Select language
Trading definitions Click on the names below to see their definitions: |
| An asset is an item of monetary value. |
|
The bonds market is a mechanism that enables organisations like companies or governments to borrow money for their business needs (eg, projects, and expansions). A bond (also known as a debt security) is basically a loan agreement. The organisation which needs money issues a bond, and whoever buys the bond is essentially lending money to the organisation. The seller or issuer of the bond (ie, the organisation borrowing money) agrees to repay the loan amount after a specified time and with interest (known as a coupon). The prices of bonds depend on many factors, including interest rates. Bond prices generally go up when interest rates go down, and vice versa, and there are many people who seek to profit from changes in interest rates by trading bonds. |
|
Bond 30 (US Benchmark 30 year Treasury Bond) is a debt obligation of the US government that is paid off after 30 years. It is considered to be a benchmark indicator of US interest rates. When interest rates rise its market price decreases.The bond’s interest payments are fixed so a decrease in its market price means an increase in its yield. Interest payments are made every 6 months. |
| The BUND 10 (German Benchmark 10 year Treasury Bond) is a debt obligation of the German government that is paid off after 10 years. The bond is issued in $1,000 denominations and pays interest every six months. |
| The CAC 40 is a French stock market index comprising the top 40 companies (market cap weighted) traded on the Euronext Paris (the Paris stock exchange, which was formally known as the Paris Bourse). The price of the index reflects the average of the share prices of the companies which make up the index. |
| A carry trade is where investors borrow money in a country which has the lowest interest rates among developed economies, to buy securities with better returns overseas. A trader using this strategy attempts to capture the difference between the rates – which can often be substantial – depending on the amount of leverage the investor chooses to use. |
|
The commodity markets deal with the buying and selling of raw materials
via standard contracts and on regulated commodities exchanges. Examples
of commodities include, diamonds, gold, oil, electricity, chemicals (eg,sulphuric acid), metals, wheat, pork-bellies, coffee and orange juice.
Other, modern commodities include bandwidth and RAM computer chips. |
|
The currencies, foreign exchange, forex
or fx market is a mechanism which allows people and businesses to trade
currencies. It is the largest market in the world, in terms of volume
of business and cash value traded.
It includes global trading between large and small banks, individual traders, multinational organisations, financial markets and governments, as well as trading by small retailers. |
| The DAX (an abbreviation of Deutscher Aktienindex, the German Stock Index) is a stock market index comprising the top 30 German companies trading on the Frankfurt Stock Exchange. |
| Demand is the quantity of goods or services that people are willing to purchase and are able to buy at a given price per unit of time. It also describes the act of offering to buy a product, or the quantities offered to buy at various prices. |
| Diversification is a risk management technique where traders and investors put their money on a number of different markets rather than on a single trade. It is a way to lower your trading risks and minimise the impact of a loss if a market goes against you. |
|
The Dow (Dow Jones Industrial Average) (NYSE: DJI) is a stock market index which reflects the average share price of the 30 most actively-traded industrial stocks on the New York Stock Exchange.
The index was originally created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow in 1896, and it is the oldest and best known US stock market index. |
|
The Euro (symbol €) is the official currency of European Union (EU) member states (per US dollar).
Around 329 million people live in the 16 countries (EU member states)
where the euro is the official currency . The Euro is also accepted as
legal tender, and for other purposes, by many other countries in Europe
and also former colonies.
(Source: European Commission). |
| The Dow Jones EURO STOXX 50 is a stock market index of the top 50 European stocks in EU member states which have adopted the euro. The Index is made by the companies Dow Jones and STOXX Ltd. |
| A financial bet is a money wager on a financial market or market event with an uncertain outcome, with the aim of winning additional money. The term also describes the amount of money (or stake) risked in a wager. |
| A financial instrument is a real or virtual document which represents a legal agreement involving money. Examples include, shares, bonds and currencies. |
|
A financial market is a mechanism which allows buyers and sellers to find each other and create or exchange financial instruments and assets. In many cases it is a place where people trade money for securities (eg, shares or bonds) or commodities such as gold or other precious metals.
A market can be in a physical place, but often it exists as a virtual network of buyers and sellers (individuals and organisations) who are dispersed all over the world and communicate over long distances. |
|
"Forex" is a common abbreviation for "Foreign Exchange", which is the place where currencies are traded.
The terms forex market and currencies market are often used to refer to the foreign exchange, which is actually the largest global market in terms of volume of business. The basic function of forex is to allow people and businesses to swap/exchange currencies to meet their needs. Another common abbreviation for foreign exchange, forex market or currency market, is FX market The value of a currency depends on many factors, including the country’s economic prospects and interest rates.. Forex markets are open 24 hours a day. |
|
The FTSE 100 (Financial Times Stock Exchange 100) stock market index comprises the 100 largest companies (market capitalisation weighted) listed on the London Stock Exchange.
The FTSE 100 is not part of a stock exchange, although its co-owners include the London Stock Exchange and the Financial Times newspaper. It is often called the ‘footsie’ 100. The price of the index reflects the average of the share prices of the companies which make up the index. |
| Abbreviation for the Great British Pound, the official currency of the UK. Market convention is to list its price as pounds per US dollar (rather than US dollars per pound). The rate is often known among trading circles as 'cable'. |
| Gold is a commodity, the price of which is given in US dollars per ounce. |
|
The Hang Seng Index comprises the 33 largest companies ( market cap weighted) on the Hong Kong stock exchange (abbreviated as SEHK or HKSE).
It is the main indicator of the overall market performance in Hong Kong. The price of the market index reflects the average of the share prices of the companies which make up the index. |
| Interest is the fee that a borrower pays a lender for the privilege of using the borrowed money (ie, money they do not own). Partial or total ownership in an asset. It is also a term to describe the return on an investment. |
|
Interest rate is an amount of money given as a percentage, which
borrowers pay for the privilege of using money they do not own (ie,
borrowing money). Conversely it is an amount of money given as a
percentage that a lender receives for lending money to a borrower.
An interest rate is often expressed as an annual or monthly percentage of the sum borrowed. |
| A limit order is a request to buy or sell a financial instrument when it reaches a specific price, or better, in the future. The customer/trader specifies the price. |
| The "Margin Balance" is the maximum you could lose from the trades you have currently open, if markets go against you. |
| Market capitalisation (often abbreviated to market cap) is a calculated figure used to express the ‘size’ of a company and gauge its level of success. It is obtained by multiplying the number of company shares available by its current share price. |
| A market index is a list of markets that have something in common. It is also a statistic which reflects the prices of the markets in an index, and this is used to help evaluate trends in price changes in a market as a whole (eg, the stock or bond market). (See Stock Market Index.) |
| A market order is a request to buy or sell a financial instrument (eg, a stock) immediately, at the current market price. |
| Market price is the price that a good or service is offered at, or will fetch, in the marketplace. |
|
NASDAQ (National Association of Securities Dealers Automated Quotations) is the largest US electronic stock market and stock exchange. It lists more than 3,000 companies and, on average, trades more shares per day than any other US market.
NASDAQ does not have a physical trading floor for buyers and sellers. Trading on the NASDAQ exchange is via computers and telephones. When NASDAQ was created, in 1971, it was the world's first electronic stock market. |
| The NIKKEI 225 is a stock index of the 225 largest stocks trading on the Tokyo Stock Exchange. The NIKKEI average is the most watched index of Asian stocks which is calculated daily by the Nihon Keizai Shimbun newspaper. |
| Crude oil is a commodity, the price of which is given in dollars per barrel. |
| Play money is credits to trade which have no cash value. You may use them to experiment with trading strategies and test your skills without risking your real money. Many companies offer demo or 'dummy' trading accounts which allow you to practice on live prices with their play money or 'virtual' currency, and to take part in 'fantasy' trading competitions or trading games. |
|
Points represent the value of a particular stock or market. e.g. if the NASDAQ moves from 2232 points to 2235 points, its value has risen by 3 points. If you place a £10 trade on the NASDAQ (buy the NASDAQ) at a buy price of 2232 points, and then sell when the price is at 2235 points, you will make £10 x 3points = £30. Similarly, if the value/price of the Euro goes up from 1.3574 to 1.3590, it has risen by 16 points. |
| A portfolio is a collection of active trades, investments or assets held by an individual trader or organisation. |
| Profit is the positive income gained from an investment or trade (after subtracting any expenses and losses). |
| A security is another term for a financial instrument. Examples of securities include bonds (debt securities) and stocks (equity securites). |
| A share is a unit/piece of ownership in an organisation, fund, or company. |
| The share price is the price at which a share is quoted on a market. It usually has two prices: the buy price is what you use to buy the share; the sell price is the price if you want to sell the share. |
| To "speculate" is to risk money, for example, by trading the markets, with the aim of making a profit. |
|
See Volatility. Volatility is the relative rate at which the price of a market or financial instrument moves up and down. In other words, it is a statistical measure of the tendency of a market price or financial instrument’s price to rise or fall sharply within a period of time.
In a highly volatile market, prices can move sharply up or down and in a short period of time. If prices hardly change or move very slowly, a market is said to have low volatility and increased stability. |
|
The S&P 500 (US Standard & Poors 500) is a list of the top 500 US corporations, in terms of market capitalisation, which trade on US stock exchanges such as the New York Stock Exchange and Nasdaq.Its performance is considered to be indicative of the performance of the stock market as a whole, as well as trends in the US economy.
The price of the S&P 500 index reflects the performance of the companies in the list. It is often quoted using the symbol GSPC or SPX. |
| A stock market is a financial market in which shares are issued and traded, either through exchanges or over-the-counter markets. |
|
A stock market index (plural indices) is a listing of stocks which have
something in common and are traded on the same exchange. For example,
the FTSE 100 is a list of the 100 largest companies (in terms of market capitalisation) which are traded on the London Stock Exchange.
The price of an index reflects the average of the share prices of the companies which make up the index. If the share prices of the companies in an index go up or down, the value of the index itself can go up or down. Many indices are compiled by news or financial services firms and they are used to ‘gauge’ how the markets are performing. Other, regularly quoted indices are, the Dow Jones Industrial Average and S&P 500 in the US, the French CAC 40, the Japanese NIKKEI 225 and the German DAX. |
|
A stop order is a type of ‘ limit order’,
which closes a trade if a specified price (the stop price) is reached
or passed. It is used as part of a risk management strategy, to limit
the amount of money lost if the markets move in the ‘wrong’ direction
and to ‘lock in’ any gains if the market moves against you in the
future.
For example, a trader may put in a market order to buy the CAC 40 at a price of 1.500 with a limit order to sell at 1.800, and a stop order to sell at 1.400. If the price rises to 1.800 of falls to 1.400, the trade closes. If the price rises to say 1.700 they may put in a new stop order, to sell at say 1.600. This ‘locks in’ some of the gains (ie, 1.600 – 1.500) if the price drops to 1.600 or lower. |
| Supply is the quantity of goods offered for sale at various prices. It also means to make available for use or provide. |
|
Volatility is the relative rate at which the price of a market or financial instrument moves up and down. In other words, it is a statistical measure of the tendency of a market price or financial instrument’s price to rise or fall sharply within a period of time.
In a highly volatile market, prices can move sharply up or down and in a short period of time. If prices hardly change or move very slowly, a market is said to have low volatility and increased stability. |
| The official currency of Japan. Its price is given as yen per US dollar. |
ShareThis