ASK PRICE

The Ask Price is the selling price from the dealer (broker) to the trader. This is the price you will pay when you enter a “Buy” order. It is generally displayed on the right side of the price pair displayed in a quote. For an explanation on the second price, see “Bid Price."

ASSET

The Asset is the single item the is traded on. This can be a commodity, stock, index or currency.

BASIS POINTS

A Basis Point refers to 1% of one percent, in other words, 0.01% and is used when quoting interest rate changes.

BEAR MARKET

A Bear Market describes a declining asset price of more than 20% in a specified time period.

BID PRICE

The Bid Price is the price at which the dealer (broker) buys an asset from the trader. This is the price of a “Sell” order. It is generally displayed on the left side of the price pair displayed in a quote. For an explanation on the other price in the pair, see “Ask Price.”

BROKER

A Broker is the intermediary between buyers and sellers and enables trade between them. The broker is licensed to buy and sell assets on behalf of traders against a specific fee. The broker carries out the traders' orders. Certain brokers offer a platform for online trading.

BULL MARKET

A Bull Market describes a rising asset value over a specified time period. Often the term “bullish market” is also used or the market is described as being in a “bullish mode."

CANDLESTICK

Candlestick is the name given to the graphic display-method of price movements on the charts. A Candlestick shows open- and close-price as well as high and low prices on a specific day.

COMMODITY

Commodities are naturally occurring materials or raw materials, traded on the international market. Examples of commonly traded commodities are Gold, oil, coffee, cotton, sugar, etc.

CURRENCY

A Currency, in general, is a system of money or more specifically a medium of exchange. Regular currencies are associated with a specific country (or in the case of the EUR, with a union of countries). Recently new country-independent digital currencies, also known as Cryptocurrencies have been introduced and offer particular advantages for trades.

DAY TRADING

Day Trading is the act of opening and exiting trade positions within the same trading day.

DEALER

The term Dealer is usually used as another word for a broker. There are, however different types of dealers, not all of them are brokers.

DEPRECIATION

Depreciation is a decrease in value of an asset as a result of market activities.

DERIVATIVES

Derivatives are additional financial instruments to invest in the financial market, other than through traditional buying and selling of financial assets. s () are a popular financial derivative. You can find detailed explanations on s in the articles on this site.

ECONOMIC INDICATORS

The term Economic Indicators refers to official data reflecting the state of health of a countries economy or specific economic sectors. Examples are data regarding manufacturing quantities, retail sales, import vs. export quantities and values, employment and unemployment rates, inflation rates, gross domestic product (GDP), etc. These potentially influence the financial market. See our Economic Event Calendar for economic indicators.

FINANCIAL INSTRUMENT

A Financial Instrument can mean the underlying asset of a trade. Often it is also used for financial derivatives or an actual trading method or category.

FUNDAMENTAL ANALYSIS

In Fundamental Analysis of the financial market, analysts investigate socio-economic and political data to determine their influence on price developments. They use the findings to try and predict future price developments. Also, see Technical Analysis.

GOOD FOR DAY (GFD) ORDER

In the financial trading market the term ‘Good for Day’ is used to describe an order with a specified limit price that is cancelled automatically at the end of the trading day, if the limit was not reached.

GOOD TILL CANCELED (GTC) ORDER

The term ‘Good Till Cancelled’ is used in the financial trading market to describe an order with a specified limit price but without a specific time limit. It can only be cancelled by the trader if not fulfilled.

GROSS DOMESTIC PRODUCT (GDP)

Gross Domestic Product is a way to measure a countries economic performance. It is a single numeric figure that includes all finished goods and services provided in a specified time period.

HEAD AND SHOULDERS

The term ‘Head and Shoulders’ describes a specific pattern in the price chart of an asset. The chart forms a shape that looks like a head and shoulders.

HEDGING

Hedging is a trading technique to limit the risk of loss involved when placing large positions. A large position is partially secured by opening a smaller contrary position.

INDEX / INDICES

An Index (plural: indices) is the accumulated value of a group of stocks representative for a specific stock exchange. The value is typically calculated against a base value. A stock index is also a financial instrument for investment.

INDUSTRIAL PRODUCTION

Industrial Production is measured regularly and appears as an economic indicator in economic calendars because it has the potential to impact financial markets. It indicates the total value of output produced by manufacturers, mines, and utilities.

INFLATION

Inflation is an economic situation in which the prices of goods in a country rise to levels that exceed and eventually destroy the purchasing power of the country’s currency.

INITIAL MARGIN

Initial Margin is the basic initial amount the trader needs to invest to place the first trade. The amount is set by the broker which functions as a security buffer.

INSTRUMENT

Means here a Financial Instrument. Please look up under Financial Instrument.

INTRODUCING BROKER

An Introducing Broker is a company or an individual who locates and opens trader accounts on behalf of a broker for a commission.

INVESTMENT

Investment refers to the amount of money assigned by the trader to a specific trade.

LEVERAGE

Leverage describes a strategy to increase the potential return on an investment by the use of borrowed capital. The broker adds a certain amount of capital to the traders’ investment so that the trader will profit on a higher total amount. s typically include leverage.

LIMIT ORDER

A Limit Order is a trade order carried out when the market reaches a certain price limit. The limit at which the transaction is triggered is set by the trader.

LIQUIDATION

Liquidation in the financial market means closing a long or short position by offsetting it with the opposite position.

LIQUIDITY

Liquidity refers to how quickly assets can be bought or sold on the market without impacting the price significantly.

LONG

A “Long,” also ‘Long Position’ or ‘Long Trade’ is a trade transaction in which the trader enters a and profits from a rising asset price.

LOT

A Lot is the accumulated value of the traders open s, relative to his/her account size.

MANUFACTURING DATA

Manufacturing Data refers to any data related to the production industry and are indicators for potential market movements.

MARGIN

The Margin in s trading is the amount of capital the trader is required to invest in a trading position to adequately secure the trade. This is usually a percentage of the investment, while the rest is borrowed from the broker.

MARGIN CALL

A Margin Call is a demand to add funds to a trading position. It is issued by the broker to the trader when a position has significantly lost value, and the margin percentage has gone below the margin requirement.

OFFER

Offer is the price at which an asset is offered to the trader. Also, Ask Price.

ORDER

An Order in the financial market is an instruction given by the trader to the broker, containing specific directions regarding asset, amount, time, etc.

ORDER CANCELS ORDER (OCO)

The term ‘Order cancels Order’ is used to describe a type of trade order in which the execution of one order automatically cancels a previous order.

OPEN POSITION

An ‘Open Position’ is any trade that the trader has invested in and not yet closed.

POSITION

A Position is another word for a single trade. In s trading, a is also referred to a position.

PPI – PRODUCT PRICE INDEX

The PPI reflects price changes of products or product groups according to regions. This is an indicator for potential movements on the financial market.

PROFIT TAKING

Profit Taking means closing a position with a profit. The trader takes his profit which he gained in the trade.

QUOTE

A Quote shows the indicative market price at which the trader can buy or sell an asset.

RALLY

A Rally is a period of mild increase in an asset price. This occurs often following a prolonged decline in value.

RANGE

Range means the price range an asset covers during one trading day. In other words from the lowest price to the highest price.

RESISTANCE

Resistance is an imaginary line on the chart marking the level at which buyer activity is likely to increase, and a price increase is expected to stop.

RETURN

Return is another word for profit, and it refers to the amount a trader gains when a trade is successful.

SHORT

A “Short,” also ‘Short Position’ or ‘Short Trade’ is a trade transaction in which the trader enters into a and profits from a decreasing asset price.

SIGNAL

A Signal is a type of indicator given by analysts to inform the trader about exciting investment opportunities

SPREAD

Spread in the financial market refers to the difference between the bid price and the asking price of an asset. The spread is the broker’s compensation.

STOP LOSS

The Stop Loss is a means to prevent loss. It allows the trader to determine the lowest possible price level at which to close a position. In other words, a on a declining asset is automatically closed when the stop-loss limit is reached.

SUPPORT

Support is an imaginary line on the chart marking the level at which the buying activity is likely to increase, and a price decrease is expected to stop.

SWAP

Swap is the term used for the interest on a trade rolled over to the next trading day.

TECHNICAL ANALYSIS

A Technical Analysis of the financial market is based on the principal of recurring patterns in price movements. These are reflected clearly in the charts. By analyzing the patterns analysts attempt to predict future price developments. See also Fundamental Analysis.

TRAILING STOP

A Trailing Stop is a tool to protect profit. In this type of order, the level of the stop loss “trails” behind the asset price, when it is increasing. This way, the stop loss limit advances proportional to the price on the way up. When the price is decreasing the stop loss remains constant.

UNDERLYING ASSET

The Underlying Asset is the asset a is based on.

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