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Trading Glossary

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.

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Ethereum

Ethereum was launched in 2015, after founder Vitalik Buterin decided to improve on perceived problems with Bitcoin.

He wanted a cryptocurrency that could deliver outstanding functionality, especially in terms of processing speed. Ether's transaction speed is just 15 seconds, much faster than the 10 minutes Bitcoin transactions can take.

When most people talk about Ethereum, they are really talking about Ether (ETH), the underlying token currency of the Ethereum platform.

Ether is priced in USD. It was worth just $2.80 when it first launched, and hit an all-time high of $4,891.70 in November 2021.

Ethereum is the world's second-largest cryptocurrency by market cap. The cryptocurrency relies on blockchain, just like Bitcoin, but it is used in a different way. This has led many to view Ethereum has having real-world uses.

Interest Rate

What is an Interest Rate?

An interest rate is the percentage of a loan or deposit that a lender charges a borrower for the use of their money, or the percentage paid on a deposit account. It is used as a way to compensate the lender for the opportunity cost of not using their money elsewhere. The interest rate can be fixed or variable, and it is typically expressed as an annual percentage. The interest rate is used to calculate the amount of interest due on a loan or deposit over a certain period of time.

What are the 3 types of interest?
The three main types of interest are:

Simple interest: Interest calculated only on the original principal amount of a loan or deposit.
Compound interest: Interest calculated not only on the original principal but also on accumulated interest from previous periods.
Nominal interest: Interest rate stated on a loan or deposit, does not take into account the effect of compounding.

However, there are a few other types of interest as well. 

How do I calculate interest rate?
Interest rate is calculated as the cost of debt for the borrower and the rate of return for the lender. This makes the total sum to be repaid to be more than the borrowed amount since lenders require compensation for the loss of use of the money during the loan period. Although many make use of the various online “interest calculators”.
 

Amsterdam 25

The AEX Index, known also as the Amsterdam 25, is a free float-adjusted and market capitalisation-weighted index of the 25 biggest and most actively traded companies trading in Amsterdam. It was created on January 3rd, 1983, but its base value of 538.36 is taken from 4th January 1999 to account for conversion to the euro.

The index recorded an all-time high in September 2000 of 701.56. It is the most widely-used bellwether of the Dutch stock market's performance.

The biggest sector in the index is Oil & Gas, which accounts for 17% of the total weighting. Personal & Household Goods, and Technology, are the second and third biggest sectors in the index respectively, each making up around 14% of the AEX.

Amsterdam 25 futures allow you to speculate on, or hedge against, changes in the price of stocks in the Netherlands market. The instrument is priced in euros and rolled over on the second Friday of every month.

Lithium and Battery Tech

Lithium and Battery Tech ETF (LIT) tracks a market-cap weighted index of global lithium miners and battery producers. The asset invests in the full cycle of lithium, from mining to refining and battery production.  

For this reason, it doesn't offer the exposure of other assets to metals and mining sectors, instead is an investment for niche lithium exposure. Holdings in the ETF include Tesla, Albemarle corp, Panasonic, Samsung SDI and Enersys.
 

WisdomTree Emerging Markets High Dividend

The WisdomTree Emerging Markets High Dividend ETF (DEM) tracks the WisdomTree Emerging Markets Dividend Index. The index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index. This provides it with some downside protection from market volatility.

DEM is an equity fund, and has a mix of market sectors. It includes stocks from key emerging markets such as Russia and China, with assets including China Contruction Bank, China Mobile and Norilsk Nickel.

JETS

The US Global JETS ETF tracks the performance, before fees and expenses, of the US Global Jets Index. The Index is composed of the common stock of US and international passenger airlines, aircraft manufacturers, airports, and terminal services companies listed on well-developed securities exchanges across the globe.

Brazil Index

The Fund seeks to track the investment results of the MSCI Brazil 25/50 Index (EWZ) composed of Brazilian equities. The Fund invests, under normal circumstances, at least 95% of its assets in the securities of its Underlying Index and in depositary receipts representing securities in its Underlying Index.

European Central Bank

What is the European Central Bank (ECB)?

The European Central Bank (ECB) is the central bank for the European Union's member states that have adopted the euro. The ECB is responsible for the management of the euro and for implementing monetary policy in the eurozone. It is independent of national governments and has the primary objective of maintaining price stability in the eurozone.

Who controls the European Central Bank?
As stated above, the European Central Bank (ECB) is independent from national governments and political influences. It is governed by the Governing Council, which is composed of the six members of the Executive Board and the governors of the national central banks of the 19 European Union (EU) member states that have adopted the euro as their currency. The President of the ECB, currently Christine Lagarde, is appointed by the European Council

USA 2000

The USA 2000 Index, also known as the USA 2000, is a small cap index of the US stock market. It represents the bottom 2,000 companies in the Russell 3,000 stock market index, accounting for around 8% of the Russell 3,000's market capitalisation.

The index was created in 1984 and was the first index of small cap stocks; it has since become the benchmark of choice, along with its variants, for around 84% of small cap assets. The index first broke 1,000 points on May 20th 2013, and hit a record high of 1,737.63 in August 2018.

USA2000 index futures allow you to speculate on, or hedge against, changes in the price of thousands of small-cap US stocks. Contracts rollover on the second Friday of March, June, September, and December.

Dollar Index

The US Dollar Index, introduced in 1973, allows you to take a position on the overall strength of USD as measured by its performance against a basket of currencies. When it was launched the index had a base level of 100; it reached an all-time high of 164.72 in February 1985, and struck a low of 70.698 in March 2008.

Unlike the trade-weighted index of the US Dollar produced by the US Federal Reserve, the composition of the USDX has remained unaltered since its inception, save for one change: in January 1999 the euro was created, so many individual European currencies were removed from the index and replaced by the euro. Despite this change, the euro still has the same weighting in the index (57.6%) as all the currencies that it replaced combined.

After the euro, the Japanese yen is the second-largest proponent in the dollar index, with a weighting of 13.6%. The British pound with 11.9%, and the Canadian dollar, with 9.1%, are the next two largest components.

USD/BRL

The US Dollar to Brazilian real exchange rate is known by the acronym USD/BRL. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion.

The Brazilian real is the 19th most actively traded currency, accounting for 1% of all average daily turnover. US $45 billion worth of over-the-counter USD/BRL trades are made every day.

The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.

The real was adopted in July 1994 and was pegged against the US Dollar until 1999. The USD/BRL exchange rate is a popular one with carry traders; those who borrow dollars, convert them into real and then use the proceeds to buy debt issued in Brazil, where interest rates are significantly higher than in the United States. Times of market uncertainty can deter carry traders, as high USD/BRL volatility can weaken profits made from exploiting the interest rate differential.

Delisting a Stock

What is Delisting?

Delisting is the removal of a security from a stock exchange. This can happen voluntarily by the company, or involuntarily by the exchange if the security no longer meets certain listing criteria. When a security is delisted, it cannot be traded on the exchange, although investors may still hold it as an unlisted investment.

What happens when stock is delisted?
A company can undergo voluntary or compulsory delisting. 
• In voluntary delisting, a company removes its own securities / shares from a stock exchange. 
• In compulsory (or involuntary) delisting, the securities of a company are removed by regulatory functions, usually for not complying with Listing Agreement.

Can I sell delisted shares?
Delisted stocks often continue to trade over-the-counter. Shareholders can still trade the stock, though it is likely that the market will be less liquid.

Will I get my money back if a stock is delisted?
It depends on the type of delisting. Generally, investors receive their initial investment if a stock is voluntarily delisted. However, in cases of involuntary delisting, investors may not be entitled to any reimbursement.

Ex-Dividend Date

What is an Ex-Dividend Date?

The term Ex-Dividend date refers to a cut-off date where shareholders buying shares from a company will not be eligible for upcoming dividends for those shares. 

Why is it important to know the ex-dividend date?
Knowing the ex-dividend date is important for investors as it determines whether they are eligible to receive the next dividend payment. On this day, stocks typically drop in price by an amount equal to the dividend paid, so understanding this date is essential for making informed decisions.

The Ex-Dividend Date is one of four dates relevant to a company’s dividends: The other three are:
• Declaration Date – When a company announces that it plans to issue dividends in the foreseeable future
• Record Date - When the dividend issuing company examines and closes its list of shareholders
• Payable Date - When the eligible shareholders are to be paid by the company 


What happens if I sell on ex-dividend date?
If you sell the stock on its ex-dividend date, you will not receive the next dividend. The buyer of the stock will receive the dividend and any capital gains, but you as the seller will miss out on this benefit.

Spreads

What are Spreads in trading?

The term Spreads in trading is defined as the gap between the highest price to be paid for any given asset, to the lowest price the current asset holder is willing to sell at. Different markets and assets generate different spreads. For example, the Forex market, where both buyers and sellers are very active with this “gap” or spread will be small. 
 
In trading, a spread is one of the key costs of online trading. Generally, the tighter the spread, the better value traders get from their trades. Also, spreads are implied costs, where it is presented to traders in subsequent trades, as the assets traders buy on leverage must increase above the level of the Spread, rather than the above the initial price, for traders to make profit.

What is the importance of a Spread?
The Spread is important, even a crucial piece of information to be aware of when analysing trading costs. An instrument’s spread is a variable number that directly affects the value of the trade. Several factors influence the spread in trading:
• Liquidity. How easily an asset can be bought or sold. 
• Volume. Quantity of any given asset that is traded daily. 
• Volatility. How much the market price changes in a given period.

A-D

Amsterdam 25

The AEX Index, known also as the Amsterdam 25, is a free float-adjusted and market capitalisation-weighted index of the 25 biggest and most actively traded companies trading in Amsterdam. It was created on January 3rd, 1983, but its base value of 538.36 is taken from 4th January 1999 to account for conversion to the euro.

The index recorded an all-time high in September 2000 of 701.56. It is the most widely-used bellwether of the Dutch stock market's performance.

The biggest sector in the index is Oil & Gas, which accounts for 17% of the total weighting. Personal & Household Goods, and Technology, are the second and third biggest sectors in the index respectively, each making up around 14% of the AEX.

Amsterdam 25 futures allow you to speculate on, or hedge against, changes in the price of stocks in the Netherlands market. The instrument is priced in euros and rolled over on the second Friday of every month.

Brazil Index

The Fund seeks to track the investment results of the MSCI Brazil 25/50 Index (EWZ) composed of Brazilian equities. The Fund invests, under normal circumstances, at least 95% of its assets in the securities of its Underlying Index and in depositary receipts representing securities in its Underlying Index.

Dollar Index

The US Dollar Index, introduced in 1973, allows you to take a position on the overall strength of USD as measured by its performance against a basket of currencies. When it was launched the index had a base level of 100; it reached an all-time high of 164.72 in February 1985, and struck a low of 70.698 in March 2008.

Unlike the trade-weighted index of the US Dollar produced by the US Federal Reserve, the composition of the USDX has remained unaltered since its inception, save for one change: in January 1999 the euro was created, so many individual European currencies were removed from the index and replaced by the euro. Despite this change, the euro still has the same weighting in the index (57.6%) as all the currencies that it replaced combined.

After the euro, the Japanese yen is the second-largest proponent in the dollar index, with a weighting of 13.6%. The British pound with 11.9%, and the Canadian dollar, with 9.1%, are the next two largest components.

Delisting a Stock

What is Delisting?

Delisting is the removal of a security from a stock exchange. This can happen voluntarily by the company, or involuntarily by the exchange if the security no longer meets certain listing criteria. When a security is delisted, it cannot be traded on the exchange, although investors may still hold it as an unlisted investment.

What happens when stock is delisted?
A company can undergo voluntary or compulsory delisting. 
• In voluntary delisting, a company removes its own securities / shares from a stock exchange. 
• In compulsory (or involuntary) delisting, the securities of a company are removed by regulatory functions, usually for not complying with Listing Agreement.

Can I sell delisted shares?
Delisted stocks often continue to trade over-the-counter. Shareholders can still trade the stock, though it is likely that the market will be less liquid.

Will I get my money back if a stock is delisted?
It depends on the type of delisting. Generally, investors receive their initial investment if a stock is voluntarily delisted. However, in cases of involuntary delisting, investors may not be entitled to any reimbursement.

E-H

Ethereum

Ethereum was launched in 2015, after founder Vitalik Buterin decided to improve on perceived problems with Bitcoin.

He wanted a cryptocurrency that could deliver outstanding functionality, especially in terms of processing speed. Ether's transaction speed is just 15 seconds, much faster than the 10 minutes Bitcoin transactions can take.

When most people talk about Ethereum, they are really talking about Ether (ETH), the underlying token currency of the Ethereum platform.

Ether is priced in USD. It was worth just $2.80 when it first launched, and hit an all-time high of $4,891.70 in November 2021.

Ethereum is the world's second-largest cryptocurrency by market cap. The cryptocurrency relies on blockchain, just like Bitcoin, but it is used in a different way. This has led many to view Ethereum has having real-world uses.

European Central Bank

What is the European Central Bank (ECB)?

The European Central Bank (ECB) is the central bank for the European Union's member states that have adopted the euro. The ECB is responsible for the management of the euro and for implementing monetary policy in the eurozone. It is independent of national governments and has the primary objective of maintaining price stability in the eurozone.

Who controls the European Central Bank?
As stated above, the European Central Bank (ECB) is independent from national governments and political influences. It is governed by the Governing Council, which is composed of the six members of the Executive Board and the governors of the national central banks of the 19 European Union (EU) member states that have adopted the euro as their currency. The President of the ECB, currently Christine Lagarde, is appointed by the European Council

Ex-Dividend Date

What is an Ex-Dividend Date?

The term Ex-Dividend date refers to a cut-off date where shareholders buying shares from a company will not be eligible for upcoming dividends for those shares. 

Why is it important to know the ex-dividend date?
Knowing the ex-dividend date is important for investors as it determines whether they are eligible to receive the next dividend payment. On this day, stocks typically drop in price by an amount equal to the dividend paid, so understanding this date is essential for making informed decisions.

The Ex-Dividend Date is one of four dates relevant to a company’s dividends: The other three are:
• Declaration Date – When a company announces that it plans to issue dividends in the foreseeable future
• Record Date - When the dividend issuing company examines and closes its list of shareholders
• Payable Date - When the eligible shareholders are to be paid by the company 


What happens if I sell on ex-dividend date?
If you sell the stock on its ex-dividend date, you will not receive the next dividend. The buyer of the stock will receive the dividend and any capital gains, but you as the seller will miss out on this benefit.

I-L

Interest Rate

What is an Interest Rate?

An interest rate is the percentage of a loan or deposit that a lender charges a borrower for the use of their money, or the percentage paid on a deposit account. It is used as a way to compensate the lender for the opportunity cost of not using their money elsewhere. The interest rate can be fixed or variable, and it is typically expressed as an annual percentage. The interest rate is used to calculate the amount of interest due on a loan or deposit over a certain period of time.

What are the 3 types of interest?
The three main types of interest are:

Simple interest: Interest calculated only on the original principal amount of a loan or deposit.
Compound interest: Interest calculated not only on the original principal but also on accumulated interest from previous periods.
Nominal interest: Interest rate stated on a loan or deposit, does not take into account the effect of compounding.

However, there are a few other types of interest as well. 

How do I calculate interest rate?
Interest rate is calculated as the cost of debt for the borrower and the rate of return for the lender. This makes the total sum to be repaid to be more than the borrowed amount since lenders require compensation for the loss of use of the money during the loan period. Although many make use of the various online “interest calculators”.
 

Lithium and Battery Tech

Lithium and Battery Tech ETF (LIT) tracks a market-cap weighted index of global lithium miners and battery producers. The asset invests in the full cycle of lithium, from mining to refining and battery production.  

For this reason, it doesn't offer the exposure of other assets to metals and mining sectors, instead is an investment for niche lithium exposure. Holdings in the ETF include Tesla, Albemarle corp, Panasonic, Samsung SDI and Enersys.
 

JETS

The US Global JETS ETF tracks the performance, before fees and expenses, of the US Global Jets Index. The Index is composed of the common stock of US and international passenger airlines, aircraft manufacturers, airports, and terminal services companies listed on well-developed securities exchanges across the globe.

M-P

Q-T

Spreads

What are Spreads in trading?

The term Spreads in trading is defined as the gap between the highest price to be paid for any given asset, to the lowest price the current asset holder is willing to sell at. Different markets and assets generate different spreads. For example, the Forex market, where both buyers and sellers are very active with this “gap” or spread will be small. 
 
In trading, a spread is one of the key costs of online trading. Generally, the tighter the spread, the better value traders get from their trades. Also, spreads are implied costs, where it is presented to traders in subsequent trades, as the assets traders buy on leverage must increase above the level of the Spread, rather than the above the initial price, for traders to make profit.

What is the importance of a Spread?
The Spread is important, even a crucial piece of information to be aware of when analysing trading costs. An instrument’s spread is a variable number that directly affects the value of the trade. Several factors influence the spread in trading:
• Liquidity. How easily an asset can be bought or sold. 
• Volume. Quantity of any given asset that is traded daily. 
• Volatility. How much the market price changes in a given period.

U-Z

WisdomTree Emerging Markets High Dividend

The WisdomTree Emerging Markets High Dividend ETF (DEM) tracks the WisdomTree Emerging Markets Dividend Index. The index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index. This provides it with some downside protection from market volatility.

DEM is an equity fund, and has a mix of market sectors. It includes stocks from key emerging markets such as Russia and China, with assets including China Contruction Bank, China Mobile and Norilsk Nickel.

USA 2000

The USA 2000 Index, also known as the USA 2000, is a small cap index of the US stock market. It represents the bottom 2,000 companies in the Russell 3,000 stock market index, accounting for around 8% of the Russell 3,000's market capitalisation.

The index was created in 1984 and was the first index of small cap stocks; it has since become the benchmark of choice, along with its variants, for around 84% of small cap assets. The index first broke 1,000 points on May 20th 2013, and hit a record high of 1,737.63 in August 2018.

USA2000 index futures allow you to speculate on, or hedge against, changes in the price of thousands of small-cap US stocks. Contracts rollover on the second Friday of March, June, September, and December.

USD/BRL

The US Dollar to Brazilian real exchange rate is known by the acronym USD/BRL. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion.

The Brazilian real is the 19th most actively traded currency, accounting for 1% of all average daily turnover. US $45 billion worth of over-the-counter USD/BRL trades are made every day.

The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.

The real was adopted in July 1994 and was pegged against the US Dollar until 1999. The USD/BRL exchange rate is a popular one with carry traders; those who borrow dollars, convert them into real and then use the proceeds to buy debt issued in Brazil, where interest rates are significantly higher than in the United States. Times of market uncertainty can deter carry traders, as high USD/BRL volatility can weaken profits made from exploiting the interest rate differential.

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