FAQ
Glossary
Explore essential trading terminology that is crucial for both novice traders embarking on their trading journey and seasoned experts with decades of experience.
A
Algorithmic Trading
The use of computer algorithms and systems to trade on the market according to pre-set strategies that do not require direct human intervention.
Appreciation
An increase in the value of a currency. For example, if USD/JPY rises from 105.00 to 110.00, the USD has appreciated against the JPY.
Ask Price
The price at which a seller is willing to sell an asset. Also known as the "offer price."
B
Bear Market
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. In a bear market, investors often turn pessimistic about the state of the market, fearing further losses. These markets usually occur during economic recessions or downturns, when unemployment is rising, and inflation is potentially high.
Bid Price
The price at which a buyer is willing to purchase an asset. It is typically lower than the ask price.
Broker
An individual or firm that executes buy and sell orders on behalf of clients, often earning a commission or fee.
C
CFD (Contract for Difference)
A financial contract that allows traders to speculate on the price movement of assets without owning the underlying asset.
D
E
ETF (Exchange-Traded Fund)
A type of investment fund that is traded on stock exchanges, similar to stocks, and holds assets such as stocks, commodities, or bonds.
F
Futures Contract
A standardized agreement to buy or sell an asset at a predetermined price at a future date.
Fundamental Analysis
A method of evaluating an asset by examining economic, financial, and other qualitative and quantitative factors.
G
H
I
J
K
L
Leverage
Using borrowed funds to increase the potential return on an investment. It amplifies both gains and losses.
Limit Order
An order to buy or sell an asset at a specified price or better. It is not executed until the price reaches the specified level.
M
Margin
The amount of money required to open and maintain a leveraged trading position. It acts as a deposit to cover potential losses.
Market Order
An order to buy or sell an asset immediately at the current market price.
N
O
Options Contract
A financial instrument that gives the holder the right, but not the obligation, to buy or sell an asset at a specified price within a predetermined time frame. In forex trading, options contracts are less common compared to spot and futures contracts but can be used for hedging or speculative purposes.
P
Pip (Percentage in Point)
The smallest price movement in a currency pair. It is often used in forex trading to measure changes in value.
Portfolio
A collection of investments held by an individual or institution. It may include stocks, bonds, ETFs, and other financial assets.
Q
R
Risk Management
The process of identifying, analyzing, and mitigating risks associated with trading to protect capital and reduce potential losses.
S
Spread
The difference between the bid price and ask price of an asset. It represents the cost of trading.
Stop-Loss Order
An order placed to sell an asset when it reaches a certain price to limit potential losses.
Short Selling
The practice of selling an asset not owned by the seller, with the intention of buying it back later at a lower price to profit from a decline in value.
T
Take-Profit Order
An order placed to sell an asset when it reaches a specific price to secure profits from a trade.
Technical Analysis
A method of evaluating assets by analyzing statistical trends from trading activity, such as price movement and volume.
U
V
Volatility
A measure of the price fluctuation of an asset over time. Higher volatility indicates larger price swings.