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.
The Federal Reserve bank, or the ‘Fed’ for short, is the central bank in charge of monetary and financial stability in the United States. It is part of a wider system – known as the Federal Reserve system – with 12 regional central banks located in major cities across the US.
What does the Federal Reserve do?
The Federal Reserve performs five main functions to promote the effective operation of the U.S. economy and, more generally, the public
interest. It:
• Conducts the nation’s monetary policy
• Promotes the stability of the financial system
• Promotes the safety and soundness of individual financial institutions
• Fosters payment and settlement system safety and efficiency
• Promotes consumer protection and community development
Who Controls Federal Reserve?
The Federal Reserve is governed by a Board of Governors in Washington, DC, and 12 regional Federal Reserve Banks located throughout the country. The Board of Governors is an independent government agency appointed by the President and confirmed by the Senate. The Chairman of the Board of Governors also serves as Chair of the Federal Open Market Committee, which sets monetary policy.
The Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve System (the Fed) which is responsible for making monetary policy decisions. The FOMC is made up of 12 members, including the seven governors of the Federal Reserve Board and five of the 12 Reserve Bank presidents.
What does the Federal Open Market Committee impact?
The FOMC meets eight times a year to set the target for the federal funds rate, which is the interest rate at which banks lend and borrow money from each other overnight. The FOMC's decisions can have a significant impact on interest rates, the economy, and the stock market. The FOMC makes key decisions about interest rates and the growth of the United States money supply. It also directs operations undertaken by the Federal Reserve System in foreign exchange markets. They consider a wide array of factors such as trends in prices and wages, employment and production, business investment and inventories, foreign exchange markets, and fiscal policy.
Energy Select Sector SPDR Fund (XLE) tracks US energy companies within the S&P 500. This asset uses the Energy Select Sector Index as its tracking benchmark. The ETF is offers concentrated exposure to oil and gas industry giants, as the S&P500 favours large-caps. Nevertheless, it is fairly representative of the whole energy market.
Just a few holdings make up a big part of the portfolio, and there are only 31 holdings in total. Top holdings for the benchmark index include Exxon Mobil Corp, Chevron Corp and ConocoPhillips.
ProShares Ultra Silver, also known as AGQ, is a single-day bet, not a buy-and-hold ETF. AGQ is a leveraged ETF that aims to deliver daily investment results that equate to twice the daily price performance of silver bullion, measured by US Dollar for delivery in London.
Materials Select Sector SPDR Fund (XLB) tracks US basic materials companies within the S&P 500. This asset uses the Materials Select Sector Index as its tracking benchmark. The limited spread and niche sector mean that it is heavily concentrated. Just a few holdings make up a big part of the portfolio, and there are only 24 holdings in total.
Top holdings for the benchmark index include DowDuPont Inc, Linde Plc, Ecolab Inc and The Sherwin-Williams Co.
A reverse stock split, also known as a "reverse split," is a corporate action in which a company reduces the number of outstanding shares by canceling a portion of its shares and increasing the par value of its remaining shares. This means that for every N shares that a shareholder owns, they will end up owning 1 share, where N is the reverse split ratio. For example, if a company performs a 1-for-2 reverse stock split, a shareholder who previously owned 100 shares would now own 50 shares.
Is it better to buy before or after a reverse stock split?
It is not necessarily better to buy before or after a reverse stock split, as it depends on the specific circumstances of the company and the stock. A reverse stock split does not change the underlying value of the company, it only changes the number of shares outstanding and the stock price. However, it is important to understand that in general, companies that perform reverse stock splits tend to be struggling and have a low stock price. Buying before a reverse stock split may allow you to buy shares at a lower price, but it also means you're probably buying into a struggling company.
Is a reverse stock split good?
As with all things in the market, the answer is that it depends. The main reason for a company to perform a reverse stock split is to increase the per-share price of the stock, which can make the stock appear more attractive to investors and also bring it above a certain listing requirement in stock exchanges. Additionally, a reverse split can also help to reduce the number of shareholders and increase the liquidity of the stock, making it easier to trade. However, a reverse stock split can also be a sign of a struggling company, and it can also dilute the value of shares for the existing shareholders.
Financial leverage refers to the use of borrowed money to increase the potential return on an investment. It is the process of using borrowed money to increase the purchasing power of an investor, by using debt to amplify the trading outcomes from an investment. This leverage can increase returns but also increases the risk of loss, as the interest and principal payments on the debt must be made regardless of the performance of the investment. In other words, it is the amount of debt used to finance a firm's assets and it is measured by debt-to-equity ratio.
What is a financial leverage ratio?
In trading, financial leverage ratio is a metric used to measure the level of leverage used by a trader or a trading firm. It is the ratio of the value of the trader's or firm's assets to the value of their equity capital. Leverage ratios in trading can be used to identify traders or firms that are using a high level of leverage, meaning they are using a large amount of borrowed money to invest in markets.
What affects financial leverage?
In trading, financial leverage is affected by a number of factors, including:
Margin requirements: The amount of money or collateral required by a broker to open a leveraged position.
Risk tolerance: A trader's willingness to take on risk and their ability to handle potential losses.
Investment horizon: A trader's investment time frame and goals can affect their use of leverage.
Market conditions: Volatility, liquidity, and other market conditions can influence a trader's decision to use leverage.
Capital: The amount of capital a trader has available to invest, will influence their use of leverage.
The Federal Reserve bank, or the ‘Fed’ for short, is the central bank in charge of monetary and financial stability in the United States. It is part of a wider system – known as the Federal Reserve system – with 12 regional central banks located in major cities across the US.
What does the Federal Reserve do?
The Federal Reserve performs five main functions to promote the effective operation of the U.S. economy and, more generally, the public
interest. It:
• Conducts the nation’s monetary policy
• Promotes the stability of the financial system
• Promotes the safety and soundness of individual financial institutions
• Fosters payment and settlement system safety and efficiency
• Promotes consumer protection and community development
Who Controls Federal Reserve?
The Federal Reserve is governed by a Board of Governors in Washington, DC, and 12 regional Federal Reserve Banks located throughout the country. The Board of Governors is an independent government agency appointed by the President and confirmed by the Senate. The Chairman of the Board of Governors also serves as Chair of the Federal Open Market Committee, which sets monetary policy.
The Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve System (the Fed) which is responsible for making monetary policy decisions. The FOMC is made up of 12 members, including the seven governors of the Federal Reserve Board and five of the 12 Reserve Bank presidents.
What does the Federal Open Market Committee impact?
The FOMC meets eight times a year to set the target for the federal funds rate, which is the interest rate at which banks lend and borrow money from each other overnight. The FOMC's decisions can have a significant impact on interest rates, the economy, and the stock market. The FOMC makes key decisions about interest rates and the growth of the United States money supply. It also directs operations undertaken by the Federal Reserve System in foreign exchange markets. They consider a wide array of factors such as trends in prices and wages, employment and production, business investment and inventories, foreign exchange markets, and fiscal policy.
Energy Select Sector SPDR Fund (XLE) tracks US energy companies within the S&P 500. This asset uses the Energy Select Sector Index as its tracking benchmark. The ETF is offers concentrated exposure to oil and gas industry giants, as the S&P500 favours large-caps. Nevertheless, it is fairly representative of the whole energy market.
Just a few holdings make up a big part of the portfolio, and there are only 31 holdings in total. Top holdings for the benchmark index include Exxon Mobil Corp, Chevron Corp and ConocoPhillips.
Financial leverage refers to the use of borrowed money to increase the potential return on an investment. It is the process of using borrowed money to increase the purchasing power of an investor, by using debt to amplify the trading outcomes from an investment. This leverage can increase returns but also increases the risk of loss, as the interest and principal payments on the debt must be made regardless of the performance of the investment. In other words, it is the amount of debt used to finance a firm's assets and it is measured by debt-to-equity ratio.
What is a financial leverage ratio?
In trading, financial leverage ratio is a metric used to measure the level of leverage used by a trader or a trading firm. It is the ratio of the value of the trader's or firm's assets to the value of their equity capital. Leverage ratios in trading can be used to identify traders or firms that are using a high level of leverage, meaning they are using a large amount of borrowed money to invest in markets.
What affects financial leverage?
In trading, financial leverage is affected by a number of factors, including:
Margin requirements: The amount of money or collateral required by a broker to open a leveraged position.
Risk tolerance: A trader's willingness to take on risk and their ability to handle potential losses.
Investment horizon: A trader's investment time frame and goals can affect their use of leverage.
Market conditions: Volatility, liquidity, and other market conditions can influence a trader's decision to use leverage.
Capital: The amount of capital a trader has available to invest, will influence their use of leverage.
Materials Select Sector SPDR Fund (XLB) tracks US basic materials companies within the S&P 500. This asset uses the Materials Select Sector Index as its tracking benchmark. The limited spread and niche sector mean that it is heavily concentrated. Just a few holdings make up a big part of the portfolio, and there are only 24 holdings in total.
Top holdings for the benchmark index include DowDuPont Inc, Linde Plc, Ecolab Inc and The Sherwin-Williams Co.
A reverse stock split, also known as a "reverse split," is a corporate action in which a company reduces the number of outstanding shares by canceling a portion of its shares and increasing the par value of its remaining shares. This means that for every N shares that a shareholder owns, they will end up owning 1 share, where N is the reverse split ratio. For example, if a company performs a 1-for-2 reverse stock split, a shareholder who previously owned 100 shares would now own 50 shares.
Is it better to buy before or after a reverse stock split?
It is not necessarily better to buy before or after a reverse stock split, as it depends on the specific circumstances of the company and the stock. A reverse stock split does not change the underlying value of the company, it only changes the number of shares outstanding and the stock price. However, it is important to understand that in general, companies that perform reverse stock splits tend to be struggling and have a low stock price. Buying before a reverse stock split may allow you to buy shares at a lower price, but it also means you're probably buying into a struggling company.
Is a reverse stock split good?
As with all things in the market, the answer is that it depends. The main reason for a company to perform a reverse stock split is to increase the per-share price of the stock, which can make the stock appear more attractive to investors and also bring it above a certain listing requirement in stock exchanges. Additionally, a reverse split can also help to reduce the number of shareholders and increase the liquidity of the stock, making it easier to trade. However, a reverse stock split can also be a sign of a struggling company, and it can also dilute the value of shares for the existing shareholders.
ProShares Ultra Silver, also known as AGQ, is a single-day bet, not a buy-and-hold ETF. AGQ is a leveraged ETF that aims to deliver daily investment results that equate to twice the daily price performance of silver bullion, measured by US Dollar for delivery in London.
EN
