Take a look at our list of the financial terms associated with trading and the markets. From beginners starting their trading journey to experts with decades of experience, all traders need to clearly understand a huge number of terms.
Volatility is the amount of uncertainty or risk associated with the size of changes in a security's value. It is measured by calculating the standard deviation of returns over a given period. High volatility means the price of an asset can change dramatically over a short time period in either direction. Traders often take advantage of volatility by speculating on stocks, options, and other financial instruments.
What causes market volatility?
Market volatility can be caused by a variety of factors including economic data releases, political events, changes in interest rates, and unexpected news or events. It can also be caused by changes in investor sentiment, speculation and market manipulation.
How do you know if a market is volatile?
A market is considered volatile if prices change rapidly, unpredictably, and significantly. This can be measured using volatility indices or by analyzing price movements and fluctuations over time.
Platinum is one of the world's rarest metals, and mines are concentrates in just a handful of countries around the world.
Platinum is priced in USD per troy ounce. It saw a high of $2253 in March 2008, and a record low of $97.70 in January 1970.
Most of the world's platinum is produced in South Africa, which accounts for 80% of supply. Russia is a distant second with 11% and North America produces 6%.
Platinum is an important metal due to its ability to catalyse reactions and its strong resistance to corrosion. This makes it irreplaceable in a broad range of industrial and laboratory reactions, especially the catalytic converter which is the most widely used application of platinum.
The metal is also highly sought-after for jewellery, which is the second largest area of demand,
The concentration of platinum in South Africa (an often-volatile emerging market), combined with the importance of platinum as an industrial material, has led to instability in price.
Liquidity refers to how easily or quickly an asset can be bought or sold in a secondary market. Liquid investments can be sold readily and without paying considerable fees. This enables their holders to trade them for cash when needed.
What are the three types of liquidity?
Traders and business owners use three types of liquidity ratio to assess an enterprise. Quick ratio, cash ratio and current ratio. These different measures of liquidity are often used in tandem, but each have their own merits and applications independently.
What happens when liquidity is low?
Stocks with low liquidity are more difficult to sell. Traders may take a bigger loss if they cannot sell the shares when they want to. Liquidity risk is the risk that traders won’t find a market for their assets. This may prevent them from entering or exiting at the desired moment.
What is a good liquidity for a stock?
A stock is considered to have good liquidity when it can be easily bought or sold without significantly affecting the stock's price. This means that there are a large number of buyers and sellers actively trading the stock, and the bid-ask spread (the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept) is small.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
Bollinger Bands® are a helpful technical analysis tool. They assist traders to identify short-term price movements and potential entry and exit points.
A Bollinger Band typically consists of a moving average band (the middle band), as well as an upper and lower band which are set above and below the moving average. This represents the volatility of reviewed asset. When comparing a share’s position relative to these bands, traders may be able to determine if that share’s price is low or high. Bollinger bands are good indicators and are good for day trading.
Additionally, the width of this band can serve as an indicator of the share’s volatility. Narrower bands indicate less volatility while wider ones indicate higher volatility. A Bollinger Band typically uses a 20-period moving average. These “periods” can represent any timeframe from 5 minutes per frame to hours or even days.
A limit order is an order to buy or sell an asset such as a security at a specific price or better than that price. Traders wishing to define a maximum price for either buying or selling an asset can use limit orders. By placing a limit order they tell a broker to buy or sell a particular stock at a certain price or better than that price (lower for buying, higher for selling). This order is executed only if the transaction can be processed at the limit set in the order.
Is a limit order a good idea?
A key benefit of using a limit order is to ensure that the stock is bought or sold at a certain price point or better than that price point. There is of course the risk of not being able to execute that order as that specific price may never reach that limit as set in the order.
What are the types of limit order?
There are several types of limit orders in trading:
Buy Limit Order: An order to buy a security at a specific price or lower.
Sell Limit Order: An order to sell a security at a specific price or higher.
Buy Stop Limit Order: A stop order to buy a security at a specific price or higher, only activated once a specified stop price has been reached.
Sell Stop Limit Order: A stop order to sell a security at a specific price or lower, only activated once a specified stop price has been reached.
Trailing Stop Limit Order: A type of stop order where the stop price is set at a fixed amount or percentage below or above the market price, and adjusts as the market price moves.
Multilateral Trading Facilities (MTFs, also known as Alternative Trading Systems or ATS in the United States) provide investment firms and eligible traders with alternatives to traditional stock exchanges. MTFs enable the trading of a wider variety of markets than other exchanges. MTFs users can trade on securities and instruments, including those that may not have an official market. They are electronic systems controlled by approved market operators as well as large investment banks.
What are OTFs?
OTFs (Organized Trading Facilities) are a type of trading venue that is authorized by European Union (EU) legislation to operate in the EU. They are similar to Multilateral Trading Facilities (MTFs) and provide a platform for the trading of financial instruments, such as bonds, derivatives, and equities. Unlike MTFs, OTFs have more flexibility in terms of the types of instruments and trading methods that they can offer.
Is a multilateral trading facility a regulated market?
Yes it is. MTFs are authorized by EU regulators, which provides a platform for the trading of financial instruments, such as bonds, derivatives, and equities.
Utilities Staples Select Sector SPDR Fund (XLU) tracks US utilities companies within the S&P 500. This asset uses the Utilities Select Sector Index as its tracking benchmark. The fund is concentrated to just a few large firms, as the index comprises just 30 holdings from the utilities sector. This can be a pro or a con depending on your trading strategy.
Top holdings include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern Co.
Trailing Stop Orders are a type of stock order that lets investors adjust the stop price as a security rises or falls. This order works by continuously monitoring the price of a security and dynamically adjusts the stop price with every tick. The advantage of this type of order is that it allows investors to limit their losses, while locking in profits, without having to manually modify the stop-loss point.
Are Trailing Stop Orders good?
Trailing Stop Orders can be a good way to protect profits in your trading. They allow you to set an automated stop-loss that trails the price of a stock, adjusting up as it rises, while allowing you to lock in some gains if the stock begins to fall. This is especially useful when dealing with volatile stocks, giving you more control over your position.
What is a disadvantage of a trailing stop loss?
Trailing stop losses can help minimize risk when trading, however they also limit potential gains. The stop price adjusts based on market conditions, so as the price increases, the stop loss will move up. If the stock drops significantly and your trailing stop loss is too close, it may be triggered before you have a chance to react.
Which is better stop limit or trailing stop?
It depends entirely on the trader. A stop limit will sell at the specified price, while a trailing stop will track price changes and sell when the specified amount is exceeded. Different traders may have different needs and objectives, so which type of order is best will vary. Consider your goals before deciding which option is right for you.
DBC, also known as the PowerShares DB Commodity Tracking ETF, tracks 14 commodities based on the futures curve. It aims to limit the effect of contango and maximise the effect of backwardation so that investors improve their returns. The commodities included in the ETF are gasoline, heating oil, Brent crude oil, WTI crude oil, gold, wheat, corn, soybeans, sugar, natural gas, zinc, copper, aluminium and silver.
Unlike other commodity ETFs, DBC rolls future contracts based on the shape of the future curve, rather than following a schedule. This allows the ETF to generate the best roll yield by minimising losses and maximising backwardation.
The CBOE Volatility Index, also known as the VIX Index, is a benchmark index which tracks market expectations of future volatility. Markets consider it a leading indicator of volatility on the US equity market. It is often known colloquially as the “Fear Index”.
The VIX Index is calculated based upon the price of options for the S&P 500, which is considered a barometer of the US stock market. Changes in the price of options reflect upon the demand for hedging or speculating tools and therefore upon market expectations of volatility.
By aggregating the weighted bid/ask prices of put and call options for the S&P 500, the VIX creates a simple, trackable measure of expected volatility over the next 30 days.
The VIX itself is not a tradable product, but it is used as the basis for options and futures. Our VIXX futures allow you to hedge against volatility, speculate on changes in US market conditions, or diversify your indices portfolio.
Futures rollover on the second Friday of every month.
The Cboe Volatility Index (VIX) represents the market’s expectations for near-term price changes of the S&P 500 Index (SPX). The Cboe Volatility Index is used to track volatility within that index. As it is derived from the prices of SPX index options, it generates a 30-day forward potential of volatility.
How is the CBOE volatility index calculated?
Volatility is often seen as a way to measure and speculate on market sentiment, as well as assessing risks. The VIX is calculated through the prices of SPX index options and is represented as a percentage. If the VIX value increases, it is likely that the S&P 500 is falling, and if the VIX value declines, then the S&P 500 is likely to be experiencing stability.
How do you trade the CBOE VIX?
The CBOE VIX can be traded on most major financial markets. To trade it, you need to buy or sell contracts for the futures, options or exchange-traded products linked to it. Trading in these contracts can be done through a broker and usually requires a margin account.
Bollinger Bands® are a helpful technical analysis tool. They assist traders to identify short-term price movements and potential entry and exit points.
A Bollinger Band typically consists of a moving average band (the middle band), as well as an upper and lower band which are set above and below the moving average. This represents the volatility of reviewed asset. When comparing a share’s position relative to these bands, traders may be able to determine if that share’s price is low or high. Bollinger bands are good indicators and are good for day trading.
Additionally, the width of this band can serve as an indicator of the share’s volatility. Narrower bands indicate less volatility while wider ones indicate higher volatility. A Bollinger Band typically uses a 20-period moving average. These “periods” can represent any timeframe from 5 minutes per frame to hours or even days.
DBC, also known as the PowerShares DB Commodity Tracking ETF, tracks 14 commodities based on the futures curve. It aims to limit the effect of contango and maximise the effect of backwardation so that investors improve their returns. The commodities included in the ETF are gasoline, heating oil, Brent crude oil, WTI crude oil, gold, wheat, corn, soybeans, sugar, natural gas, zinc, copper, aluminium and silver.
Unlike other commodity ETFs, DBC rolls future contracts based on the shape of the future curve, rather than following a schedule. This allows the ETF to generate the best roll yield by minimising losses and maximising backwardation.
The Cboe Volatility Index (VIX) represents the market’s expectations for near-term price changes of the S&P 500 Index (SPX). The Cboe Volatility Index is used to track volatility within that index. As it is derived from the prices of SPX index options, it generates a 30-day forward potential of volatility.
How is the CBOE volatility index calculated?
Volatility is often seen as a way to measure and speculate on market sentiment, as well as assessing risks. The VIX is calculated through the prices of SPX index options and is represented as a percentage. If the VIX value increases, it is likely that the S&P 500 is falling, and if the VIX value declines, then the S&P 500 is likely to be experiencing stability.
How do you trade the CBOE VIX?
The CBOE VIX can be traded on most major financial markets. To trade it, you need to buy or sell contracts for the futures, options or exchange-traded products linked to it. Trading in these contracts can be done through a broker and usually requires a margin account.
Liquidity refers to how easily or quickly an asset can be bought or sold in a secondary market. Liquid investments can be sold readily and without paying considerable fees. This enables their holders to trade them for cash when needed.
What are the three types of liquidity?
Traders and business owners use three types of liquidity ratio to assess an enterprise. Quick ratio, cash ratio and current ratio. These different measures of liquidity are often used in tandem, but each have their own merits and applications independently.
What happens when liquidity is low?
Stocks with low liquidity are more difficult to sell. Traders may take a bigger loss if they cannot sell the shares when they want to. Liquidity risk is the risk that traders won’t find a market for their assets. This may prevent them from entering or exiting at the desired moment.
What is a good liquidity for a stock?
A stock is considered to have good liquidity when it can be easily bought or sold without significantly affecting the stock's price. This means that there are a large number of buyers and sellers actively trading the stock, and the bid-ask spread (the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept) is small.
A limit order is an order to buy or sell an asset such as a security at a specific price or better than that price. Traders wishing to define a maximum price for either buying or selling an asset can use limit orders. By placing a limit order they tell a broker to buy or sell a particular stock at a certain price or better than that price (lower for buying, higher for selling). This order is executed only if the transaction can be processed at the limit set in the order.
Is a limit order a good idea?
A key benefit of using a limit order is to ensure that the stock is bought or sold at a certain price point or better than that price point. There is of course the risk of not being able to execute that order as that specific price may never reach that limit as set in the order.
What are the types of limit order?
There are several types of limit orders in trading:
Buy Limit Order: An order to buy a security at a specific price or lower.
Sell Limit Order: An order to sell a security at a specific price or higher.
Buy Stop Limit Order: A stop order to buy a security at a specific price or higher, only activated once a specified stop price has been reached.
Sell Stop Limit Order: A stop order to sell a security at a specific price or lower, only activated once a specified stop price has been reached.
Trailing Stop Limit Order: A type of stop order where the stop price is set at a fixed amount or percentage below or above the market price, and adjusts as the market price moves.
Platinum is one of the world's rarest metals, and mines are concentrates in just a handful of countries around the world.
Platinum is priced in USD per troy ounce. It saw a high of $2253 in March 2008, and a record low of $97.70 in January 1970.
Most of the world's platinum is produced in South Africa, which accounts for 80% of supply. Russia is a distant second with 11% and North America produces 6%.
Platinum is an important metal due to its ability to catalyse reactions and its strong resistance to corrosion. This makes it irreplaceable in a broad range of industrial and laboratory reactions, especially the catalytic converter which is the most widely used application of platinum.
The metal is also highly sought-after for jewellery, which is the second largest area of demand,
The concentration of platinum in South Africa (an often-volatile emerging market), combined with the importance of platinum as an industrial material, has led to instability in price.
Multilateral Trading Facilities (MTFs, also known as Alternative Trading Systems or ATS in the United States) provide investment firms and eligible traders with alternatives to traditional stock exchanges. MTFs enable the trading of a wider variety of markets than other exchanges. MTFs users can trade on securities and instruments, including those that may not have an official market. They are electronic systems controlled by approved market operators as well as large investment banks.
What are OTFs?
OTFs (Organized Trading Facilities) are a type of trading venue that is authorized by European Union (EU) legislation to operate in the EU. They are similar to Multilateral Trading Facilities (MTFs) and provide a platform for the trading of financial instruments, such as bonds, derivatives, and equities. Unlike MTFs, OTFs have more flexibility in terms of the types of instruments and trading methods that they can offer.
Is a multilateral trading facility a regulated market?
Yes it is. MTFs are authorized by EU regulators, which provides a platform for the trading of financial instruments, such as bonds, derivatives, and equities.
Trailing Stop Orders are a type of stock order that lets investors adjust the stop price as a security rises or falls. This order works by continuously monitoring the price of a security and dynamically adjusts the stop price with every tick. The advantage of this type of order is that it allows investors to limit their losses, while locking in profits, without having to manually modify the stop-loss point.
Are Trailing Stop Orders good?
Trailing Stop Orders can be a good way to protect profits in your trading. They allow you to set an automated stop-loss that trails the price of a stock, adjusting up as it rises, while allowing you to lock in some gains if the stock begins to fall. This is especially useful when dealing with volatile stocks, giving you more control over your position.
What is a disadvantage of a trailing stop loss?
Trailing stop losses can help minimize risk when trading, however they also limit potential gains. The stop price adjusts based on market conditions, so as the price increases, the stop loss will move up. If the stock drops significantly and your trailing stop loss is too close, it may be triggered before you have a chance to react.
Which is better stop limit or trailing stop?
It depends entirely on the trader. A stop limit will sell at the specified price, while a trailing stop will track price changes and sell when the specified amount is exceeded. Different traders may have different needs and objectives, so which type of order is best will vary. Consider your goals before deciding which option is right for you.
Volatility is the amount of uncertainty or risk associated with the size of changes in a security's value. It is measured by calculating the standard deviation of returns over a given period. High volatility means the price of an asset can change dramatically over a short time period in either direction. Traders often take advantage of volatility by speculating on stocks, options, and other financial instruments.
What causes market volatility?
Market volatility can be caused by a variety of factors including economic data releases, political events, changes in interest rates, and unexpected news or events. It can also be caused by changes in investor sentiment, speculation and market manipulation.
How do you know if a market is volatile?
A market is considered volatile if prices change rapidly, unpredictably, and significantly. This can be measured using volatility indices or by analyzing price movements and fluctuations over time.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
Utilities Staples Select Sector SPDR Fund (XLU) tracks US utilities companies within the S&P 500. This asset uses the Utilities Select Sector Index as its tracking benchmark. The fund is concentrated to just a few large firms, as the index comprises just 30 holdings from the utilities sector. This can be a pro or a con depending on your trading strategy.
Top holdings include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern Co.
The CBOE Volatility Index, also known as the VIX Index, is a benchmark index which tracks market expectations of future volatility. Markets consider it a leading indicator of volatility on the US equity market. It is often known colloquially as the “Fear Index”.
The VIX Index is calculated based upon the price of options for the S&P 500, which is considered a barometer of the US stock market. Changes in the price of options reflect upon the demand for hedging or speculating tools and therefore upon market expectations of volatility.
By aggregating the weighted bid/ask prices of put and call options for the S&P 500, the VIX creates a simple, trackable measure of expected volatility over the next 30 days.
The VIX itself is not a tradable product, but it is used as the basis for options and futures. Our VIXX futures allow you to hedge against volatility, speculate on changes in US market conditions, or diversify your indices portfolio.
Futures rollover on the second Friday of every month.
EN
