A trader can buy or sell currencies in the forward or swap markets in advance and lock in a specific exchange rate. Unlike the spot, forwards, and futures markets, the options market doesn’t involve an obligation to purchase the currency. The spot market is the largest of all three markets because it is the underlying asset (the money) on which the forwards and futures markets are based. The speed of today’s forex market means retail traders are often reacting to price moves rather than anticipating them.

At the money definition

• Examples of prominent stock exchanges include the New York Stock Exchange (NYSE), NASDAQ, and London Stock Exchange (LSE).
• For example, if a trader believes that the USD will strengthen against the JPY, they will go long on the USD/JPY pair.
• Country’s current accountA country’s balance of payments – its financial situation relative to the world – is made up of the current account and the capital account…
• Excessive buying and selling of securities, either by trading too frequently, in too large quantities, or without proper strategy.
• The first is a ‘one-off’ charge, whereby the fund will take a percentage of an investor’s money on entry.
• A positive alpha suggests that the investment has outperformed the benchmark, while a negative alpha indicates underperformance.

The difference between the bid price (buyer) and ask price (seller) of an asset. An investment strategy focused on generating financial returns while promoting positive social or environmental impacts. The difference between the expected price of a trade and the actual execution price. Securities represent ownership (stocks) or creditor relationships (bonds). Groupings of companies operating in similar industries or markets, such as technology, healthcare, or energy. The primary regulatory body overseeing securities markets in the United States.

Detailed Glossary of Essential Stock Market Terms

In a margin account, trades still settle on T+1 Trading Terminology (per SEC rules), but you don’t have to wait for settlement to reuse funds. Options trades are also T+1 and take 1 business day to settle, which means you can trade with the cash the next day. When you take a trade, you have to wait T+1 (Transaction + 1 business day to settle).

• Traders use it to identify trend direction and potential reversals.
• For example, after GBP/USD makes a big move up, traders might use Fibonacci retracement to predict where it might pull back to.
• Limit up refers to the maximum allowable price increase, while limit down refers to the maximum allowable decrease.
• A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random short-term price fluctuations.
• An order that combines features of stop and limit orders, triggering a limit order when the stop price is reached.

Equity

A regulator is a government or independent authority responsible for overseeing financial markets. Participants include traders, investors, brokers, and regulators. Bulls actively buy securities to profit from upward momentum and drive optimism in financial markets.

Stock analysis definition

This can also include items that don’t have an inherent value – intangible assets, for example – or assets with no fixed expiry such as property or land. Net change can be positive or negative, as it represents whether the markets are up or down on the previous day. Net change is the difference between the closing price of the current trading session, compared to the closing price of the previous trading session. When an individual, government or company spends money it has a trickle-down effect to businesses and individuals.

Understanding market structure helps traders know when markets are trending (HH, HL) or ranging (equal highs and lows). A large institutional order to buy 1 million shares might push the stock price up due to market impact. The stock market is where shares of publicly traded companies are bought and sold. The market’s expectation of future volatility of an underlying asset, derived from option prices.

Volume Profile

Before you study any of my YouTube videos, blog posts, or watchlists, you should have your stock market vocabulary down pat. The real deal starts when you actually get into the stock market. That includes trading abbreviations like ITM (in the money), ATM (at the money), and OTM (out of the money). The stock market is impacted by macroeconomic factors like inflation, interest rates, and geopolitical stability. The term refers to all the major exchanges as a whole.

Take Profit (TP)

It ensures price control but carries the risk that the order may never be executed if the market does not reach the specified level. A limit order sets a specific price at which a trader is willing to buy or sell a stock. Together with the ask price, it determines the spread, which directly impacts trading costs and liquidity. It forms one side of the market quote and is crucial for traders to understand when deciding the cost of entry into a position. Yield is the income return on an investment, usually expressed as a percentage of the market price. Volatility measures the rate at which a stock’s price fluctuates over time.

They’re often used in forex trading and are programmed to generate trading signals or to even automatically place trades according to pre-set rules. For example, if EUR/USD is trading at 1.1850, that’s the exchange rate. The theory, developed by Ralph Nelson Elliott, proposes that markets move in a series of impulse and corrective waves. An easing cycle is often positive for currency values due to the increased money supply. The decline in one’s trading account from a trade or a series of trades. This is a pattern observed when the price of a currency drops twice to the same level before rebounding.

Traders use these levels to identify areas where an asset’s price may reverse its current trend or experience a pullback before continuing in its primary direction. Achieving Dividend Aristocrat status demonstrates financial stability and a strong track record of profitability, which can attract income-focused investors. It often leads to unexpected losses as the initial upward movement was a false signal, and the market sentiment quickly shifts bearish.

Blue Chip Stocks

The price paid for an options contract, representing the cost to buy the right to exercise the option. Today’s POC at $150 acts as a magnet, with price returning to this level multiple times. A regulatory designation for traders who execute four or more day trades within five business days in a margin account. When Parabolic SAR dots flip from below to above price, it suggests a potential trend change from bullish to bearish. A technical indicator that provides potential reversal points and trailing stop levels, appearing as dots above or below price. A term describing investors who sell their positions quickly at the first sign of volatility or loss.

A strategy where an investor borrows in a low-interest-rate currency and invests in a higher-interest-rate currency. To purchase a security with the expectation that its value will increase over time. A person or firm that executes buy and sell orders for investors and charges a commission for this service. When a security’s price moves outside a defined support or resistance level with increased volume. Price breaking below the previous low at $98 creates a bearish BOS, signaling potential trend change. A bracket order to buy at $100, take profit at $110, and stop loss at $95, managing the entire trade setup at once.

Slippage occurs when a trade is executed at a price different from the one requested. Short selling is the practice of selling borrowed shares with the intention of buying them back at a lower price. It guarantees execution but does not control the final price, making it riskier during volatile conditions. A market maker is an entity or individual that provides continuous buy and sell quotes to ensure liquidity in a stock. While it provides greater buying power, trading on margin also amplifies losses if the market moves against the investor.

Participating shares – see full definition Participating preferred shares, give the holder the right to receive dividends paid to preferred shareholders. The first is a ‘one-off’ charge, whereby the fund will take a percentage of an investor’s money on entry. It is a variant of the individual savings account that was brought in by the Chancellor of the Exchequer at the time, George Osborne, in 2014. Modified internal rate of return (MIRR) is used to assess the cost and profitability of a future project for a company. M2 is a classification of money supply.

morning routine: set the tone for the TRADING day

A growth stock belongs to a company that is expected to expand at a faster pace than the overall market. Equity refers to ownership interest in a company, typically represented by stocks. By doing so, investors reduce the risk of being overly exposed to a single stock or industry.