying asset within a single trading day, taking advantage of market fluctuations, usually by employing large amounts of leverage, in order to profit from relatively small movements in price. The most common markets for day traders are the Forex and stock markets. Day traders are important as their activities provide liquidity to the markets in which they trade; they also maintain market efficiency by arbitrage. In today’s markets the overwhelming majority of intra-day trades are made by automated trading algorithms.
- Digital OptionA digital option is another term for a binary option.
- Dormant AccountA dormant or inactive accounts are considered any accounts which over a period of ninety (90) consecutive days there were no trading activities, where no trading activities are defined as following: - No deposit of funds has taken place within the last ninety (90) consecutive calendar days in the specific Account. - No trades/positions have been executed or being open and/or pending for the ninety (90) consecutive calendar days through this Account.
- DoveIn economics a dove refers to a central banker or economic advisor who is in favour of policies that keep interest rates low, reasoning that inflation is not an imminent threat to the country or economic bloc in question. When these individuals make statements in the press to this effect, these statements are referred to as being ‘dovish’.
- Early ClosureIf a trader chooses an early closure, it means they are able to close an open position so the option expires immediately.
- Economic CalendarEconomic calendars are used to keep track of all the economic data that is due to be released by each country and region. Data releases are usually graded according to the impact they tend to have on the markets.
- Economic IndicatorsEconomic indicators are economic reports that are released periodically by individual nations and economic regions like the E.U. They are used by investors to try and determine the overall economic health and investment potential of the countries and regions in question. Usually the release of an important economic indicator causes an increase in market volatility both in the run-up to and aftermath of the data being released.
- EMAExponential moving averages trace an asset’s average price over a preset number of periods, but unlike simple moving averages (SMA), EMA calculations give more weight to the most recent data. As a result EMAs react faster to changes in price than SMAs do. Two of the most popular EMAs in technical analysis are the 12 and 26 period moving averages.
- EquityWhen trading, your equity is your account balance, plus or minus the unrealized profit and loss from any positions you currently still have open. It is calculated as follows: Equity = Balance +/- Floating Profit/Loss. A stock or other security that represents ownership of a given asset.
- European SessionThe European session is the second trading session of each trading day. Europe trades between 7am and 4pm GMT. These hours change when daylight savings time is observed.
- ExecutionThe execution of Clients’ orders on the Company’s trading platform, where the Company acts as an Agent to Clients’ transactions.
- Expiry Rate/PriceThe 'Expiry Price' indicates the price of the contract at the time that the trade closes. This price determines whether an option has fulfilled its contract target.
- Expiry TimeThe expiry time is the time and date at which a binary option will automatically expire.
- Fibonacci RetracementsNamed after 13th century mathematician Leonardo Fibonacci, the Fibonacci numbers are an integer sequence in which each number is the sum of the previous two. The sequence is closely related to the golden mean and its ratios are to be found in many places in nature, from shell spirals and tree branches, to the ratios of the human body’s appendages and joints. In technical analysis Fibonacci retracements are support and resistance lines drawn on an asset’s price chart in order to discern the Fibonacci relationships that are thought to also exist in asset price fluctuations. Instead of them simply being plotted at high and low points like traditional support and resistance lines, they are drawn according to the Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. To apply them, select Fibonacci retracements from your terminal and draw a line from a recent lowest low to a recent highest high (or vice versa depending on whether the market is trending bullishly or bearishly), your platform will automatically plot the ratios for you between these two points. Fibonacci retracements work best when plotted on strongly trending markets. When drawn from low to high the levels indicate retracement support levels that price action may pull back to, thus generating buy signals for traders. When drawn from high to low the levels indicate retracement resistance levels that price action may momentarily spike back up to, thus generating sell signals for traders. It is thought that one of the reasons Fibonacci retracements seem to work so well as a predictive tool has more to do with the levels being self-fulfilling due to so many investors observing them, rather than there being some essential mathematical ratio that defines price movement.
- Financial InstrumentsAny of the financial instruments offered by the Company and which are defined as such under applicable Law or Regulation.
- Financial MarketsInternational financial markets in which financial instruments exchange rates are determined in multi-party trade.
- Fixed ReturnA profit amount that doesn’t vary when the asset value changes. BullMarkets.com offers high, fixed returns of up to 85%.
- Floating Profit and LossFloating profit and loss refers to the unrealized profits or losses resulting from any open positions currently held by a trader.
- FOMCMembers of the Federal Reserve’s Open Market Committee are responsible for voting on where U.S interest rates should be set. Consequently, whenever one of their number is scheduled to speak publically, or their internal meeting minutes are released, it is regarded as a high-impact economic indicator. If their sentiment is more hawkish than expected this can have a positive effect on the value of the US dollar, and vice versa if it more dovish than expected.
- Foreign Exchange MarketA 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. Trading is divided into three main sessions: the Asian session, the European Session and the North American Session, which open one after the other throughout the day and overlap, ensuring that the market is operational 24 hours a day, 5 days a week.
- ForexForex is just an abbreviated term for the Foreign Exchange.
- Fundamental AnalysisFundamental analysis is a method of market analysis primarily focusing on the external factors that affect the price of a security. This school of analysis presupposes that securities are always either over- or underpriced and are thus perpetually correcting themselves towards their true value. Fundamental analysts focus on the economic, geo-political and social climate, as well as macroeconomic factors such as: output, income, unemployment, GDP, inflation/deflation. The purpose of this type of analysis is to identify whether a certain security is over- or underpriced and then to take the appropriate position.
- FuturesFutures are a class of indirect securities which are contracts to buy or to sell a specific commodity at a set time down the road. Futures can be strict, which requires the holder to buy or sell the said commodity, while futures options allow for choice.
- GDPGross Domestic Product is an economic indicator that tracks the changes in the total value of goods and services produced by a country or economic region (adjusted for inflation). GDP provides a comprehensive account of economic activity and is regarded as the most important barometer of economic health. With the exception of Canada, which releases its own GDP figures on a monthly basis, GDP is usually reported quarterly. Most countries release three versions of their GDP figures: a Preliminary report, a revised Second Estimate, and a Final version. Even though the Preliminary report is not the most accurate, it tends to have the greatest market impact due to it being released first. When GDP comes in higher than expected, it will tend to have a beneficial effect on the value of the currency in question.
- GuppyThe Guppy is the market nickname for the GBP/JPY currency pair.
- HawkA central banker, or economic advisor, whose policies are defined by being primarily concerned with interest rates. Hawks tend to be in favour of keeping interest rates relatively high in order to keep inflation down. Another way to describe a hawk’s policies is to say that they are not as concerned with economic growth as they are with keeping inflationary pressures in check. Policies or statements made to this effect are described as being ‘hawkish’.
- Hedging/FencingHedging means buying an asset or option in order to reduce a trader’s risk from another investment. Options are considered ideal for hedging because the risks and payouts are set.
- HighA high is an option in which the trader is assuming the underlying asset will rise to a price higher than the target price.
- High/Low OptionA high/low option gives an investor a set payout if the underlying asset hits a certain price that is either higher or lower than it was at the beginning of the trade, providing that particular option or trade expired “in the money.”
- In The MoneyThis is a term that is often used to describe a profitable trade.
- IndexIndices are imaginary portfolios of securities which represent the relative health of a given market or sector of the economy. For example, the S&P 500, which is one of the most popular benchmarks of the U.S stock market, tracks the value of 500 of the largest American companies, and represents around 75% of the American equity market. Its value represents the aggregated performance of all the stocks that comprise it. Though each index has its own calculation methodology, what investors look for is the percentage that an index rises or falls above or below its base value. Indices are not technically investment vehicles; however index mutual funds and exchange-traded funds allow investors to take positions on the changing fortunes of the economic sectors represented by indices.
- Industrial ProductionIndustrial Production is an economic indicator that reports the total value of a country or economic region’s industrial output (adjusted for inflation). The figures take manufacturing, mining and utilities into account. Industrial output is a valuable indicator because it is closely correlated with other areas such as employment, earnings and consumer confidence. It is considered a coincident indicator due to production being so sensitive to changes in demand. When the figures come in higher than expected they tend to have a positive effect on a country’s currency value.
- InstrumentAn instrument is another term used for an asset.
- Investment AmountThe amount of money that a trader invests to purchase an option.
- JawboningJawboning, also known as ‘Moral Suasion’, is use of rhetoric to influence political and economic events rather than having to resort to direct intervention through legislation. Speeches by central bankers tend to fall into this category as they seek to influence market sentiment and exchange rates without overtly changing policy.
- KiwiThe Kiwi is the market nickname for the New-Zealand dollar.
- Lagging IndicatorLagging indicators are technical indicators that register change after the economy does as a whole. A good example of a lagging indicator is employment as it will tend to increase or decrease after upturns or downturns in the wider economy.
- Laissez-FaireLiterally meaning “leave alone” in French, laissez-faire is an economic theory that originated in the 18th century which is against government interference. Proponents of laissez-faire economics believe that the markets should be allowed to regulate themselves and are typically against regulation, trade restrictions and even minimum wages.
- LatencyTrade latency refers to the interval of time between an order being placed and its execution. Lower latency is desirable as it means that a trader has a higher possibility of securing the price displayed for an instrument before the market moves.
- Leading IndicatorLeading indicators are economic indicators that register change before it is felt by the economy at large. Money Supply, Building Permits and Manufacturing Orders are all considered leading indicators.
- LeverageLeverage allows investors to command a much larger investment than their capital will allow, thus allowing them to potentially increase their returns while only investing a percentage of the overall value of the asset in question.
- LiquidityLiquidity refers to the degree that an asset can easily be bought or sold on a given market. A highly liquid asset is one that can be bought and sold in large numbers without this activity substantially altering its market price.
- Long PositionTo take a long position, or to ‘go long’, on an asset is to buy with the expectation that it is due to rise in value.
- LoonieThe Loonie is the market nickname of the Canadian dollar. It is derived from the Common Loon, the provincial bird of Ontario which appears on one side of the Canadian one dollar coin.
- Lost DecadeLost decades occur after severe economic crises, particularly after an economic bubble has burst. Sluggish economic growth, high unemployment and falling real-estate prices are typical in these situations. Standards of living, if they ever return to pre-crisis levels, take many years to be recovered.
- LowThe term “low” refers to a trade or an option that a trader feels will expire at a price lower than the target price.
- MACDMACD (Moving Average Convergence Divergence) is a popular technical indicator that was developed by Gerald Appel in the 1970s. It is used to indicate changes in the momentum, direction and duration of an underlying asset’s price action. MACD focuses on the relationship between two moving averages. The first is called MACD line; it is calculated by subtracting the 26 period EMA (exponential moving average), from the 12 period EMA. The second line is known as the signal line, this is a 9 period EMA of the MACD line. Both the MACD line and the signal line are plotted over current price action, and the difference between them is presented in a histogram beneath the chart being monitored. MACD works best in trending markets as its main strength is alerting traders to subtle changes in the strength and direction of an asset’s trend. There are three main things MACD traders look out for when using this technical indicator. MACD/signal line crossovers: When the MACD line crosses up through the signal line it is a bullish signal indicating the emergence of an uptrend. When the MACD line crosses down through the signal line it is a bearish signal indicating that a downtrend is in effect. These crossovers are also clearly visible in the histogram, which shows the difference between the two. The point at which they cross over the histogram is to be found at zero because there is no difference between them. MACD/Zero line crossovers: When the MACD line plotted on the histogram crosses the x-axis, or zero line there is no difference between the fast (short period) and slow (long period) EMAs that compose it. An upward move through the zero-line means that the short term EMA is above the long-term EMA, which is considered an indication of a possible bullish reversal, a downward move through the zero-line means that the long-term EMA is above the short-term EMA, which is considered an indication of a possible bearish reversal. It is important to keep in mind that while a zero crossover indicates a trend reversal, it says less about the momentum of this change than a signal-line crossover. 3. When the underlying asset’s price begins to diverge from the MACD line or histogram, i.e. price action moves either above or below the MACD line or histogram, this can be an indication that a current trend is beginning to break down.
- MarginMargin refers to the funds that traders are required to have in their accounts in order to guarantee their open positions.
- Market PriceThe market price is the price that reflects the current value of an underlying asset.
- MomentumMomentum is the rate at which an underlying asset’s price and volume accelerate, either positively or negatively. Once an asset begins to gather momentum it is considered increasingly likely that it will continue to move in the same direction. In technical analysis indicators of momentum are called oscillators and are used to indicate emerging trends.
- NFPNFP (Non-Farm Payroll) 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, government, non-profit organization and private household employees. The previous month’s data is released on the first Friday of every month, making NFP the earliest and most important employment indicator from the United States. Numbers can vary from +/- 10,000 – 250,000, if it comes in better than expected bullish USD activity normally follows.
- No TouchA no-touch is an option that does not reach or surpass its target level.
- North American SessionThe North American session is the last session of each trading day, opening between 12pm and 8pm GMT. These hours change whenever daylight savings is observed.
- Operating TimeThe period of time within a business week, where the trading terminal of the Company provides the opportunity of trading operations. The Company reserves the right to alter this period of time as fit, upon notification to the Client.
- OptionAn option is a financial instrument that secures the right, though not the obligation, to buy or sell a given asset at a certain price on a specified date. The seller of an option is referred to as an option writer and the buyer of an option is referred to as option holder. In options trading to purchase an option on a given asset is to ‘Call’ and to sell is to ‘Put’
- OrderAn order is an instruction from a trader to a broker to buy or sell a specified security.
- OscillatorIn technical analysis, technical indicators that operate by plotting the output of a trend indicator between two extreme values are called oscillators. Oscillators are employed by traders to identify overbought and oversold conditions.
- Out-of-the-moneyIf a trader is out-of-the-money, it means they have experienced a loss.
- P&LProfit and loss is a method of monitoring a trading system’s ability to consistently create more profits than loses over a given period of time. Profit and loss is calculated by taking the average profit from winning trades and dividing it by the average loss from losing trades. The result is two numbers which form a profit and loss ratio. A common benchmark for a successful strategy is that it should generate a profit and loss ratio of at least 2:1, in other words two wins for every one loss.
- Parabolic SARAlso known as parabolic stop and reverse, Parabolic SAR is a technical indicator developed by J. Welles Wilder Jr. It is used in trending markets to determine entry and exit points and is also employed to set effective trailing stop-loss parameters. Parabolic SAR is presented as a series of dots which are plotted either over or under the current market price. The simplest way to read this indicator is to sell when price action is below Parabolic SAR and to buy when price action is above it. It works by calculating the next period’s value using the current period, added to an acceleration factor (normally valued at 0.02 and increased by a further 0.02 each time a new extreme high or low point is registered), this is multiplied by the value of that last registered Extreme Point (EP) minus the current value. The way the acceleration factor is set causes SAR to converge on the current price as a trend continues. This indicator takes as a given that trends tend to be short-lived and can only continue unabated for a limited period of time.
- PayoutThis is the financial return or profit that is realized when a contract expires. More often, this is a term used for an 'In-The-Money' trade, but many contracts also include a return percentage on 'Out-Of-The-Money' trades.
- Pending OrderA pending order is an instruction to buy or sell an instrument when certain preconditions specified by the trader are met. Pending orders fall into two categories, limit orders and stop orders. Essentially, when placing a pending order a trader is informing their broker that they do not want the current market price, but rather that they only want their order executed if the market price reaches a certain level.
- PetrodollarPetrodollars are US dollars earned through the sale of oil. Since crude oil is priced in US dollars each transaction involves US dollars changing hands. The term was coined by Ibrahim Oweiss amidst the oil crisis of 1973 as a way of describing the US dollars that OPEC nations were accruing through the sale of their oil.
- Pivot PointPivot points are technical indicators used to predict short-term movements in price action. Usually they are calculated by taking the average of an asset’s highest, lowest and closing prices, or an average of an asset’s highest, lowest, opening and closing prices. When current price action takes place above a pivot point it is regarded as being bullish, when it takes place below a pivot point it is regarded as being bearish.
- PMIPurchasing Managers’ Index is a leading economic indicator derived by surveying a large cross-section of private sector purchasing managers in the manufacturing, construction and service sectors. The survey consists of questions regarding business conditions including employment production, prices, new orders, deliveries and inventories. A figure above 50.0 indicates an industry that is expanding, a figure below 50.0 indicates an industry that is contracting.
- PortfolioA portfolio is a selection of financial assets held by an investor. These can include stocks, bonds, commodities, options contracts as well as investments in mutual and exchange-traded funds. It is thought prudent to have a diverse investment portfolio as this limits an investor’s exposure to the risk of being tied to a single financial instrument.
- PPIProducer Price Index is a leading economic indicator which tracks the changing prices of goods and services sold by producers on a monthly basis. PPI is an important indicator of consumer inflation as higher prices charged by producers will ordinarily be passed on to the consumer. When this report is released before CPI (consumer price index) it will have more of a market impact due to the two reports being highly correlated. A PPI figure that is higher than forecast will tend to have a positive effect on the value of the currency in question.
- Put OptionThe put option is one of the two choices for binary options. This is what a trader chooses if they believe that the value of the underlying asset will expire at a lower price.
- RallyA rally refers to a large upward movement in price action. Rallies occur in market conditions where there is an abundance of buyers and not many sellers. This demand causes price increases that can only be dampened by a large number of sellers coming to the market.
- Range OptionWhen traders use a range option, they must decide whether they feel an asset price will either be in or out of a certain set range by the expiry date. This is a popular option type because it is seen to be very effective in hedging.
- Re-quoteA 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.
- Real BodyReal body is a term used to refer to the main bar that composes each candlestick on a candlestick chart. It excludes the shadows, or wicks, to be found above and below the real body.
- RefundThe refund is how much money is returned to the investor if an option expires at-the-money.
- Reserve CurrencyA reserve currency is a currency that is held by central and commercial banks in order to service debts, purchase commodities (which are ordinarily priced in the reserve currency), and to influence exchange rates. This currency is held in reserve so as to minimize exchange rate risk. Since the end of the Second World War the US dollar has been the world’s reserve currency.
- Resistance LevelWhen charting an asset’s price action resistance is a price level which the market seems reluctant or incapable of going beyond. In other words it is a level at which selling is likely to occur. Traders often use recent highs to plot resistance lines on the charts they are monitoring because they can be good indicators of imminent trend reversal. The more times an asset’s price fails to break through a resistance level the more that resistance level is reinforced.
- Retail SalesA high-impact economic indicator that tracks the monthly change in the value of sales at the retail level. Retail sales reports are important to traders because consumer spending accounts for the majority of a country’s economic activity. When retail sales figures come in better than expected traders can expect bullish price action on the country’s currency. In the United States retail sales are divided into a standard retail sales report and a core retail sales report, which excludes automobile sales as these big ticket items are regarded as being highly volatile and can conceal the underlying trend.
- RetracementWhen price action moves in the opposite direction of the prevailing trend it is regarded as a retracement.
- ReturnA return is how much money is given to the investor if an option expires in-the-money.
- ReversalA reversal is a complete change in the direction of a trend. If a security is trending upwards, then a reversal marks the beginning of a downward trend. If it is trending downwards then a reversal marks the beginning of a new upward trend. Reversals tend to be more sustained than pullbacks or retracements.
- Risk AppetiteRisk appetite is the amount of risk an individual or institution is prepared to accept in their investment portfolio.
- Risk AversionRisk aversion is characterized by a reluctance, or unwillingness to take what are deemed to be risky positions. A risk-averse investor’s primary objective is to minimize uncertainty. In trading this can translate to positions in ‘safer’ investments such as bonds, and safe-haven assets such as gold.
- Risk CapitalThe amount of capital a trader is at liberty to invest without being significantly affected in the event that it should be lost.
- RSI (Relative Strength Index)Developed by J. Welles Wilder in the 1970s, Relative Strength Index (RSI) is a very popular momentum oscillator used in technical analysis to determine whether an asset is overbought or oversold. Typically it is calculated using 14 periods of historical data. Current price action is assigned a value between 0 and 100 depending on how it relates to the respective average gains and losses for the past 14 periods. If this figure reaches or exceeds 70 then the underlying asset is regarded as being overbought, if it reaches or dips below 30 then it is regarded as being oversold, in both instances a reversal is thought to be imminent and so overbought conditions prompt selling activity, and oversold conditions prompt buying activity.
- ScalpingScalping 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. In this way risk is limited and profits accumulate due to the sheer volume of trades placed. Scalpers can either trade manually, or with the use of automated strategies.
- SentimentSentiment is the general feeling surrounding a given financial instrument, market or economy. In many ways it is the aggregated attitude of all the investors taking part in that specific market. The terms ‘bullish’ and ‘bearish’ refer to the sentiment surrounding a market as much as they describe its price action. Investors also talk of ‘hawkish’ or ‘dovish’ sentiment to refer to central bankers’ attitudes to interest rates and growth; hawkish sentiment is rhetoric that supports and encourages the maintenance of high interest rates, and dovish sentiment involves promoting economic growth through low interest rates with little or no concern for inflationary pressures. Sentiment alone, even in the absence of the relevant fundamentals, can dramatically change the fortunes of a market, albeit temporarily.
- Sentiment IndicatorA sentiment indicator is an economic indicator which is not derived by compiling economic statistics, but rather by surveying people’s attitudes to an economy or market. The University of Michigan’s Consumer Sentiment survey is a good example of a high-impact indicator that is based entirely on sentiment.
- Short PositionTo take a short position, or to go short on an asset, is to sell with the expectation that it is due to drop in value.
- Signal LineUsed in technical analysis, signal lines normally consist of moving averages used in combination with other technical indicators in order to generate buy or sell signals. Buy signals are usually triggered when a signal line is crossed upwards by the indicator in question and sell signals are triggered when it is crossed downwards.
- SMASimple moving averages represent an asset’s average price over a given period of time. They are calculated by adding the closing price for a certain number of periods and then dividing the result by the number of periods used.
- SpikeSpikes are relatively large, though short-lived, positive or negative movements in price action.
- Stochastic OscillatorStochastic Oscillator is a momentum indicator developed by George C. Lane in the late 1950s. It is used in technical analysis to track bullish and bearish divergences, as well as oversold and overbought conditions. Stochastic Oscillator is calculated by positioning the current closing price in relation to the range of high/low closes over a certain number of periods, usually 14.
- StockAlso known as a share or equity, a stock is a tradable security which grants the purchaser ownership of a fraction of a corporation, as well as a claim on a percentage of its assets and earnings (dividends). The two main types of stock are common and preferred. Common stock entitles owners to dividends as well as a say at stockholder meetings. Preferred stock owners are entitled to higher dividends but do not have the right to vote at shareholder meetings.
- Stock ExchangeIs the place, where shares and stocks or other securities are bought and sold.
- Strike PriceAlso called the 'Exercise Price', it is the price at which an option holder can buy or sell the underlying instrument.
- Support LevelWhen charting an asset’s price action, support is a price level which the market seems reluctant or unwilling to fall below. In other words it is a level at which buying is likely to occur. Traders often use recent lows to plot support lines on the charts they are monitoring because they can be good indicators of an imminent trend reversal. The more times an asset’s price fails to drop below a support level the more that support level is reinforced.
- Swing TradingSwing trading is a relatively short-term investment style that attempts to capitalize on short-term trends that may last for up to several days. Technical analysis is employed by swing traders to identify securities that are experiencing increased momentum; these securities are invested in and sold when the momentum begins to subside.
- SwissyThe Swissy is the market nickname for the Swiss franc.
- Technical analysisTraders use technical analysis to trade in financial markets. The analysis involves studying patterns of market prices.
- Technical IndicatorTechnical indicators are a class of mathematical processes applied to certain features of historical price action in order to determine the momentum, volume, volatility and strength of current price action. This is done with a view to predicting future movements in price. Technical indicators are primarily used in live trading conditions as their results are constantly being updated in relation to the current market price.
- Time of ExpirationThis is the date and time when an option expires.
- TouchThis is an option that pays out when the asset reaches or surpasses a predetermined level.
- Touch OptionA touch option gives a trader a predetermined payout if the trader chooses either a touch or no-touch outcome. In a touch option, a trader will get a payout if an option reaches or surpasses a set level just once during a specific period of time. If the level is never reached even once, the investment is lost. A no touch option will provide a payout if the asset never reaches or surpasses a predetermined level during a specific period of time.
- Trade BalanceTrade balance is an economic indicator that tracks the monthly changes in the difference between the value of goods and services imported and exported by a country or region. A negative figure indicates a trade deficit; a positive figure indicates a trade surplus. When the data is better than expected, i.e. a deficit is reduced and/or a surplus is extended, this tends to have a positive effect on the currency in question.
- Trade DeficitA country or economic region is said to have a trade deficit, trade gap, or negative trade balance when it imports more goods than it exports.
- Trade SurplusA country or economic region is said to have a trade surplus, or positive trade balance when it exports more goods than it imports.
- Trading SessionThe foreign exchange market is open 24 hours a day, 5 days a week. This is one of its most attractive features as it allows traders from all across the globe to participate whenever they want. Market hours are divided into three broad trading sessions. The Asian session (which also includes New-Zealand, Australia, and Eastern Europe), the European session, and the North American session. These hours change slightly when daylight savings time is observed.
- TransactionAny type of transaction subject to this Agreement effected in the Client’s trading account(s) including but not limited to Deposit, Withdrawal, Open Trades, Closed Trades and any other transaction of any financial instrument.
- TrendA trend is the prevailing direction that a certain asset or market is moving in. Trends can be confirmed at a number of chart duration, and can be extremely profitable for investors who identify them when they are emerging and invest accordingly.
- Trend LineTrend lines are drawn beneath uptrends and above downtrends to mark their respective support and resistance levels. Unlike regular support and resistance lines they are drawn diagonally across low points in an uptrend to indicate support levels and along high points in a downtrend to indicate resistance levels. When they are broken the prevailing trend is thought to be over.
- Underlying AssetAn Underlying Asset is any asset that forms the basis for an option. These include, but are not limited to, Indexes, Commodities, Currency Pairs, and Stocks
- US Reportable PersonsIn accordance to FATCA, a US Reportable person is: a US citizen (including dual citizen) a US resident alien for tax purposes a domestic partnership a domestic corporation any estate other than a foreign estate any trust if: a court within the United States is able to exercise primary supervision over the administration of the trust one or more United States persons have the authority to control all substantial decisions of the trust Any other person that is not a foreign person.
- VelocityVelocity is a measure of the rate at which an asset’s price changes. It is useful to analysts looking for potential points of reversal.
- VolatilityVolatility is a measure of an underlying asset’s tendency to oscillate between highs and lows. Volatility is measured by analysing an asset’s historical price action for certain periods of time that can range anywhere between 30 days to 12 months.
- YuppyThe Yuppy is the market nickname for the EUR/JPY currency pair.