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.
While all traders know that crypto is traded online, they may not be aware that they can also trade more traditional markets such as bonds. So, what are Bonds, what is a bond, and where can you trade them?
A bond is a form of financial derivative trading. Traders take position on the price of the underlying instrument and not purchasing the instrument itself. As such, they buy a Bond CFD or Contract for Difference of that instrument. If a Bond CFD is expected to go up in value, traders can take a long position. The opposite is true of course and if the value of a bond is expected to fall, traders can take a short position.
A bond is a loan that the trader (now bond holder) makes to the issuer. Bonds can be issued by governments, corporations or companies looking to raise capital. When traders buy a bond, they are providing the issuer with a loan in return for that bond. The issuer takes on a commitment to pay the bondholder interest and to return the principal sum when the bond matures.
Trading trends refer to the overall direction of a security or market, often revealed through chart patterns or indicators. Traders use these trends to identify potential entry and exit points, as well as possible trading opportunities. Analyzing the financial markets in order to identify trends is an essential skill for successful traders. With knowledge of historical trends, investors can spot emerging ones and plan accordingly.
How do you identify a trend in trading?
Analyzing past market movements, changes in asset prices and economic data can be used to identify short-term and long-term trends. Using technical indicators such as moving averages, MACD, and stochastics can also help you spot potential trading opportunities and take advantage of prevailing market trends.
What are the 3 types of trends?
When analyzing the stock market, there are three primary trends that can be observed: short-term, intermediate-term, and long-term. Short-term trends generally last within one to three weeks, intermediate-term trends can range from one to four months, and long-term trends last more than a year. Being able to identify these different trend patterns will help investors maximize their potential returns.
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.
US Treasury Bonds 30Y (UB) are securities issued by the US government with maturities that vary from ten to 30 years. The U.S Treasury suspended issuance of the 30 year bond between February 2002 and February 2006. When bonds are sold on the secondary market, they can go up and down in price in the same way that shares and funds do. US Treasury Bond prices are primarily affected by interest rates, inflation and economic growth, as well as their reputation as a safe haven.
Historically, the US Government Bond 30Y reached an all-time high of 15.21% in 1981 and a record low of 2.11% in 2016.
A dividend is a payment made by a company to its shareholders out of its profits. It's typically paid quarterly, with the amount of each dividend depending on how profitable the company is and how much the board of directors chooses to distribute. Dividends can be used as income or reinvested back into the company to purchase additional shares.
How many shares do you need to get dividends?
The exact number of shares you need to get dividends depends on the company's policy and dividend payout rate. Generally, owning at least one share qualifies you for receiving dividends.
Is a dividend a good thing for traders?
Yes. Dividends provide traders with regular income and the potential for capital gains if the dividend is reinvested into more shares. This can be beneficial to traders, as it can create a passive stream of income and add to their overall yeild.
Euro Bonds (FBGL) or German Government Bonds, are issued with original maturities of 10 and 30 years. Bunds are a highly liquid debt security as they are eligible to be used as insurance reserves for trusts and are accepted as collateral by the ECB.
Bunds are often used to determine the strength of the Eurozone is doing relative to Germany: Investors who are bearish about Germany’s obligations to the Eurozone may demand higher returns, pushing bond yields higher. However, those seeking a safe haven may accept lower yields. Bunds are influenced by interest rates and ECB monetary policy. The Germany 10Y Bond reached a high of 10.80% in September 1981 and a record low of -0.19% in July 2016.
Gilts are issues by the British Government and are generally considered to be low-risk investments. They traditionally have maturities of five, ten and 30 years. As with shares and funds, bond prices rise and fall as their attractiveness changes, based on changes in the market, economy and currency. The price is also affected by the attractiveness of other investments, particularly other ‘safe havens’ such as cash.
The UK Gilt 10 year bond reached a historic high of 16.09% in November 1981, and a record low of 0.52% in August 2016.
Fibonacci retracement is a technical analysis tool that uses horizontal lines to indicate areas where a stock's price may experience support or resistance at the key Fibonacci levels before it continues to move in the original direction. These levels are derived from the Fibonacci sequence and are commonly used in conjunction with trend lines to find entry and exit points in the market. The key levels are 23.6%, 38.2%, 50%, 61.8% and 100%.
Unlike moving averages, Fibonacci retracement levels are static prices. They do not change. This allows quick and simple identification and allows traders and investors to react when price levels are tested. Because these levels are inflection points, traders expect some type of price action, either a break or a rejection.
Why do people use Fibonacci in trading?
Fibonacci retracement is used in trading as it enables traders to identify long-term trends by determining when an asset's price is likely to change direction. This is useful to traders since it can help them to decide when to open or close trading positions, or when to apply stops and limits to their trades.
Is Fibonacci retracement a good strategy?
Fibonacci retracement can be a powerful trading tool when used correctly. It is based on the principle of support and resistance levels and can help identify key levels of entry and exit. When combined with other technical indicators it can help traders take better informed decisions.
Consumer Price Index or CPI is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. It is considered as one of the most popular measures of inflation and deflation. CPI is also used to estimate the purchasing power of a country’s currency.
How is CPI Calculated?
CPI is calculated by considering Key contributors, including retail and services businesses as well as the U.S. rental housing market (housing accounts for approx. 30% of the CPI). There are several CPI variations:
• CPI-U index reviews the spending habits of urban consumers in the U.S.A. This constitutes for approx. 88% of the U.S population.
• CPI-W index for calculates changes in the costs of benefits paid to “urban wage earners and clerical workers,” which is used to calculate changes in the costs of benefits paid via Social Security.
• CPI ex-food and energy – is highly volatile and thus is excluded from the overall CPI.
A bid is the highest price that a trader will pay to buy a stock or any other asset. On the other hand, the seller has a limit as to the lowest price he will accept, which is called an “ask”. The difference between the buyer’s bid and the seller’s ask is a spread. The smaller the spread, the greater the liquidity of the any asset.
What is difference between bid and offer in trading?
There are several differences between a bid and an offer in trading. One important key differentiator is that a bid describes how buyers are willing to want to buy for a lower price than what the seller indicated. While an offer represents the higher price initially requested by the seller.
EOS supports the EOS.IO blockchain protocol. The protocol’s architecture has the potential to eliminate user fees while processing millions of transactions per second. On our platform, EOS is priced in USD using the EOS/USD spot rate.
The Nuveen ESG Small-Cap ETF (NUSC) is primarily composed of equity securities issued by small- capitalization companies listed on U.S. exchanges that satisfy certain environmental, social and governance (“ESG”) criteria. The fund seeks to track the investments results, before fees and expenses, of the TIAA ESG USA Small-Cap Index.
Gold is a precious metal and has been used for thousands of years for currency, jewellery and trading. It was first smelted by the ancient Egyptians in around 3600 BC. The desire for gold has led to wars, gold rushes and conquests.
It remains highly sought after for investment purposes and a strong jewellery demand - half of the gold consumption in the world is jewellery, and 40% is investments. It is also used in the manufacture of electronic and medical devices, which accounts for the remaining 10% of the market.
Gold is priced in USD per troy ounce. The lowest price for gold, historically, was $34.83 in January 1970, it reached a record high in September 2011 at $1898.25.
Gold has experienced some significant price fluctuations. There are many factors that can impact gold prices, including central bank reserves, worldwide jewellery and industrial demand (especially from emerging economies) and wealth protection. It can also be affected by the value of the US Dollar and interest rates.
An Order in trading is a request sent by a trader to a broker or trading platform to make a trade on a financial instrument such as shares, Crypto, CFDs, currency pairs and assets. This can be done on a trading venue such as a stock market, bond market, commodity market, financial derivative market, or cryptocurrency exchange
What are the most common types of orders?
Common types of orders are:
• Market Orders. A market order is given by traders and investors as an order to immediately buy or sell an asset, security, or share. Such an order guarantees that the order will be executed, yet the actual execution price is not guaranteed.
• Limit Orders. 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.
• Stop Orders. Stop orders instruct brokers to execute a trade when the asset’s price reaches a certain level.
What is a Position in trading?
A position in trading refers to the amount of a security or financial instrument that is held by an investor or trader. It can be a long position, where the trader has bought the security and expects its price to rise, or a short position, where the trader has sold the security and expects its price to fall. The size of the position is typically measured in units of the security or financial instrument, such as shares or contracts. The trader or investor can then make a profit or loss based on the movement of the price of that security or instrument. In addition, an open position is one that has been entered into but not yet closed or settled, and a closed position is one that has been settled or offset by an opposing trade.
Consumer Staples Select Sector SPDR Fund (XLP) tracks US consumer staples companies within the S&P 500. This asset uses the Consumer Staples Select Sector Index as its tracking benchmark. The fund provides strong and representative exposure to consumer staples and the companies are large-cap in the main.
The index comprises just 34 holdings from the consumer sector and includes many household names. Top holdings include Procter and Gamble, Coca-Cola, PepsiCo and Walmart.
The Consumer Discretionary Select Sector SPDR Fund (XLY) tracks US consumer discretionary companies within the S&P 500. This asset uses the Consumer Discretionary Select Sector Index as its tracking benchmark. The top ten holdings account for 66.2% of the fund’s portfolio.
The index comprises just 66 holdings from the consumer sector and includes many household names. Top holdings include Amazon, Home Depot, McDonalds and Nike.
For Forex trading, a “Base Currency” is the first currency in any currency pair, representing the traded currency. The second currency in the pair is the quote currency. Example: in EUR/USD, the Euro is the base currency, and you can buy 1 EUR by paying 1.1 USD.
An exchange rate attached to a currency pair indicates how much of the quote currency is needed to buy a single unit of the mentioned base currency. For example, reading EUR/USD = 2.15 means that 1 Euro is equal to $2.15.
What is Base vs. Local currency?
When viewing or receiving a direct quote, the base currency = foreign currency. Likewise, the local currency in a pair is the quote currency.
A basis point (abbreviated as BP, bps or “bips”) measures changes in the interest rate of a financial instrument. It is also used describe the percentage change in the value of financial instruments or the rate change of an index. They are less ambiguous than percentages as they represent an absolute, set figure instead of a ratio.
Why do we use Basis Points?
In the bond market, a basis point is used to refer to the yield that a bond pays to the investor. They are also used when referring to the cost of mutual funds and exchange-traded funds.
Monero (XMR) uses blockchain tech focussed on tech. Because the public leger is obscured, external parties cannot see transaction sources, amounts, or destinations. That means no single XMR can be tainted or devalued after transactions. Use our platform to trade XMR/USD spot rates.
The NIFTY 50 Index, also known as the India 50, is a free-float market capitalisation computed index of 50 top companies trading on the National Stock Exchange of India.
The index was launched on April 22nd, 1996, with a base value of 1,000, calculated as of November 3rd, 1995.
Financial Services is the largest component of the index, with a weighting of 37.09%, while Energy and IT are the second and third largest sectors, accounting for 15.01% and 13.27% respectively. The index covers 12 sectors of the Indian economy; Financial Services, Energy, IT, Consumer Goods, Automobile, Construction, Metals, Pharma, Cement & Cement Products, Telecom, Media & Entertainment, Services, and Fertilisers & Pesticides.
India 50 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the National Stock Exchange of India. Futures rollover on the fourth Friday of each month.
Index Trading is a type of trading that involves trading a specific financial index such as the S&P 500. It is considered to be a passive investment strategy, where the investor seeks to match their performance with the broader market, instead of attempting to beat it.
What is an index?
An index is a measure of a portion of the stock market that reflects changes in the value of a basket of stocks within it. This can provide an overall snapshot of how a specific market is performing. For example, the US Tech 100 gives a broad overview of the US tech market performance at any given time.
What are indexes used for in finance?
Indexes are used in finance to measure the performance of portfolios and to benchmark the performance of investments against a predetermined set of criteria. They also help investors assess and analyze market trends, risks, and opportunities.
What are different types of index in stock market?
There are different types of indices in the stock market. Some indices used in Index trading are often used as benchmarks to evaluate performance in financial markets. Some of the most important indices in the U.S. markets are the Dow Jones Industrial Average and the S&P 500.
A long position is a market position where the investor has purchased a security such as a stock, commodity, or currency in expectation of it increasing in value. The holder of the position will benefit if the asset increases in value. A long position may also refer to an investor buying an option, where they will be able to purchase an underlying security at a specific price on or before the expiration date.
What is riskier a long or a short position?
A short position is considered riskier than a long position because the potential loss is theoretically unlimited, while the potential profit is limited to the amount of depreciation in the value of the security. When an investor short sells a stock, they borrow shares from someone else and sell them, with the hope that the price will drop so they can buy the shares back at a lower price and return them to the lender, pocketing the difference. In case the price of the stock rises instead, the loss for the short seller is theoretically unlimited as there is no limit to how high the stock price can go.
When should I buy a long position?
When an investor believes that the market will rise, they could consider purchasing a long position.
How can I protect my long position?
Protecting a long position often involves setting up a stop-loss order, which automatically sells the asset at a predetermined price. This ensures that any sharp market drops don't result in excessive losses for the investor.
Online brokers are digital trading platforms that allow users to trade stocks, options, ETFs and other financial products online. They offer convenience and competitive pricing, making them popular among individual investors and traders.
What are the three types of brokers?
Trading brokers come in three main varieties: full-service, discount, and online. Full-service brokers offer a variety of services such as research, advice, and account management. Discount brokers are low-cost and may only offer basic services. Online brokers provide customers access to the markets with limited assistance.
Are online brokers safe?
Online brokers are generally safe when used correctly. It is important to use trusted and reliable providers, keep your account secure, and be mindful of any potential risks when trading online. For example, markets.com is fully regulated and controlled for maximum security and safety while you trade.
The Financial Conduct Authority (FCA) is a regulatory body in the United Kingdom that oversees and regulates financial firms to ensure they operate in an honest and fair manner, and to protect consumers. It is responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
The FCA’s functions include:
• Regulating the conduct of 50,000 businesses
• Supervising 48,000 firms
• Setting specific standards for 18,000 firms
What are the main objectives of the FCA?
The main objectives of the Financial Conduct Authority (FCA) are to protect consumers, protect and enhance the integrity of the UK financial system, and promote competition in the interests of consumers. This includes taking action to address any conduct that falls below the standards the FCA expects and working to ensure that firms compete in ways that are fair, transparent and not detrimental to consumers.
Dow Jones Industrial Average - SPDR (DIA) mirrors the USA 30, which tracks 30 large-cap blue-chip companies – many of which are household names. The Dow Jones is one of the oldest indices in the world and is not considered to be volatile. However, because it is only 30 companies it is heavily influenced by the fortunes of those firms and is not a good indicator of the economy as a whole.
Stocks in the fund include Coca-Cola, Disney, Apple and Visa. The ETF is a good way to invest in the index. However, it is not ideal for those looking for broad exposure to US caps, as it only follows the top 30 companies. It is extremely liquid with a strong track record.
The Bank of England is the central bank of the U.K. Its mandate is to support the economic policies of the government, being independent in maintaining price stability. The Bank of England is authorized to issue banknotes in the United Kingdom, with a monopoly on the issue of banknotes in England and Wales. It also regulates the issue of banknotes by commercial banks in Scotland and Northern Ireland. The Bank's Monetary Policy Committee has the responsibility of managing monetary policy.
What services does the Bank of England provide?
In addition to issuing bank notes, the Bank of England’s provides the following services:
• Monitoring banks and the financial system
• Setting interest rates
• Maintaining the UK’s gold repository
Basic Attention Token (BAT) crypto was built to improve the security, fairness, and efficiency of digital advertising through the use of blockchain technology. Users are rewarded with BAT for viewing ad content, publishers can deliver higher-impact ads and advertisers can be assured their messaging is being viewed by a willing audience. Trade BAT in USD using the BAT/USD symbol.
The Hang Seng Index, also known as the Hong Kong 45, is an index of the top companies listed on the Stock Exchange of Hong Kong Main Board. Stocks are free float-adjusted but there is a 10% cap on weighting.
The Hang Seng is the bellwether index for the Hong Kong market. Because Hong Kong is a special administrative region of China, many Chinese companies are listed on the Hong Kong Stock Exchange.
The index was launched on 24th November 1969, but has a base date of 31st July 1964. it's baseline value is 100. The index reached a record high in January 2018 of 33,154.12 and recorded its lowest level in August 1967, when the index fell to 58.61.
Financials dominate the index with a weighting of 48.22%. Properties & Construction is the next largest sector with a weighting of 11.20%, followed by Information Technology with 10.24%.
Hong Kong 45 futures allow you to speculate on, or hedge against, changes in the price of major Asian stocks. Futures rollover on the 4th Friday of each month.
Non-farm payrolls are a monthly statistic representing how many people are employed in the US, in manufacturing, construction and goods companies. These statistical reports also known as non-farms, or NFP. The name is derived from jobs that aren’t included in these statistics, which are : agricultural workers and those employed by private households or non-profit organizations. The NFP report data is generally released on the 1st Friday of any calendar month and has the potential to significantly impact multiple markets, including on a global level.
The NFP report is comprised of the following three segments:
• The numbers: jobs created or lost.
• Unemployment rate.
• Average Hourly Earnings. Reflecting the changes in wages enterprises pay for labour.
NFPs are very important to Forex traders as they follow it to see how the USD currency pairs react. Gold is also a popular asset to trade on NFP results.
Industrial Select Sector SPDR Fund (XLI) tracks US industrial companies within the S&P 500. This asset uses the Industrial Select Sector Index as its tracking benchmark. The ETF provides concentrated exposure large-cap US industrial companies, with limited small and midcap companies.
The index comprises just 70 holdings from the industrial sector. Top holdings for the benchmark index include Boeing Co, 3M Co, Union Pacific Corp and Honeywell International Inc.
What do hawkish and dovish mean?
Hawks and doves are terms used by analysts and traders to categorise members of Central Bank committee ahead of their votes on monetary policy.
Hawkish: Refers to a monetary policy that is seen as being more aggressive and leaning towards higher interest rates. It implies a strong stance from the monetary authorities in order to keep inflationary pressures in check and provide an incentive for businesses to invest.
Dovish: Refers to a monetary policy that is seen as being less aggressive and leaning towards lower interest rates. It implies a softer stance from the monetary authorities, allowing businesses to have access to cheap credit, which can help stimulate the economy.
Does hawkish mean bullish?
No, hawkish does not mean bullish. Hawkish is an economic term that describes a central bank policy stance that is believed to favor higher interest rates and tighter monetary policy. It contrasts with dovish which is used to describe policies which favor lower interest rates and more accommodative monetary policy.
Is hawkish good for a currency?
Generally, yes. A hawkish monetary policy can be beneficial for a currency as it typically causes an increase in demand and prices of goods and services produced within the country.
NUGT, also known as the Direxion Daily Gold Miners Index Bull 3x Shares, aims to deliver three times the daily return of the NYSE Arca Gold Miners Index. This is a leveraged fund. It is designed for intraday trades and it is not recommended for periods of greater than one day.
The NYSE Arca Gold Miners Index is a market-cap weighted index of public companies with global operations in developed and emerging markets. The companies in the index are primarily involved in gold mining, with some also involved in silver mining. Top holdings include Newmont Mining, Barrick Gold, Franco Nevada and Newcrest Mining. Canadian companies represent 52.14% of the asset.
US Treasury Bonds are securities issued by the US government with maturities that vary from ten to 30 years. After initial auction, the bonds can be sold on the secondary market. A number of things can affect the price of TBonds, as with other bonds, shares and funds. US Treasury Bonds are primarily affected by interest rates, inflation and economic growth, as well as their reputation as a safe haven.
Historically, the US Government Bond 10Y (ZN) reached an all-time high of 15.82% in September 1981 and a record low of 1.36% in July 2016.
ACWI stands for All Country World Index and this ETF is designed to provide a broad reflection of the performance of equity markets around the world comprising stocks from 23 developed and 24 emerging markets. It’s owned by Morgan Stanley Capital International (MSCI).
The ETF tracks nearly 2,500 stocks, including Apple, Microsoft, Amazon and Facebook. Stocks from five countries make up 72.6% of the ACWI, those being the USA, Japan, the UK, France and China. The remaining 27.4% comprises stocks from the other 42 countries. The ACWI is used as a benchmark of performance by fund managers, and is considered a good way to diversify a portfolio.
RSI stands for Relative Strength Index and is a technical analysis indicator that measures the strength of a security's price action, by comparing the magnitude of recent gains to recent losses. The RSI ranges from 0 to 100, with values above 70 indicating overbought conditions and values below 30 indicating oversold conditions. Traders often use the RSI as a buy or sell signal, depending on whether the RSI is above or below a certain level.
Is a higher RSI value better?
A higher RSI value generally indicates that a security is overbought, which means that it is trading at a relatively high price compared to its recent price history. Traders may interpret this as a signal to sell, or to be cautious about buying. Traditionally, an RSI value of 70 or above is considered to be overbought, and a value of 30 or below is considered to be oversold.
Exchange Traded Funds (ETFs) are a type of security that tracks a basket of underlying assets, like stocks, bonds, or commodities. They can provide diversification and lower costs compared to other investment types. ETFs are traded on stock exchanges and offer more liquidity than traditional investments.
How do ETFs work?
In trading, Exchange-Traded Funds or ETFs, combine the features of funds and equities into one instrument. Like other investment funds, they group together various assets, such as stocks or commodities. This helps the ETF track the value of its underlying market as closely as possible.
ETFs can be useful in diversifying trading portfolios, or for active trader, they can be used to make use of price movements. ETFs are traded on an exchange like shares or stocks, traders can also take "short" or "long" positions. CFD trading on ETFs enables traders to sell or buy an ETF they don't actually own to make use of price movements, and not a lot of money is needed to start trading in ETFs.
How much money do you need to start trading ETFs?
The minimum amount you need to start trading ETFs depends on the brokerage you are using, the minimum amount to deposit for markets.com is the equivalent of 100 in the following currencies: USD, EUR and GBP.
While all traders know that crypto is traded online, they may not be aware that they can also trade more traditional markets such as bonds. So, what are Bonds, what is a bond, and where can you trade them?
A bond is a form of financial derivative trading. Traders take position on the price of the underlying instrument and not purchasing the instrument itself. As such, they buy a Bond CFD or Contract for Difference of that instrument. If a Bond CFD is expected to go up in value, traders can take a long position. The opposite is true of course and if the value of a bond is expected to fall, traders can take a short position.
A bond is a loan that the trader (now bond holder) makes to the issuer. Bonds can be issued by governments, corporations or companies looking to raise capital. When traders buy a bond, they are providing the issuer with a loan in return for that bond. The issuer takes on a commitment to pay the bondholder interest and to return the principal sum when the bond matures.
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 dividend is a payment made by a company to its shareholders out of its profits. It's typically paid quarterly, with the amount of each dividend depending on how profitable the company is and how much the board of directors chooses to distribute. Dividends can be used as income or reinvested back into the company to purchase additional shares.
How many shares do you need to get dividends?
The exact number of shares you need to get dividends depends on the company's policy and dividend payout rate. Generally, owning at least one share qualifies you for receiving dividends.
Is a dividend a good thing for traders?
Yes. Dividends provide traders with regular income and the potential for capital gains if the dividend is reinvested into more shares. This can be beneficial to traders, as it can create a passive stream of income and add to their overall yeild.
Consumer Price Index or CPI is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. It is considered as one of the most popular measures of inflation and deflation. CPI is also used to estimate the purchasing power of a country’s currency.
How is CPI Calculated?
CPI is calculated by considering Key contributors, including retail and services businesses as well as the U.S. rental housing market (housing accounts for approx. 30% of the CPI). There are several CPI variations:
• CPI-U index reviews the spending habits of urban consumers in the U.S.A. This constitutes for approx. 88% of the U.S population.
• CPI-W index for calculates changes in the costs of benefits paid to “urban wage earners and clerical workers,” which is used to calculate changes in the costs of benefits paid via Social Security.
• CPI ex-food and energy – is highly volatile and thus is excluded from the overall CPI.
A bid is the highest price that a trader will pay to buy a stock or any other asset. On the other hand, the seller has a limit as to the lowest price he will accept, which is called an “ask”. The difference between the buyer’s bid and the seller’s ask is a spread. The smaller the spread, the greater the liquidity of the any asset.
What is difference between bid and offer in trading?
There are several differences between a bid and an offer in trading. One important key differentiator is that a bid describes how buyers are willing to want to buy for a lower price than what the seller indicated. While an offer represents the higher price initially requested by the seller.
Consumer Staples Select Sector SPDR Fund (XLP) tracks US consumer staples companies within the S&P 500. This asset uses the Consumer Staples Select Sector Index as its tracking benchmark. The fund provides strong and representative exposure to consumer staples and the companies are large-cap in the main.
The index comprises just 34 holdings from the consumer sector and includes many household names. Top holdings include Procter and Gamble, Coca-Cola, PepsiCo and Walmart.
The Consumer Discretionary Select Sector SPDR Fund (XLY) tracks US consumer discretionary companies within the S&P 500. This asset uses the Consumer Discretionary Select Sector Index as its tracking benchmark. The top ten holdings account for 66.2% of the fund’s portfolio.
The index comprises just 66 holdings from the consumer sector and includes many household names. Top holdings include Amazon, Home Depot, McDonalds and Nike.
For Forex trading, a “Base Currency” is the first currency in any currency pair, representing the traded currency. The second currency in the pair is the quote currency. Example: in EUR/USD, the Euro is the base currency, and you can buy 1 EUR by paying 1.1 USD.
An exchange rate attached to a currency pair indicates how much of the quote currency is needed to buy a single unit of the mentioned base currency. For example, reading EUR/USD = 2.15 means that 1 Euro is equal to $2.15.
What is Base vs. Local currency?
When viewing or receiving a direct quote, the base currency = foreign currency. Likewise, the local currency in a pair is the quote currency.
A basis point (abbreviated as BP, bps or “bips”) measures changes in the interest rate of a financial instrument. It is also used describe the percentage change in the value of financial instruments or the rate change of an index. They are less ambiguous than percentages as they represent an absolute, set figure instead of a ratio.
Why do we use Basis Points?
In the bond market, a basis point is used to refer to the yield that a bond pays to the investor. They are also used when referring to the cost of mutual funds and exchange-traded funds.
Dow Jones Industrial Average - SPDR (DIA) mirrors the USA 30, which tracks 30 large-cap blue-chip companies – many of which are household names. The Dow Jones is one of the oldest indices in the world and is not considered to be volatile. However, because it is only 30 companies it is heavily influenced by the fortunes of those firms and is not a good indicator of the economy as a whole.
Stocks in the fund include Coca-Cola, Disney, Apple and Visa. The ETF is a good way to invest in the index. However, it is not ideal for those looking for broad exposure to US caps, as it only follows the top 30 companies. It is extremely liquid with a strong track record.
The Bank of England is the central bank of the U.K. Its mandate is to support the economic policies of the government, being independent in maintaining price stability. The Bank of England is authorized to issue banknotes in the United Kingdom, with a monopoly on the issue of banknotes in England and Wales. It also regulates the issue of banknotes by commercial banks in Scotland and Northern Ireland. The Bank's Monetary Policy Committee has the responsibility of managing monetary policy.
What services does the Bank of England provide?
In addition to issuing bank notes, the Bank of England’s provides the following services:
• Monitoring banks and the financial system
• Setting interest rates
• Maintaining the UK’s gold repository
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ACWI stands for All Country World Index and this ETF is designed to provide a broad reflection of the performance of equity markets around the world comprising stocks from 23 developed and 24 emerging markets. It’s owned by Morgan Stanley Capital International (MSCI).
The ETF tracks nearly 2,500 stocks, including Apple, Microsoft, Amazon and Facebook. Stocks from five countries make up 72.6% of the ACWI, those being the USA, Japan, the UK, France and China. The remaining 27.4% comprises stocks from the other 42 countries. The ACWI is used as a benchmark of performance by fund managers, and is considered a good way to diversify a portfolio.
Euro Bonds (FBGL) or German Government Bonds, are issued with original maturities of 10 and 30 years. Bunds are a highly liquid debt security as they are eligible to be used as insurance reserves for trusts and are accepted as collateral by the ECB.
Bunds are often used to determine the strength of the Eurozone is doing relative to Germany: Investors who are bearish about Germany’s obligations to the Eurozone may demand higher returns, pushing bond yields higher. However, those seeking a safe haven may accept lower yields. Bunds are influenced by interest rates and ECB monetary policy. The Germany 10Y Bond reached a high of 10.80% in September 1981 and a record low of -0.19% in July 2016.
Gilts are issues by the British Government and are generally considered to be low-risk investments. They traditionally have maturities of five, ten and 30 years. As with shares and funds, bond prices rise and fall as their attractiveness changes, based on changes in the market, economy and currency. The price is also affected by the attractiveness of other investments, particularly other ‘safe havens’ such as cash.
The UK Gilt 10 year bond reached a historic high of 16.09% in November 1981, and a record low of 0.52% in August 2016.
Fibonacci retracement is a technical analysis tool that uses horizontal lines to indicate areas where a stock's price may experience support or resistance at the key Fibonacci levels before it continues to move in the original direction. These levels are derived from the Fibonacci sequence and are commonly used in conjunction with trend lines to find entry and exit points in the market. The key levels are 23.6%, 38.2%, 50%, 61.8% and 100%.
Unlike moving averages, Fibonacci retracement levels are static prices. They do not change. This allows quick and simple identification and allows traders and investors to react when price levels are tested. Because these levels are inflection points, traders expect some type of price action, either a break or a rejection.
Why do people use Fibonacci in trading?
Fibonacci retracement is used in trading as it enables traders to identify long-term trends by determining when an asset's price is likely to change direction. This is useful to traders since it can help them to decide when to open or close trading positions, or when to apply stops and limits to their trades.
Is Fibonacci retracement a good strategy?
Fibonacci retracement can be a powerful trading tool when used correctly. It is based on the principle of support and resistance levels and can help identify key levels of entry and exit. When combined with other technical indicators it can help traders take better informed decisions.
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Gold is a precious metal and has been used for thousands of years for currency, jewellery and trading. It was first smelted by the ancient Egyptians in around 3600 BC. The desire for gold has led to wars, gold rushes and conquests.
It remains highly sought after for investment purposes and a strong jewellery demand - half of the gold consumption in the world is jewellery, and 40% is investments. It is also used in the manufacture of electronic and medical devices, which accounts for the remaining 10% of the market.
Gold is priced in USD per troy ounce. The lowest price for gold, historically, was $34.83 in January 1970, it reached a record high in September 2011 at $1898.25.
Gold has experienced some significant price fluctuations. There are many factors that can impact gold prices, including central bank reserves, worldwide jewellery and industrial demand (especially from emerging economies) and wealth protection. It can also be affected by the value of the US Dollar and interest rates.
The Financial Conduct Authority (FCA) is a regulatory body in the United Kingdom that oversees and regulates financial firms to ensure they operate in an honest and fair manner, and to protect consumers. It is responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
The FCA’s functions include:
• Regulating the conduct of 50,000 businesses
• Supervising 48,000 firms
• Setting specific standards for 18,000 firms
What are the main objectives of the FCA?
The main objectives of the Financial Conduct Authority (FCA) are to protect consumers, protect and enhance the integrity of the UK financial system, and promote competition in the interests of consumers. This includes taking action to address any conduct that falls below the standards the FCA expects and working to ensure that firms compete in ways that are fair, transparent and not detrimental to consumers.
The Hang Seng Index, also known as the Hong Kong 45, is an index of the top companies listed on the Stock Exchange of Hong Kong Main Board. Stocks are free float-adjusted but there is a 10% cap on weighting.
The Hang Seng is the bellwether index for the Hong Kong market. Because Hong Kong is a special administrative region of China, many Chinese companies are listed on the Hong Kong Stock Exchange.
The index was launched on 24th November 1969, but has a base date of 31st July 1964. it's baseline value is 100. The index reached a record high in January 2018 of 33,154.12 and recorded its lowest level in August 1967, when the index fell to 58.61.
Financials dominate the index with a weighting of 48.22%. Properties & Construction is the next largest sector with a weighting of 11.20%, followed by Information Technology with 10.24%.
Hong Kong 45 futures allow you to speculate on, or hedge against, changes in the price of major Asian stocks. Futures rollover on the 4th Friday of each month.
NUGT, also known as the Direxion Daily Gold Miners Index Bull 3x Shares, aims to deliver three times the daily return of the NYSE Arca Gold Miners Index. This is a leveraged fund. It is designed for intraday trades and it is not recommended for periods of greater than one day.
The NYSE Arca Gold Miners Index is a market-cap weighted index of public companies with global operations in developed and emerging markets. The companies in the index are primarily involved in gold mining, with some also involved in silver mining. Top holdings include Newmont Mining, Barrick Gold, Franco Nevada and Newcrest Mining. Canadian companies represent 52.14% of the asset.
Exchange Traded Funds (ETFs) are a type of security that tracks a basket of underlying assets, like stocks, bonds, or commodities. They can provide diversification and lower costs compared to other investment types. ETFs are traded on stock exchanges and offer more liquidity than traditional investments.
How do ETFs work?
In trading, Exchange-Traded Funds or ETFs, combine the features of funds and equities into one instrument. Like other investment funds, they group together various assets, such as stocks or commodities. This helps the ETF track the value of its underlying market as closely as possible.
ETFs can be useful in diversifying trading portfolios, or for active trader, they can be used to make use of price movements. ETFs are traded on an exchange like shares or stocks, traders can also take "short" or "long" positions. CFD trading on ETFs enables traders to sell or buy an ETF they don't actually own to make use of price movements, and not a lot of money is needed to start trading in ETFs.
How much money do you need to start trading ETFs?
The minimum amount you need to start trading ETFs depends on the brokerage you are using, the minimum amount to deposit for markets.com is the equivalent of 100 in the following currencies: USD, EUR and GBP.
The NIFTY 50 Index, also known as the India 50, is a free-float market capitalisation computed index of 50 top companies trading on the National Stock Exchange of India.
The index was launched on April 22nd, 1996, with a base value of 1,000, calculated as of November 3rd, 1995.
Financial Services is the largest component of the index, with a weighting of 37.09%, while Energy and IT are the second and third largest sectors, accounting for 15.01% and 13.27% respectively. The index covers 12 sectors of the Indian economy; Financial Services, Energy, IT, Consumer Goods, Automobile, Construction, Metals, Pharma, Cement & Cement Products, Telecom, Media & Entertainment, Services, and Fertilisers & Pesticides.
India 50 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the National Stock Exchange of India. Futures rollover on the fourth Friday of each month.
Index Trading is a type of trading that involves trading a specific financial index such as the S&P 500. It is considered to be a passive investment strategy, where the investor seeks to match their performance with the broader market, instead of attempting to beat it.
What is an index?
An index is a measure of a portion of the stock market that reflects changes in the value of a basket of stocks within it. This can provide an overall snapshot of how a specific market is performing. For example, the US Tech 100 gives a broad overview of the US tech market performance at any given time.
What are indexes used for in finance?
Indexes are used in finance to measure the performance of portfolios and to benchmark the performance of investments against a predetermined set of criteria. They also help investors assess and analyze market trends, risks, and opportunities.
What are different types of index in stock market?
There are different types of indices in the stock market. Some indices used in Index trading are often used as benchmarks to evaluate performance in financial markets. Some of the most important indices in the U.S. markets are the Dow Jones Industrial Average and the S&P 500.
A long position is a market position where the investor has purchased a security such as a stock, commodity, or currency in expectation of it increasing in value. The holder of the position will benefit if the asset increases in value. A long position may also refer to an investor buying an option, where they will be able to purchase an underlying security at a specific price on or before the expiration date.
What is riskier a long or a short position?
A short position is considered riskier than a long position because the potential loss is theoretically unlimited, while the potential profit is limited to the amount of depreciation in the value of the security. When an investor short sells a stock, they borrow shares from someone else and sell them, with the hope that the price will drop so they can buy the shares back at a lower price and return them to the lender, pocketing the difference. In case the price of the stock rises instead, the loss for the short seller is theoretically unlimited as there is no limit to how high the stock price can go.
When should I buy a long position?
When an investor believes that the market will rise, they could consider purchasing a long position.
How can I protect my long position?
Protecting a long position often involves setting up a stop-loss order, which automatically sells the asset at a predetermined price. This ensures that any sharp market drops don't result in excessive losses for the investor.
Industrial Select Sector SPDR Fund (XLI) tracks US industrial companies within the S&P 500. This asset uses the Industrial Select Sector Index as its tracking benchmark. The ETF provides concentrated exposure large-cap US industrial companies, with limited small and midcap companies.
The index comprises just 70 holdings from the industrial sector. Top holdings for the benchmark index include Boeing Co, 3M Co, Union Pacific Corp and Honeywell International Inc.
The Nuveen ESG Small-Cap ETF (NUSC) is primarily composed of equity securities issued by small- capitalization companies listed on U.S. exchanges that satisfy certain environmental, social and governance (“ESG”) criteria. The fund seeks to track the investments results, before fees and expenses, of the TIAA ESG USA Small-Cap Index.
An Order in trading is a request sent by a trader to a broker or trading platform to make a trade on a financial instrument such as shares, Crypto, CFDs, currency pairs and assets. This can be done on a trading venue such as a stock market, bond market, commodity market, financial derivative market, or cryptocurrency exchange
What are the most common types of orders?
Common types of orders are:
• Market Orders. A market order is given by traders and investors as an order to immediately buy or sell an asset, security, or share. Such an order guarantees that the order will be executed, yet the actual execution price is not guaranteed.
• Limit Orders. 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.
• Stop Orders. Stop orders instruct brokers to execute a trade when the asset’s price reaches a certain level.
What is a Position in trading?
A position in trading refers to the amount of a security or financial instrument that is held by an investor or trader. It can be a long position, where the trader has bought the security and expects its price to rise, or a short position, where the trader has sold the security and expects its price to fall. The size of the position is typically measured in units of the security or financial instrument, such as shares or contracts. The trader or investor can then make a profit or loss based on the movement of the price of that security or instrument. In addition, an open position is one that has been entered into but not yet closed or settled, and a closed position is one that has been settled or offset by an opposing trade.
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Online brokers are digital trading platforms that allow users to trade stocks, options, ETFs and other financial products online. They offer convenience and competitive pricing, making them popular among individual investors and traders.
What are the three types of brokers?
Trading brokers come in three main varieties: full-service, discount, and online. Full-service brokers offer a variety of services such as research, advice, and account management. Discount brokers are low-cost and may only offer basic services. Online brokers provide customers access to the markets with limited assistance.
Are online brokers safe?
Online brokers are generally safe when used correctly. It is important to use trusted and reliable providers, keep your account secure, and be mindful of any potential risks when trading online. For example, markets.com is fully regulated and controlled for maximum security and safety while you trade.
Non-farm payrolls are a monthly statistic representing how many people are employed in the US, in manufacturing, construction and goods companies. These statistical reports also known as non-farms, or NFP. The name is derived from jobs that aren’t included in these statistics, which are : agricultural workers and those employed by private households or non-profit organizations. The NFP report data is generally released on the 1st Friday of any calendar month and has the potential to significantly impact multiple markets, including on a global level.
The NFP report is comprised of the following three segments:
• The numbers: jobs created or lost.
• Unemployment rate.
• Average Hourly Earnings. Reflecting the changes in wages enterprises pay for labour.
NFPs are very important to Forex traders as they follow it to see how the USD currency pairs react. Gold is also a popular asset to trade on NFP results.
What do hawkish and dovish mean?
Hawks and doves are terms used by analysts and traders to categorise members of Central Bank committee ahead of their votes on monetary policy.
Hawkish: Refers to a monetary policy that is seen as being more aggressive and leaning towards higher interest rates. It implies a strong stance from the monetary authorities in order to keep inflationary pressures in check and provide an incentive for businesses to invest.
Dovish: Refers to a monetary policy that is seen as being less aggressive and leaning towards lower interest rates. It implies a softer stance from the monetary authorities, allowing businesses to have access to cheap credit, which can help stimulate the economy.
Does hawkish mean bullish?
No, hawkish does not mean bullish. Hawkish is an economic term that describes a central bank policy stance that is believed to favor higher interest rates and tighter monetary policy. It contrasts with dovish which is used to describe policies which favor lower interest rates and more accommodative monetary policy.
Is hawkish good for a currency?
Generally, yes. A hawkish monetary policy can be beneficial for a currency as it typically causes an increase in demand and prices of goods and services produced within the country.
Trading trends refer to the overall direction of a security or market, often revealed through chart patterns or indicators. Traders use these trends to identify potential entry and exit points, as well as possible trading opportunities. Analyzing the financial markets in order to identify trends is an essential skill for successful traders. With knowledge of historical trends, investors can spot emerging ones and plan accordingly.
How do you identify a trend in trading?
Analyzing past market movements, changes in asset prices and economic data can be used to identify short-term and long-term trends. Using technical indicators such as moving averages, MACD, and stochastics can also help you spot potential trading opportunities and take advantage of prevailing market trends.
What are the 3 types of trends?
When analyzing the stock market, there are three primary trends that can be observed: short-term, intermediate-term, and long-term. Short-term trends generally last within one to three weeks, intermediate-term trends can range from one to four months, and long-term trends last more than a year. Being able to identify these different trend patterns will help investors maximize their potential returns.
RSI stands for Relative Strength Index and is a technical analysis indicator that measures the strength of a security's price action, by comparing the magnitude of recent gains to recent losses. The RSI ranges from 0 to 100, with values above 70 indicating overbought conditions and values below 30 indicating oversold conditions. Traders often use the RSI as a buy or sell signal, depending on whether the RSI is above or below a certain level.
Is a higher RSI value better?
A higher RSI value generally indicates that a security is overbought, which means that it is trading at a relatively high price compared to its recent price history. Traders may interpret this as a signal to sell, or to be cautious about buying. Traditionally, an RSI value of 70 or above is considered to be overbought, and a value of 30 or below is considered to be oversold.
US Treasury Bonds 30Y (UB) are securities issued by the US government with maturities that vary from ten to 30 years. The U.S Treasury suspended issuance of the 30 year bond between February 2002 and February 2006. When bonds are sold on the secondary market, they can go up and down in price in the same way that shares and funds do. US Treasury Bond prices are primarily affected by interest rates, inflation and economic growth, as well as their reputation as a safe haven.
Historically, the US Government Bond 30Y reached an all-time high of 15.21% in 1981 and a record low of 2.11% in 2016.
US Treasury Bonds are securities issued by the US government with maturities that vary from ten to 30 years. After initial auction, the bonds can be sold on the secondary market. A number of things can affect the price of TBonds, as with other bonds, shares and funds. US Treasury Bonds are primarily affected by interest rates, inflation and economic growth, as well as their reputation as a safe haven.
Historically, the US Government Bond 10Y (ZN) reached an all-time high of 15.82% in September 1981 and a record low of 1.36% in July 2016.
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