Dictionary
Account Statement: A detailed report given to clients that outlines their trading activity within an account, covering deposits, withdrawals, trades, swaps, and current account balances.
Allocation: The process of selecting and distributing assets to form a trading portfolio.
Balance: The value of a client’s trading account, excluding profits and losses from open positions. It is calculated by subtracting withdrawals and closed position P&L from the total deposits.
Bear Market: A market environment where prices are declining and investor sentiment is generally negative.
Bull Market: A market scenario in which prices are on the rise or expected to increase.
Bid-Ask Spread: The gap between the highest price a buyer is willing to offer (bid) and the lowest price a seller is prepared to accept (ask) for an asset.
Blue Chip Stocks: Shares of large, reputable companies with a track record of consistent and stable performance.
Commission: A fee imposed by the broker for carrying out trades on a client’s behalf.
Candlestick Chart: A graphical tool that shows price movements over a selected period, illustrating the open, closed, high, and low prices in the form of candlestick figures.
Chart Patterns: Configurations on a chart that serve as signals for potential future price movements.
Day Trading: The act of purchasing and selling financial assets within a single trading day, often involving multiple trades throughout the day.
Diversification: The strategy of investing in a variety of asset classes, industries, and regions to reduce overall risk.
Dividend: A portion of a company’s profits distributed to shareholders, as determined by the board of directors. Dividends may be paid in cash, additional shares, or other forms of property.
ETF (Exchange-Traded Fund): A financial product composed of a collection of securities, typically designed to mirror the performance of a specific index.
Equity: The current value of a client’s trading account, calculated as the balance plus any profits or losses from open positions.
Forex (Foreign Exchange): The worldwide market for buying and selling currencies, where currencies are traded against one another at a mutually determined exchange rate.
IPO (Initial Public Offering): The initial sale of a company’s shares to the public, signifying its shift from a private entity to a publicly traded corporation.
Index: A theoretical collection of investment assets representing a specific segment of the financial market, such as the S&P 500, which tracks 500 of the largest companies in the United States.
Intraday Trading: The practice of buying and selling financial instruments within the same trading day, ensuring all positions are closed before the market day ends.
Limit Order: An order placed to buy or sell a security at a specific price or better. A Buy Limit order will only be executed at the limit price or lower, while a Sell Limit order will be executed at the limit price or higher. Unlike a market order, where the trade is executed at the current market price, a limit order requires you to set the desired price at which you want the trade to be completed.
Long Position: The purchase of a security, such as a stock, commodity, or currency, with the anticipation that its value will increase over time.
Liquidity: The ability to quickly buy or sell an asset without causing a significant impact on its price.
Margin: Margin is the collateral a client must deposit with the broker to cover the credit risk associated with borrowing funds to purchase an investment. It represents the difference between the total value of the investment and the amount borrowed.
Margin Call: A broker’s demand for additional funds or collateral to bring the margin up to the required level, ensuring that a position that has moved unfavorably is adequately secured.
Market Order: An order given to a broker to buy or sell an investment immediately at the best available current price.
Portfolio: A group of diverse investments, such as stocks, bonds, and other assets, that an investor holds.
Penny Stocks: Stocks that are usually priced under $5 per share, often representing smaller companies with low liquidity and higher volatility.
Research Tools: Tools and resources offered by the broker, including market analysis, stock screeners, and financial news, are designed to assist users in making well-informed investment choices.
Risk Management: Methods and strategies employed to mitigate risks and safeguard investments against unfavorable market fluctuations.
Risk Tolerance: The degree of risk an investor is willing to accept when making investment decisions.
Stop-Loss (S/L): An order set with a broker to automatically sell a security when it hits a predetermined price, aiming to limit an investor’s potential loss on a position.
Short Position: A trading strategy where an investor sells borrowed shares on the open market, anticipating that the stock’s price will decline. The investor plans to buy the shares back at a lower price later, returning them to the broker from whom they were borrowed, and profiting from the price difference.
Trading Hours: The designated times when the broker’s platform is open for trading across different markets, including stock exchanges and commodities.
Trading Platform: The software or web-based interface that enables users to execute trades, perform research, and manage their investment portfolios.
Technical Analysis: A method of analysis that examines price movements and other internal factors to predict future price changes in an asset.
Volatility: A metric that quantifies the extent of price fluctuations in a market or security over time, typically calculated using standard deviation.
Value Investing: An investment approach focused on picking stocks that appear undervalued based on fundamental analysis, including factors like earnings and book value.