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.
Financial leverage refers to the use of borrowed money to increase the potential return on an investment. It is the process of using borrowed money to increase the purchasing power of an investor, by using debt to amplify the trading outcomes from an investment. This leverage can increase returns but also increases the risk of loss, as the interest and principal payments on the debt must be made regardless of the performance of the investment. In other words, it is the amount of debt used to finance a firm's assets and it is measured by debt-to-equity ratio.
What is a financial leverage ratio?
In trading, financial leverage ratio is a metric used to measure the level of leverage used by a trader or a trading firm. It is the ratio of the value of the trader's or firm's assets to the value of their equity capital. Leverage ratios in trading can be used to identify traders or firms that are using a high level of leverage, meaning they are using a large amount of borrowed money to invest in markets.
What affects financial leverage?
In trading, financial leverage is affected by a number of factors, including:
Margin requirements: The amount of money or collateral required by a broker to open a leveraged position.
Risk tolerance: A trader's willingness to take on risk and their ability to handle potential losses.
Investment horizon: A trader's investment time frame and goals can affect their use of leverage.
Market conditions: Volatility, liquidity, and other market conditions can influence a trader's decision to use leverage.
Capital: The amount of capital a trader has available to invest, will influence their use of leverage.
A Reversal is when the direction of a financial market or asset moves in the opposite direction from its current trend. Reversals can occur over a period of time and can be either bullish (price increasing) or bearish (price decreasing). Being aware of these trends can help traders maximize their profits.
What is an example of reversal?
If the stock market has been rising for several weeks and then begins to fall, that's considered a reversal. Reversals are an important concept for investors to understand as they can indicate a change in sentiment that could lead to further movement in the same direction.
Slippage is a common occurrence in trading when the price of an asset changes before an order can be filled. Slippage often happens when large orders are placed and market conditions change quickly, meaning that traders must accept the new price for their order or risk having it rejected. It’s important for traders to factor slippage into their trading strategies as unexpected slippage can affect trade outcomes.
What is a good slippage tolerance?
A good slippage tolerance is a matter of personal preference and depends on the trading strategy and risk tolerance. Generally, a low slippage tolerance is preferred as it allows for more precise execution of trades at the desired price. A high slippage tolerance allows for more flexibility in trade execution, but may result in less favorable prices. A slippage tolerance of 1-2% is considered to be reasonable for many traders.
How do traders avoid big losses when it comes to slippage?
Traders can avoid big losses due to slippage by using proper risk management strategies, such as setting stop-loss orders, using smaller position sizes, and using limit orders instead of market orders. Additionally, traders can look for a trustworthy and reliable broker with low slippage levels. Trading during less volatile periods can also help to minimize slippage.
What is maximum slippage?
Maximum slippage in trading refers to the largest difference between the expected price and the actual execution price of a trade. It is a measure of the worst-case scenario for slippage and can represent the largest potential loss a trader may face due to slippage. It is usually set by the trader in advance and if the slippage exceeds that level, the trade will not execute. The level of maximum slippage a trader is willing to accept is generally based on their individual risk tolerance.
Silver (XAG) has long-been synonymous with money, indeed, in some languages the two words are the same. The white metal has been used for investment and jewellery for thousands of years, and its distinctive characteristics ensure it continues to be in high-demand.
Silver is priced in USD per troy ounce. Its price peaked at $49.45 in January 1980, and reached an all-time low of $3.55 in February 1991.
The majority (85%) of silver production comes from mining, with the remainder sourced from scrap and stockpiles. While silver can be recycled, it is less economical to do so than with other precious metals. The top producers of silver are Mexico, Peru and China.
Silver is widely used in photographic, industrial, medical and telecommunications technology. It is also highly sought after for investment purposes. Its price is influenced by industrial demand, demand for jewellery, coins, medals and silverware, as well as the price of gold and the strength of the US Dollar.
In trading, rollover refers to the process of extending the settlement date of a trade by rolling it forward to the next available delivery date. This is typically done for futures contracts and currency trades. Rollover allows traders to maintain an open position beyond the initial settlement date without having to close and re-open the trade.
What are rollover and swap?
When rolling over a trade, a trader may also be required to pay or receive the difference in the interest rate between the two currencies involved in the trade. This is known as "swap" or "overnight financing". Rollover is typically done when traders expect market conditions to remain favorable for their position, allowing them to capture more potential profit.
A reverse stock split, also known as a "reverse split," is a corporate action in which a company reduces the number of outstanding shares by canceling a portion of its shares and increasing the par value of its remaining shares. This means that for every N shares that a shareholder owns, they will end up owning 1 share, where N is the reverse split ratio. For example, if a company performs a 1-for-2 reverse stock split, a shareholder who previously owned 100 shares would now own 50 shares.
Is it better to buy before or after a reverse stock split?
It is not necessarily better to buy before or after a reverse stock split, as it depends on the specific circumstances of the company and the stock. A reverse stock split does not change the underlying value of the company, it only changes the number of shares outstanding and the stock price. However, it is important to understand that in general, companies that perform reverse stock splits tend to be struggling and have a low stock price. Buying before a reverse stock split may allow you to buy shares at a lower price, but it also means you're probably buying into a struggling company.
Is a reverse stock split good?
As with all things in the market, the answer is that it depends. The main reason for a company to perform a reverse stock split is to increase the per-share price of the stock, which can make the stock appear more attractive to investors and also bring it above a certain listing requirement in stock exchanges. Additionally, a reverse split can also help to reduce the number of shareholders and increase the liquidity of the stock, making it easier to trade. However, a reverse stock split can also be a sign of a struggling company, and it can also dilute the value of shares for the existing shareholders.
The Federal Reserve bank, or the ‘Fed’ for short, is the central bank in charge of monetary and financial stability in the United States. It is part of a wider system – known as the Federal Reserve system – with 12 regional central banks located in major cities across the US.
What does the Federal Reserve do?
The Federal Reserve performs five main functions to promote the effective operation of the U.S. economy and, more generally, the public
interest. It:
• Conducts the nation’s monetary policy
• Promotes the stability of the financial system
• Promotes the safety and soundness of individual financial institutions
• Fosters payment and settlement system safety and efficiency
• Promotes consumer protection and community development
Who Controls Federal Reserve?
The Federal Reserve is governed by a Board of Governors in Washington, DC, and 12 regional Federal Reserve Banks located throughout the country. The Board of Governors is an independent government agency appointed by the President and confirmed by the Senate. The Chairman of the Board of Governors also serves as Chair of the Federal Open Market Committee, which sets monetary policy.
Arbitrage is trading that makes use of small differences in price between identical assets in two or more markets. An asset will most likely be sold in different markets, forms or via a different financial products.
Arbitrage is one alternative trading strategy that can prove exceptionally profitable when leveraged by sophisticated traders. It also carries risks which need to be considered prior and during an arbitrage.
Arbitrage as a trading strategy is when an asset is simultaneously bought and sold in different markets, thus taking advantage of a price difference, and generating a potential profit. Arbitrage is commonly leveraged by hedge funds and other sophisticated investors.
What is an example of arbitrage?
Without going into actual trading advice, here are several examples of Arbitrage in Trading:
• Exchange rates
• Offshore operations
• Cryptocurrency
And perhaps the most obvious and common form of arbitrage which is acting as a go between or affiliate, earning commission on price differences between the seller and the buyer.
Types of arbitrage traders use:
• Pure arbitrage - Traders simultaneously buying and selling assets in different markets to take advantage of a price differences.
• Merger arbitrage – When two publicly traded companies merge. If the target is a publicly traded company, the acquiring company must purchase its outstanding shares Convertible arbitrage.
• Convertible Arbitrage. It is related to convertible bonds, also called convertible notes or convertible debt.
What are Support Levels?
Support levels refer to the levels at which the price of an asset tends to stop falling and stabilize. These levels are determined by analyzing past price movements and identifying a floor at which buying pressure is strong enough to prevent the price from falling further. Traders and investors use support levels as a guide for placing buy orders, and as a signal for potential buying opportunities.
What does support level mean in Crypto?
Support levels mean the same thing regardless of the asset class in question.
What is the best indicator for support and resistance?
There are several indicators that can be used to identify support and resistance levels in a market. Some commonly used indicators include moving averages, Fibonacci retracements, and pivot points. However, no single indicator is considered to be the "best" as different indicators may work better in different market conditions and for different traders. Ultimately, the best indicator is the one that works best for you and fits your individual trading style and strategy.
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.
Energy Select Sector SPDR Fund (XLE) tracks US energy companies within the S&P 500. This asset uses the Energy Select Sector Index as its tracking benchmark. The ETF is offers concentrated exposure to oil and gas industry giants, as the S&P500 favours large-caps. Nevertheless, it is fairly representative of the whole energy market.
Just a few holdings make up a big part of the portfolio, and there are only 31 holdings in total. Top holdings for the benchmark index include Exxon Mobil Corp, Chevron Corp and ConocoPhillips.
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.
SLV, also known as iShares Silver Trust, tracks the price of silver bullion held in London. This ETF provides investors with direct exposure to silver as the ETF physically holds the precious metal in vaults in London. This fund is one of the most liquid of its peer group and is popular among retail and institutional investors.
This ETF is suitable for buy and hold strategies. Traders should consider this asset to gain exposure to the day to day price of silver bullion, to get access to physical silver or to diversify your portfolio and protect against inflation.
The Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve System (the Fed) which is responsible for making monetary policy decisions. The FOMC is made up of 12 members, including the seven governors of the Federal Reserve Board and five of the 12 Reserve Bank presidents.
What does the Federal Open Market Committee impact?
The FOMC meets eight times a year to set the target for the federal funds rate, which is the interest rate at which banks lend and borrow money from each other overnight. The FOMC's decisions can have a significant impact on interest rates, the economy, and the stock market. The FOMC makes key decisions about interest rates and the growth of the United States money supply. It also directs operations undertaken by the Federal Reserve System in foreign exchange markets. They consider a wide array of factors such as trends in prices and wages, employment and production, business investment and inventories, foreign exchange markets, and fiscal policy.
Multilateral Trading Facilities (MTFs, also known as Alternative Trading Systems or ATS in the United States) provide investment firms and eligible traders with alternatives to traditional stock exchanges. MTFs enable the trading of a wider variety of markets than other exchanges. MTFs users can trade on securities and instruments, including those that may not have an official market. They are electronic systems controlled by approved market operators as well as large investment banks.
What are OTFs?
OTFs (Organized Trading Facilities) are a type of trading venue that is authorized by European Union (EU) legislation to operate in the EU. They are similar to Multilateral Trading Facilities (MTFs) and provide a platform for the trading of financial instruments, such as bonds, derivatives, and equities. Unlike MTFs, OTFs have more flexibility in terms of the types of instruments and trading methods that they can offer.
Is a multilateral trading facility a regulated market?
Yes it is. MTFs are authorized by EU regulators, which provides a platform for the trading of financial instruments, such as bonds, derivatives, and equities.
ProShares Ultra Silver, also known as AGQ, is a single-day bet, not a buy-and-hold ETF. AGQ is a leveraged ETF that aims to deliver daily investment results that equate to twice the daily price performance of silver bullion, measured by US Dollar for delivery in London.
The Sprott Silver Investment Trust (PSLV) seeks to provide a secure, convenient, and exchange-traded investment alternative for investors interested in holding physical silver bullion without the inconvenience that is typical of a direct investment in physical silver bullion. The Trust intends to achieve this by investing primarily in long-term holdings of unencumbered, fully allocated, physical silver bullion and does not speculate with regard to short-term changes in silver prices.
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.
CFDs are a leveraged financial instrument that allow traders to gain exposure to an underlying asset, such as shares, commodities or indices. While this provides great potential for profits, it also carries significant risks. The main risk is the possibility of losses greater than your initial deposit if the market moves against you. CFDs also have costs associated with trading such as commissions and spreads. Make sure you understand the risks before trading with CFDs.
What are the disadvantages of CFDs?
CFDs are complex instruments and may not be suitable for everyone due to the risk of leverage. CFDs also come with costs, including spreads and commissions which can cut into potential profits. Furthermore, it's important to understand how margin calls work as well as potential losses from unanticipated price movements or illiquidity in the market.
How much can you lose in a CFD trade?
In a CFD trade, you can potentially lose more than your initial investment, as the loss is based on the difference between the entry and exit price of the trade. It is important to set stop loss orders to limit potential losses. Additionally, using proper risk management strategies can help to minimize losses.
Moving Average Convergence/Divergence, also known as MACD , is an analytical trading indicator. Its function is to show changes in the strength, direction, momentum, and duration of a trend in a share’s price. The MACD indicator is comprised of three time series charts based on historical price data. For example, closing price.
How can you tell if MACD is bullish?
If the MACD line (the blue line) is above the signal line (the red line), it is considered to be bullish and suggests that the security's price is likely to rise. This is because the MACD line is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA, and when the 12-day EMA is above the 26-day EMA, it indicates that short-term momentum is bullish and the stock is likely to rise.
Is MACD a good indicator?
MACD is a widely used technical indicator that can be a useful tool for identifying trends and potential buy or sell signals in the market. However, like any indicator, it has its limitations and should be used in conjunction with other technical analysis tools and fundamental analysis to make informed trading decisions.
Which is better MACD or RSI?
Both the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) are popular technical indicators used in trading. They are both useful tools for identifying trends and potential buy or sell signals, but they are based on different calculations and are used for different purposes.
The MACD is a momentum indicator that is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. It is used to identify bullish or bearish trends and potential changes in momentum.
The RSI, on the other hand, is a momentum oscillator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.
Both indicators can be useful, but they can also give different signals, so once again, it's important to use them in conjunction with other indicators and analysis techniques to make informed trading decisions.
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.
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.
Arbitrage is trading that makes use of small differences in price between identical assets in two or more markets. An asset will most likely be sold in different markets, forms or via a different financial products.
Arbitrage is one alternative trading strategy that can prove exceptionally profitable when leveraged by sophisticated traders. It also carries risks which need to be considered prior and during an arbitrage.
Arbitrage as a trading strategy is when an asset is simultaneously bought and sold in different markets, thus taking advantage of a price difference, and generating a potential profit. Arbitrage is commonly leveraged by hedge funds and other sophisticated investors.
What is an example of arbitrage?
Without going into actual trading advice, here are several examples of Arbitrage in Trading:
• Exchange rates
• Offshore operations
• Cryptocurrency
And perhaps the most obvious and common form of arbitrage which is acting as a go between or affiliate, earning commission on price differences between the seller and the buyer.
Types of arbitrage traders use:
• Pure arbitrage - Traders simultaneously buying and selling assets in different markets to take advantage of a price differences.
• Merger arbitrage – When two publicly traded companies merge. If the target is a publicly traded company, the acquiring company must purchase its outstanding shares Convertible arbitrage.
• Convertible Arbitrage. It is related to convertible bonds, also called convertible notes or convertible debt.
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.
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.
The Federal Reserve bank, or the ‘Fed’ for short, is the central bank in charge of monetary and financial stability in the United States. It is part of a wider system – known as the Federal Reserve system – with 12 regional central banks located in major cities across the US.
What does the Federal Reserve do?
The Federal Reserve performs five main functions to promote the effective operation of the U.S. economy and, more generally, the public
interest. It:
• Conducts the nation’s monetary policy
• Promotes the stability of the financial system
• Promotes the safety and soundness of individual financial institutions
• Fosters payment and settlement system safety and efficiency
• Promotes consumer protection and community development
Who Controls Federal Reserve?
The Federal Reserve is governed by a Board of Governors in Washington, DC, and 12 regional Federal Reserve Banks located throughout the country. The Board of Governors is an independent government agency appointed by the President and confirmed by the Senate. The Chairman of the Board of Governors also serves as Chair of the Federal Open Market Committee, which sets monetary policy.
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.
Energy Select Sector SPDR Fund (XLE) tracks US energy companies within the S&P 500. This asset uses the Energy Select Sector Index as its tracking benchmark. The ETF is offers concentrated exposure to oil and gas industry giants, as the S&P500 favours large-caps. Nevertheless, it is fairly representative of the whole energy market.
Just a few holdings make up a big part of the portfolio, and there are only 31 holdings in total. Top holdings for the benchmark index include Exxon Mobil Corp, Chevron Corp and ConocoPhillips.
The Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve System (the Fed) which is responsible for making monetary policy decisions. The FOMC is made up of 12 members, including the seven governors of the Federal Reserve Board and five of the 12 Reserve Bank presidents.
What does the Federal Open Market Committee impact?
The FOMC meets eight times a year to set the target for the federal funds rate, which is the interest rate at which banks lend and borrow money from each other overnight. The FOMC's decisions can have a significant impact on interest rates, the economy, and the stock market. The FOMC makes key decisions about interest rates and the growth of the United States money supply. It also directs operations undertaken by the Federal Reserve System in foreign exchange markets. They consider a wide array of factors such as trends in prices and wages, employment and production, business investment and inventories, foreign exchange markets, and fiscal policy.
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.
Financial leverage refers to the use of borrowed money to increase the potential return on an investment. It is the process of using borrowed money to increase the purchasing power of an investor, by using debt to amplify the trading outcomes from an investment. This leverage can increase returns but also increases the risk of loss, as the interest and principal payments on the debt must be made regardless of the performance of the investment. In other words, it is the amount of debt used to finance a firm's assets and it is measured by debt-to-equity ratio.
What is a financial leverage ratio?
In trading, financial leverage ratio is a metric used to measure the level of leverage used by a trader or a trading firm. It is the ratio of the value of the trader's or firm's assets to the value of their equity capital. Leverage ratios in trading can be used to identify traders or firms that are using a high level of leverage, meaning they are using a large amount of borrowed money to invest in markets.
What affects financial leverage?
In trading, financial leverage is affected by a number of factors, including:
Margin requirements: The amount of money or collateral required by a broker to open a leveraged position.
Risk tolerance: A trader's willingness to take on risk and their ability to handle potential losses.
Investment horizon: A trader's investment time frame and goals can affect their use of leverage.
Market conditions: Volatility, liquidity, and other market conditions can influence a trader's decision to use leverage.
Capital: The amount of capital a trader has available to invest, will influence their use of leverage.
Multilateral Trading Facilities (MTFs, also known as Alternative Trading Systems or ATS in the United States) provide investment firms and eligible traders with alternatives to traditional stock exchanges. MTFs enable the trading of a wider variety of markets than other exchanges. MTFs users can trade on securities and instruments, including those that may not have an official market. They are electronic systems controlled by approved market operators as well as large investment banks.
What are OTFs?
OTFs (Organized Trading Facilities) are a type of trading venue that is authorized by European Union (EU) legislation to operate in the EU. They are similar to Multilateral Trading Facilities (MTFs) and provide a platform for the trading of financial instruments, such as bonds, derivatives, and equities. Unlike MTFs, OTFs have more flexibility in terms of the types of instruments and trading methods that they can offer.
Is a multilateral trading facility a regulated market?
Yes it is. MTFs are authorized by EU regulators, which provides a platform for the trading of financial instruments, such as bonds, derivatives, and equities.
Moving Average Convergence/Divergence, also known as MACD , is an analytical trading indicator. Its function is to show changes in the strength, direction, momentum, and duration of a trend in a share’s price. The MACD indicator is comprised of three time series charts based on historical price data. For example, closing price.
How can you tell if MACD is bullish?
If the MACD line (the blue line) is above the signal line (the red line), it is considered to be bullish and suggests that the security's price is likely to rise. This is because the MACD line is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA, and when the 12-day EMA is above the 26-day EMA, it indicates that short-term momentum is bullish and the stock is likely to rise.
Is MACD a good indicator?
MACD is a widely used technical indicator that can be a useful tool for identifying trends and potential buy or sell signals in the market. However, like any indicator, it has its limitations and should be used in conjunction with other technical analysis tools and fundamental analysis to make informed trading decisions.
Which is better MACD or RSI?
Both the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) are popular technical indicators used in trading. They are both useful tools for identifying trends and potential buy or sell signals, but they are based on different calculations and are used for different purposes.
The MACD is a momentum indicator that is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. It is used to identify bullish or bearish trends and potential changes in momentum.
The RSI, on the other hand, is a momentum oscillator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.
Both indicators can be useful, but they can also give different signals, so once again, it's important to use them in conjunction with other indicators and analysis techniques to make informed trading decisions.
A Reversal is when the direction of a financial market or asset moves in the opposite direction from its current trend. Reversals can occur over a period of time and can be either bullish (price increasing) or bearish (price decreasing). Being aware of these trends can help traders maximize their profits.
What is an example of reversal?
If the stock market has been rising for several weeks and then begins to fall, that's considered a reversal. Reversals are an important concept for investors to understand as they can indicate a change in sentiment that could lead to further movement in the same direction.
Slippage is a common occurrence in trading when the price of an asset changes before an order can be filled. Slippage often happens when large orders are placed and market conditions change quickly, meaning that traders must accept the new price for their order or risk having it rejected. It’s important for traders to factor slippage into their trading strategies as unexpected slippage can affect trade outcomes.
What is a good slippage tolerance?
A good slippage tolerance is a matter of personal preference and depends on the trading strategy and risk tolerance. Generally, a low slippage tolerance is preferred as it allows for more precise execution of trades at the desired price. A high slippage tolerance allows for more flexibility in trade execution, but may result in less favorable prices. A slippage tolerance of 1-2% is considered to be reasonable for many traders.
How do traders avoid big losses when it comes to slippage?
Traders can avoid big losses due to slippage by using proper risk management strategies, such as setting stop-loss orders, using smaller position sizes, and using limit orders instead of market orders. Additionally, traders can look for a trustworthy and reliable broker with low slippage levels. Trading during less volatile periods can also help to minimize slippage.
What is maximum slippage?
Maximum slippage in trading refers to the largest difference between the expected price and the actual execution price of a trade. It is a measure of the worst-case scenario for slippage and can represent the largest potential loss a trader may face due to slippage. It is usually set by the trader in advance and if the slippage exceeds that level, the trade will not execute. The level of maximum slippage a trader is willing to accept is generally based on their individual risk tolerance.
Silver (XAG) has long-been synonymous with money, indeed, in some languages the two words are the same. The white metal has been used for investment and jewellery for thousands of years, and its distinctive characteristics ensure it continues to be in high-demand.
Silver is priced in USD per troy ounce. Its price peaked at $49.45 in January 1980, and reached an all-time low of $3.55 in February 1991.
The majority (85%) of silver production comes from mining, with the remainder sourced from scrap and stockpiles. While silver can be recycled, it is less economical to do so than with other precious metals. The top producers of silver are Mexico, Peru and China.
Silver is widely used in photographic, industrial, medical and telecommunications technology. It is also highly sought after for investment purposes. Its price is influenced by industrial demand, demand for jewellery, coins, medals and silverware, as well as the price of gold and the strength of the US Dollar.
In trading, rollover refers to the process of extending the settlement date of a trade by rolling it forward to the next available delivery date. This is typically done for futures contracts and currency trades. Rollover allows traders to maintain an open position beyond the initial settlement date without having to close and re-open the trade.
What are rollover and swap?
When rolling over a trade, a trader may also be required to pay or receive the difference in the interest rate between the two currencies involved in the trade. This is known as "swap" or "overnight financing". Rollover is typically done when traders expect market conditions to remain favorable for their position, allowing them to capture more potential profit.
A reverse stock split, also known as a "reverse split," is a corporate action in which a company reduces the number of outstanding shares by canceling a portion of its shares and increasing the par value of its remaining shares. This means that for every N shares that a shareholder owns, they will end up owning 1 share, where N is the reverse split ratio. For example, if a company performs a 1-for-2 reverse stock split, a shareholder who previously owned 100 shares would now own 50 shares.
Is it better to buy before or after a reverse stock split?
It is not necessarily better to buy before or after a reverse stock split, as it depends on the specific circumstances of the company and the stock. A reverse stock split does not change the underlying value of the company, it only changes the number of shares outstanding and the stock price. However, it is important to understand that in general, companies that perform reverse stock splits tend to be struggling and have a low stock price. Buying before a reverse stock split may allow you to buy shares at a lower price, but it also means you're probably buying into a struggling company.
Is a reverse stock split good?
As with all things in the market, the answer is that it depends. The main reason for a company to perform a reverse stock split is to increase the per-share price of the stock, which can make the stock appear more attractive to investors and also bring it above a certain listing requirement in stock exchanges. Additionally, a reverse split can also help to reduce the number of shareholders and increase the liquidity of the stock, making it easier to trade. However, a reverse stock split can also be a sign of a struggling company, and it can also dilute the value of shares for the existing shareholders.
What are Support Levels?
Support levels refer to the levels at which the price of an asset tends to stop falling and stabilize. These levels are determined by analyzing past price movements and identifying a floor at which buying pressure is strong enough to prevent the price from falling further. Traders and investors use support levels as a guide for placing buy orders, and as a signal for potential buying opportunities.
What does support level mean in Crypto?
Support levels mean the same thing regardless of the asset class in question.
What is the best indicator for support and resistance?
There are several indicators that can be used to identify support and resistance levels in a market. Some commonly used indicators include moving averages, Fibonacci retracements, and pivot points. However, no single indicator is considered to be the "best" as different indicators may work better in different market conditions and for different traders. Ultimately, the best indicator is the one that works best for you and fits your individual trading style and strategy.
SLV, also known as iShares Silver Trust, tracks the price of silver bullion held in London. This ETF provides investors with direct exposure to silver as the ETF physically holds the precious metal in vaults in London. This fund is one of the most liquid of its peer group and is popular among retail and institutional investors.
This ETF is suitable for buy and hold strategies. Traders should consider this asset to gain exposure to the day to day price of silver bullion, to get access to physical silver or to diversify your portfolio and protect against inflation.
The Sprott Silver Investment Trust (PSLV) seeks to provide a secure, convenient, and exchange-traded investment alternative for investors interested in holding physical silver bullion without the inconvenience that is typical of a direct investment in physical silver bullion. The Trust intends to achieve this by investing primarily in long-term holdings of unencumbered, fully allocated, physical silver bullion and does not speculate with regard to short-term changes in silver prices.
CFDs are a leveraged financial instrument that allow traders to gain exposure to an underlying asset, such as shares, commodities or indices. While this provides great potential for profits, it also carries significant risks. The main risk is the possibility of losses greater than your initial deposit if the market moves against you. CFDs also have costs associated with trading such as commissions and spreads. Make sure you understand the risks before trading with CFDs.
What are the disadvantages of CFDs?
CFDs are complex instruments and may not be suitable for everyone due to the risk of leverage. CFDs also come with costs, including spreads and commissions which can cut into potential profits. Furthermore, it's important to understand how margin calls work as well as potential losses from unanticipated price movements or illiquidity in the market.
How much can you lose in a CFD trade?
In a CFD trade, you can potentially lose more than your initial investment, as the loss is based on the difference between the entry and exit price of the trade. It is important to set stop loss orders to limit potential losses. Additionally, using proper risk management strategies can help to minimize losses.
ProShares Ultra Silver, also known as AGQ, is a single-day bet, not a buy-and-hold ETF. AGQ is a leveraged ETF that aims to deliver daily investment results that equate to twice the daily price performance of silver bullion, measured by US Dollar for delivery in London.
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.
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