Glossary of Trader Terminology

Here you will find a brief but helpful list of key
trader terminology and their definitions.
Having a better understanding of something like
financial and stock market terminology can go
a long way in helping you to not only succeed in trading,
but also feel more at ease knowing that you can understand
and communicate in the large and sometimes overwhelming
financial sector, and the better you can communicate,
the more transparent the exciting and profitable
world of trading will become for you. 

Trader Terminology List

 

Automated Trading/Auto-Traders:
A form of trading foreign currencies with a computer program that is based on a set of analyses that helps determine whether to buy or sell a currency pair at a specific time.  

Analysis Paralysis:
When a trader is unable to make a decision while examining various forms of data.

Bear Market:
This is trading lingo for the stock market being in a down trend, or a period of falling stock prices which is the opposite of a bull market.

Beta:
A measurement of the relationship between the price of a stock and the movement of the whole market.

Bull Market:
This is when the stock market as a whole is in a prolonged period of increasing stock prices, this is opposite to a bear market.

Broker:
A company or individual who buys or sells an investment for you in exchange for a fee.
Here are the top regulated brokers.

Call/Long:
A trader going long or placing a call option expects the price to go up.

Day Trading:
The practice of buying and selling within the same trading day, before the close of the markets on that day. Traders that participate in day trading are often called “active traders” or “day traders.”

Exchange:
An exchange is a place in which different investments are traded. The most well-known in the United States are the New York Stock Exchange and the NASDAQ.

Hedge/Fence:
This is used to limit your losses. You can do this by taking an offsetting position.

Index:
An index is a benchmark which is used as a reference marker for traders and portfolio managers.

Initial Public Offering (IPO):
The first sale or offering of a stock by a company to the public, rather than just being owned by private or inside investors.

In the Money – ITM:
Being in the money means you have either won or will win your trade.

Leverage:
This is the use of borrowed capital to increase potential return.

Margin:
A margin account lets an individual take a loan from a broker to purchase an investment. The difference between the amount of the loan, and the price of the securities, is called the margin.

Moving Average:
A stock’s average price-per-share during a specific period of time. Some time frames are 50 and 200 day moving averages.

Order:
An investor’s bid to buy or sell a certain amount of stock or option contracts. You have to put an order in to buy or sell 100 shares of stock.

Out the Money – OTM:
Being out of the money means you have either lost or will lose your trade.

Pip:
This is the smallest value in a currency quote and can be different for different currencies.

Put/Short:
A trader going short or placing a put option expects the price to go down.

Quote:
Information on a stock’s latest trading price. This is sometimes delayed by 20 minutes unless you are using an actual broker trading platform.
You can also find the best broker platforms here.

Rally:
A rapid increase in the general price level of the market or of the price of a stock.

Risk Management:
Determining the level and amount of risks involved and then handling them in a way that is best suited to your investment goals and objectives.

Rollover:
A trader is given the choice to extend the expiry time on their trade.

Sector:
A group of stocks that are in the same business. An example would be the “Technology” sector including companies like Apple and Microsoft.

Spread:
This is the difference between the bid and the ask prices of a stock, or the amount someone is willing to buy it and someone is willing to sell it.

Stock Symbol:
A one-character to three-character, alphabetic root symbol, which represents a publicly traded company on a stock exchange. For example Apple’s stock symbol is AAPL.

Trading Strategy:
A fixed plan that includes a set of objective and predefined rules outlining certain conditions that must be met before entering or exiting a trade.

Technical Indicators:
Are a result of mathematical calculations based on indications of price and/or volume. The values obtained are used to forecast probable price changes.

Volatility:
This refers to the price movements of a stock or the stock market as a whole.

Volume:
The number of shares of stock traded during a particular time period, normally measured in average daily trading volume.

 

The Binary Advisory Team