Glossary

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A

AAII Sentiment Survey
The weekly survey conducted by the American Association of Individual Investors, a non-profit organisation dedicated to providing investment education and resources to individual investors. It is a popular tool that helps investors measure the overall sentiments of individual investors in the stock market.
Abandoned Baby
A reversal Japanese candlestick pattern that is formed by three candles: one Doji and two candles with bodies. There is a gap before and after the Doji. The shadows on the Doji must completely gap below or above the shadows of the first and third candles.

It is recommended to enter the position after the third candle has been created completely. If there was an uptrend before the formation of the pattern, then the bears will take control and push the price down after its appearance; it is time to open a short position. If there was a downtrend before, the bulls will take control and push the price up; the trader is better off going long.
Absolute Advantage
The ability of a producer to provide a good or service in a greater quantity than its competitors, yet at the same cost, or the same quantity at a lower cost.
Account Statement Report
A report that includes the record of all transactions made in a trading account over a specific period of time.
Account Value
The total worth of all the holdings of the account.
Accrual
The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (interest arbitrage) deals, over the period of each deal.
Accumulation Area
A price range or zone on a price chart where a financial asset’s price consolidates or moves within a relatively tight range over a period of time. It is a technical analysis concept used to identify potential areas of accumulation, where buying interest may be building up, and where a potential price reversal or breakout might occur.
Accumulative Swing Index (ASI)
A momentum oscillator that measures the strength of price swings in the market. The ASI is calculated by taking the difference between the current close and the previous close, as well as the range between the current high and low, then combining the two values.

A swing signal is defined as when the price of the asset breaches the previous high or low swing. A rising ASI indicates an uptrend, while a falling ASI suggests a downtrend. In a flat market, the technical chart will not show a price swing, and the ASI will be close to zero.
ADP National Employment Report
The monthly report on the US nonfarm private sector employment published by the ADP Research Institute in collaboration with Moody’s Analytics. The report is prepared using actual transactional payroll data.
Advance/Decline Index
The market breadth indicator that represents the cumulative difference between the number of advancing and declining stocks within a given index. A rising A/D index value suggests that the market is gaining momentum, whereas a falling value suggests that the market may be losing momentum.
Aggressor
A market participant who takes the initiative to place an order that is immediately executed at the best available price. The term is commonly used in the context of order flow analysis, particularly in markets where transactions occur rapidly or where the aggressor’s actions influence short-term price movements.
Algorithmic Trading
Also known as a mechanical or systematic trading system, the process for executing orders utilising automated and pre-programmed trading instructions to account for variables such as price, timing, and volume.
All or None Order (AON)
The order to buy or sell an asset that must be executed in its entirety, or not executed at all.
All-Time High
The term used in the world of finance to describe the highest price an asset or a financial instrument has ever reached.
Alligator Indicator
The indicator that helps differentiate between trending and resting periods. The chart formation consists of three lines overlaid on a price chart that represent the jaw, the teeth, and the lips of the alligator. It indicates that a trend is in effect, as well as in what direction the trend is moving.

A trader should enter a buy position when the lip line breaks through the teeth line upside, while the teeth line crosses the jawline from bottom to top. This will signal that the price is going to follow an uptrend. A sell position should be entered when the alligator lines start sloping down. The lip line should be below the teeth, and the teeth should be below the alligator’s Jaw. The price should be trading below all the alligator lines.
Alpha
The term used in investing to describe an investment strategy’s ability to beat the market or its “edge”. Alpha is therefore also often referred to as “excess return” or the “abnormal rate of return” in relation to a benchmark, when adjusted for risk.
Altcoin
A cryptocurrency other than Bitcoin.
Analyst
A financial professional who has expertise in evaluating investments and puts together buy, sell, and hold recommendations for clients.
Andrews’ Pitchfork
The technical indicator, developed by Alan Andrews, that uses three parallel trend lines to identify possible levels of support and resistance, as well as potential breakout and breakdown levels. It is created by placing three points at the ends of previous trends, then drawing a line from the first point that runs through the midpoint of the other two points.

In general, traders should purchase the asset when the price falls near the support of either the centre trendline or the lowest trendline. Conversely, they should sell the asset when it approaches the resistance of either the centreline or the highest trendline.
ANZ Commodity Price Index
Developed by Australia and New Zealand Banking Group, an economic indicator that measures the price movement of major export commodities.
API Weekly Statistical Bulletin (WSB)
The report that provides weekly data on the supply and demand of crude oil and petroleum products in the United States.
Arbitrage
Taking an equal and opposite position at the same time to benefit from small price differences between related markets.
Aroon Indicator
The technical indicator that is used to identify trend changes in the price of an asset, as well as the strength of that trend. In essence, the indicator measures the time between highs and the time between lows over a period. The indicator consists of the Aroon Up line, which measures the strength of the uptrend, and the Aroon Down line, which measures the strength of the downtrend.

When the Aroon Up is over the Aroon Down, this confirms bullish price behaviour and is considered a buy signal. The Aroon Down being above the Aroon Up confirms bearish price behaviour and is a sell signal.
Aroon Oscillator
The trend-following indicator developed by Tushar Chande in 1995 that uses aspects of the Aroon Indicator (Aroon Up and Aroon Down) to gauge the strength of a current trend, as well as the likelihood that it will continue.

The Aroon Oscillator crosses above the zero line when the Aroon Up moves above the Aroon Down, which signals that an uptrend is beginning, so the trader should buy the asset. The Aroon Oscillator drops below the zero line when the Aroon Down moves below the Aroon Up, which signals that a downtrend is starting, so the trader should sell.
Ascending Channel
The chart pattern formed from two upward trend lines drawn above and below a price, representing resistance and support levels.

A breakout above the upper trendline generates a strong buy signal, while a breakdown below the lower trendline generates a strong sell signal.
Ascending Trend Line
A diagonal line drawn on a price chart to connect a series of rising lows, indicating an upward trend in the price of a financial asset. It is one of the most basic and widely used tools in technical analysis to visually identify the direction and strength of a price trend.

A rising price combined with increasing demand is very bullish and shows very strong buying pressure. As long as the price action stays above this line, it is a bullish trend; going long is considered as a good choice. A break below the ascending trend line indicates that buyer demand has weakened, and a change in trend could be imminent; traders should think about closing their positions.
Ascending Triangle
A bullish continuation pattern used in technical analysis that is created from a horizontal resistance line and a rising trendline. The horizontal resistance line connects the highs or price peaks, where the price has encountered resistance and struggled to break above. The rising trendline connects the higher lows or price troughs, showing that the price is making higher lows over time. The two lines form a triangle.

Traders should wait for a breakout to occur before entering a long position. A breakout happens when the price moves above the horizontal resistance line convincingly. This breakout suggests that the buyers have gained enough strength to overcome the previous resistance and continue pushing the price higher.
Ask
The term used when one trader expresses an intention to buy an asset or financial instrument from another trader or institution.
Asset
The resource with economic value that is owned or controlled with the expectation that it will provide a future benefit.
ASX 200
The stock market index of the 200 largest companies listed on the Australian Securities Exchange (ASX).
Average Directional Index
Developed in 1978 by J. Welles Wilder as an indicator of trend strength in a series of prices of a financial instrument. The ADX is a combination of two other indicators developed by Wilder: the positive directional indicator (+DI) and the negative directional indicator (-DI). The ADX combines them and smooths the result with a smoothed moving average.

If the +DI line crosses above the -DI line and the ADX is above 20, or ideally above 25, that is a signal to buy. On the other hand, if the -DI crosses above the +DI, and the ADX is above 20 or 25, then that is an opportunity to enter a potential short trade.
Awesome Oscillator
Developed by Bill Williams as an indicator that is also a non-limiting oscillator, it provides insight into the weakness or strength of an asset. It is used to measure market momentum, affirm trends, or anticipate possible reversals.

A bullish buying opportunity occurs when the awesome oscillator crosses above zero, indicating that the short-term momentum is increasing faster compared to the long-term. A selling opportunity is detected when the indicator crosses below the zero-line mark, meaning that the short-term momentum is decreasing more rapidly than the long-term.

B

Baker Hughes Rig Count
A weekly report that tracks the number of active drilling rigs in the United States and Canada.
Balance of Payments
A systematic record of all economic transactions between a country and the rest of the world over a specified period.
Balance of Trade
An economic indicator that measures the difference in value between a country’s exports and imports over a specified period.
Baltic Dry Index (BDI)
An economic indicator that tracks the global shipping market’s health and offers insights into the demand for raw materials and global trade patterns.
Bar Chart
A type of chart where the price movement for given periods is shown in the form of bars. Each bar has a vertical line that shows the highest and lowest price reached during the period. The opening price is marked by a small, horizontal line on the left of the vertical line, and the closing price is marked by a small, horizontal line on the right of the vertical line.
Base Currency
The first out of two currencies comprising a currency pair.
Base Rate
The interest rate that a central bank, like the Bank of England or Federal Reserve, will charge to lend money to commercial banks.
Basis Point
A unit of measurement used to express changes in interest rates, yields, and other financial percentages. One basis point is equivalent to one-hundredth of one percentage point (0.01%).
Bear
A trader who believes the prices will decline.
Bear Flag
A bearish chart pattern that is formed by two declines separated by a brief, consolidating retracement period.

Traders of a bear flag might wait for the price to break below the support of the consolidation to find short entry into the market. The breakout suggests that the trend which preceded its formation is now being continued.
Bear Market
A market in which prices are noticeably declining.
Bear Trap
A situation where traders place a short position when the price of an asset is falling, only for the price to reverse and move higher.
Beta
A widely used metric in the world of finance to assess the risk of an investment compared to the overall market.
Bid
An offer made by an investor, trader, or dealer in an effort to buy an asset or compete for a contract.
Bid/Ask Spread
The difference between the bid and ask price.
Big Mac Index
A price index published since 1986 by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies, as well as providing a test of the extent to which market exchange rates result in goods costing the same in different countries.
Binary Options
A financial product where the parties involved in the transaction are assigned one of two outcomes. The payoff here is either some fixed monetary amount or nothing at all.
Bitcoin (BTC)
The cryptocurrency developed in 2009 by an anonymous individual under the pseudonym Satoshi Nakamoto. As a virtual currency, Bitcoin is designed to act as money and a form of payment outside the control of any one person, group, or entity.
Block
A collection of data related to transactions that are bundled together to a predetermined size and processed for transaction verification, which eventually becomes part of a blockchain.
Block Explorer
An online browser where various information about the blocks is displayed. It also shows the transaction history and address balance.
Block Height
A specific location in a blockchain, measured by the number of confirmed blocks preceding it.
Block Reward
A portion of newly minted digital coins or tokens assigned to a miner, who helps to verify transactions on a blockchain network.
Blockchain
A digital ledger or record book that keeps track of transactions or information in a secure and transparent way. Instead of being stored in a single central location like a traditional database, a blockchain is distributed across many computers or nodes around the world. Each block is linked to the previous block in a chronological order, forming a chain of blocks secured using advanced cryptographic techniques. Once a block is added to the chain, it becomes very difficult to alter the information within it, providing a high level of security and immutability.
Blue Chip
A nationally or internationally recognised, well-established, and financially sound company that is publicly traded.
Bond
The fixed-income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).
Bond Auction
The process of selling short- and long-term government bonds to investors in an attempt to minimise the cost of financing national debt.
Breakdown
A downward move in an asset’s price, usually through an identified level of support, that portends further declines.
Breakeven Point
The level when the market price of an asset is the same as its original cost.
Breakout
When the price of an asset moves above a resistance area or below a support area. The first case is usually a confirmation of a further uptrend, the second — a downtrend.

The trading behaviour should be as follows: once the price closes above a resistance level, it is recommended to open a bullish position. When it closes below a support level, a bearish position should be opened.
Breakout Trading
A popular trading strategy that seeks to profit from price movements that occur when a financial instrument breaks through established support or resistance levels.
Broadening Formation
A price chart pattern identified by technical analysts. It is characterised by increasing price volatility, and it is diagrammed as two diverging trend lines: one rising and one falling.

A buy signal can occur when the price breaks above the upper trend line of the broadening formation. This breakout suggests that the price is gaining upward momentum and could continue its ascent. A sell signal, in contrast, occurs when the price breaks below the lower trend line of the broadening formation. This break suggests a potential reversal in the pattern, and it may indicate that it is time to consider exiting or shorting.
Broker
A licensed intermediary or middleman who facilitates the buying and selling of various financial instruments on behalf of their clients.
Bull
A trader who believes that the price will rise.
Bull Flag
A bullish chart pattern formed by two rallies separated by a brief, consolidating retracement period.

Traders are advised to enter a long position when the price breaks above the consolidation resistance level on high volume.
Bull Market
A market characterised by rising prices.
Bull Trap
A situation where traders place a long position when the price of a currency pair is rising, only for the price to reverse and move lower.
Buy Limit Order
An order to purchase an asset at or below a specified price, allowing traders to control how much they pay. By using a limit order to make a purchase, the investor is guaranteed to pay that price or less.
Buy Wall
A huge buy order that prevents the market price from going down until that entire buy order is complete.

C

Capacity Utilisation
An economic indicator that measures the percentage of an economy’s industrial capacity being used in the production of goods and services.
Capital Account
A crucial component of a country’s balance of payments. It records all economic transactions between residents of the country and the rest of the world.
Carry Trade
A widely used trading strategy that involves borrowing in a low-interest-rate currency and investing in a high-interest-rate currency to profit from the interest rate differentials.
Cash Market
A marketplace in which the purchased commodities or securities are paid for and received at the point of sale.
Catalyst
An event or other news that propels the price of an asset dramatically up or down.
Chart Pattern
A graphical presentation of price movement by using a series of trend lines or curves. Chart patterns can be described as natural phenomena of fluctuations in the prices of a financial assets caused by a number of factors, including human behaviour.
Circulating Supply
An approximation of the number of cryptocurrency coins or tokens that are circulating in the public market.
Clearing
The process of settling a trade.
Closed Position
A position that has been terminated or ended.
Cloud Mining
The process of mining cryptocurrency by using shared hardware output from remote data centres. Cloud mining contracts eliminated the need for home-based mining rigs.
Cold Wallet
A type of digital wallet that stores cryptocurrency offline.
Commodity
A basic good used in commerce that is interchangeable with other goods of the same type.
Confluence
The combination of multiple ideas or strategies used together to form a single, coherent approach.
Consolidation
A technical analysis term used to describe an asset’s price movement within a given support and resistance range for a period of time.
Continuation Diamond
A chart pattern that occurs within an existing trend and signals a temporary consolidation before the price continues in the same direction. The period of consolidation on the chart has a diamond-shaped form.

The entry point is usually determined by the breakout of the price from the continuation of the diamond pattern. This breakout suggests that the consolidation phase is over, and the price is likely to continue in the direction of the previous trend.
Continuation Pattern

A chart pattern described as a series of price movements that indicate a temporary halt in the current prevailing trend, but that it should continue after the break.

The entry point is typically determined by a breakout from the continuation pattern. Traders often wait for a decisive breakout above the pattern’s resistance line (in an uptrend) or below the pattern’s support line (in a downtrend). This breakout suggests that the consolidation phase is ending, and the price is likely to continue in the direction of the previous trend.

Contract
An agreement of trade.
Contract For Difference (CFD)
A financial derivative that allows traders to speculate on the price movement of the underlying instrument, without the need for ownership of the instrument.
Conversion Rate
The ratio between two currencies. It designates how much of one currency is needed to exchange for the equivalent value of another currency.
Correlation
The statistical measure of the relationship between two or more financial assets or variables. It quantifies the degree to which the price movements of different assets move in tandem with each other.
Cost of Carry
The various expenses associated with holding a financial asset or investment over a specific period.
Counter Currency
The second currency in a currency pair, also known as the quote currency.
Cross Currency Pair
A currency pair that does not contain the US dollar as either the base or counter/quote currency.
Cross Rate
The exchange rate between two currencies that are not the official currencies of the country where the exchange rate is quoted.
Crossover
A point on the trading chart at which the price and a technical indicator line intersect, or when two indicators themselves intersect.
Cryptocurrency
A form of digital asset based on a network that is distributed across a large number of computers. This decentralised structure allows them to exist outside the control of governments and central authorities.
Cryptocurrency Wallet Address
The secure identifier marked by a unique string of characters that enables payments to an individual or entity.
Cup and Handle
A bullish continuation chart pattern that marks a consolidation period followed by a breakout. The pattern resembles a cup with a handle, hence its name.

The entry point is typically determined by a breakout from the handle portion of the pattern. Traders should wait for a decisive breakout above the resistance level formed by the upper boundary of the handle. This breakout suggests that the consolidation phase is ending, and the price is likely to resume its upward movement. It is ideal to enter the trade as close to the breakout point as possible.
Currency
A form of money used as a medium of exchange in transactions involving goods, services, or financial assets.
Currency Basket
A collection of different currencies grouped together and weighted by a specific methodology.
Currency Exposure
A term referring to the vulnerability of an investment, cash flow, or financial position to variations in the exchange rate of two currencies.
Currency Pair
The quotation of two different currencies, with the value of one currency being quoted against the other.
Currency Risk
The impact of currency fluctuations on the value of a company’s cash flows or accounting position.

D

Daily Chart
A graph that shows the past price movement of an asset in which each bar or candlestick represents a day’s worth of data.
Daily Cut-Off
The point of the day at which the trading day is over.
Dark Cloud Cover
The two-candlestick pattern that is created when a bearish candle opens above the close of the prior bullish candle, then closes below the midpoint of the bullish candle.

The theory states that, at the moment of the pattern creation, bears outweigh the bulls. Thus, traders can open a sell position a few pips below the down candle.
Day Trading
A form of speculation in which a trader buys and sells a financial instrument within the same trading day, so all positions are closed before the market day ends to avoid unmanageable risks and negative price gaps between one day’s close and the next day’s price at open.
Dead Cat Bounce
A small, brief recovery in the price of a declining asset.
Deal
A term that denotes a trade done at the current market price. It is a live trade as opposed to an order.
Delisting
The removal of a listed security, such as a stock or bond, from a stock exchange or other organised market.
Delivery Date
The specific date by which an investment contract must be completed.
Delta
In options trading, this is the ratio of the movement in the option price for every point move in the underlying asset.
Demo Account
A trading account that uses virtual funds.
Depreciation
The reduction in the value of an asset over time, due in particular to wear and tear.
Depth of Market
The volume of active buying and selling orders placed, covering a wide degree of prices.
Derivative
A financial instrument that is linked to another instrument which could be an asset, index, or interest rate.
Descending Channel
The chart pattern formed from two downward trendlines drawn above and below a price, representing resistance and support levels.

One of the most common ways to trade this pattern is to wait for the price to break through either trendline. A breakout above the upper trendline generates a strong buy signal, while a breakdown below the lower trendline generates a strong sell signal.
Descending Trend Line
A diagonal line drawn on a price chart to connect a series of declining highs, indicating a downward trend in the price of a financial asset.

As long as the price action stays below this line, it is a bearish trend, and going short is considered as a good choice. A break above the descending trend line indicates that the seller supply has weakened, and a change in trend could be imminent; traders should think about going long.
Descending Triangle
A bearish continuation pattern characterised by a series of lower highs (a descending trend line) and equal or horizontal lows (a support level).

The entry point is when the price confirms the breakout by closing below the support level. Traders can enter a short position either immediately after the confirmed breakout or on a retest of the broken support level, where the previous support now acts as resistance.
Direct Market Access (DMA)
A type of trade execution where traders are offered direct access to the interbank, enabling them to place trading orders with liquidity providers (LPs).
Direct Quote
A currency quotation in the foreign exchange market that expresses what amount of domestic currency is needed to buy one unit of the foreign currency – most commonly the US dollar.
Directional Movement Index (DMI)
An indicator developed by J. Welles Wilder in 1978 that identifies in which direction the price of an asset is moving. The indicator does this by comparing prior highs and lows, then drawing two lines: a positive directional movement line (+DI) and a negative directional movement line (-DI).

A buy signal occurs when the +DI crosses above the -DI, identified as an uptrend. A sell signal occurs when the +DI crosses below the -DI, identified as a downtrend.
Disparity Index
A technical indicator that measures the relative position of an asset’s most recent closing price to a specific moving average, and which reports the value as a percentage.

When the index crosses the zero mark in a positive direction, it indicates that the asset is gaining upward momentum – traders should open a buy position. When the value crosses the zero mark towards a negative value, this indicates that the price is in the process of falling – traders are advised to open a sell position.
Divergence
A concept in technical analysis that describes when an asset’s price is moving in the opposite direction of another piece of data, which is usually a technical indicator.
Dogecoin
An altcoin that first started as a joke in late 2013.
Doji
A candlestick pattern that occurs when the opening price and closing price of an asset are very close to each other, resulting in a candlestick with a very small or non-existent body.
Double Bottom
A chart pattern where the price holds a low two times and fails to break down lower during the second attempt; it instead continues higher.

Traders should open a long position after the breakout of the resistance level and the subsequent slight price correction, indicating a test of the broken level.
Double Top
A chart pattern where the price reaches a high twice and fails to break out higher during the second attempt; it instead continues to decline.

Traders should open a short position after the breakout of the support level and the subsequent slight price correction, indicating a test of the broken level.
Dow Jones Industrial Average (DJIA)
A price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq.
Downtrend
An overall move lower in price, created by lower lows and lower highs.
Dragonfly Doji
A candlestick pattern that can signal a potential reversal in price to the downside or upside, depending on past price action. It is formed when the asset’s high, open, and close prices are the same.

The appearance of a dragonfly Doji after a price advance warns of a potential price decline. A move lower on the next candle provides confirmation, so traders can go short. A dragonfly Doji after a price decline warns that the price may increase. The rise of the next candle can be considered a confirmation, and traders are able to go long.
Drawdown
The peak-to-trough decline in the value of an investment or trading account during a specific period, usually expressed as a percentage. It represents the largest percentage loss that an investor or trader has experienced, from their portfolio’s highest value to its lowest value, before a new peak is achieved.

E

ECN
A computerised system that automatically matches buy and sell orders for securities in the market. ECN trading is especially helpful when investors in different geographic areas wish to complete a secure transaction without the use of a third party.
Economic Calendar
A resource that allows traders to learn about upcoming news events. These events often have significant impacts on financial markets and currency volatility.
Economic Indicator
A piece of economic data, usually of macroeconomic scale, that is used by analysts to interpret current or future investment possibilities.
Elliott Wave Theory
A method of technical analysis based on crowd psychology. It looks for recurrent, long-term price patterns related to persistent changes in investor sentiment and psychology.
End of Day Order
A buy or sell order requested by an investor that is only open until the end of the day.
Engulfing
A pattern formed by two candles, where the body of the first candle is “engulfed” by the body of the second candle.

The bullish engulfing pattern provides the strongest buy signal when appearing at the bottom of a downtrend, and it indicates a surge in buying pressure. The bearish engulfing provides the strongest sell signal when appearing at the top of an uptrend, and it indicates a surge in selling pressure.
Entry Order
The order to automatically open a position when an asset’s price reaches a predefined level.
Ethereum (ETH)
The decentralised, open-source, and distributed computing platform that enables the creation of smart contracts and decentralised applications, also known as dapps. The cryptocurrency used within it is called Ether.
Euro (EUR)
The official currency of the eurozone, a group of European Union (EU) member countries that have adopted the Euro as their common currency.
Eurobond
The debt instrument that is denominated in a currency other than the home currency of the country or market in which it is issued.
Evening Doji Star
A bearish three-candle pattern that appears at the end of an uptrend and indicates that the existing uptrend is likely to end. It consists of three candles: a bullish first candle, a second Doji candle, and finally, a bearish third candle.

The entry point for trading the evening Doji star pattern typically occurs after the formation of the bearish third candle. Traders may wait for a subsequent bearish candle to further confirm the reversal, or they may consider going short once the price moves below the low of the third candle.
Evening Star
A bearish reversal candlestick pattern consisting of three candles: a large bullish candlestick, a small-bodied bullish or bearish candle, and a bearish candle. It appears at the top of a price uptrend, signifying that the uptrend is nearing its end.

The entry point for trading the evening star pattern typically occurs after the formation of the bearish third candle. Traders may wait for a subsequent bearish candle to further confirm the reversal, or they may consider going short once the price moves below the low of the third candle.
Exchange
A marketplace where financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading, as well as the efficient dissemination of price information.
Exchange Rate
The amount of one currency that is needed to buy one unit of another currency.
Exchange Rate Risk
The potential loss that could be incurred from an adverse movement in exchange rates.
Exchange Traded Fund (ETF)
A type of investment fund that trades on a stock exchange and gives investors exposure to a particular asset, such as stocks, commodities, bonds, or foreign currencies.
Exotic Currency
A currency that is thinly traded and highly illiquid.
Expectancy
In the context of trading, a statistical measure that estimates the average amount a trader can expect to win or lose per trade based on their historical performance.
Expiry Date
The date on which a financial contract or derivative instrument, such as options or futures, comes to an end or matures.
Exponential Moving Average (EMA)
A type of moving average indicator (MA) that places more weight and significance on the most recent prices.

Traders tend to interpret a rising EMA as support to the price action and a falling EMA as resistance. With that interpretation, they look to buy when the price is near the rising EMA, and they sell when the price is near the falling EMA.

F

Fading
A trading technique in which a trader assumes that a rapid upward movement is overdone and takes a short position, expecting a possible reversal.
Fakeout
A false breakout that occurs when the price moves outside of a chart pattern, then moves right back inside it.
Falling Knife
A term used to describe a situation where the price of an asset is falling rapidly, often without any apparent support levels or signs of a potential rebound.
Falling Three Methods
A bearish continuation pattern that appears in a downtrend. This Japanese candlestick pattern consists of at least five candlesticks, but it may include more. A long, black body is followed by three small body candles, each fully contained within the range of the high and low of the first candle. The fifth candle closes at a new low.

The entry point for trading the falling three methods pattern typically occurs after the formation of the last bearish candle that closes below the low of the previous candles. Traders may consider entering a short position or adding to an existing short position when the price confirms the continuation of the downtrend.
Falling Wedge
A bullish reversal chart pattern formed by drawing two descending trendlines, with one representing highs and the other representing lows.

The entry point for trading the falling wedge pattern typically occurs during the breakout above the upper trendline. Traders may consider entering a long position when the price confirms the breakout, indicating potential bullish momentum. It is essential to wait for a decisive breakout and a candle close above the upper trendline to validate the entry signal.
Fiat
The government or central bank-issued currency that is not backed by the value of a physical asset such as gold.
Fibonacci Channel
A technical analysis tool that is used to estimate support and resistance levels based on the Fibonacci numbers. It is a variation of the Fibonacci retracement tool, except the lines run diagonally rather than horizontally.
Fibonacci Extension
A tool that traders can use to establish profit targets or estimate how far a price may travel after a pullback is finished. Extension levels are also possible areas where the price may reverse.
Fibonacci Retracement
Trend lines drawn between two significant points, usually between absolute lows and absolute highs, plotted on a chart. Intersecting horizontal lines are placed at the Fibonacci levels.
Fibonacci Time Zones
Vertical lines that represent potential areas where a swing high, low, or reversal could occur. Fibonacci time zones may not indicate exact reversal points; they are time-based areas to be aware of.
Fill or Kill Order
A unique type of trading order that requires immediate execution, with no room for partial fills.
Fill Price
The price at which an order was executed.
Financial Instrument
An asset that can be traded, transferred, or exchanged. It can also be seen as a package of capital that may be traded, transferred, or exchanged.
Financial Risk
The negative chance that a firm cannot meet its financial obligations.
First In First Out (FIFO)
A rule in which positions are closed in the order they were originally opened.
Fixed Exchange Rate
A regime applied by a government or central bank that ties the country’s official currency exchange rate to another country’s currency or the price of gold.
Flip
A trader switching from having more long positions to having more short positions.
Floating Exchange Rate
A regime in which the currency price of a nation is set by the forex market based on supply and demand relative to other currencies.
Foreign Exchange (Forex)
The conversion of one country’s currency into another. In a free economy, a country’s currency is valued according to the laws of supply and demand.
Forex Spot Rate
The amount it costs in one currency to buy another currency for immediate delivery.
Forward
A customised, over-the-counter agreement between two parties to buy or sell an underlying asset at a specified price, on a specific date in the future. It is used by investors and businesses to manage risks, lock in prices for future transactions, and speculate on price movements.
FTSE 100
Also known as the Financial Times Stock Exchange 100 Index, or simply the “Footsie”, it is a benchmark index for the largest 100 publicly traded companies listed on the London Stock Exchange (LSE) by market capitalisation.
Fundamental Analysis
A method of evaluating the intrinsic value of an asset. It entails studying macro factors like the overall industry and economic state, as well as micro factors like revenues, profits, and expected growth.
Futures
Financial instruments used by investors and businesses to manage risks, speculate on price movements, and secure the future delivery of commodities or financial assets. According to this rule, the buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date.

G

Gann Fan
An analytical drawing tool used to identify price breakouts and indicate time and price movements based on important highs and lows. It is centred around the idea that the market is geometric and cyclical in nature.
Gap
An area on the chart where the price of an asset moves sharply up or down, with little or no trading in between.
Gas
The processing fee for every transaction made on the Ethereum network.
Gas Limit
The maximum amount of units of gas the user is willing to spend on a transaction on the Ethereum network.
Gearing
The ratio of a company’s debt to its equity. It denotes the extent to which a company’s operations are funded by lenders in comparison with the shareholders. Gearing measures the company’s financial leverage.
Good Till Cancelled (GTC)
A trading order type that remains active in the market until the trader decides to cancel it.
Gravestone Doji
A bearish reversal candlestick pattern that can indicate a potential trend reversal from bullish to bearish. It forms when the open, close, and low prices of a candle are at or near the bottom of its range, creating a shape which resembles a gravestone.

The entry point for trading the gravestone Doji pattern typically occurs after the formation of the bearish candle that follows the gravestone Doji. Traders may consider entering a short position when the price confirms the bearish continuation by closing below the low of the Doji candle.
Gross Domestic Product (GDP)
The total value of the goods and services produced in a country over a specified period.
Gross National Product (GNP)
The market value of all the final goods and services produced by a country’s residents in a given year.

H

Halving
Periodically reducing the rate at which new units of a cryptocurrency with a limited supply are generated. While fiat money loses its value to inflation, halving intends to prevent this by periodically slowing the pace at which new cryptocurrency units are created so as to not outstrip demand.
Hammer Candlestick
A price pattern in candlestick charting that occurs when an asset trades at significantly lower than its opening, but then rallies within the period to close near the opening price.

The pattern suggests that sellers have attempted to push the price lower, but buyers have eventually regained control and returned the price to near its opening level. It indicates a potential price reversal to the upside, and it signals a good buy opportunity.
Hang Seng Index (HSI)
A free-float market capitalisation-weighted index of the sixty largest companies that trade on the Hong Kong Exchange (HKEx).
Hanging Man Candlestick
A single, bearish reversal candlestick pattern that occurs after a price advance. It forms when the price opens near its high, experiences significant selling pressure during the trading session, and eventually closes near its low. The resulting candlestick resembles a “hanging man” with a small body, a long lower shadow (or tail), and little to no upper shadow.

The entry point for trading the hanging man pattern typically occurs after the formation of a bearish candle that confirms the reversal. Traders may consider entering a short position when the price confirms the bearish continuation by closing below the low of the hanging man candle. It is important to wait for a decisive bearish candle close to validate the entry signal.
Harami Candlestick
A two-candlestick pattern that indicates a potential trend reversal. It consists of a large candlestick followed by a smaller candlestick, which is completely engulfed within the range of the preceding candle.

The entry point for trading the harami pattern typically occurs after the formation of the second candlestick. Traders may consider entering a trade in the direction of the potential reversal. For example, if the second candlestick is bullish (bullish harami engulfing pattern), traders may consider entering a long position. If the second candlestick is bearish (bearish harami engulfing pattern), traders may consider entering a short position. It is important to wait for a decisive candle close to validate the entry signal.
Harami Cross Candlestick
A two-candlestick pattern that indicates a potential trend reversal. It consists of a large candlestick followed by a small Doji candlestick, which is completely engulfed within the range of the preceding candle. The bullish harami cross occurs in a downtrend, signals a potential reversal to a bullish trend, and starts with a large, bearish candle. The bearish harami cross occurs in an uptrend, signals a potential reversal to a bearish trend, and starts with a large, bullish candle.

Traders should opt to enter positions only after the complete harami cross appears. On a bullish harami cross, traders need to go long once the price moves above the opening of the first candle. On a bearish harami cross, traders need to go short once the price drops below the first candle open.
Hard Cap
The maximum amount that an ICO will raise. If an ICO reaches its hard cap, they will stop collecting any more funds.
Hard Fork
The process of radically changing the protocols on a blockchain, where the developers determine that changes which must be made to a cryptocurrency will create incompatibilities between the old and new coin.
Hash Function
A mathematical process of taking a message (the input) of an arbitrary length and turning it into a fixed-length message digest (the output).
Head and Shoulders
A bearish reversal pattern that consists of three peaks, with the middle peak (the head) being the highest, and the two outer peaks (the shoulders) lower and roughly equal in height.

The entry point for trading the head and shoulders pattern typically occurs after the price breaks below the neckline. Traders may consider entering a short position when the price confirms the breakdown and exhibits a decisive move downside. It is important to wait for a clear break and a candle close below the neckline to validate the entry signal.
Hedge
A strategy that seeks to limit risk exposures in financial assets.
Hedge Fund
A limited partnership of private investors whose money is managed by professional fund managers who use a wide range of strategies, including the leveraging or trading of non-traditional assets, to earn above-average investment returns.
Historical Volatility
The measure of an asset’s price movement based on historical prices. It quantifies the degree of price variability experienced by the asset in the past, and it provides insights into the asset’s price movement characteristics.
Hit the Bid
Accepting a purchase at the ask price or selling at the bid price.
Hold Time
The period between the entry and exit of a trade, during which the trader or investor is exposed to the potential gains or losses associated with the asset’s price movement.
Holder
A person, company, or institution that owns trading assets.
Horizontal Channel
A neutral chart pattern formed by two parallel, horizontal lines that frame the evolution of the price. The upper line is called the “resistance line” and the lower line is the “support line”.

The entry point for trading the horizontal channel typically occurs after a confirmed breakout of the channel. In a bullish breakout, traders can enter long positions once the price breaks above the resistance level. In a bearish breakout, traders can enter short positions once the price breaks below the support level. It is important to wait for a decisive breakout with a strong close or an increase in trading volume to validate the breakout signal.
Hot Wallet
A cryptocurrency wallet that is connected to the internet.
Hybrid Wallet
A cryptocurrency storage and management system that is a combination of a software wallet (stored on your own computer) and a web wallet (stored on a third-party server).

I

Immediate or Cancel Order (IOC)
An order to buy or sell an asset that must be executed immediately. Any portion of an IOC order that cannot be filled immediately will be cancelled.
Implied Volatility
The market’s forecast of a likely movement in an asset’s price.
In Neck
A two-candlestick, bearish continuation pattern. It is created by a tall down candle, followed by a much shorter up candle that gaps down on the open, then closes slightly higher than the prior candle’s close.

The entry point for trading the in neck pattern typically occurs after the formation of the second candlestick. Traders may consider entering a short position when the price confirms the continuation of the bearish move.
Indicative Quote
A reasonable estimate of an asset’s current market price that is provided by a market maker upon request.
Indirect Quote
A currency quotation in the foreign exchange market that expresses the variable amount of foreign currency required to buy or sell one unit of the domestic currency.
Inflation
A rise in prices, which can be translated as the decline of purchasing power over time.
Initial Coin Offering (ICO)
A process or event in which a company attempts to raise capital by selling a new cryptocurrency. Investors may purchase it in hope that the value of the cryptocurrency will increase, or to later exchange it for services offered by that company.
Initial Margin
The percentage of the purchase price of an asset that must be covered by cash or collateral when using a margin account.
Inside Bar
A two-candlestick pattern that indicates a period of consolidation or indecision in the market. It occurs when the high to low range of the current candle is completely contained within the high to low range of the previous candle.

Traders should wait for the price to break out above the high or below the low of the first candle. This breakout can signal a potential continuation of the existing trend, or it can indicate a reversal. When the candle following the pattern passes above the high, a buy position should be opened; when it falls below the low, it is time to go short.
Institutional Investor
A long-term investor, such as a mutual fund, a pension fund, an insurance company, a reinsurance company, or an endowment fund.
Interest Rate
The amount that a lender charges to a borrower for the loan of an asset, usually expressed as a percentage of the amount borrowed.
Interest Rate Differential
The difference between the interest rates of two currencies that are paired together in a currency trade.
Interest Rate Risk
The potential for losses arising from changes in interest rates.
Intraday Position
An open position that is closed by the end of the trading day.
Inverse Head and Shoulders
A bullish reversal pattern that consists of three valleys: the middle valley (the head) is the lowest, and the two outer valleys (the shoulders) are higher and roughly equal in depth.

The entry point for trading the inverse head and shoulders pattern typically occurs after the price breaks above the neckline. Traders may consider entering a long position when the price confirms the breakout and exhibits a decisive move. It is important to wait for a clear break and a candle to close above the neckline to validate the entry signal.
Inverted Hammer
A candlestick pattern that appears at the bottom of a downtrend, signalling a potential bullish reversal. It is characterised by a single candlestick with a small body near the top of the price range, as well as a long lower shadow (or tail) that is at least twice the size of the body.

Traders may consider entering a long position once the price confirms the potential bullish reversal. It is important to wait for a confirmation signal to validate the entry. This can include waiting for a bullish candle to close above the high of the inverted hammer or for a subsequent candle to show further bullish follow-through.
Investment Fund
An investment product created with the sole purpose of gathering investors’ capital, then investing that capital collectively through a portfolio of financial instruments such as stocks, bonds, and other securities.

J

Job Lot
A commodities futures contract whose denomination is smaller than the typical standard lot for that commodity.
Jobber
A person who trades for small profits, rarely leaving a trade open overnight.
Joint
A legal term describing a transaction or agreement where two or more parties act in unison.

K

Keep the Powder Dry
A phrase that means to limit trades due to harsh trading conditions. In either choppy or extremely narrow markets, it may be better to stay on the sidelines until a clear opportunity arises.
Keltner Channel
A channel indicator that seeks to identify areas of volatility in an asset’s price movements. It consists of three lines that are plotted around a central, moving, average line. These lines are calculated using a combination of the average true range (ATR) and an exponential moving average (EMA).

When trading the Keltner channel, traders should consider initiating a long position if the price breaks above the band. If the price action breaks below the band, it makes sense to open a short position.
Knock-In Option
A type of barrier option which is triggered only after the underlying asset’s price reaches a certain specified barrier.
Knock-Out Option
A type of barrier option which expires worthlessly if the underlying asset’s price exceeds or falls below a specified price.
Know Your Customer (KYC)
The process of verifying the identity of a customer, usually by requesting a number of documents.

L

Latency
The delay between the transmission of information from a source and the reception of that information at its destination.
Latency-Driven Trading
A trading strategy that attempts to profit from latency differentials across traders or trading platforms.
Leading Economic Indicators
Statistical data points that change ahead of the overall economy, making them useful for predicting economic trends. Among them are stock market indices, manufacturing data, building permits, consumer sentiment, initial jobless claims, yield curve, and others.
Leads and Lags
The meaning refers to the timing differences or relationships between two variables or events. A lead implies that one variable or event precedes another, while a lag indicates that one variable or event follows another.
Ledger
A digital record of all transactions related to a specific cryptocurrency. The ledger is distributed across a network of computers, known as nodes, that participate in the blockchain network.
Level
A price zone or a particular price that is significant from a technical standpoint, or based on reported orders or option interest.
Leverage
A financial instrument that allows the use of borrowed money or debt to maximise the returns of an investment, acquire additional assets, or raise funds.
Lightning Network
A low latency, off-chain, P2P system for making micropayments of cryptocurrencies.
Limit Order
An order to buy or sell an asset at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.
Linear Regression Channel
A three-line technical indicator used to analyse the upper and lower limits of an existing trend. It gives potential buy and sell signals based on price volatility and consists of the linear regression line, upper channel line, and lower channel line.

Using this indicator, traders should consider the price falling below the lower channel line, when the continuation of the trend is expected, as a buy signal. If the price rises above the upper channel line, this should be considered a sell signal. It is not necessary to open a position immediately after the line is broken; traders should wait for confirmation in the form of a price correction inside the channel.
Liquidation
Closing one position by opening a new transaction to offset it.
Liquidity
The extent to which an asset can be bought and sold quickly, at stable prices, and converted to cash.
Liquidity Coverage Ratio (LCR)
A requirement under Basel III whereby banks are required to hold an amount of high-quality liquid assets that is sufficient to fund cash outflows for 30 days.
Liquidity Trap
An economic situation where people hoard money instead of investing or spending it.
London Interbank Offered Rate (LIBOR)
A benchmark that dictates daily interest rates on loans and financial instruments around the world.
Long Candle
A Japanese candlestick with a relatively large range between its opening and closing prices compared to the surrounding candles on a price chart. It indicates strong buying or selling pressure during the period represented by the candle.
Long Position
A position that makes a profit if an asset’s market price increases.
Long Term Trading
A trading style in which the trader will hold on to a position for an extended period of time. A position trade can last anywhere from a few weeks to a couple of years.
Long-Legged Doji
A candlestick that consists of long upper and lower shadows with approximately the same opening and closing price.

Since the pattern is viewed as an indecision period, a trader could wait for the price to move above the high or below the low of the long-legged Doji. If the price moves above, enter a long position. If the price moves below the pattern, enter a short position.
Long/Short Equity (L/S)
An investing strategy that takes long positions in assets expected to appreciate in value and short positions in assets expected to decline in value.
Lot
The number of units of a financial instrument that is traded on an exchange.

M

M2
The US Federal Reserve’s estimate of the total money supply, including all of the cash people have on hand plus all money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit.
Maintenance Margin
The amount that must be available in funds in order to keep a margin trade open.
Managed Futures
An investment strategy that involves allocating funds to professional money managers, known as commodity trading advisors (CTAs), who actively trade futures contracts and other derivative instruments on behalf of investors.
Margin
The amount of money needed to open a leveraged trading position.
Margin Call
A term used to describe the alert sent to a trader to notify them that the capital in their account has fallen below the minimum amount needed to keep a position open.
Margin Requirement
The minimum amount in collateral that the issuer of a financial security requests from the buyer. This is in order to hedge against the risk of adverse price movements or the buyer defaulting.
Mark to Market
An accounting practice that involves valuing assets or liabilities at their current market value.
Market
A place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services.
Market Capitalisation
A measure used in trading and finance to determine the total value of a publicly traded company’s outstanding shares of stock. It represents the market value of a company, and it is calculated by multiplying the current stock price by the total number of outstanding shares.
Market Impact
The effect that a trade or order has on the price of an asset.
Market Maker
A financial intermediary that stands ready to buy or sell assets by continuously quoting bid and ask prices that are accessible to other traders or registered participants of a trading platform.
Market Order
An instruction by an investor to a broker to buy or sell stock shares, bonds, or other assets at the best available price in the current financial market.
Market Risk
The possibility that an individual or other entity will experience losses due to factors that affect the overall performance of investments in the financial markets.
Marubozu
A tall Japanese candlestick with no upper or lower shadow.

A bullish Marubozu can be interpreted as a buy signal and a bearish one as a sell signal. In both cases, traders should enter the market when the next candle appears on the chart.
Maturity
The date on which a financial instrument or investment reaches its final payment date, and the principal amount is repaid in full.
McClellan Oscillator
A market breadth indicator that is based on the difference between the number of advancing and declining issues on a stock exchange, such as the New York Stock Exchange (NYSE) or Nasdaq.

When the indicator gives a positive value, it is usually a reliable sign that the market is best suited for bullish investors, and it is time to buy. Negative values, on the other hand, are usually a positive sign for bearish investors, and it indicates the time to sell.
Mean Reversion
A popular trading strategy based on the belief that financial markets and asset prices tend to revert to their historical averages following a temporary price spike or extended price move.
Mining
The process of validating the information in a blockchain block by generating a cryptographic solution that matches specific criteria. By design, mining is difficult and requires special software to solve mathematical problems. The computer that finds the solution to the current problem the fastest is rewarded with some number of coins.
Momentum Indicator
A technical analysis tool used to determine the strength or weakness of an asset’s price by fixing the rate of fluctuation over a given period of time. If the trend on a chart is speeding up, the momentum indicator will be rising. If it is slowing down, the momentum indicator will be declining.

When the momentum indicator’s line breaks out the zero-level upside, this is a potential buy signal. When it breaks out the zero-line downside, a potential sell signal appears.
Momentum Trading
A popular and widely used trading strategy that seeks to capitalise on market trends by taking positions in financial instruments that exhibit strong price movements.
Morning Star
A pattern that forms from a series of three candlesticks on a market’s chart and indicates an upcoming bullish reversal. The first candle is a long, bearish candle that represents the existing downtrend. The second candle can be bullish or bearish, has a smaller range, and indicates indecision or a potential change in trend. The third candle is a long, bullish candle that closes above the midpoint of the first candle, indicating a bullish reversal.

The entry point for trading the morning star pattern occurs after the formation of the third candlestick. Traders may consider entering a long position when the price confirms the bullish reversal.
Moving Average (MA)
An indicator commonly used in technical analysis that averages an asset’s price over a period of time. There are two main types of MAs: exponential moving average (EMA) and simple moving average (SMA). Both are used in technical analysis and can be interpreted in the same manner.

Using MAs in trading can help identify trends, and they become significant in building trading strategies. For example, if price action is above a moving average then it can be a signal for opening long positions; if the price action is below the moving average, it can indicate that short positions should be taken.
Moving Average Convergence/Divergence (MACD)
A trend-following indicator that shows a histogram based on the difference between two lines: the MACD line and the signal line. The MACD line is calculated by subtracting a 26-day exponential moving average from a 12-day exponential moving average. The signal line is a 9-day exponential moving average of the MACD itself.

When the MACD line crosses the signal line, it is perceived as the start of a new trend. The falling of the MACD line below the signal line indicates a time to sell, while rising above the signal line suggests it is time to buy.
Mutual Fund
A type of investment vehicle that pools money from multiple investors to invest in a diversified portfolio of securities, such as stocks, bonds, money market instruments, or a combination of these assets.

N

Nasdaq Composite Index
A market capitalisation-weighted index of more than 3,700 stocks listed on the Nasdaq stock exchange.
Nasdaq-100 Index
A basket of the 100 largest, most actively traded US companies listed on the Nasdaq stock exchange.
Net International Investment Position
A critical indicator of a country’s financial standing in the global economy.
Net Position
The difference between a trader’s total long and short open positions at any given time. A net position can be either positive (long) or negative (short). For example, if a trader has more long positions than short, their net position will be positive.
Nikkei 225
The leading and most respected price-weighted index of Japanese stocks, composed of Japan’s top 225 blue-chip companies traded on the Tokyo Stock Exchange.
Node
A computer that has a full copy of the blockchain and is part of the decentralised network.
Noise Trading
Occurs when a trader decides to buy or sell without the use of fundamental data, such as economic, financial, and other qualitative or quantitative data that can affect the value of the asset.
Non-Convertible Currency
The legal tender of a country that is not traded at all on the international foreign exchange market, usually due to government restrictions.
Notional Amount
The nominal amount of an underlying asset in a contract. It is calculated as the contract size multiplied by the underlying price.

O

Offer
A conditional proposal made by a buyer or seller to buy or sell an asset. This becomes legally binding if accepted.
Offered Market
A market in which the number of sellers exceeds the number of buyers. That is, the supply of assets exceeds the demand to buy them.
Offsetting Transaction
A transaction that cancels or eliminates all market risk in an open position.
On Neck
A bearish continuation pattern that consists of two candlesticks and typically occurs during a downtrend. The first candle is a long, bearish candle that represents the existing downtrend. The second candle is a small, bullish candle that opens slightly above the previous candle’s low and closes below (but very close to) its low.

The entry point for trading the on neck pattern typically occurs after the formation of the second candlestick. Traders may consider entering a short position when the price confirms the continuation of the downtrend.
One Cancels Other Order (OCO)
A trading order type that allows traders to manage their positions more effectively by placing two orders simultaneously, with the execution of one order resulting in the automatic cancellation of the other.
One Triggers Other Order (OTO)
A trading order type that allows traders to place multiple orders simultaneously, with the execution of one order automatically triggering the placement of the other order(s).
Open Market Operations (OMOs)
A term that refers to the purchase and sale of securities in the open market by the Federal Reserve (Fed).
Open Order
An order that will be executed when a specified market price is reached.
Open Position
An active trade that has yet to be closed.
Option
A financial instrument that give buyers the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price and date.
Order
A request for a trade to be executed.
Order Block
A specific price area where large market participants, such as institutional traders, have previously placed significant buy or sell orders.
Order Book
An electronic list of buy and sell orders for a specific financial instrument.
Oscillator
A technical indicator that gravitates between two levels on a price chart. Oscillators measure momentum and are designed to show when an asset is potentially overbought or oversold.
Over-the-Counter (OTC)
The process of trading securities via a broker-dealer network as opposed to on a centralised exchange, such as the New York Stock Exchange.
Overnight Position
A position that stays open until the next trading day.

P

Pain Trade
A situation where a majority of market participants have positioned themselves in a particular direction, only to see the market move against them.
Parabolic
A market that moves a great distance in a very short period of time, frequently moving in an accelerating fashion that resembles one half of a parabola.
Parabolic SAR Indicator
A momentum indicator used to identify potential trend reversals when the price is in a strong uptrend or downtrend. It appears as a series of dots placed either above or below the price bars.
Parity Price
A price level that sets two assets to be equal in value to one another.
Passive Order
A trading order in which the order price is different from the market price.
Payoff Ratio
A measure of the average profit per winning trade compared to the average loss per losing trade.
Pennant
A type of continuation pattern formed when there is a large movement in an asset, known as the flagpole, followed by a consolidation period with converging trend lines. This is followed by a breakout movement in the same direction as the initial large movement, which represents the second half of the flagpole.

A buy signal on a bullish figure is generated when the price breaks above the upper border of the pennant pattern. A sell signal on the bearish figure is generated when the price breaks below the lower border of the pennant pattern. The breakout is valid only after the price has closed above or below the boundary, respectively.
Perpetual Futures
A type of derivative contract that allows traders to speculate on the future price of an underlying asset without an expiration date.
Petrocurrency
A currency of an oil-producing country whose oil exports, as a share of total exports, are sufficiently large enough that the currency’s value rises and falls along with the price of oil.
Petrodollar Recycling
A mechanism in the global economy that involves oil-exporting countries using their revenues from the sale of petroleum to invest in foreign assets, particularly in the United States and other developed economies.
Petrodollars
Crude oil export revenues denominated in US dollars.
Piercing Line
A bullish two-candlestick pattern that typically occurs at the end of a downtrend and signals a potential reversal in the price direction. The first candlestick is bearish, which indicates a continuation of the existing downtrend. It opens higher than the previous day’s close and closes lower, creating a bearish body. The second candlestick is a bullish one that opens lower than the previous day’s close. It then rallies significantly during the trading session, closing above the mid-point of the first candlestick’s body.

The entry point for trading the piercing line pattern typically occurs after the formation of the second candlestick. Traders may consider entering a long position once the price confirms the bullish reversal.
Pip
The smallest standardised movement in forex trading used to define the change in value between two currencies.
Pivot Point
A significant price level used in trading to determine potential support and resistance levels for the current trading day. Pivot points are calculated based on the previous day’s price data. To calculate the pivot point, traders should add the high, the low, and the closing prices of the previous trading day, then divide the result by three.

Pivot point breakout trading is a popular trading strategy that involves entering a position when the price of an asset breaks above or below a significant pivot point level. If the price breaks above the pivot point level, it is considered a buy breakout signal. If the price breaks below the pivot point level, it is considered a sell breakout signal.
Position
The amount of a security, asset, or property that is owned (or sold short) by some individual or other entity.
Position Sizing
The number of units invested in a particular asset by an investor or trader.
Position Trading
A trading style that focuses on capturing and profiting from long-term trends in financial markets.
Presale
A token sale event that takes place before an ICO is made available for the general public to participate in.
Price Action
A financial asset’s price movement.
Price Discrimination
A selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to.
Price Transparency
The degree to which market participants, including buyers and sellers, have access to relevant and accurate information about the prices of goods, services, or financial instruments.
Price Variance
The difference between the price at which a business expects to sell its products or services and what it actually sells them for.
Principal Model
A business model used by certain financial institutions, such as broker-dealers or market makers, to execute trades on their own accounts as principals rather than acting as an intermediary between buyers and sellers.
Principal Trading Firm (PTF)
A firm that invests, hedges, or speculates for its own account.
Principal Value
The original sum of money borrowed in a loan or put into an investment.
Profit Factor
A ratio that compares the total profits generated by winning trades to the total losses incurred by losing trades.
Proof of Stake (PoS)
A cryptocurrency consensus mechanism for processing transactions and creating new blocks in a blockchain. It was created as an alternative to proof-of-work (POW), the original consensus mechanism used to validate transactions and open new blocks. While PoW mechanisms require miners to solve cryptographic puzzles, PoS mechanisms require validators to hold and stake tokens for the privilege of earning transaction fees.
Proof of Work (PoW)
An algorithm that rewards the first person that solves a computational problem (mining) and achieves distributed consensus.
Protocol
A set of rules governing the exchange or transmission of data between devices, as agreed upon by the network participants.
Pullback
A temporary reversal in the upside price action of an asset.
Pump-and-Dump
An illegal scheme to boost an asset’s price based on false, misleading, or greatly exaggerated statements.
Put/Call Ratio
A widely used technical indicator calculated by dividing the total number of put options (bearish bets) traded by the total number of call options (bullish bets) traded over a specific period.

Q

Quantitative Analysis
A technique that uses mathematical and statistical modelling, measurement, and research to understand behaviour.
Quantitative Easing (QE)
A form of monetary policy in which a central bank purchases securities from the open market to reduce interest rates and increase the money supply.
Quantitative Tightening (QT)
The opposite of quantitative easing (QE); a monetary policy tool used by central banks to reduce the amount of liquidity or money supply in the economy.
Quote
The most recent price that a buyer and seller agreed upon and at which some amount of the asset was transacted.
Quote Currency
The second currency in both direct and indirect quotes which is used to determine the value of the base currency. It is also known as the counter currency.

R

Rally
A short-term and often sharp upward move in prices.
Range
The difference between the high and low prices in a given trading period.
Range Trading
The process when a financial instrument experiences sideways price movement, fluctuating within a defined price band.
Rate
The price of one currency in terms of another currency.
Rate of Change (ROC) Indicator
A momentum-based, technical indicator that measures the percentage change in price between the current price and the price from a certain number of periods ago. The ROC indicator is typically used to confirm price moves or detect divergences, as well as determine when markets are overbought or oversold.

When the indicator is above the zero line and moving higher, it indicates the trend is getting stronger; traders can open a position depending on the trend direction. However, if it rises too far, that could indicate an overbought market. If it is falling back towards the zero line, it indicates slowing momentum and a potential change in trend; traders should think about closing positions. The same is true but reversed when the indicator is below zero.
Rectangle
A pattern that is formed when the price reaches the same horizontal support and resistance levels multiple times. It indicates that a war is raging between bulls and bears.

The most popular way to use this pattern is trading on breakouts. When the price breaks through the support or resistance, it is time to spring into action. Traders should buy if the price moves above resistance and sell if the price falls below support.
Relative Strength Index (RSI)
A technical indicator that measures the strength or weakness of a currency pair by comparing its up movements versus its down movements over a given time period. It is plotted on a scale of 0 to 100. A reading above 70 typically indicates an overbought condition, suggesting that the asset’s price may be due for a pullback or correction. A reading below 30 suggests an oversold condition, indicating that the asset’s price may be due for a bounce or potential reversal.

The simplest strategy uses the overbought and oversold conditions as criteria to enter the market just before a trend reverses. However, traders do not need to open a sell position when the indicator exceeds 70. Instead, they should wait until it crosses the line from above. A buy signal would also appear not when RSI goes below 30, but when it comes out of the oversold zone.
Relative Vigor Index (RVI)
A momentum indicator used in technical analysis. It measures the strength of a trend by comparing an asset’s closing price to its trading range while smoothing the results using a simple moving average (SMA).

The indicator consists of two lines: the RVI line and the signal line. When the RVI line crosses the signal line downwards, a sell position can be opened. When the RVI indicator line crosses the signal line upwards, a signal for a buy position is issued.
Repo (RP)
A repurchase agreement, or repo, is a short-term agreement to buy securities in order to sell them back at a slightly higher price.
Request For Market (RFM)
A request for a quote where the client does not reveal the direction of the desired trade (buy or sell).
Resistance Level
A price point or price zone that an asset has had trouble breaking above in the time period being considered.
Retail Trader
An individual trader who trades with money from personal wealth, rather than on behalf of an institution. They buy or sell assets for personal accounts.
Return on Investment (ROI)
A popular profitability metric used to evaluate how well an investment has performed. It is expressed as a percentage and is calculated by dividing an investment’s net profit (or loss) by its initial cost or outlay.
Revaluation
An increase in price due to central bank activity.
Reversal
A turnaround in the price movement of an asset.
Reverse Repo (RRP)
A reverse repurchase agreement, or reverse repo, is a short-term agreement to sell securities in order to buy them back at a slightly higher price.
Rising Three Methods
A continuation pattern that occurs during an uptrend. It is composed of five candlesticks. The first candle is a long, bullish candle, representing the existing uptrend. Candles two through five are shorter and are all bearish. They are contained within the high to low range of the first candle but do not engulf it completely. The fifth candle is another long, bullish candle that breaks above the high of the first candle, indicating a continuation of the uptrend.

The entry point typically occurs after the confirmation by a bullish candle that appears on the chart immediately after the pattern. Traders may consider entering a long position once the price confirms the continuation of the uptrend.
Rising Wedge
A bearish reversal pattern that forms during an uptrend. It is characterised by converging trendlines, with the lower trendline (support) sloping upward and the upper trendline (resistance) sloping upward as well, but at a steeper angle.

After the rising wedge pattern forms, traders should wait for a bearish confirmation signal before entering a trade. This can be in the form of a strong, bearish candle that closes below the lower trendline (support) of the rising wedge.
Risk
The chance that an outcome or investment’s actual gains will differ from an expected outcome or return.
Risk Appetite
The general level of risk that a trader can handle.
Risk Aversion
The tendency to avoid risk and have a low risk tolerance.
Risk Management
The process of identifying, assessing, and mitigating potential risks associated with trading financial instruments. It is a crucial aspect of successful trading and involves implementing strategies to protect capital, limit potential losses, and manage exposure to market volatility.
Risk Parity
An investment strategy that seeks to balance the risks among different asset classes in a portfolio, rather than allocating them based on traditional methods such as market capitalisation or equal weighting.
Risk-Reward Ratio
A mathematical calculation used by investors to measure the expected gains of a given investment against the risk of loss.
Rollover
The procedure of moving open positions from one trading day to another.
Rollover Rate
The net interest return on a currency position held overnight by a trader.
Round-Trip Trading
A manipulative trading practice in financial markets where an individual or entity simultaneously buys and sells a financial instrument to create the illusion of trading activity and volume, but without any change in ownership or position.

S

S&P 500
Also known as the Standard & Poor’s 500. A widely followed stock market index that tracks the performance of 500 large-cap companies listed on US stock exchanges.
Safe Haven Currencies
Currencies that are expected to retain or increase in value when it seems like the world is coming to an end (geopolitical stress). The US dollar (USD), Japanese yen (JPY), and Swiss franc (CHF) are considered safe-haven currencies.
Same Day Transaction
A financial transaction involving the purchase and sale of an asset within the same trading day.
Scalping
An aggressive, fast-paced trading strategy that seeks to profit from small price movements in financial markets.
Securitisation
The pooling of assets in order to repackage them into interest-bearing securities.
Sell Wall
A huge sell order that prevents the market price going up until the entire sell volume is complete.
Sell-Off
A situation in which many traders sell their holdings of an asset suddenly. It often (but not always) occurs due to bad or unexpected news.
Sentiment Analysis
The process of gauging the overall mood and emotions of investors and traders towards specific assets.
Settlement Date
The date when a trade is final; the buyer must pay the seller while the seller delivers the asset(s) to the buyer.
Settlement Period
The time between the trade date and the settlement date.
Settlement Risk
The chance that one of the two parties of a transaction cannot fulfil the terms of the transaction.
Shadow
Represents a price action that occurs outside the open and close prices of a Japanese candlestick.
Sharpe Ratio
A measure used to evaluate the risk-adjusted performance of an investment or trading strategy.
Shooting Star
A bearish candlestick with a long upper shadow, little or no lower shadow, and a small real body near the low of the day. It appears after an uptrend.

Traders typically wait to see what the next candle (period) does following a shooting star. If the price declines during the next period, they can go short.
Short Position
A trading technique in which a trader sells an asset with the expectation that its value will fall in the future. Traders in this case do not actually own the asset; they borrow it from another source, pay a fee for the borrowing, and plan to buy it back later at a lower price.
Short Squeeze
A situation where the price of an asset rises rapidly, causing investors who have bet on its price falling (short sellers) to buy it back to avoid or limit losses. This creates more demand and less supply, which pushes the price higher and may trigger more short sellers to cover their positions.
Sideways Market
A situation where asset prices fluctuate within a tight range for an extended period of time without trending one way or the other.
Sideways Trend
The horizontal price movement that occurs when the forces of supply and demand are nearly equal.
Simple Moving Average (SMA)
A technical indicator that shows the average price of an asset over a specific period of time.

If the SMA is going upward, the market is in an uptrend; if the SMA is heading downward, the market is in a downtrend. A buy signal is formed when the short-term SMA crosses and goes above the long-term SMA, and a sell signal is generated when the short-term SMA crosses and moves below the long-term SMA.
Slippage
The difference between the expected price of a trade and the price at which the trade is executed.
Social Trading
A way of trading that allows traders to copy or follow the strategies or signals of other traders or the crowd.
Speculating
The act of buying a financial asset in hopes of making a profit when the asset’s price appreciates (or depreciates, when short selling) over time.
Spinning Top
A Japanese candlestick with a small real body and long upper and lower shadows. A candlestick pattern forms when the buyers push the price up during a given time period, the sellers push the price down during the same time period, and the closing price ultimately ends up very close to the open.

The bullish spinning top pattern occurs at the bottom of a downward trend, and it may signal a bullish trend reversal; traders should think about entering a long position after the next candle appears. In the other direction, a bearish spinning top pattern occurs at the top of a trend, and it may signal a price reversal. This hints at a good time to go short if the next candle confirms the new trend.
Spot Price
The current price in the marketplace at which a given asset — such as a security, commodity, or currency — can be bought or sold for immediate delivery.
Spread
The difference or gap that exists between two prices, rates, or yields.
Spread Betting
A popular form of financial trading that allows traders to speculate on the price movements of various financial instruments without owning the underlying asset.
Stablecoin
A type of cryptocurrency where the value of the digital asset is supposed to be pegged to a reference asset, which is either fiat money, exchange-traded commodities, or another cryptocurrency.
Stick Sandwich
A three-candlestick pattern that is formed when the middle candlestick is oppositely coloured to the candlesticks on either side of it. Stick sandwiches can occur in both bullish and bearish indications.

A buy signal is generated when the price breaks above the high of the middle bearish candlestick, indicating a potential bullish continuation. A sell signal is generated when the price breaks below the low of the middle bullish candlestick, indicating a potential bearish continuation.
Stochastic Oscillator
A momentum indicator that shows the location of the closing price relative to the high-low range over a set number of periods. The indicator can range from 0 to 100.

Generally, the area above 80 indicates an overbought region, while the area below 20 is considered an oversold region. A sell signal is given when the oscillator is above the 80 level and crosses back below 80. Conversely, a buy signal is given when the oscillator is below 20 and crosses back above 20. 80 and 20 are the most common levels used, but they can be adjusted as needed.
Stock
A security that represents the ownership of a fraction of the issuing corporation.
Stop Limit Order
A conditional trade over a set time frame that combines the features of the stop with those of a limit order. It is used to mitigate risk.
Stop Loss
A specific type of order placed by a trader to limit potential losses on an existing position. It is designed to automatically execute a market order to sell or buy a financial instrument when its price reaches a predetermined level
Stop Order
A type of order used to trigger a market order when the price of a financial instrument reaches a specific level. Unlike a stop loss, which is used to protect existing positions, a stop order is used to initiate a new position.
Support Level
A price point that an asset struggles to fall below over a given time period.
Swap
A derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.
Swing Trading
A trading approach that seeks to profit from short-term price movements and market momentum by holding positions for a period from several days to a few weeks.

T

Take-Profit Order
A type of order used in trading to automatically close a position at a predetermined price level when the market moves in a favourable direction. It is a risk management tool that allows traders to lock in profits and make trades without the need for continuous monitoring.
Technical Analysis
A method used in trading to evaluate financial markets and make trading decisions based on historical price and volume data. It involves studying and interpreting price charts, patterns, indicators, and other quantitative data to identify trends, forecast future price movements, and determine optimal entry and exit points for trades.
Technical Indicator
A statistical calculation or graphical representation used to analyse price and volume data in financial markets. It provides traders with additional information and insights into market trends, momentum, volatility, and potential trading opportunities.
Thin
A term used to describe an illiquid, slippery, or choppy market environment.
Three Black Crows
A bearish candlestick pattern that signals a potential trend reversal from an uptrend to a downtrend. It consists of three consecutive, long, bearish candles with lower highs and lower lows.

After the three black crows pattern forms, traders should wait for a bearish confirmation signal before going short. This can be in the form of a strong, bearish candle that closes below the low of the third black crow.
Three White Soldiers
A bullish candlestick pattern that signals a potential trend reversal from a downtrend to an uptrend. It consists of three consecutive, long, bullish candles with higher highs and higher lows.

After the three white soldiers pattern forms, traders should wait for a bullish confirmation signal before going long. This can be in the form of a strong, bullish candle that closes above the high of the third white soldier.
Tick
The smallest price change to the right side of the decimal point.
Time-Weighted Average Price (TWAP)
A trading algorithm based on the weighted average price used for the execution of bigger orders without excessive impact on the market price.
Tomorrow Next
Often abbreviated as tom/next, a financial term used in currency trading to refer to the rollover of an open position from one business day to the next.
Total Supply
The total quantity or number of units of a financial asset, such as a cryptocurrency or stock, that is currently available in the market. It represents the entire amount of the asset that has been issued or created and which is in circulation at a given point in time.
Trading Heavy
A market or specific financial instrument that is experiencing a larger volume of selling pressure or selling activity compared to buying activity.
Trading Volume
The total number of units of a financial asset that was traded during a certain period of time.
Trailing Stop
A type of stop loss order that automatically adjusts its stop price as the market moves in a favourable direction.
Transaction Cost
The cost of buying or selling a financial instrument.
Transaction Date
The date a transaction was executed.
Transaction Risk
The potential risk or uncertainty associated with the execution of a financial transaction. It encompasses various factors that could adversely affect the outcome of a trade, including price fluctuations, order execution delays, liquidity issues, and operational or settlement risks.
Transparency
The access to and proper disclosure of financial information, such as a company’s audited financial reports.
Treasury Bills
Short-term obligations of a government issued for periods of one year or less.
Treasury Bonds
Government obligations with maturities of ten years or more.
Treasury Notes
Government obligations with maturities of more than one year, but less than ten years.
Trend Channel
A set of parallel trend lines defined by the highs and lows of an asset’s price action.
Trend Following
A popular trading strategy that aims to capitalise on market trends by taking positions in financial instruments that exhibit clear and persistent price movements.
Trend Line
A straight line drawn on a price chart that connects a series of higher lows (in an uptrend) or lower highs (in a downtrend). It is used to visually represent the general direction and strength of a market’s price movement over a specific period of time.
Triple Bottom
A bullish reversal chart pattern characterised by three consecutive troughs or lows at approximately the same price level, followed by a break above resistance. The pattern suggests that the price has found support three times before running a trend reversal from a downtrend to an uptrend.

A price break above resistance generates a buy signal. This breakout suggests that buyers have gained strength and the price may continue to rise.
Triple Top
A bearish reversal chart pattern characterised by three consecutive peaks or highs at approximately the same price level, followed by a break below support. The pattern suggests that the price has faced resistance three times before running a trend reversal from an uptrend to a downtrend.

A price break below the support level indicates a sell signal. This breakout suggests that buyers have gained strength, and the price may continue to decline.
Turnover
Total monetary value of all executed transactions in a given time period.
Turtle Channel
A trading band created by plotting the highest and lowest price levels of an asset over a certain time period as a channel around the other prices.

U

Underlying Market
The market on which a derivative is based.
Unemployment Rate
The percentage of the people in the workforce without jobs but which are able and willing to work.
Unrealised Gain/Loss
The theoretical profit or loss of an open position determined by current market prices.
Upside
The potential for an investment to increase in value, as measured in terms of money or percentage.
Uptick
A transaction in which the price of a financial instrument increases from the previous transaction.
Uptrend
An overall move higher in price, created by higher highs and higher lows.

V

Value Date
The date on which both sides of a transaction agree to exchange payments.
Volatility
A measure of the market’s uncertainty, and the magnitude of price swings that an asset experiences during a given timeframe.
Volatility Targeting
An investment or trading strategy where the level of risk in a portfolio is actively managed and adjusted based on the volatility of the underlying assets or the overall market.

W

Wallet
A device or program that stores cryptocurrency keys and allows one to access coins.
Wash Trading
A process whereby a trader buys and sells an asset for the express purpose of feeding misleading information to the market.
Wedge
A pattern formed by converging trend lines on a price chart. The two trend lines are drawn to connect the respective highs and lows of a price series over the course of 10 to 50 periods. The two forms of the wedge pattern are a rising wedge (which signals a bearish reversal) or a falling wedge (which signals a bullish reversal).

The entry point following a wedge pattern largely depends on the breakout direction. For a rising wedge, a trader may look to open a sell position after a downward breakout. Conversely, in a falling wedge, a trader may consider buying after an upward breakout. The breakout should be ideally accompanied by an increase in volume for stronger confirmation.
Whale
Someone who buys or sells such large amounts of a cryptocurrency that it could influence its price.
Williams %R
A technical indicator that reflects the level of the close relative to the highest high over a specific period, usually 14 days.

A popular Williams %R trading strategy involves buying an asset once the indicator moves above -80, or selling it once the indicator moves below -20.
Working Order
An instruction or request given by a trader to a brokerage or exchange to execute a trade at a specified price or under specific conditions. It is an order that has been entered into the trading system but not yet fully executed or cancelled.

X

Xenocurrency
A currency deposited or exchanged in a market outside its country of origin.

Y

Yield
The income returned on an investment, such as the interest received from holding a security.
Yield Chasing
A situation where a central bank is suppressing interest rates at low or negative levels.
Yield Curve
A graphical representation of the yields or interest rates on bonds of various maturities. It is typically plotted on a graph, with the x-axis representing the time to maturity and the y-axis representing the yield or interest rate. It is an essential tool in finance and trading, providing insights into the expectations of investors about future economic conditions and interest rate movements.

Z

Zero Coupon Bond
A bond that pays no interest.
Zombie
A business that is barely profitable now, and their outlook for future profitability is also bleak.
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