How To Start Forex Trading: A Guide To Making Money with Forex

If Apple stock is trading at $150, a $150 call or put option would be considered at-the-money. An option whose strike price is equal or very close to the current market price of the underlying asset. Traders willing to pay market prices immediately, crossing the spread by hitting bids or lifting offers. A phase where institutional investors and smart money gradually build positions in a security, often during sideways price movement. I personally use the 5min time frame and have found this one is the most commonly used among Trading Terminology day traders.

It is widely used by investors, businesses, and financial professionals to make informed decisions about allocating resources and evaluating the potential benefits of different investment opportunities. By analyzing the order book, market participants can assess the levels of support and resistance, identify potential price trends, and make informed trading decisions. The order book provides valuable information to traders and investors, helping them gauge the supply and demand dynamics in the market. It displays the prices at which market participants are willing to buy (bids) and sell (asks) that asset, along with the corresponding quantities.

Stock exchange – see full definition Stock analysis can also be referred to as market analysis, or equity analysis. It is then used to make informed decisions about buying and selling shares. The goal of an SOR is to find the best way of executing a trade.

• It often leads to unexpected losses as the initial upward movement was a false signal, and the market sentiment quickly shifts bearish.
• However, bear market rallies are typically short-lived and do not indicate a sustained reversal of the bearish trend.
• During an IPO, shares of the company are priced and allocated to institutional and retail investors, allowing them to become shareholders.
• This term refers to a market condition where prices are either already rising or are expected to rise.

CFD (Contract for Difference)

MarginWhen buying a derivative like a spread bet, an investor will only have to pay a small initial deposit, or ‘margin’, of say 10% of the value of the shares. M&A arbitrageM&A arbitrage is a way to profit from one company taking over another, or two firms deciding to merge. Long-term refinancing operations (LTRO)The Long-term refinancing operations (LTRO) of the European Central Bank (ECB) are designed to provide stability to Europe’s banking sector. Loan-to-value ratioThe loan-to-value (LTV) ratio is one of the main risk assessment measures used by lenders to assess a person’s suitability for a mortgage. Lloyd’sLloyd’s of London is an international insurance market, which controls and regulates the activities of the groups offering insurance services

• Whether you’re a beginner looking to grasp the basics or an experienced investor refining your strategy, understanding key stock market terms is crucial.
• Understanding market structure helps traders know when markets are trending (HH, HL) or ranging (equal highs and lows).
• Professional fund managers make investment decisions on behalf of the fund’s shareholders, aiming to achieve specific investment objectives, such as capital appreciation, income generation, or risk mitigation.
• It is widely used to protect traders from excessive losses during adverse price movements.

Financial data for every need

Conversely, a bear market refers to a condition where prices are falling or are expected to fall, usually by 20% or more from recent highs. Mastering trading terminology is an essential first step in your journey as a trader. A systematic method for identifying and trading securities that takes into consideration several factors including time, risk, and the investor’s objectives. The mental and emotional aspects of trading are often what separate successful traders from unsuccessful ones. A derivative that gives the holder the right to buy the underlying stock of the issuing company at a fixed price until the expiry date. A contract between two parties to exchange the difference in value of a financial product between the time the contract opens and closes.

Multilateral trading facilities definition

A stock exchange is a centralized venue where stocks are listed and traded under regulatory oversight. An analyst is a financial professional who studies companies, sectors, or entire markets to provide investment recommendations. This final section looks at stock market terminology describing the people and institutions that drive markets. It indicates how traders perceive risk in certain price ranges. Speculation involves taking high-risk positions in financial markets with the aim of achieving substantial profits.

Master Trading Terminology

Traders often use Fibonacci retracement levels (23.6%, 38.2%, 50%, 61.8%) to predict price reversals or continuations. A technical analysis tool used to identify potential support and resistance levels based on the Fibonacci sequence. The value of fiat currency is derived from the trust and confidence of its users and the government that issues it. Government-issued currency that is not backed by a physical commodity like gold or silver. The central banking system of the United States, responsible for managing monetary policy, regulating banks, and maintaining financial stability. Its primary goal is to protect consumers, ensure market integrity, and promote competition.

Free Cash Flow

A currency future is a contract that details the price at which a currency could be bought or sold, and sets a specific date for the exchange. It specifically refers to currencies in a floating exchange rate – a system in which a currency’s value is set by the forex market, based on supply and demand. A covered call is when a trader sells (or writes) call options in an asset that they currently have a long position on.

Benefits of Day Trading

A mutual fund pools money from many investors to buy a diversified portfolio of stocks, bonds, or other securities. This comprehensive stock market terminology dictionary covers everything from basic investing terms to advanced trading concepts. The number of shares of a stock that were traded during a given period of time.

The overall attitude or mood of investors toward a particular market or asset. Mid-cap stocks offer a balance between growth potential and stability. The current price at which an asset or security can be bought or sold in the open market.

Interest Rate Differential (IRD)

They are the opposite of assets. Firstly it refers to the charge levied against a party for borrowing money, which can be either a cost or a means of making profit for a trader. High frequency trading (or HFT) is a form of advanced trading platform that processes a high numbers of trades very quickly using powerful computing technology.

Buy orders can be placed at market price or set as limit orders to execute at a specific price. An individual or firm that acts as an intermediary between buyers and sellers, executing trades on behalf of clients. Breakouts signal potential trend continuation or reversal, making them critical points for trade entry. The central bank of the United Kingdom, responsible for monetary policy, issuing currency, and maintaining financial stability. A strategy where an investor buys more of an asset as its price falls, lowering the average cost per share. These are grouped based on their market behavior, risk profiles, and regulatory frameworks.

They allow traders to limit risk while still profiting from market movements. A derivative is a financial instrument whose value is based on an underlying asset such as stocks, bonds, or commodities. A convertible bond is a type of bond that can be exchanged for a predetermined number of shares of the issuing company. Arbitrage is the practice of taking advantage of price differences in different markets for the same asset.

The use of computer algorithms and systems to trade on the market according to pre-set strategies that do not require direct human intervention. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. 68.5% of retail investor accounts lose money when trading CFDs with this provider. CFD trading involves a high risk of loss.

A bullish technical analysis signal that occurs when a short-term moving average crosses above a long-term moving average. Green investing aligns financial goals with environmental responsibility. It measures how efficiently a company is producing and selling its products. A financial metric representing the difference between revenue and the cost of goods sold (COGS), expressed as a percentage of revenue.