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.
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”.
Companies in the Internet ETF (ARKW) are those that focus on or benefit from cloud computing technologies enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media.
Sectors covered include cloud computing & cyber security, eCommerce, Big Data & AI, mobile technology & Internet of Things, social platforms, and blockchain & P2P.
The United States Oil Fund (USO) is an ETF that aims to track the daily price movements of WTI Crude Oil. USO's Benchmark is the near-month crude oil futures contract traded on the NYMEX. The Crude Oil contract is WTI light, sweet crude delivered to Cushing Oklahoma.
This ETF is a good way to get commodity exposure without using a futures account and offers more options for traders such as intraday pricing and limit/stop orders.
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.
Fintech ETF (ARKF) is an ETF focussing on innovative and disruptive financial technologies. Companies represented within ARKF transaction innovations, blockchain, risk transformation, frictionless funding platforms, customer facing platforms, and new Intermediaries.
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.
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.
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.
West Texas Intermediate or WTI is a benchmark type of oil that is central to commodities trading. These benchmarks indicate quality and also the source of the oil. The three dominant benchmarks for oil are WTI, Brent Crude and Dubai/Oman. These are similar indicators as Scottish and Norwegian might be for smoked salmon, for example.
What is the difference between West Texas Intermediate and Brent crude?
The different benchmarks for oil come from different regions and have different chemical compositions. They have what are called 'quality spreads' and 'location spreads' which affect price differences.
What is West Texas Intermediate Used For?
West Texas Intermediate is a high-quality oil that is easily refined. The price of WTI is often reported on in news reports on the oil industry and oil commodities, together with Brent Crude Oil which originates from the North Sea. Oil futures contracts on the New York Mercantile Exchange (NYMEX) use West Texas Intermediate as an underlying commodity.
A Guaranteed stop order provides traders with a form of protection for their positions. They can have a guaranteed exit at the exact price they specify. This can be used regardless of market volatility. This is different from “standard” stop-loss orders, which may be filled at worse price levels than were requested due to “slippage”. A guaranteed stop loss order (GSLOs) will incur a fee / premium which will only be charged if it was triggered.
How does guaranteed stop work?
A guaranteed stop loss works in the same way as a standard one does, via instructions provided to the broker to close a position at a specific level, thereby reducing the risk should the market move against the trader.
Should I use guaranteed stop-loss?
Guaranteed stop-loss automatically exits you from the market at a certain predetermined price level in order to limit potential losses if the market goes against you. As such, especially for less experienced traders, it is a recommended strategy to mitigate losses.
The Proshares Bitcoin Strategy ETF (Bitcoin ETF) offers managed exposure to bitcoin futures contracts. The Fund does not invest directly in bitcoin and may also invest in other instruments. It’s one of the first of its kind and marks a new way to get exposure to cryptocurrency price movements.
Utilities Staples Select Sector SPDR Fund (XLU) tracks US utilities companies within the S&P 500. This asset uses the Utilities Select Sector Index as its tracking benchmark. The fund is concentrated to just a few large firms, as the index comprises just 30 holdings from the utilities sector. This can be a pro or a con depending on your trading strategy.
Top holdings include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern Co.
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.
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.
Futures are a specific type of derivative contract agreements to buy or sell a given asset (commodity or security) at a predetermined future date for a designated price. Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price.
How does the futures market work?
A futures contract includes a seller and a buyer – which must buy and receive the underlying future asset. Similarly, the seller of the futures contract must provide and deliver the underlying asset to the buyer. The purpose of futures in trading is to allow traders to speculate on the price of a financial instrument or commodity. They are also used to hedge the price movement of an underlying asset. This helps traders to prevent potential losses from unfavourable price changes.
What are examples of Futures?
There are numerous types of futures and futures contracts in the trading and financial markets. The following are a few examples of futures that can be traded on: Soft Commodities such as food or agricultural products, fuels, precious metals, treasury bonds, currencies and more.
Expiry date, also known as expiration date or maturity date, is the date on which a financial contract, such as a futures contract or option, will expire and can no longer be traded. At the expiry date, the terms of the contract, such as the price and quantity, will be settled or exercised. For options, if the holder of the option chooses to exercise it, they will buy or sell the underlying asset at the strike price. For futures contracts, the holder will have to buy or sell the underlying asset at the agreed-upon price.
How does a expiry date work?
One key takeaway about Expiration Dates is that the further away they are the better. In this aspect, the potential value of an option can benefit from a longer time an option prior to expiring. I.e., the said option is more likely it is to hit its strike price and actually become valuable the longer it is on the market.
Are Expiry dates good for day trading?
expiry dates can be an important factor to consider for day trading options and futures contracts as they determine when the contract must be settled or exercised. Day traders should take into account the expiration date when planning their trades and adjust their strategy accordingly. It's important to remember that expiry dates are just one of many factors that can influence the price of financial instruments, and traders should always consider multiple factors when making trades.
Currency futures are legally binding agreements that are traded on exchanges, where traders can buy or sell a specific currency at a fixed exchange rate on a future date. These contracts allow traders to hedge against foreign exchange risks by fixing the price at which a currency can be obtained (exchanged). On the expiration date of the contract, the "counterparties" to the agreement must deliver the specified currency amount at the agreed-upon price.
What is the benefit of buying a currency futures contract?
The main benefit of buying a currency futures contract is that it allows traders to fix the price of a currency and thus hedge against foreign exchange risks.
What is a futures contract in simple terms?
A futures contract is a legally binding agreement to buy or sell a specific asset at a fixed price on a future date.
What happens when currency futures expire?
At expiration, the counterparties to the contract must deliver the specified currency amount at the agreed-upon price. Traders are responsible for having enough capital in their account to cover margins and losses which result after taking the position. If they wish to exit their obligation prior to the contract's delivery date, they need to close out their positions.
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.
Currency futures are legally binding agreements that are traded on exchanges, where traders can buy or sell a specific currency at a fixed exchange rate on a future date. These contracts allow traders to hedge against foreign exchange risks by fixing the price at which a currency can be obtained (exchanged). On the expiration date of the contract, the "counterparties" to the agreement must deliver the specified currency amount at the agreed-upon price.
What is the benefit of buying a currency futures contract?
The main benefit of buying a currency futures contract is that it allows traders to fix the price of a currency and thus hedge against foreign exchange risks.
What is a futures contract in simple terms?
A futures contract is a legally binding agreement to buy or sell a specific asset at a fixed price on a future date.
What happens when currency futures expire?
At expiration, the counterparties to the contract must deliver the specified currency amount at the agreed-upon price. Traders are responsible for having enough capital in their account to cover margins and losses which result after taking the position. If they wish to exit their obligation prior to the contract's delivery date, they need to close out their positions.
Fintech ETF (ARKF) is an ETF focussing on innovative and disruptive financial technologies. Companies represented within ARKF transaction innovations, blockchain, risk transformation, frictionless funding platforms, customer facing platforms, and new Intermediaries.
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.
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.
A Guaranteed stop order provides traders with a form of protection for their positions. They can have a guaranteed exit at the exact price they specify. This can be used regardless of market volatility. This is different from “standard” stop-loss orders, which may be filled at worse price levels than were requested due to “slippage”. A guaranteed stop loss order (GSLOs) will incur a fee / premium which will only be charged if it was triggered.
How does guaranteed stop work?
A guaranteed stop loss works in the same way as a standard one does, via instructions provided to the broker to close a position at a specific level, thereby reducing the risk should the market move against the trader.
Should I use guaranteed stop-loss?
Guaranteed stop-loss automatically exits you from the market at a certain predetermined price level in order to limit potential losses if the market goes against you. As such, especially for less experienced traders, it is a recommended strategy to mitigate losses.
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.
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.
Futures are a specific type of derivative contract agreements to buy or sell a given asset (commodity or security) at a predetermined future date for a designated price. Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price.
How does the futures market work?
A futures contract includes a seller and a buyer – which must buy and receive the underlying future asset. Similarly, the seller of the futures contract must provide and deliver the underlying asset to the buyer. The purpose of futures in trading is to allow traders to speculate on the price of a financial instrument or commodity. They are also used to hedge the price movement of an underlying asset. This helps traders to prevent potential losses from unfavourable price changes.
What are examples of Futures?
There are numerous types of futures and futures contracts in the trading and financial markets. The following are a few examples of futures that can be traded on: Soft Commodities such as food or agricultural products, fuels, precious metals, treasury bonds, currencies and more.
Expiry date, also known as expiration date or maturity date, is the date on which a financial contract, such as a futures contract or option, will expire and can no longer be traded. At the expiry date, the terms of the contract, such as the price and quantity, will be settled or exercised. For options, if the holder of the option chooses to exercise it, they will buy or sell the underlying asset at the strike price. For futures contracts, the holder will have to buy or sell the underlying asset at the agreed-upon price.
How does a expiry date work?
One key takeaway about Expiration Dates is that the further away they are the better. In this aspect, the potential value of an option can benefit from a longer time an option prior to expiring. I.e., the said option is more likely it is to hit its strike price and actually become valuable the longer it is on the market.
Are Expiry dates good for day trading?
expiry dates can be an important factor to consider for day trading options and futures contracts as they determine when the contract must be settled or exercised. Day traders should take into account the expiration date when planning their trades and adjust their strategy accordingly. It's important to remember that expiry dates are just one of many factors that can influence the price of financial instruments, and traders should always consider multiple factors when making trades.
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”.
Companies in the Internet ETF (ARKW) are those that focus on or benefit from cloud computing technologies enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media.
Sectors covered include cloud computing & cyber security, eCommerce, Big Data & AI, mobile technology & Internet of Things, social platforms, and blockchain & P2P.
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.
The Proshares Bitcoin Strategy ETF (Bitcoin ETF) offers managed exposure to bitcoin futures contracts. The Fund does not invest directly in bitcoin and may also invest in other instruments. It’s one of the first of its kind and marks a new way to get exposure to cryptocurrency price movements.
The United States Oil Fund (USO) is an ETF that aims to track the daily price movements of WTI Crude Oil. USO's Benchmark is the near-month crude oil futures contract traded on the NYMEX. The Crude Oil contract is WTI light, sweet crude delivered to Cushing Oklahoma.
This ETF is a good way to get commodity exposure without using a futures account and offers more options for traders such as intraday pricing and limit/stop orders.
West Texas Intermediate or WTI is a benchmark type of oil that is central to commodities trading. These benchmarks indicate quality and also the source of the oil. The three dominant benchmarks for oil are WTI, Brent Crude and Dubai/Oman. These are similar indicators as Scottish and Norwegian might be for smoked salmon, for example.
What is the difference between West Texas Intermediate and Brent crude?
The different benchmarks for oil come from different regions and have different chemical compositions. They have what are called 'quality spreads' and 'location spreads' which affect price differences.
What is West Texas Intermediate Used For?
West Texas Intermediate is a high-quality oil that is easily refined. The price of WTI is often reported on in news reports on the oil industry and oil commodities, together with Brent Crude Oil which originates from the North Sea. Oil futures contracts on the New York Mercantile Exchange (NYMEX) use West Texas Intermediate as an underlying commodity.
Utilities Staples Select Sector SPDR Fund (XLU) tracks US utilities companies within the S&P 500. This asset uses the Utilities Select Sector Index as its tracking benchmark. The fund is concentrated to just a few large firms, as the index comprises just 30 holdings from the utilities sector. This can be a pro or a con depending on your trading strategy.
Top holdings include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern Co.
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