Sign up Log in
Log in Sign up

Trader’s dictionary

This page presents the basic trading terminology that anyone who wants to start trading should know.

A
Ask
This is the lowest price at which a seller is willing to sell a particular financial instrument. This is the price at which the owners of this instrument are willing to sell it.
Asset
It is an economic resource that can be owned or controlled for profit or future benefit.
B
Bid
This is the highest price a buyer is willing to pay for a financial instrument.
Broker
This is a sales representative, a legal entity, a professional participant in the securities market, who has the right to carry out transactions with securities on behalf of the client and at his expense or on his own behalf and at the expense of the client on the basis of compensated agreements with the client.
Buy
The process of acquiring a financial instrument.
Buy-limit
This is a pending order to purchase an asset at a specified price or lower. Such an order allows traders to control the entry price and take advantage of favorable prices.
Buy-stop
This is one of the types of pending orders in the Forex market. When a trader sets a Buy Stop, it means that he plans to buy at a higher price than the current market price. Such an order is activated when the price rises above a certain level and continues to grow.
C
Capitalization
The total value of a company's shares currently outstanding. It is calculated by multiplying the number of shares outstanding by the price per share.
Comission
This is a certain percentage or fixed portion of the amount that is paid to the broker for providing services.
F
Flipper
This is a strategy in which a trader quickly buys and resells an asset in order to make a quick profit. Flippers hunt for potentially attractive shares that are issued in the form of an IPO (initial public offering). They buy shares at the very start of sales, and then quickly sell them off, taking profits.
Forward
Represents a financial agreement between a buyer and seller. In a forward contract, the parties agree to sell the underlying asset at a predetermined price on an agreed date in the future. This tool allows you to protect against fluctuations in asset prices and plan business operations
Futures
This is an agreement to buy or sell an asset at a future date at a pre-agreed price and time. It is important to note that futures can be considered as a standardized type of forward that is traded in an organized market with mutual settlements.
H
Hedge
It is a financial strategy (or risk management tool) used to reduce the risk of an investment by protecting against potential losses. This strategy involves using certain financial instruments to protect a portfolio from market volatility or changes in prices.
I
Issue
This is the issue of new securities by a company or government. This could be stocks, bonds, certificates.
Issuer
This concept refers to a person or organization that issues securities such as stocks or bonds. The issuer may be a company, government, or other financial institution.
L
Leverage
This is a tool that allows traders to open transactions in volumes that significantly exceed the amount of funds in their account. It involves using a broker's leverage to increase the potential return on an investment.
Liquidity
This is the ability of an asset to be quickly and efficiently purchased and sold on the market. The presence of high liquidity means that a trader can quickly and at minimal cost buy or sell an asset at the current price.
Long
This is a trader’s purchase of shares or other investment instrument in anticipation of an increase in stock prices. This is the basic and most commonly used term to describe such an action.
M
Margin
These are the collateral funds that are required to open a position. It is not a fee or transaction cost, but rather a portion of the funds in your trading account used as security against the broker. The margin is expressed as a percentage and depends on the leverage provided by the broker.
Mining
This is the process by which cryptocurrency transactions are collected, verified, and recorded on a digital ledger known as a blockchain.
O
Option
This is a specialized contract that gives the holder the right (but not the obligation) to buy or sell a financial asset in the future at a pre-agreed price.
Order
This is a tool that allows a trader to control his transactions and protect his interests on the exchange. An order is an instruction from a trader to buy or sell a specified quantity of an asset (such as a stock, currency, or commodity) at a specified price and within a specified time period.
Oscillator
These are technical indicators that help traders determine whether the market is overbought or oversold, as well as predict possible changes in the price of an asset.
P
Pool
This is a mechanism that allows traders to unite their strengths and resources to achieve greater liquidity in the market.
R
Retracement
A short-term price movement against the current trend. This is usually a temporary change before the main trend continues.
S
Sell
This is a position to sell a trading asset.
Sell-limit
This is a type of order that allows a trader to sell an asset at or above a price they set.
Sell-stop, s/s
This is a type of pending order that allows a trader to sell an asset when the price reaches or falls below a specified level.
Setup
It is a specific pattern, structure or signal that a trader looks for on price charts to predict price movement. The setup can be based on various indicators, chart models or other technical analyses. It serves as the basis for a trader's decision to enter or exit a position.
Short selling
This is the sale of securities, currency or goods that the trader does not currently own. In other words, the trader borrows it from the broker.
Spot
This is a form of transactions that are completed here and now, in contrast to futures contracts, which are concluded at the current moment in time, but are executed at a certain interval. In spot trading, the buyer pays the cost of the asset and receives it almost immediately. The spot price is the price at which an asset is offered to be bought or sold.
Spread
This is the difference in price between buying and selling a financial instrument. When you see quotes for the EUR/USD currency pair, for example, the spread refers to the difference between the ask price and the bid price. This is an important indicator of liquidity: the lower the spread, the higher the liquidity of the asset.
Statement
This is a document that contains information about the financial transactions of a trader or investor. It is usually provided by a broker or bank and includes transaction history, balance and turnover, commissions and fees, dividends and interest.
Stock market
This is a financial and economic instrument of global scale, the main function of which is to regulate the circulation of securities through purchase, sale, exchange or pledge.
Stop-loss, sl
This is an exchange order that a trader or investor places in a trading terminal in order to limit their losses when the price reaches a predetermined level.
Stop Out
This is the forced closing of open positions by the broker on the trader’s trading account at the current price. This occurs when a trader's margin level falls to a certain percentage, known as the stop out level, and their funds are insufficient to maintain open positions.
Swap
This is an operation of depositing or withdrawing funds for transferring an open position to the next day.
Switch
This is the liquidation of previously assumed obligations for some securities or currencies and the conclusion of transactions for others.
T
Take profit, t/p
This is an order that the trader submits to the broker along with the conclusion of a transaction on the instrument. The main task of Take Profit is to set a target profit level.
Technical analysis
A tool for forecasting prices based on charts, indicators and other data.
Tick
These are one-time changes in the market value of various investment instruments.
Timeframe
This is a time period that characterizes the price movement on the chart. It helps traders simplify and unify the display of data in various trading terminals.
Trading
It is the process of buying and selling financial instruments such as stocks, currencies, commodities and indexes in financial markets in order to make a profit. Traders strive to predict price movements and make decisions in accordance with these predictions.
Trading account
This is an investment account that holds securities, cash, and other assets.
Trailing stop
This is an order to close a position, which is automatically changed by the trading terminal in accordance with the settings specified by the trader. It allows you to automate the trading process in terms of closing positions.
Trend
This is the general direction of movement of the price of an asset in financial markets. It can be upward, downward or sideways (when the price fluctuates in a narrow range).
Transaction
This is the specific action of buying or selling an asset in the market.
V
Validity
This is the extent to which a trading strategy or indicator reflects actual market trends.
Volatility
This concept characterizes the range within which the price of a financial instrument fluctuates in the short term. Simply put, volatility measures how much a price can change at a given time.