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Contract size

Dividend adjustment

Dividend

Financial contract

Trading model

Bank for International Settlements

The Bank for International Settlements (BIS) is a global financial institution owned by central banks. Headquartered in Basel, Switzerland, the BIS also has representative offices in Hong Kong and Mexico City. The BIS's original members were Switzerland, Germany, Belgium, France, United Kingdom, Italy, the United States and Japan.

Broker

A financial broker is a third-party coordinating the sale of financial securities between parties selling securities and those purchasing them. Brokers are individuals or firms acting as intermediaries between investors and trading exchanges. Exchanges only accept orders from their members, either individuals or firms. Therefore, traders and investors require exchange members' services to make financial transactions. Brokers get compensated for their services in several ways; commissions, fees or paid directly by the exchange.

Buck

The word buck is a slang term for one US dollar. The word’s use traces back to 1748, forty-four years before the first US dollar became minted.

Capitulation

Capitulation is the act of surrendering or giving up. In financial market trading, the term indicates when investors and traders have decided to stop trying to recapture lost gains or maintain their positions, due to falling or rising prices.

Chartist

A chartist is a trader that analyses a market’s price history to determine future price trends. A chartist will use a range of analytical tools, as well as indicators, to conduct technical analysis on a market’s price chart. Chartists look for patterns in a market’s price behaviour. By identifying these patterns, chartists can then try to predict future price movement and make trades to capitalise on them. For example, they might try to identify a trend as it forms and use that information to guide their trading decisions.

Choppy

A choppy market is when an asset’s price shows no clear trend but instead experiences many smaller fluctuations. A choppy market can occur when buyers and sellers of a market are at an equilibrium. If there is high liquidity (large trading volumes) in a market and neither bears nor bulls can dominate, the result is often a choppy market.

Cleared funds

Cleared funds refers to money held in a trading account that has completed the settlement process and is available for trading or withdrawal. Once funds have cleared, they can generally be used for trading or withdrawn, subject to any applicable account terms. If funds have not yet cleared, they may be pending, which can limit how they can be used.

Closed position

A closed position is a trade that is no longer active and has been closed by a trader. To close a position, you need to trade in the opposite direction to when you opened it.

Commodity trading advisors

A commodity trading advisor (CTA) is a type of financial advisor that only supplies advice on commodities trading: typically the buying and selling of futures contracts, commodity options or swaps. US commodity trading advisors must be certified. Registration requires CTAs to advise on all forms of commodity investments.

Contract size

Contract size is the deliverable amount of a market that makes up a futures or options contract, spot forex or CFDs. These vary between markets and assets. For instance, in forex the standard size of one contract is typically 100,000 units of the currency. Whereas for stocks, the typical size of a futures contract is 100 shares.

CPI (Consumer Price Index)

CPI stands for Consumer Price Index. It is one of the most widely used measures of consumer inflation. CPI is calculated by measuring changes in the price of a weighted basket of goods and services purchased by households.

Deal

A deal refers to a trade executed at the current market price. Unlike an order, a deal is executed immediately rather than being placed for execution at a later time or under specified conditions.

Dividend

A dividend is a share of profits and retained earnings a company usually pays out to its shareholders, after it’s used a portion to reinvest in the business. A dividend is often regarded as a measurement of a company’s health and good management. Mostly profitable or cash rich firms pay out dividends and some investors rely on these annual returns for investment income.

Dividend adjustment

An adjustment can be defined as the impact of a company paying out dividends on the ex-date. The share price takes a slight dip, because money flows out of the company and to the shareholders. The dividend adjustment occurs at the close of business before the ex-dividend date.

End of day order (EOD)

An end of day order (EOD) is an instruction to your broker to keep a buy or sell order open only until the end of a trading day. An EOD, also known as a day order, can be to open a new position or close an existing one, but either way it will close on the same business day it’s placed, usually by way of a stop or limit. The point at which an EOD order will close depends on the trading hours for your given market. If we take EOD orders on stocks, for example, the closing time will depend on the given exchange’s hours. Day orders on London Stock Exchange-listed shares will close at 4:30pm (UTC) each day, while day orders on Nasdaq or NYSE-listed shares will close at 9pm (UTC).

EST

EST stands for Eastern Standard Time. It is five hours behind Coordinated Universal Time (UTC) and Greenwich Mean Time (GMT). The EST time zone gets used during standard time in North America, Central America, and The Caribbean. EST is often called Eastern Time Zone.

Expiration date and options values

Expiration dates vary depending on the derivative. The expiration date for US stock options is usually the third Friday of the contract month or the month when the contract expires. If the Friday falls on a holiday, the expiration date is the Thursday immediately before the third Friday.

Figure/the figure

Refers to the price quotation of '00' in a price such as 00-03 (1.2600-03) and would be read as 'figure-three.' If someone sells at 1.2600, traders would say 'the figure was given' or 'the figure was hit’.

Financial contract

A financial contract is a legally binding document between at least two parties which defines and governs the parties’ rights and responsibilities under the agreement. A financial contract is legally enforceable when it meets the law’s requirements and approval. It usually involves exchanging money, goods, services or promises to trade any of these products.

Flat Market

A flat market describes when the price for a certain security neither rises nor falls for a significant time period. Flat markets can occur when there is low trading volume or when increasing price movements on some securities are offset by declining price movements of other securities in the same index. In forex, a flat market occurs when a currency pair fails to move significantly up or down and does not contribute a significant loss or gain to the forex trading position.

FTSE 100

The FTSE 100 is an index of the 100 companies with the highest market capitalisation on the London Stock Exchange. Although, many of the listed companies are international, making it a somewhat weak indicator of the UK economy.

GMT

GMT stands for Greenwich Mean Time. Due to its maritime connection, back in 1884 the village of Greenwich, London England, was chosen as the reference point for all time on Earth.

Guaranteed order

An order type that protects a trader against the market gapping. It guarantees to fill your order at the price asked.

Hawk/hawkish

Hawkish is a term used in economics to describe a monetary policy that takes rigorous steps to control inflation, principally by means of raising interest rates. An inflation hawk will be less concerned with economic growth than they are with reducing the likelihood of a recession. Although hawkish individuals are often viewed negatively, as high interest rates reducing borrowing and investments, the monetary policies often encourage saving and can lead to imported goods becoming cheaper.

HK50/HKHI

Names for the Hong Kong Hang Seng index.

INX

Symbol for S&P 500 index.

Knockout options

A knockout option is a type of option that will automatically expire if its underlying market hits a specific price level. This sets a cap on the potential risk associated with the options trade. Knockout options can be bought for a smaller premium than an equivalent option without a knockout condition because they limit the profit potential for the option buyer. As such, knockout options limit both potential losses and profits.

London session

The London trading session is one of four main forex trading sessions, alongside Sydney, Tokyo and New York. According to a 2019 report by IFS, the London session accounts for 34% of the trading activity on the global forex market.

Macro trader

The longest-term trader who bases their trade decisions on fundamental analysis. A macro trader’s holding period can last anywhere from around six months to multiple years.

Mark to market

Mark to market (MTM) is an accounting method that values an asset, portfolio or account at its current market price instead of an assumed book value. An asset’s mark to market value reveals how much a company gets if it sells it at that point in time.

MOM

Abbreviation for month-over-month, which is the change in a data series relative to the prior month's level.

Net position

The amount of currency bought or sold that has not yet been offset by an opposite transaction.

Order book

An order book is a list of orders for a specific market, recorded by an exchange to measure market depth and interest from buyers and sellers. Order books are often used by traders to identify market sentiment. For short-term traders in particular, order books are valuable as they show whether bulls or bears are dominant in the market.

Rollover

A rollover is the simultaneous closing of an open position for today's value date and the opening of the same position for the next day's value date at a price reflecting the interest rate differential between the two currencies.

Running profit/loss

An indicator of the profit or loss on your open positions; that is, the unrealised amount you would gain or lose if you were to close all your open positions at that point in time.

SNB

Swiss National Bank, the central bank of Switzerland.

SONIA

The Sterling Overnight Index Average (SONIA) is a measure of the average interest rate paid on unsecured overnight sterling transactions between banks and other financial institutions. It’s used for overnight funding of trades that occur in off-hours and indicates the depth of business in the marketplace in these hours.

Tomorrow next (tom/next)

The simultaneous buying and selling of a currency to extend its settlement date from tomorrow to the next business day.

TONAR

The Tokyo Overnight Average Rate (TONAR) is the risk-free unsecured interbank overnight interest rate for the Japanese yen – it’s also known as TONA. TONAR became the preferred Japanese yen risk-free reference rate during the transition away from LIBOR.

Trading confirmation

A trade confirmation is a record of an executed order sent to you by your broker. Trade confirmations are sent to confirm that a transaction has taken place, and you will receive one after each trade you make.

Trading model

A trading model is a rule-based structure created to govern trading activities. Trading models help take some guesswork out of the markets while encouraging investors and traders to set risk parameters.

XAU/USD

Symbol for Gold Index.

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