Trader's dictionary

Trader's dictionary

Asset - (1) in accounting, this is a part of the balance sheet that characterizes the composition and value of the property that the company currently owns. In other words, these are the resources that belong to the enterprise: buildings, equipment, materials, intermediate and finished products, and others. (2) according to R. Kiyosaki, this is what generates income.

A share is a security related to a certain company, which allows the holder of this share to receive dividends.

Shareholder - the owner of the shares of the joint stock company. A shareholder is a co-owner of a joint stock company and has the right to receive dividends (profit from the results of his activities).

Depreciation is a gradual decrease in the value of fixed assets of an enterprise due to their wear and tear. In other words, physical or moral deterioration of property, which is expressed in money.

Graphical analysis is a method of analyzing price movements and forecasting using graphical figures on a chart, such as a triangle, pennant, flag, etc.

Technical analysis is a method of analyzing price movements and forecasting using technical indicators.

Fundamental analysis is a way of analyzing price movements and forecasting by considering the macroeconomic indicators of countries, the state of their economies.

An underwriter is an organization-intermediary in the implementation of an IPO (Initial Public Offering - initial public offering of securities on an exchange), which places securities on an exchange on specific conditions and for a pre-agreed fee.

Ask - (English ask - ask for price) the price in the order book at which a trader can open a buy deal.

Algo trader is a trader who uses algorithmic and robotic trading systems.

Algorithmic trading is a method of working in financial markets using algorithms - automated robotic programs that are capable of making trading decisions in whole or in part.

Affiliation is the joining of a company to another organization, which from this moment acts as a parent for the first one. When trading in financial markets, affiliation can be considered within the framework of mergers and acquisitions (M&A, Mergers and Acquisitions), which can cause changes in stock prices due to market redistribution.

A basis point is a value equal to one hundredth of a percent, or 0.01%. Pips are used in the news bulletins of percentage changes. For example, if the key interest rate in the US economy was 1.5% and then decreased by 25 basis points, then its new value is 1.25%.

A barrel is a unit of measure for the volume of oil, equal to 42 gallons, or approximately 159 liters. The barrel used to measure other bulk solids or liquids may differ in volume from an “oil” barrel: a US standard barrel holds 31.5 gallons, or about 119 liters; An English barrel holds 36 English gallons, which is the equivalent of 163.7 liters.

Buy - (eng. Buy) a deal to buy.

Buy-limit - (English buy-limit) a pending order to buy, which is below market prices.

Buy-stop - (English buy-stop) a pending order to buy, which is located above market prices.

Bar - (eng. Bar) a vertical element of the price chart, reflecting 4 prices (open, high, low, close) for a certain time period (minute, hour, day, etc.).

Bid - (English bid - offer price) the price in the order book at which a trader can open a sell deal.

Exchange (English exchange) - a centralized financial market where securities (stocks), bonds, derivatives and other financial instruments are traded.

Exchange rate (quote) - a specific price at which a security is traded on a specific exchange at a specific time. The current exchange rate reflects the price at which one can buy or sell a security right now.

Broker - (English broker - intermediary) institutional and regulated intermediary in the trading of financial instruments.

Brokerage - the implementation of transactions of purchase and sale of securities on the stock exchange on behalf of their present or future owner. As a rule, when transferring securities for brokerage, a power of attorney is drawn up.

Brokerage Association - an association of brokers-members of the exchange, which is officially registered on the exchange for the purpose of joint execution of clients' orders.

Balance sheet is a tabular set of information on the value of property and the amount of the company's liabilities. The balance sheet is a form of accounting that gives an idea of ​​the financial condition of the company: the success and stability of the business, the amount of debt burden, the likelihood of bankruptcy. Typically, the balance sheet is prepared at the end of the quarter or year.

Backtest - testing of trading systems on historical data.

Currency - (English currency) the currency of the country.

Base currency - in a currency pair, the base currency is the first, i.e. stands in the numerator.

Quote currency - in a currency pair, the quote currency is the second, i.e. stands in the denominator.

A currency pair is a financial instrument in which the value of one currency is expressed in units of the second.

A bill of exchange is a security that obliges a person to pay another person a specific amount within a specified period. A bill of exchange can be used as a means of payment and settlement, as well as a means of obtaining a loan. A bill of exchange is a security, which allows you to carry out purchase and sale transactions with it on the stock market.

Vice Broker - Assistant to a broker on the exchange.

Volatility - (English volatility, from Lat. Volare - to fly), an indicator of the speed of price movement. As a rule, it is measured visually or using indicators, for example Average True Range (ATR), Stardard Deviation. Markets are distinguished as volatile and non-volatile. Accordingly, volatile markets are characterized by high speed of price movements. Non-volatile markets are calm.

High frequency trading - (English high frequency trading - HFT) type of trading, when deals can be opened and closed within a fraction of a second. For HFT, trading robots and algorithms are used, and companies that deal with HFT locate their offices as close as possible to the servers of brokers and dealers so that the execution error is minimal.

Gap - (English gap) price gap, which occurs, as a rule, in the foreign exchange market and associated with the lack of trading on Saturday and Sunday, or with the release of significant news. Examples of gaps on the daily chart and in the hourly increase. Gaps are more common in equity markets due to the evening close of trading and their resumption the next day. The night between trades can bring news that will affect the opening prices of trades tomorrow.

Market depth - the volume of the market for a selected asset at a specific price at a specific point in time. Market depth reflects the current state of supply and demand and shows how the placement of a deal of what volume can change the price.

Blue chips are securities of large, liquid and reliable companies with stable profitability indicators. The term itself came to financial markets from poker, in which blue is the color of the most expensive chip.

Goodwill is a form of intangible assets of a company that do not lend themselves to tangible measurement. Goodwill may include: a company's business reputation; established connections with consumers and suppliers; access to promising markets. Goodwill may show the unrecorded tangible value of a company, which affects the value of the related securities.

Double top is a graphical analysis pattern that is formed when the price twice reached a certain upper extremum (extreme point) and then dropped to a lower level in a certain period of time. The double top is a bearish pattern and signals the inception of a downward movement.

Double bottom is a graphical analysis pattern that is formed when the price twice reached a certain lower extreme (extreme point) and then rose to a higher level in a certain period of time. A double bottom is a bullish pattern and signals the inception of an upward movement.

Deposit - (English deposit) the amount of the account on which the trader conducts his trade in financial instruments.

Currency devaluation - a decrease in the real exchange rate of the national currency in relation to other currencies. For example, a change in the USDNOK rate from 9 Norwegian kroner per US dollar to 12 kroner is a devaluation of the Norwegian krone against the US dollar. Devaluation leads to a relative rise in the cost of imports and an increase in the income of exporters, expressed in national currency.

A derivative is a derivative financial instrument, for example, a futures, a forward or an option.

A decentralized market is a market in which trading takes place not in one place physically, but on different trading platforms.

Deflation is a decline in the general price level or an increase in the real value of money. Deflation can be caused by: a decrease in the amount of money in circulation; a drop in the aggregate demand for goods and services with a continuing supply; increase in aggregate supply with non-increasing demand; decrease in the cost of goods caused by increased productivity; lower prices for imported goods and services due to the revaluation of the national currency. Deflation is believed to be harmful to the economy, as falling prices reduce the income of entrepreneurs and further stimulate economic development. The reverse of deflation is inflation.

Diversification - distribution of risks by markets, instruments, strategies.

Dividend - a part of the profit of a joint stock company, which is to be distributed among the owners of securities in proportion to their shares in the company. Dividends are one of two key investment reasons for purchasing shares of public companies (the second is the rise in the share price over time). The dividend is paid once per period (quarter, year), which is predetermined by the company. Dividends can be paid both in cash and in company shares.

Dealer - (eng. Dealer) a market participant acting as a counterparty in a transaction with clients. Among traders, DC is often affectionately referred to as “kitchen”.

Dealing center, DC - see Dealer.

Discretionary analysis - (eng. Discretionary) a method of analyzing price movements using logic, without using rigid rules and technical indicators.

The yield on a security is the ratio of the yield on a security to its market value, calculated for a certain period. This indicator is used to assess the investment attractiveness of a security: as a rule, the higher the yield, the more attractive the security, all other things being equal.

Day trader - (English daytrader) a trader who makes transactions, as a rule, within the day, without transferring them to the next trading session or day.

Mirror level - a support level, after breaking through which it becomes a resistance level, or vice versa.

Investor - (English investor) a market participant that conducts long-term trading.

Index is an indicator of the average value of financial instruments. For example, the S&P 500 index includes the 500 largest companies in America (thereby showing the strength or weakness of the American stock market), and the US dollar index is the average value of the dollar against major currencies.

Technical indicator - a mathematical formula into which historical prices and / or volumes are substituted in the form of lines, histograms, points, etc., located on the price chart. Technical indicators show the trader the market direction, entry points, measure volatility, etc.

Inflation is an increase in the general price level or a decrease in the real value of money. The reasons for inflation can be: an increase in the amount of money in circulation; growth in the aggregate demand for goods and services with a non-increasing supply; reduction in aggregate supply with unremitting demand; rise in prices for imported goods and services due to the devaluation of the national currency. It is believed that inflation of 1.5-2% per year is characteristic of a "healthy" economy. Lower inflation limits economic incentives to develop entrepreneurship. Higher inflation contributes to a significant depreciation of money. The opposite of inflation is deflation.

Costs - fees for trading in financial markets. These include commissions, spreads, swaps.

Capitalization (market capitalization) is the value of a public company, calculated as the product of the company's ordinary share price by the total number of ordinary shares outstanding. Capitalization reflects both the real state of affairs of the company and the expectations of investors in the market regarding its future financial success, because investors often buy shares, calculating the development potential of the company.

Quant is the name used in the trading world for mathematicians, programmers or physicists who work in investment companies to develop trading robots or algorithms.

A quota is a way of quantitatively limiting the production or import of goods into the territory of the state. In financial markets, quotas are often referred to as cartels that regulate oil production or the production of agricultural commodities (such as sugar). In this case, an increase in the extraction / production quota contributes to an increase in the supply of goods, and vice versa.

Carry trading - (eng. Carry-trading) a type of long-term trade, in which profit is earned on the difference in interest rates of the two countries whose currencies are involved in the transaction.

Order book - (English order book) all stop and limit orders to buy or sell an instrument that are at the dealer at a certain point in time.

Quantitative trading is a method of trading in financial markets that uses algorithmic strategies, high frequency and arbitrage strategies.

Commission - a trader's fee to his broker for services.

Convertibility is a property of an asset that reflects the ease with which it can be converted into another asset. For example, the high convertibility of the US dollar to the euro indicates the ease of exchanging one currency for another; and the low degree of convertibility of a Nizhny Novgorod apartment on Apple shares speaks of the practical impossibility of making such a deal.

The counterparty is the other party to the transaction.

Market situation - the situation in the market at a particular point in time. The market situation includes the following values: the ratio of supply and demand of the selected assets; market quotes of assets; asset trading volumes; other.

Consolidation is another name for flat. The period when the price does not show trend movements.

Correlation is the relationship between the movement of individual instruments.

Quote is the price of an asset.

Quoting is reversed - a method of quotation in which the US dollar (USD) is in the denominator. Reverse quoted currency pairs include EURUSD, GBPUSD, AUDUSD, NZDUSD.

Direct quotation is a method of quotation in which the US dollar (USD) is in the numerator. Direct quoted currency pairs include USDCAD, USDCHF, USDJPY, etc.

Coefficient - the ratio of two values ​​or a multiplier for a variable. The calculation of ratios is of great importance in the financial markets when analyzing the financial statements of companies. Based on a comparison of ratios based on data from different companies or securities, an investor can decide to invest in the most attractive ones.

The recovery factor expresses the ratio between the average annual return and the maximum drawdown.

Cross rate is a financial instrument that does not contain the United States dollar (USD). However, cross-rate trades are still done with the US dollar.

Liquidity - (eng. Liquidity) the volume of the traded asset available at the moment on the market.

Limit - see Pending Order.

Listing - adding shares of a particular company to the list of securities that can be placed on a particular exchange and participate in exchange trading. Listing is a procedure for preparing securities and transparency ("openness") of the company's activities to meet the requirements set by the exchange.

Long - (English long) "long" deal, or a buy deal.

Lot - volume per trade equal to 100,000 units of the underlying instrument. For example, buying one lot of EUR / USD would be equal to buying 100,000 EUR. In digital terms, it is measured as 1.0 (100,000 base units), 0.1 (10,000 base units), 0.01 (1,000 base units).

Major - (English major) actively traded currency pair with forward or reverse quotation.

Margin - (English margin) the trader's security contribution to the trading account.

Margin call - (English margin call) literally “a broker's call with a request to the client to replenish the margin”; a trading situation in which a trader does not have enough funds on his balance sheet to maintain open positions.

Market-maker - (English market-maker) a large market participant who is obliged to provide liquidity and receives a commission for its services. Market makers are usually large world banks.

Bear - (English bear) a market participant expecting a fall in price. A bear market is a falling market. See also: Bull.

Meta order - (eng. Metaorder) a very large order, usually owned by large players.

Mechanical trading - trading with strict technical rules. Most often, such systems use indicators and computer algorithms.

Volume - the total amount of an asset traded per unit of time. See also: volume indicators in Technical indicator.

A bond is a debt security issued by a government or corporation. The most conservative instrument after the bank deposit.

Overnight - (English overnight) percentage of the transaction volume held by the broker for the position transfer to the next day. This percentage depends on the interest rates of the countries whose currencies participate in the trader's deal.

Overfitting - (English overfitting) or re-optimization of a trading strategy - adjustment of the strategy parameters on historical testing, in which the strategy shows profitable results on history, but, as a rule, "breaks" in real trading.

Option - (English option) an instrument that gives its owner the right, but not the obligation, to buy or sell a financial instrument at an agreed rate within a certain period of time.

Order - (English order - order) trader's application to open a position.

Pending order - an order to open or close a position at prices that are far from the current market prices.

Market order - an order to open or close a position at current market prices.

Limit order - see Pending order.

Oscillator - (English oscillator, from oscillate - to fluctuate) an indicator limited by the levels of 0% and 100%. Oscillators are called leading indicators because they often reach extreme values ​​before price reversals. Profitable oscillator signals are most likely in flat markets. However, trends do not leave the oscillators any chances for profitable signals, since the oscillator on the trend spends most of its time in the extreme zone.

Oscillators include the following indicators: Stochastic, Williams ’% R, RSI, Momentum and some others. Even the MACD can refer to oscillators, although it does not formally have an upper and lower swing border.

Open Interest - (English Open Interest, OI) is also called the "Amount of open positions". Open Interest is the sum of open futures or options contracts that have not been settled. In a word - open positions. OI is a popular indicator among traders. Information is taken from the Chicago Mercantile Exchange (CME).

Liability - (1) in accounting, this is a part of the balance sheet that characterizes the composition and volume of the company's debts and liabilities at the moment. In the liabilities column, there are: borrowed funds, deferred tax liabilities, accounts payable, deferred income, and more. (2) according to R. Kiyosaki, this is what takes away income.

Pattern - (eng. Pattern - a model, pattern, scheme) a price pattern or a pattern formed by indicator readings.

A pip is the smallest possible price step in financial markets. For example, if a currency pair has the following quote record: 1.26534, then 1 pip represents a value of 0.00001. A change in the quote from 1.10003 to 1.10009 is equivalent to its growth by 6 pips. In USDJPY, a pip is calculated as 0.001. Using pips, it is possible to determine the slightest changes in the quotations of financial assets.

Pyramiding - (English pyramiding) a gradual increase in the volume of a working profitable position.

Trading platform - software for a trader, on which you can analyze charts and perform trading operations.

Leverage - (eng. Leverage), the broker's funds, thanks to which a trader can open a position with a volume exceeding his margin.

Support is a horizontal or inclined price level that holds the price and prevents it from falling further.

Portfolio - traded financial instruments with an individual trader / fund in a certain period of time.

A liquidity supplier is a market participant, usually a market maker, providing liquidity to other trading participants. Liquidity deliveries are the placing of limit orders.

A liquidity consumer is a market participant, as a rule, a trader who consumes liquidity from an order book. Liquidity is consumed by market orders.

Order flow - a set of all transactions that enter the order book and that affect pricing.

Price action - (English Price Action) literally price behavior, a method of analyzing charts of financial instruments without indicators, based on the search for patterns of trend continuation and reversal formed by one or more bars (candles). Well-known Price Action patterns: pin bar, inside bar, DBHLC / DBLHC, outside bar (engulfing), etc. The method is similar to Japanese candlestick analysis.

Drawdown - (eng. Drawdown) - loss received during the time from reaching the historical peak of the yield curve to the historical minimum of the yield curve.

Slippage - (eng. Slippage) lack of quotes at the specified price levels, associated with the sparseness of the order book. See also: Order book.

Prop trading - (English proprietary trading) type of activity in the financial markets when a company works with its own capital (without attracting investor money), and also allows private traders to cooperate with them, selecting the best for the main staff.

Profit factor - (English profit-factor) the ratio of total income to total loss.

Profit - (English profit) profit received in the financial markets as a result of a successful transaction or transactions.

Offer - a participant's desire and ability to sell an instrument at a certain price.

Rally - (English rally) stable, strong and impulsive trend up or down.

Currency revaluation - an increase in the real exchange rate of the national currency in relation to other currencies. For example, a change in the USDNOK rate from NOK 9 per US dollar to NOK 6 is a revaluation of the NOK to the US dollar. The revaluation leads to a relative reduction in the cost of imports and a decrease in the income of exporters, expressed in national currency.

Renko is a way of displaying a chart to filter out market noise.

Profitability is an indicator of the effectiveness of economic activity, showing the degree of return on investment. At the corporate level, profitability indicators are used to calculate the return on investment in promising projects. A private trader can calculate profitability indicators for different trading strategies.

Robot - see Advisor.

Stock market or securities market - an exchange (a physical place, for example, Wall Street and the NYSE exchange) where transactions for the purchase, sale or initial placement of securities and other instruments are carried out.

Market inefficiency is a specific characteristic of the market where there is an opportunity to make money. As a rule, markets are efficient, therefore, finding market inefficiencies is the main task of any trader.

A candlestick is a vertical element of a price chart containing 4 prices for a certain time period - see also OHLC Prices. A candlestick consists of a body, which is formed by the opening and closing prices, as well as the upper and lower shadows. The size of the body and shadows is constantly variable. There may be candles without shadows at all or with a very narrow body.

The candlestick chart looks like this. On it candles are colored green, where the trading period ended with growth. Red - with a fall. Coloring in white and black, respectively, is also possible.

Sell ​​- (engl. Sell) sale of a financial asset, a deal to sell.

Sell-limit - (English sell-limit) a pending sell order, which is above market prices.

Sell-stop - (English sell-stop) a pending sell order, which is below market prices.

Trading session is a period of time within a trading day when a particular financial center or region is active. There are 3 main sessions: Asia-Pacific, London (European) and New York (American).

Setup - (English setup) price model suitable for making a deal.

Swap - (English swap) see Overnight.

Trading system - a set of trading rules, according to which transactions are made on the market.

Scalper - (eng. Scalper) an active day trader using scalping as a trading approach.

Scalping is a type of short-term intraday trading in financial markets, characterized by a high frequency of transactions and their small size.

An expert advisor is a trading robot, a computerized trading algorithm that runs on the platform and performs all or individual trading actions for a trader. Expert Advisors are created in programming languages ​​(popular languages ​​plus MQL 4/5), as well as in visual designers, for example, Visual JForex. Visual programming of a trading robot does not require programming skills from a trader.

Resistance is a horizontal or oblique price level that holds the price and prevents it from growing further.

Speculation is a type of noble activity in the financial markets, which consists in making a profit on the difference in prices for financial assets.

A speculator is a kind of noble participant in financial markets who speculates.

Spread - (English spread) distance between the Bid and Ask prices.

Bar spread is the difference between the high and low of a candle.

Demand is the willingness and ability of a participant to buy an instrument at a certain price.

Stop-loss - (English stop-loss) a pending order that fixes a loss planned by a trader.

Statemant - (English statement) statistics of the trading results of a trader or fund.

Subordinated bond is a debt security issued by a commercial organization and ranked lower than other securities in line of payments in the event of bankruptcy or liquidation of the organization. In other words, in case of bankruptcy or liquidation of an organization, payments are first sent to the shareholders of the company, and only after (in the case of a positive balance) to the holders of subordinated bonds. Unlike a regular bond, which is considered one of the most reliable securities, a subordinated bond is a riskier security due to its lack of collateral. There are fewer requirements for issuing subordinated bonds than for ordinary bonds. Subordinated bonds offer higher yields than conventional bonds due to their increased risk.

Timeframe - (English timeframe) the time period of price movement, reflected on the charts as a single vertical element.

Take profit - (English take profit) literally "take profit", a pending order that fixes the trader's planned profit.

Trend is a stable direction of price movement. Also called a trend. The direction of trends is determined using trend indicators, for example: SMA, EMA, MACD and others.

Ticker - (English ticker) letter code (abbreviated name) of an exchange or over-the-counter instrument. For example: EUR (Euro), BRN (Brent oil), AAPL (Apple), MSFT (Microsoft), etc.

Tick ​​(eng. Tick) - updating the price of the instrument traded on the exchange. Unlike a pip, a tick shows not a unit of change in the quote, but the very fact of a change, which can occur even by several pips in the absence of counter transactions between price levels. For example, if the market updates the price from 105.005 to 105.008, bypassing the levels 105.006 and 105.007 (there were no volumes on them), then we say that the price has changed by 3 pips per 1 tick.

Trading terminal is a program, or some kind of software, where a trader makes deals to buy or sell financial instruments. The most popular trading terminals: MetaTrader 4, 5, Quik, JForex.

Transaction - (eng. Transaction) a transaction between two participants in financial markets.

Trader - (English trader) literally "trader", a participant in financial markets, seeking to make money on the price difference.

Trailing stop - a stop loss level that automatically follows the price movement at a distance in points specified by a trader.

Trend - see Trend.

Averaging is a method of managing positions, in which the volume of a position increases as the price moves in the direction against the deal, i.e. as the position loss increases. Averaging is one of the main causes of large losses and is not recommended for use (English averaging). There is also a well-known saying “Losers average losers” (losers average losing trades).

Capital manager - a person who trades in funds entrusted to him for a percentage of the profit received. As a rule, a money manager is a person who has one or more formed trading strategies in the financial markets, who attracts external capital to increase the return on his trading ideas.

A financial participant is a so-called informed player whose tasks include investments, speculation and other professional activities related to the markets. These include hedge funds, broker-dealers, central banks, etc.

Flat - (English flat) literally “flat”, the state of the market in which there is no pronounced trend.

Stock market - (English stock market, equity market) a centralized exchange market on which shares of companies of a certain country are traded. Notable stock exchanges: New York - NYSE, NASDAQ; London - LSE; Tokyo Stock Exchange, etc.

A forward test is a test of a trading strategy that simulates performance on “future” time ranges. As a rule, testing is divided into backtest and forward test. The backtest shows the initial statistics on the TS, while the forward is needed to confirm the trend (profitable or unprofitable) on the backtest.

A forward or forward contract (English forward) is a bilateral obligation, the subject of which is the purchase and sale of a real asset at a specific point in time for a specific price. Unlike futures, the forward is more commonly used as an OTC instrument and is less standardized.

A futures or futures contract (English future) is a contract according to which the seller of the futures undertakes to deliver the underlying asset to the buyer of the futures at an agreed price on a specific date. For example, if you conclude a futures contract for the supply of 100 barrels of oil on June 30 at a delivery price of $ 40 per barrel, then regardless of the market price on June 30 (it can be, for example, $ 5 or $ 90 per barrel) , the contract must be executed at a price of US $ 40 per barrel in the agreed volume of 100 barrels. Unlike a forward, futures are exchange-traded and more standardized.

Hedge fund - (eng. Hedge-fund) financial market participant, the main goal of which is to make a profit on various trading floors of the world for themselves and their clients.

Hedger (English hedge - fence) - a person engaged in insurance risks. The hedger can be a company, bank or other individual. In financial markets, hedgers are often referred to as specialists in the futures markets who insure the client's risk positions by purchasing derivative financial instruments (futures, forwards, options).