The grant price is often used synonymously but can refer to the price set when options are granted to employees. Financial ratios such as the Current Ratio and Equity Ratio are critical in evaluating a company’s financial health. This metric is particularly valuable in assessing the right execution price for large orders to minimize market impact and optimize the cost of carry.
- A document required by EU regulations for certain investment products, such as UCITS funds.
- When it comes to options, understanding how concepts like volatility affect the market is crucial for success.
- We also offer real-time stock alerts for those that want to follow our options trades.
- Our chat rooms will provide you with an opportunity to learn how to trade stocks, options, and futures.
- The ability of a currency to be quickly converted into cash.
In a high-variance environment, you might choose options strategies that benefit from large price movements. Traders need to balance the potential rewards against the risks when choosing their positions. Analyzing skew can help you decide whether to buy or sell options based on perceived market mispricings. Skew helps you understand market expectations for future price movements. Traders can monitor to anticipate potential price swings and adjust their positions accordingly.
Trading Terms Glossary
Owners of common stock may also receive dividends, although they are not guaranteed. An asset is anything that has economic value and can be owned or controlled to produce future benefits. Gives you price control. A portion of a company’s profits paid out to its shareholders, typically on a regular schedule.
Bear market definition
A statistical measure that estimates the maximum potential loss in a portfolio over a specific time period and confidence level. The activity of buying and selling financial instruments to profit from price movements. In Market Profile, a letter representing a 30-minute period showing where price traded, building the profile’s structure.
A company that owns, operates, or finances income-generating real estate properties. The gain or loss on an investment over a specific period, expressed as a percentage of the original investment. Quick orders are frequently used in high-frequency and algorithmic trading. A trading order placed with minimal delay, often using predefined parameters on trading platforms. Quant funds are often managed by data scientists and financial engineers. Assets or instruments that function as currency but are not officially recognized as legal tender.
Moving Average Convergence Divergence (MACD)
A prolonged period of declining prices, typically defined as a 20% or greater decline from recent highs. Hedging a stock portfolio with index futures may have basis risk if the portfolio doesn’t track the index perfectly. The total amount of money in your trading account, including cash and the value of any positions.
A measure of an option’s sensitivity to changes in the volatility of the underlying asset. A company that generates just enough revenue to cover its operating costs and Trading Terminology debt payments but is unable to invest in growth. A company that initially attempts a hostile takeover but later proposes a friendly merger.
Private equityPrivate equity covers the many ways of raising finance ‘off exchange’. Prime brokerPrime brokers are typically investment banks which are able to sell clients, often hedge funds, a ‘one-stop shop’ service. Price to earnings growth (PEG) ratioThis key ratio compares the price to earnings ratio to a firm’s earnings growth rate to see whether a share is cheap or expensive. Price to book ratioPrice-to-book value ratio (p/bv) is is calculated by dividing the current share price by its book value per share. The extent to which this is true for each product is referred to as price elasticity.
Sharpe Ratio
The highest price a buyer is willing to pay for an asset. The lowest price a seller is willing to accept for an asset. Welcome to The Traders Network Trading Glossary — your go-to resource for understanding common terms, acronyms, and concepts in the world of trading. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. VolatilityVolatility refers to the fluctuations in the price of a security, commodity, currency, or index. UnderwritingA common way to guarantee a minimum level of proceeds when a public company issues new shares is for the issuing firm to involve an underwriter.
Forwards and Futures Markets
Margin of safetyThe margin of safety itself is the gap between the price you pay and what you think a stock might be worth. Like-for-like salesOne way of making meaningful year-on-year comparisons, especially with retail stocks, is by looking at ‘like-for-like’ sales growth. It is typical of emerging markets, in that it is highly exposed to the global economic cycle.
They are betting that the base currency will strengthen against the quote currency. The ability of a currency to be quickly converted into cash. This is a pattern that, when formed, signals the currency is likely to move against the previous trend. Higher GDP growth can strengthen a country’s currency as it indicates a healthy economy.
Capital gains tax definition
- A trading period during which the market is open, typically referring to a single trading day.
- Swing lows are considered key support levels, and they can be used by traders to identify potential entry points for long positions or to set stop-loss orders.
- By doing this they are reducing the number of shares available to trade and everyone holding shares of the company will see their shares increase in value.
- It refers to a market in a prolonged period of increasing stock prices at least 20% above a recent low.
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Colors are sometimes used to indicate price movement, with green or white for rising prices and red or black for declining prices. Each bar contains the trade’s opening, highest, lowest, and closing prices. For example, they may put up $50 for every $1 you put up for trading, meaning you’ll only need to use $10 from your funds to trade $500 in currency.
It recognises that not all commercial trade transactions from the seller to the buyer are conducted by a third-party carrier. The CIP Incoterms® rule now requires a higher level of cover, compliant with the Institute Cargo Clauses (A) or similar clauses. The Incoterms® 2020 rules provide for different levels of insurance coverage in the Cost Insurance and Freight (CIF) rule and Carriage and Insurance Paid To (CIP) rule. Free Carrier (FCA) has been revised for Incoterms® 2020 to cater to a situation where goods are sold FCA for carriage by sea and buyer or seller (or either party’s bank) requests a bill of lading with an on-board notation.
When you buy a CFD, you aren’t actually buying shares of a stock. Some of the best traders could have 10mil or more in cash available to trade. This creates an extreme buy/sell imbalance and can lead stocks to making % moves intraday. If a company has outstanding shares (float) of 10 mil shares, and 1 mil of those shares are short, the short interest is 10%.
Security
It is often compared to market value to determine if a stock is undervalued or overvalued. Book value represents the net asset value of a company, calculated by subtracting total liabilities from total assets. It helps traders spot potential reversals.