Investing Glossary | Online Trading And Investing Terms

Trading And Investing Glossary is prepared by the Traders Union team to cater to the needs of novice investors and traders. TU Trading Dictionary is a user-friendly resource that simplifies complex financial and investment terminology, ensuring that anyone, regardless of their level of expertise, can grasp the intricacies of the financial world. Each entry in this Financial Dictionary is thoughtfully designed with beginners in mind, offering clear and concise definitions accompanied by straightforward examples.

A
ADX Indicator

ADX (Average Directional Index) is a technical indicator used in financial analysis to measure the strength and momentum of a price trend. It quantifies the degree of trendiness in a market, with higher ADX values indicating stronger trends and lower values suggesting weaker trends.

After-Hours Trading

After-hours trading occurs outside of regular market hours, allowing investors to react to news and events that arise after the official market close.

Algorithmic trading

Algorithmic trading is an advanced method that relies on advanced coding and formulas based on a mathematical model. However, compared to traditional trading methods, the process differs by being automated.

Arbitrage in Crypto trading

Crypto arbitrage is a trading strategy that takes advantage of price discrepancies of the same cryptocurrency across different exchanges. Essentially, it involves buying a cryptocurrency at a lower price on one exchange and selling it at a higher price on another exchange, pocketing the difference as profit.

Arbitrage in Forex trading

Forex Arbitrage is a strategy of trading on the difference of rates for one asset on different exchanges. Arbitrage involves a constant search for assets with price differences, investing large sums of money to quickly capitalize on small exchange rate differences.

ASIC (Australian Securities and Investments Commission)

ASIC is the Australian Securities and Investments Commission that, along with the Reserve Bank of Australia, performs constant supervision over licensees and their interaction with each other. One of ASIC’s tasks is to collect information from open sources about brokers, banks, and investment and insurance funds.

ATR Indicator

ATR (Average True Range) is a volatility indicator that helps traders assess the potential price range or volatility of a financial instrument. It calculates the average of true price ranges over a specified period, providing insight into the level of price fluctuations within that timeframe.

B
Backtesting

Backtesting is the process of testing a trading strategy on historical data. It allows you to evaluate the strategy's performance in the past and identify its potential risks and benefits.

BaFin

BaFin is the Federal Financial Supervisory Authority of Germany. Along with the German Federal Bank and the Ministry of Finance, this government regulator ensures that licensees abide by eurozone laws.

Bear market

A bear market is a period of time in which an investment asset, such as stocks, bonds, or commodities, experiences a decline in price for an extended period of time.

Black swans

Black swans are a term that was introduced by Nassim Taleb, denoting global unpredictable events that can radically change the situation.

Bollinger Bands

Bollinger Bands (BBands) are a technical analysis tool that consists of three lines: a middle moving average and two outer bands that are typically set at a standard deviation away from the moving average. These bands help traders visualize potential price volatility and identify overbought or oversold conditions in the market.

Boom And Crash In Trading

A boom and crash in trading refers to a sharp rise in the price of a financial asset, called a “boom”, and its subsequent steep fall, or “crash”.

Break-even point

The break-even point in trading is when your trade brings neither profit nor loss. As a rule, traders move the stop loss to the breakeven point when the trade starts to make profit.

Breakout trading

Breakout trading is a trading strategy that focuses on identifying and profiting from significant price movements that occur when an asset's price breaches a well-defined level of support or resistance.

British Virgin Islands Financial Services Commission (BVI FSC)

The British Virgin Islands Financial Services Commission (BVI FSC) is a state regulator that issues licenses to companies registered in the Islands and controls their operation. A license means that a broker meets certain basic requirements such as minimum registered capital and its financial statements are audited every year.

Broker

A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.

Brokerage fee

A brokerage fee, also known as a commission, is a fee charged by a brokerage or financial institution for facilitating and executing financial transactions on behalf of clients. Brokerage fees are typically associated with services related to buying or selling assets such as stocks, bonds, commodities, or mutual funds.

Binary options trading

Binary options trading is a financial trading method where traders speculate on the price movement of various assets, such as stocks, currencies, or commodities, by predicting whether the price will rise or fall within a specified time frame, often as short as a few minutes. Unlike traditional trading, binary options have only two possible outcomes: a fixed payout if the trader's prediction is correct or a loss of the invested amount if the prediction is wrong.

Bitcoin

Bitcoin is a decentralized digital cryptocurrency that was created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto. It operates on a technology called blockchain, which is a distributed ledger that records all transactions across a network of computers.

C
CFD

CFD is a contract between an investor/trader and seller that demonstrates that the trader will need to pay the price difference between the current value of the asset and its value at the time of contract to the seller.

CFTC

The CFTC protects the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to fosters open, competitive, and financially sound futures and option markets.

Chinese Yuan

The yuan (CNY) is the official currency of the People's Republic of China. The yuan is divided into 10 jiao, which are further divided into 10 fen.

Commodity Currencies

A commodity currency is a currency whose price strongly correlates to the exporting of resources in the currency’s country, and the commodity’s price.

Copy trading

Copy trading is an investing tactic where traders replicate the trading strategies of more experienced traders, automatically mirroring their trades in their own accounts to potentially achieve similar results.

Cross Currency

Cross currency refers to a currency pair or transaction that does not involve the U.S. dollar (USD). In the foreign exchange market, most currency pairs are quoted against the U.S. dollar, such as EUR/USD or USD/JPY. These are known as major currency pairs.

Cross trading

Cross trading is a unique type of broker-side trade where they buy and sell an underlying at the same time, in a manner that both transactions offset each other. Such transactions are not recorded on the exchange, leaving non-participants unaware of their existence.

Cryptocurrency

Cryptocurrency is a type of digital or virtual currency that relies on cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies operate on decentralized networks, typically based on blockchain technology.

Crypto trading

Crypto trading involves the buying and selling of cryptocurrencies, such as Bitcoin, Ethereum, or other digital assets, with the aim of making a profit from price fluctuations.

CySEC (Cyprus Securities and Exchange Commission)

CySEC, the Cyprus Securities and Exchange Commission, is a regulator for investment companies and brokers. The commission operates in partnership with the state financial and judicial authorities of Cyprus. SySEC’s objectives are to control the operation of brokers, monitor the observance of the financial laws, and consider complaints submitted by traders.

D
Day trading

Day trading involves buying and selling financial assets within the same trading day, with the goal of profiting from short-term price fluctuations, and positions are typically not held overnight.

Day trader

A day trader is an individual who engages in buying and selling financial assets within the same trading day, seeking to profit from short-term price movements.

Deviation

The deviation is a statistical measure of how much a set of data varies from the mean or average value. In forex trading, this measure is often calculated using standard deviation that helps traders in assessing the degree of variability or volatility in currency price movements.

Direct Market Access (DMA)

Direct Market Access (DMA) in Forex, as the name suggests, provides traders with direct access to the electronic systems and order books of various exchanges, including the Forex market.

Diversification

Diversification is an investment strategy that involves spreading investments across different asset classes, industries, and geographic regions to reduce overall risk.

Dividend adjustment

The dividend adjustment in CFD trading is an analogue of the dividend amount, which is accrued for a long position on a CFD on shares and deducted for a short position. Depends on the position volume and the number of contracts in the lot.

Dividend Capture Strategy

The dividend capture strategy is a trading technique used to profit from dividend payments issued to shareholders of companies.

Dividend gap

Dividend gap is a price gap in the value of a stock that occurs after the cut-off date. The cut-off date is the last day for the formation of the list of shareholders applying for dividends.

Dovish Monetary Policy

Dovish Monetary Policy prioritizes promoting economic growth. It aims to reduce unemployment and involves the lowering of interest rates in order to encourage borrowing and spending.

DXY (U.S. Dollar Index)

The DXY is a widely used tool in the global financial market that measures the strength or weakness of the U.S. Dollar against other major currencies.

E
ECN

An ECN, or Electronic Communication Network, is a technology that connects traders directly to market participants, facilitating transparent and direct access to financial markets.

Economic indicators

Economic indicators — a tool of fundamental analysis that allows to assess the state of an economic entity or the economy as a whole, as well as to make a forecast. These include: GDP, discount rates, inflation data, unemployment statistics, industrial production data, consumer price indices, etc.

Elliott Wave Principle

Elliott Wave Principle is a theory of market analysis based on the concept of wave patterns. It suggests that financial markets move in a series of repetitive waves, both upward (impulse waves) and downward (corrective waves). Traders use this principle to predict future price movements based on these wave patterns.

ETF (Exchange-Traded Fund)

An ETF, or exchange-traded fund, represents ownership in a portfolio of assets such as stocks, bonds, or commodities and is traded on stock exchanges like individual stocks.

Ethereum

Ethereum is a decentralized blockchain platform and cryptocurrency that was proposed by Vitalik Buterin in late 2013 and development began in early 2014. It was designed as a versatile platform for creating decentralized applications (DApps) and smart contracts.

Euro (EUR)

The euro (EUR) is the world’s second reserve currency behind the U.S. dollar and the second most popular currency in the Forex market. The EUR/USD pair accounts for over 25% of the market’s trading volume. The pair has high liquidity, narrow spread and moderate level of volatility.

Exotic Currency Pairs

Exotic currencies are currencies from countries with smaller or emerging economies, and they are less commonly traded in the foreign exchange market compared to major currencies like the US Dollar, Euro. These currencies are often considered exotic because they are not as liquid or widely used in international trade and finance.

Expert Advisor

An Expert Advisor (EA) is a piece of software or script used in the MetaTrader trading platform to automate trading strategies. EAs are programmed to execute trading decisions based on predefined criteria, rules, and algorithms, allowing for automated and systematic trading without the need for manual intervention.

Extra

Xetra is a German Stock Exchange trading system that the Frankfurt Stock Exchange operates. Deutsche Börse is the parent company of the Frankfurt Stock Exchange.

F
Fair Value Gap (FVG)

A Fair Value Gap (FVG) in Forex trading is essentially the difference between the current market price of a currency pair and what it's believed to be worth based on economic factors or reversion to the mean idea in technical analysis.

False breakout

A false breakout, also known as a "fakeout," occurs when the price of a financial asset briefly moves beyond a key level of support or resistance, triggering buy or sell signals, but then quickly reverses direction, trapping traders who entered positions based on the initial breakout signal.

Fear And Greed Index

The fear and greed index is a tool that measures the sentiment of the crypto market based on various indicators. It assigns a value between 0 and 100, where 0 represents extreme fear while 100 represents extreme greed. The index can help investors avoid emotional overreactions and make rational decisions.

Financial Conduct Authority (FCA)

The Financial Conduct Authority (FCA) is a financial regulatory and supervisory body in the UK. It cooperates with the Bank of England and other British regulatory bodies independently of the UK Government.The FCA regulates the operation of investment, banking, and financial companies, including Forex brokers.

Financial Industry Regulatory Authority (FINRA)

Financial Industry Regulatory Authority (FINRA) - the largest non-governmental financial regulator in the United States, and its mission is to protect the rights of investors. FINRA controls the OTC market, audits NYSE and Nasdaq as per agreements with them.

Financial Sector Conduct Authority (FSCA)

The Financial Sector Conduct Authority (FSCA) supervises the financial sector of South Africa along with other government bodies. The regulator grants licenses and monitors licensees. Its objective is to create favorable conditions for the attraction of investors and investments to the country’s financial sector.

Financial Services Commission of Belize

The Financial Services Commission of Belize regulates the non-banking sector of that country. The Commission issues licenses to brokerage, investment, and insurance companies, collects and analyzes information about the operation of its licensees, develops the jurisdiction’s financial sector, and assists in organizing effective interaction between all financial market participants.

FINMA

FINMA is a government body in Switzerland overlooking financial markets including banks, insurance companies, stock exchange, cryptocurrencies, etc

FOMO

FOMO in trading refers to the fear that traders or investors experience when they worry about missing out on a potentially profitable trading opportunity in the financial markets.

Forex bonus

A forex bonus is a promotional incentive offered by brokers to attract traders, typically providing additional funds or trading benefits upon fulfilling certain conditions.

Forex Fury

Forex Fury is a trading advisor for Metatrader 4/5 terminal. You can purchase it to try and create a passive income stream.

Forex God

The informal term "Forex Gods" refers to highly successful and renowned forex traders such as George Soros, Bruce Kovner, and Paul Tudor Jones, who have demonstrated exceptional skills and profitability in the forex markets.

Forex indicators

Forex indicators are tools used by traders to analyze market data, often based on technical and/or fundamental factors, to make informed trading decisions.

Forex MLM

Forex MLM (Multi-Level Marketing) refers to a business model that combines aspects of foreign exchange (forex) trading with network marketing or MLM. In this scheme, individuals are encouraged to join a network of traders or investors and earn commissions not only from their own forex trading activities but also from recruiting others into the network.

Forex rebate

A forex rebate, also known as a cashback rebate, is a financial incentive offered to forex traders by certain brokers or rebate service providers. It is essentially a portion of the trading commission or spread that traders receive back as a refund for their trading activity.

Forex Risk Management

Risk management in Forex involves strategies and techniques used by traders to minimize potential losses while trading currencies, such as setting stop-loss orders and position sizing, to protect their capital from adverse market movements.

Forex market trend

In the Forex market, a “trend” is the label used to describe the general direction that the prices of currency pairs are moving in, over a specific period of time. Trends are basically the pattern that a currency pair appears to be following and can help traders determine when to enter and exit a trade.

Forex Trading

Forex trading, short for foreign exchange trading, is the practice of buying and selling currencies in the global foreign exchange market with the aim of profiting from fluctuations in exchange rates. Traders speculate on whether one currency will rise or fall in value relative to another currency and make trading decisions accordingly.

Forex trading scam

A Forex trading scam refers to any fraudulent or deceptive activity in the foreign exchange (Forex) market, where individuals or entities engage in unethical practices to defraud traders or investors.

Fundamental Analysis

Fundamental analysis is a method or tool that investors use that seeks to determine the intrinsic value of a security by examining economic and financial factors. It considers macroeconomic factors such as the state of the economy and industry conditions.

Futures contract

A futures contract is a standardized financial agreement between two parties to buy or sell an underlying asset, such as a commodity, currency, or financial instrument, at a predetermined price on a specified future date. Futures contracts are commonly used in financial markets to hedge against price fluctuations, speculate on future price movements, or gain exposure to various assets.

FX Swap

FX swap or foreign exchange swap, in simple words, is an agreement between parties. It involves lending one currency and borrowing another simultaneously at an initial date.

G
George Soros

George Soros is a prominent billionaire investor and philanthropist known for his involvement in financial markets, including forex trading. He gained fame for his successful currency speculation in 1992 when he famously bet against the British pound, earning him a significant profit and the nickname "The Man Who Broke the Bank of England." Soros is also known for his political and philanthropic activities through organizations like the Open Society Foundations.

Goldbacks

Goldbacks are banknotes resembling ordinary currency notes, such as dollar bills, but they are overlaid with pure 24-karat gold. This gold “sheeting” is protected by two layers of polymer, which is also used to add artistic elements to the Goldback currency.

H
Hawkish Monetary Policy

Hawkish Monetary Policy prioritizes controlling inflation. It typically involves rising interest rates and reducing the monetary supply or limiting its growth.

HFX

HFX trading likely refers to high-frequency forex trading, where automated algorithms execute a large number of trades at extremely high speeds.

I
IIROC (Investment Industry Regulatory Organization Of Canada)

IIROC is a non-governmental self-regulatory organization in Canada that oversees and facilitates interactions in the securities market across the entire country. It collaborates with provincial regulators and other structural organizations. It reviews claims from private traders when there are clear violations of legislation and manipulations.

Index

Index in trading is the measure of the performance of a group of stocks, which can include the assets and securities in it.

Insider buying

Legal insider buying is when company insiders buy shares of that company based on confidence in its growth and future earnings due to publicly available financial information. If an insider buys shares based on private information and does not report it to the relevant financial authorities, this becomes illegal insider trading.

Insider trading

Insider trading is the illegal practice of buying or selling a company's securities (such as stocks or bonds) based on non-public, material, and confidential information about the company. This information is typically known only to insiders, such as company executives, employees, or individuals with close connections to the company, and it gives them an unfair advantage in the financial markets.

Investor

An investor is an individual, who invests money in an asset with the expectation that its value would appreciate in the future. The asset can be anything, including a bond, debenture, mutual fund, equity, gold, silver, exchange-traded funds (ETFs), and real-estate property.

J
Jim Simons

Jim Simons is a highly successful hedge fund manager and mathematician known for his quantitative trading strategies. He founded Renaissance Technologies, a quantitative hedge fund firm, in 1982. Simons and his team developed sophisticated mathematical and statistical models to identify profitable trading opportunities in various financial markets, including stocks, futures, and options

K
Ken Griffin

Kenneth C. Griffin, commonly known as Ken Griffin, is a prominent American hedge fund manager and investor. He is the founder and CEO of Citadel, a leading global financial institution that encompasses Citadel Securities, a market-making and trading firm, and Citadel Advisors, a hedge fund manager.

L
Leverage

Forex leverage is a tool enabling traders to control larger positions with a relatively small amount of capital, amplifying potential profits and losses based on the chosen leverage ratio.

Limit order

A limit order is a type of order used in trading where an investor specifies a particular price at which they want to buy or sell a financial asset. The order will only be executed if the market price reaches or exceeds the specified limit price, ensuring that the trader gets the desired price or better when the trade is executed.

Long position

A long position in Forex, represents a positive outlook on the future value of a currency pair. When a trader assumes a long position, they are essentially placing a bet that the base currency in the pair will appreciate in value compared to the quote currency.

Lot size (Forex)

In forex trading, a lot size refers to the standardized quantity of currency units that a trader buys or sells in a single trade. Lot sizes vary but are commonly categorized into standard lots (100,000 units), mini lots (10,000 units), and micro lots (1,000 units), allowing traders to manage their exposure and risk according to their account size and trading strategy.

M
Margin Call

A margin call is a demand made by a broker or a financial institution to a trader or investor who is using margin (borrowed funds) to cover potential losses in a trading account. It occurs when the value of the securities or assets held in the account falls below a certain threshold, known as the maintenance margin or margin requirement, as specified by the broker.

Market Efficiency

Market efficiency is defined as the degree to which market prices reflect all available, relevant information. The term was first coined by economist Eugen Fama in his 1970 paper in which he proposed the Efficient Market Hypothesis (EMH).

Margin level

Margin level is an indicator reflecting the ratio of the trader’s capital to the used margin, expressed as a percentage

MAS (Monetary Authority of Singapore)

MAS is the Central Bank of Singapore and also serves as a regulator. MAS oversees all markets, including the over-the-counter Forex and stock markets. The jurisdiction’s centralized regulatory system is strict and authoritarian, but thanks to it, Singapore is among the world’s top countries for doing business.

Mitigation

The idea behind mitigation is to recognize and effectively trade mitigation blocks. These blocks consist of specific price action patterns that signal a change in market sentiment or demand-supply dynamics.

MFSA

MFSA was established on 23 July 2002. MFSA comprises a group of government and non-government regulators that license and control brokers and their financial activities.

Moving Average (MA)

Moving Average is a commonly used technical indicator that smooths out price data over a specific period to identify the underlying trend. It is calculated by averaging the prices of an asset over a chosen time frame, making it a valuable tool for trend-following and trend-reversal strategies.

N
NZDUSD

NZDUSD pertains to the ratio between the New Zealand Dollar (NZD) and the United States Dollar (USD). It explains how much one NZ Dollar equates to in US Dollars.

O
Options trading

Options trading is a financial derivative strategy that involves the buying and selling of options contracts, which give traders the right (but not the obligation) to buy or sell an underlying asset at a specified price, known as the strike price, before or on a predetermined expiration date. There are two main types of options: call options, which allow the holder to buy the underlying asset, and put options, which allow the holder to sell the underlying asset.

Overtrading

Overtrading is a phenomenon where a trader executes too many transactions in the market, surpassing their strategy and trading more frequently than planned. It's a common mistake that can lead to financial losses.

P
Paper trading

Paper trading, also known as virtual trading or simulated trading, is a practice where individuals or traders simulate real-life trading scenarios without using real money. Instead of placing actual trades with real capital, participants use a simulated trading platform or keep track of their trades on paper or electronically to record their buying and selling decisions.

Paul Tudor Jones

Paul Tudor Jones is a highly successful and influential hedge fund manager and investor. He is best known for his macro trading and his ability to navigate and profit from major financial market trends.

Payouts in binary options

Payout percentage in binary options trading represents the amount of money a trader stands to make if their binary option expires in the money. It is usually expressed as a percentage of the initial investment.

Pip in Forex

A pip, or "percentage in point," represents the smallest price movement in forex trading, typically the fourth decimal place in exchange rates, indicating the price change's minimal increment.

Position trading

Position trading is a long-term strategy where traders hold positions for extended periods, often weeks or months, based on fundamental analysis of an asset's value.

Ponzi Scheme

A Ponzi scheme may be defined as a fraudulent scheme in which the perpetrators attract investors and pay them a relatively small profit from new investors just before the criminals abscond with the overwhelming bounty of the funds.

Pre-Market Trading

Pre-market trading refers to trading activity in financial markets before the official opening of the regular trading session, allowing investors to react to pre-market news and events.

Price action trading

Price action trading is a trading strategy that relies primarily on the analysis of historical price movements and patterns in financial markets, such as stocks, currencies, or commodities. Traders who use this approach focus on studying price charts, candlestick patterns, support and resistance levels, and other price-related data to make trading decisions.

Private Trader

A private trader is an individual who doesn’t represent any institution and trades using their own capital.

Prop trading

Proprietary trading (prop trading) is a financial trading strategy where a financial firm or institution uses its own capital to trade in various financial markets, such as stocks, bonds, commodities, or derivatives, with the aim of generating profits for the company itself. Prop traders typically do not trade on behalf of clients but instead trade with the firm's money, taking on the associated risks and rewards.

Pump and Dump

Pump and dump" is a fraudulent scheme commonly seen in financial markets, especially in the context of stocks or cryptocurrencies. In a pump and dump scheme, manipulative individuals or groups artificially inflate the price of an asset, often through spreading false or misleading information to attract unsuspecting investors.

P2P trading

Trading crypto P2P (peer-to-peer) allows the buyer and seller to interact with each other directly instead of in the presence of a third party or an intermediary.

Q
Quantitative Trading

Quantitative trading consists of trading strategies based on quantitative analysis, which rely on mathematical computations and number crunching to identify trading opportunities.

Quotes (in Forex)

In Forex (foreign exchange) trading, a "quote" refers to the current price at which one currency can be exchanged for another. It consists of two prices: the bid price, representing the maximum a buyer is willing to pay, and the ask price, representing the minimum a seller is willing to accept.

R
Ranging markets

Ranging markets are a type of market characterized by short-term movement between apparent asset price highs and lows.

Ray Dalio

Ray Dalio is the founder of Bridgewater Associates, one of the world's largest and most successful hedge fund firms. His investment principles, outlined in his book "Principles: Life and Work," have been influential in guiding his investment strategy and the culture of his firm. Dalio is also known for his economic research and predictions, which have garnered significant attention in the financial industry.

Risk Management

Risk management is a risk management model that involves controlling potential losses while maximizing profits. The main risk management tools are stop loss, take profit, calculation of position volume taking into account leverage and pip value.

Risk/Reward Ratio in Trading

The risk/reward ratio in trading is a key metric used by traders to assess the potential profit relative to the potential loss in a trade. It represents the ratio of the expected gain (reward) to the amount at risk (risk) and is used to determine whether a trade is worth pursuing.

Robo-Advisor

A Robo-Advisor is a digital platform using automated algorithms to provide investment advice and manage portfolios on behalf of clients, often with lower fees than traditional advisors.

Roth IRA

A Roth IRA (Individual Retirement Account) is a tax-advantaged retirement savings account available in the United States. It allows individuals to contribute after-tax income to the account, and the contributions grow tax-free. When qualified withdrawals are made in retirement, including both contributions and earnings, they are typically tax-free as well.

S
Scalping

Scalping in trading is a strategy where traders aim to make quick, small profits by executing numerous short-term trades within seconds or minutes, capitalizing on minor price fluctuations.

SCB (Financial Regulator of Bahamas)

SCB - an independent regulator of the Bahamas, is subordinate to the country’s Ministry of Finance and responsible for overseeing securities, investing, and all exchange and over-the-counter (OTC) markets, including Forex.

SEC (Securities and Exchange Commission)

SEC is an independent federal government regulatory agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation.

Security token

A Security Token is one of the latest exchange instruments. It is a digital analog of physical securities (stocks, bonds), running on blockchain and representing a smart contract (as a non-fungible token).

Semiconductor stocks

Semiconductor stocks represent shares in companies specializing in the design, manufacture, and distribution of vital semiconductor devices. These components, including integrated circuits and microchips, are integral to electronic devices across diverse industries like technology, telecommunications, automotive, and healthcare.

Seychelles Financial Services Authority (FSA)

The Seychelles Financial Services Authority (FSA) is a government regulator that inspects license applicants and superficially oversees their operation. The FSA has mild registration conditions and considers private investors’ complaints pro forma.

Short selling

Short selling in trading involves selling an asset the trader doesn't own, anticipating its price will decrease, allowing them to repurchase it at a lower price to profit from the difference.

Short Squeeze

A short squeeze is a situation in which short sellers are forced to close their positions at a loss, which leads to a sharp rise in the price of an asset.

SIPC

SIPC is a nonprofit corporation created by an act of Congress to protect the clients of brokerage firms that are forced into bankruptcy.

Social trading

Social trading is a form of online trading that allows individual traders to observe and replicate the trading strategies of more experienced and successful traders. It combines elements of social networking and financial trading, enabling traders to connect, share, and follow each other's trades on trading platforms.

Stock fraud

Stock fraud, also known as securities fraud, refers to a range of illegal activities or deceptive practices related to stocks and securities markets. These fraudulent activities can harm investors, undermine market integrity, and are often subject to legal penalties.

Stop loss hunting

Stop loss hunting is an unethical strategy used by notorious traders to gain from the market at the cost of retail traders. They achieve this by driving the asset's price to a point where most traders have set their stop losses.

Spot Forex trading

Spot Forex trading is the simultaneous buying and selling of currency pairs in the foreign exchange market with immediate settlement and delivery, based on the current exchange rate.

Spread (in Forex)

A forex spread is the difference between the buying (bid) and selling (ask) prices of a currency pair, serving as the cost of trading and the broker's profit margin.

Spread betting

Spread betting in trading is a form of speculation where traders bet on the price movement of an asset, either rising or falling, and the degree of the price change.

Supertrend indicator

Supertrend Indicator is a trend-following indicator that helps traders identify potential entry and exit points in the market. It combines price and volatility data to plot a trend-following line that can be used to guide trading decisions. When the price is above the Supertrend line, it suggests a bullish trend, and when below, a bearish trend.

Stochastic Oscillator

The Stochastic Oscillator is a technical indicator used in financial analysis to gauge the momentum of a security's price and identify overbought or oversold conditions by comparing the closing price to a specified price range over a defined period.

Stop-loss hunting

Stop-loss hunting is a term that has gained notoriety among retail traders. It refers to the alleged practice of brokers manipulating the market to trigger their clients' stop loss orders intentionally.

Strike price in binary options

The strike price in binary options is the price at which the underlying asset is valued at the expiration of the option.

Swing trading

Swing trading is a trading strategy that involves holding positions in financial assets, such as stocks or forex, for several days to weeks, aiming to profit from short- to medium-term price swings or "swings" in the market. Swing traders typically use technical and fundamental analysis to identify potential entry and exit points.

Supply and Demand Zones

In trading, a supply and demand zone refers to specific price levels on a chart where there is an imbalance between buyers (demand) and sellers (supply). A demand zone represents a price area where buying interest is strong, potentially leading to price increases, while a supply zone indicates an area where selling interest is significant, possibly resulting in price declines.

T
Take-Profit

Take-Profit order is a type of trading order that instructs a broker to close a position once the market reaches a specified profit level.

Time Management

Time management is the coordination of tasks and activities to maximize the effectiveness of an individual's efforts.

Trade Execution

Trade execution is knowing how to place and close trades at the right price. This is the key to turning your trading plans into real action and has a direct impact on your profits.

Trade Setups in Forex

A trade setup is a prespecified set of conditions in the market that a trader can use to identify an opportunity to engage in a trade.

Trading

Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.

Trailing Stop Order

A Trailing Stop Order is a type of order that automatically adjusts the stop-loss level as the market price moves in a favorable direction, helping to protect profits.

Trading system

A trading system is a set of rules and algorithms that a trader uses to make trading decisions. It can be based on fundamental analysis, technical analysis, or a combination of both.

Trend Trading

Trend trading is a trading strategy where traders aim to profit from the directional movements of an asset's price over an extended period.

Types of orders in trading

Main types of orders in trading are: Market Orders - an order to buy or sell at the current market price; Limit Orders - an order to buy or sell at a specified price or better; Stop Loss Orders - an order that becomes a market order once a specified price (the "stop price") is reached or passed; Stop Limit Orders - when the stop price is reached, the order becomes a limit order to buy/sell at a specified limit price or better and Trailing Stop Orders - this order sets the stop price at a fixed amount or percentage below (for a long position) or above (for a short position) the market price.

Types of prop trading firms

Prop trading firms come in a variety of forms, each with its own unique characteristics and strategies. These include: independent prop trading firms, bank prop trading desks, broker-dealer prop trading desks, market-making firms

Types of stock indices

Benchmark indices, like the S&P 500, track overall market performance; sectoral indices, such as the Nasdaq-100, focus on specific industries; market-cap based indices, like the Russell 2000, classify stocks by size; coverage-based indices span global to country-specific markets; indices by weighting method vary in how they assign component weights; and ethical indices consider ESG factors alongside financial performance.

U
Upward Trend

Uptrend is a market condition in which prices are generally rising. Uptrends can be identified by using moving averages, trendlines, and support and resistance levels.

V
VFSC

VFSC is the financial regulatory authority of Vanuatu. It was created by the Vanuatu Financial Services Commission of 1993 when it assumed a part of the responsibilities of the Ministry of Finance and Economic Management. VFSC is a offshore regulator.

Volatility

Volatility refers to the degree of variation or fluctuation in the price or value of a financial asset, such as stocks, bonds, or cryptocurrencies, over a period of time. Higher volatility indicates that an asset's price is experiencing more significant and rapid price swings, while lower volatility suggests relatively stable and gradual price movements.

W
Wire transfer

A wire transfer is a method of electronic funds transfer in which money is sent from one bank or financial institution to another, typically across international or domestic boundaries. It involves the sender providing their bank with specific instructions, including the recipient's bank details and the amount to be transferred, and the funds are then electronically moved from the sender's account to the recipient's account.

X
XAU USD

XAUUSD – the forex symbol representing the exchange rate between gold and the US dollar. Traders use this pairing to speculate on the price movements of gold in relation to the US dollar.

Y
Yield

Yield refers to the earnings or income derived from an investment. It mirrors the returns generated by owning assets such as stocks, bonds, or other financial instruments.

Z
Zigzag indicator

Zigzag indicator is used to filter out insignificant price movements. It points out whenever the price changes more than pre-specified rate of percentage.

FAQs

IsTraders Union Trading Dictionary free to use?

Yes, the Traders Union Trading Dictionary is free to use, but it is not free to copy. If you wish to quote or reproduce this content, please provide a link to https://tradersunion.com/.

How can I learn trading?

To begin learning trading, start by educating yourself through online resources, books, and courses. Open a demo trading account to practice without risking real money, and consider joining trading communities or forums to gain valuable insights from experienced traders.

Can I study trading without financial education?

Yes, it is possible to study trading without a formal financial education. Many successful traders are self-taught, relying on readily available resources such as books, online courses, and trading communities to acquire the necessary knowledge and skills. However, it's essential to approach trading with discipline and caution, continuously educate yourself, and practice risk management to navigate the markets effectively.

Is trading difficult?

The difficulty of trading varies from person to person and depends on several factors, including one's level of dedication, aptitude for financial analysis, and ability to manage emotions. While some find trading challenging due to its complexity and the need for disciplined risk management, others may thrive in the dynamic environment of financial markets.