Trading Encyclopedia & Terms | A – Z

A

trade date – the day on which a trade is concluded.

Devaluation – the devaluation of one currency in relation to another currency. Important: this is the deliberate downward adjustment of a currency rate, usually by an official announcement from the government or central bank.

Offer – in the financial world, an offer is understood to be an indicative market price, usually for information purposes only.

Share – a share is a security that securitises a share in the capital of a public company. It guarantees the owner certain membership and property rights.

Share index – a share index is a number that shows the price developments of various shares as a summary. The companies included in an index can, for example, belong to the same industry, so that the respective index can also serve as a barometer of sentiment.

Share price – the share price is the price of a stock corporation determined on a stock exchange. It reflects the value of an individual share of the respective company.

Bonds – Bonds are promissory notes with a fixed nominal value and a fixed interest rate. They are issued, for example, as government bonds by the government.

Arbitrage – Arbitrage is the buying or selling of an instrument and simultaneously taking up an equal counter position in the corresponding market in order to profit from small price differences between markets or the pricing of different brokers.

Premium – In the Forex market, premium describes the amount by which the future price exceeds the value of the spot price.

Appreciation – appreciation is the increase in the value of one currency compared to another currency.

Ask – the so called ask price is the ask price of a currency.

Off-exchange (OTC) – off-exchange, also called OTC (Off the Counter) describes any transaction that is not directly executed on an exchange.

B

Back Office – Tasks and processes that enable the settlement of financial transactions in the background.

Basic analysis – also known as fundamental analysis, describes the analysis of economic and political information with the aim of drawing conclusions about the future price movements of a market.

Basis point – one hundredth of one percentage point (= 0.01 percent).

Base currency – the currency used as the basis for the exchange rate. For example, EUR for EUR/USD. The base currency is the first currency in the quotation.

Bid – the bid rate of a currency.

Bid-ask price – the “bid” (ask price) is the price at which a market participant is willing to buy a security, as opposed to the “ask” (bid price), which is the price at which a market participant is willing to sell a security.

Ask price – exchange rate at which the base currency is offered for sale by the trader.

Bundesbank – The Bundesbank is the German central bank

Stockbrokers – Stockbrokers are traders who broker securities transactions on the exchange.

Broker – Broker is the designation of the securities dealer on the exchange, who usually executes the securities transactions of the dealers on behalf of the client for a fee.

Exchange supervisory authority – The exchange supervisory authority is an authority that monitors whether the legal provisions and regulations for the settlement of trading transactions on the exchanges are actually observed.

Initial public offering – the initial public offering refers to the first issue of shares or share certificates in general of a company.

Stock market crash – If a large part of the prices of the shares traded on the stock exchange lose a lot of value within a short period of time, this is colloquially referred to as a stock market crash.

Bonds – Bonds are bonds issued, for example, by companies or government bodies.

Bonus certificate – a bonus certificate is a certificate in which the holder receives a bonus at maturity in the form of interest previously guaranteed by the issuer. A precondition is, however, that the underlying of the certificate does not exceed a certain knock-out threshold during the term.

C

CFD – CFD stands for Contract for Difference. A CFD represents the speculation between the buy and sell price of a security or commodity. The CFD represents the underlying asset 1:1.
These transactions are settled via a CFD broker.

Call – a call is a call option. With the purchase, one acquires the right to buy the underlying asset, for example a share.

Clearing – Clearing describes the process of cancelling a transaction.

Chart analysis – in chart technical analysis, the trader looks at the price development of a security represented by a chart and tries to draw conclusions for the future price development from the course of the security in the past.

Chart technique – Chart technique is the generic term for the numerous methods of chart analysis. This is an attempt to determine the future course of a price from past developments.

Commodities – commodities are material goods such as wheat, sugar or oil.

D

Derivative – a security whose value changes with the price movement of the underlying security. Certificates and warrants are probably the best-known derivatives.

Foreign exchange trading – Forex or FX refers to the simultaneous purchase of one currency and sale of another currency.

Forex price – the current market price of a currency pair.

Deflation – Deflation is the term used to describe an economic situation in which the prices of consumer goods fall, thereby strengthening purchasing power.

Drawdown – the drawdown refers to the decrease in capital due to losses in a trading account.

Day trading – day trading is a trading strategy in which the trader tries to profit from price fluctuations of a single day and to end his transactions within this period.

Dealer – English for traders

Custody account – A custody account is an account in which all types of securities can be traded and managed.

Discount Broker – a discount broker is a securities trader who usually charges traders a lower brokerage fee for their services than branch banks.

DAX – DAX stands for “Deutscher Aktien Index” and is the most important German share index. It reflects the development of the 30 largest German stocks. In its calculation both the current market values and the dividend payments are included.

Depression – in economics, a depression describes a long period of very poor economic conditions.

Double bottom – a double bottom is a chart formation where the price touches the support line twice but does not break through it. Double bottoms often announce a trend reversal.

Double Top – a double top is a chart formation where the price touches the resistance line twice but does not break through it. Often double-tops announce a trend reversal.

Dow Jones – the Dow Jones is an American stock index that shows the average development of securities in the USA. It is composed of the shares of the 30 largest American companies.

E

Euro – the Euro is the currency of the European Monetary Union (EMU).

European Central Bank (ECB) – the ECB is the central bank for the European Monetary Union.

Exchange Rate – the exchange rate of a currency pair.

Exotics – Exotics are currency pairs with only small trading volumes.

Deposit protection – the protection of deposits in case of a bankruptcy of the broker.

Emerging Markets – Emerging markets are the emerging markets in about 40 emerging countries of the world such as Argentina, Brazil or Vietnam. Ermerging markets are in the process of developing from developing countries to industrial nations and therefore usually have higher growth rates than the large industrial nations.

Issue – an issue is understood to be the issue of securities. If a security is issued for the first time on the stock exchange, it is referred to as a new issue.

Issuer – an issuer is the person who issues a security.

Equity – Equity is the English term for equity capital

ETF – an ETF or Exchange Traded Fund is an investment fund that can be traded directly over the stock exchange like shares. An issue surcharge is therefore usually not incurred.

Euribor – the Euribor refers to the interest rate for short and medium-term time deposits on the interbank market.

Euro-Stoxx – the Euro-Stoxx or Dow-Jones-Euro-Stoxx-50 is an index of the 50 largest European listed companies.

F

Maturity – maturity is the process of revaluing all open positions at current market rates.

Federal Reserve (FED) – the FED is the US Federal Reserve and the supreme institution over the financial market.

Flat – Flat is a technical term that expresses that there are no more open positions in the portfolio.

Funds – the term funds usually refers to investment funds. A fund is a pool of investor capital that is used by fund managers for professional investment.

Foreign Exchange Market – Foreign Exchange Market is the English term for the foreign exchange market. Foreign exchange is mainly traded on the interbank market.

Forex Broker – Forex broker is a company that enables individuals to trade currencies

Forex/FX – Forex or FX is the abbreviation for the Foreign Exchange market.

Forward – Forward is the term used to describe a forward transaction in foreign exchange trading.

Tax-free amount – this is a monetary amount that is exempt from taxation. Therefore, only the amount exceeding the tax-free amount has to be taxed.

Futures – futures are forward transactions on the stock exchange. An underlying asset, such as a stock or index, is bought or sold at a certain price on a certain maturity date. In contrast to options, where the right but not the obligation to execute exists, with futures the contracting parties are obliged to execute the transaction.

G

GAP – A GAP describes a gap in the chart of a security. Gaps occur when price jumps occur that are greater than the trading range of the previous day.

Monetary depreciation – Monetary depreciation is the loss of purchasing power in relation to certain goods within a certain period of time.

Bid-ask spread – the bid-ask spread describes the difference between the bid and ask price.

Bid price – the bid price is the demand price of a security on the stock exchange.

Profit margin – the profit margin describes the share of profit compared to the turnover of a company within a certain period of time.

Closing out – technical term meaning that a position has been closed out completely.

Profit – profit is the difference between income and expenses over a certain period of time.

Profit-taking – profit-taking is the realization of profits from price gains.

Profit distribution – profit distribution, also called dividend, is a distribution of profit to shareholders.

Profit warning – refers to the notification by a company of a lower profit or higher loss than previously forecast. According to §5 of the German Securities Trading Act, listed companies are obliged to issue profit warnings.

Increase in share capital – a joint stock company can increase its share capital by issuing new shares. However, share capital can also be increased by transferring financial reserves of the company into shares.

H

Trade balance – the trade balance is the value of a country’s exports minus its imports.

Trade volume – the volume of trade describes the total volume of a market or the sum of the securities traded in it.

Holding costs – the holding costs, also known as cost of carry, in futures transactions describe the cost of holding a position for a certain period of time (for example, overnight).

Leverage certificates – a leverage certificate, also known as a wave or turvo certificate, tracks the performance of the underlying instrument in a linear fashion. However, the investor’s capital outlay is much lower due to the leverage.

Hedging – Hedging refers to the protection of an existing position against price fluctuations, for example by taking an opposite position in the same security or a warrant.

Hedge fund – A hedge fund is an investment fund that is subject to few or no investment regulations. In the case of hedge funds, the fund manager may invest in all possible currencies, securities or derivatives, and may sometimes make short sales.

Leverage – the leverage describes the relationship between a derivative and the underlying instrument. Leverage describes the factor by which the derivative rises more than the underlying instrument.

I

Inflation – inflation is the term used to describe an economic situation in which the prices of consumer goods rise, thus weakening purchasing power.

Interbank market – the interbank market is a network between banks and other financial institutions in which foreign exchange is traded “over the counter”.

Index – an index or stock index is a key figure that summarizes the price developments of various stocks.

ifo Business Climate Index – the ifo Business Climate Index is an important indicator of the current and future development of the German economy. For evaluation purposes, the Institute for Economic Research surveys several thousand companies from a wide range of sectors every month.

Insolvency – insolvency is the term used to describe the economic situation of a debtor who is no longer able to meet his payment obligations to creditors.

Interbank trade – interbank trade is the term used to describe transactions between two banks. In interbank trade, securities such as futures, currencies and bonds are usually traded with very large amounts.

Interbank market – the market on which commercial and central banks settle transactions and where supply and demand determine the price of securities, foreign exchange or commodities.

Investment – an investment is an investment where the aim is to achieve the highest possible return after a certain holding period.

Investment – Funds or mutual funds are a pool of investor capital that is used by fund managers for professional investment.

J

Annual report – in an annual report, a company informs the public about the economic situation and any developments in the past financial year.

Net profit – the profit for the year is defined as the profit generated during a financial year.

Joint Venture – a joint venture is the usually temporary merger of two or more companies.

K

Capital market – the capital market describes a special part of the financial market. The capital market includes the stock market and the bond market.

Capital increase – capital increase describes the increase of capital with which a company is liable.

Spot market – the spot market is where trading takes place within a short period of time. The delivery or payment of transactions on the spot market are usually due immediately.

Spot transaction – Spot trading is the trading of foreign exchange on the spot market, i.e. the maturity of the transaction is two banking days.

Commission – commission is a transaction fee set by the broker.

Contract – in stock exchange trading, the term contract usually refers to the smallest tradable unit on the futures exchanges.

Price – the price is the price of a security and can fluctuate due to supply and demand.

Price transparency – price transparency describes currencies or securities to which every market participant has equal access.

Buy signal – the term “buy signal” comes mainly from chart analysis. Here, past chart patterns are used to infer future price developments. The analysis can then generate a buy signal as a result.

Knock-out certificate – a knock-out certificate is a derivative financial instrument which, due to its leverage, allows high returns with comparatively small investment. If the price of the underlying falls below a certain level during the term, the certificate expires and is worthless.

Economy – The general economic and national economy of a country is referred to as the business cycle. Historically, the economy always goes through ups and downs.

Credit – a credit is the temporary transfer of ownership of money. After a certain period of time, the borrower must repay the lender the amount according to previously defined conditions.

Price target – a price target is a certain price of a security that should be reached by the security within a certain period of time.

L

LIBOR – LIBOR stands for “London Interbank Offered Rate” and is the short-term reference interest rate at which the reference banks borrow money.

Limit Order – A limit order is an order that is not executed until the price below which the limit order is to be triggered is reached.

Liquidity – Liquidity refers to the ability to meet maturing liabilities on time.

Liquid market – a liquid market is characterised by sufficient buying and selling opportunities. In contrast to the “narrow” market, where buying or selling problems can occur.

Long position – if you take a long position, you speculate that the market will rise. In contrast to a short position, where the trader speculates on a falling market.

Lot – a lot is usually the standard trade size for Forex brokers (100,000 units of the quoted base currency).

LSE – the LSE “London Stock Exchange” is the largest stock exchange in Europe in terms of capitalisation of the securities listed there.

Leading stock exchange – the development of prices on a leading stock exchange significantly influences prices on other exchanges. Leading stock exchanges are stock exchanges such as the NYSE (New York Stock Exchange), London (FTSE) or Tokyo.

Key interest rates – the key interest rate is the interest rate at which banks can borrow money from central banks. It is set by the central banks and central banks. The key interest rate is therefore an important financial policy factor.

M

Broker – a broker is an individual or company that acts as an intermediary, bringing together buyers and sellers in exchange for a commission.

Margin – margin is a security deposit that the trader must deposit with his broker to open a position.

Market order – in case of a market order, the trader wants to buy/sell at the Bid or Ask price at the currently displayed price.

Market Maker – Market Makers are traders who seek to ensure liquidity by providing buy and sell prices based on supply and demand. The market maker earns money from the margin between the bid and ask price.

Market risk – The risk of changes in market prices.

Mini lot – a mini lot is a reduced trading size via a forex broker (10,000 units of the quoted base currency).

Micro lot – a mini lot is a reduced trade size via a Forex broker (1,000 units of the quoted base currency).

Minors – Minors are currencies with only low to moderate trading activity.

MDAX – The MDAX is a stock index that includes 50 German mid-cap stocks.

Mid-Caps – MID-Caps are shares which usually have a market capitalization between 500 and 2,000 million Euro or USD.

Momentum – Momentum is a term from chart analysis. Momentum describes the momentum with which a security follows an upward or downward trend. A rising momentum often indicates an intact trend.

N

NASDAQ – the NASDAQ (National Association of Security Dealers) is the world’s largest over-the-counter stock exchange, on which over 5000 shares are traded.

NFA – the National Futures Association (NFA) is a regulatory body that monitors futures brokers and their employees.

Small caps – Small caps are shares of smaller companies that have only a low market value.

New issue – A new issue or IPO (Initial Public Offering) is the first time a company goes public.

O

Open position – an open position is a position that is still open (not closed) and has not yet been closed by the trader.

Open order – an order that is in the market but has not yet been triggered.

OTC market – the OTC market is an over-the-counter marketplace where securities and foreign exchange are traded.

Online broker – online brokers offer their clients access to trading securities over the Internet. Usually online brokers do not have their own branch network, but offer more favourable conditions.

Order – an order is the order to buy or sell a security.

Offer – the price at which a trader is prepared to sell a security is called an offer, also known as the ask or ask price.

Option – in the case of an option or a warrant, it is determined that a certain number of securities or shares can be acquired at a certain price within a certain time frame. A special feature of options is that the option can be redeemed but does not have to be redeemed.

Warrant – in the case of warrants, the buyer has the right but not the obligation to buy or sell the underlying instrument underlying the warrant. Underlying assets (underlyings) can be all listed securities, but also indices.

Option right – an option right is the right, previously defined in the terms of the option, that entitles the owner of the option to buy or sell the option at a certain price within a certain period of time.

P

Floor – Floor is the traditional name of the exchange hall. However, due to the increasingly important role of electronic trading systems, floor trading is becoming less and less important.

Pending Order – once the trader has placed an order on the exchange, it is called a “pending order” for the time the order is executed.

Penny Stock – Penny stocks are shares whose value per share is less than 1 Euro.

Performance – performance is the development of the value of a security or a share over a certain period of time.

Pip – a pip is the smallest price movement in the valuation of foreign exchange. In EUR/USD, for example, 1 pip describes the fourth decimal place. Thus, a rise of one pip would cause the EUR/USD to rise from 1,3001 to 1,3002.

Portfolio – a portfolio is the entire contents of a securities account.

Position – a position is a security within a securities account.

Profit & Loss – Unrealized gains and losses from open positions.

Private equity – Private equity is a form of equity capital in which the investor’s holding is not tradable on any stock exchange.

Put – A put is a put option, whereby the trader makes a profit if the underlying asset loses value.

Q

Quote – usually refers to the price of a security such as a share or a share index.

R

Rating – a rating is the assessment of a company according to certain criteria. AAA (Triple A) stands for the best rating, whereas C and D mean a very low rating.

Real-time quote – a real-time quote is a price that is transmitted to market participants in real time immediately after its creation.

Real-Estate – Real-Estate describes the real estate market. Real-Estate Investments therefore invest at least 75% in real estate or land.

Bond funds – Bond funds are investment funds in which investments are primarily made in fixed-interest securities such as bonds or debentures.

Yield – the term yield refers to the profit that one has achieved with an investment.

Recession – recession is a period of stagnant or negative economic growth.

Risk – risk is the description of an event or action with the possibility of negative consequences.

Risk management – risk management is a technique used to try to reduce or control the danger posed by different types of risk as far as possible.

Risk capital – risk capital, also known as venture capital or venture capital, is an investment in mostly young companies or start-ups, where the total loss of the investment often cannot be ruled out.

Rollover – rollover is a measure in which the settlement of a forward transaction is postponed to another value date. The contract is virtually rolled over.

S

Scalper – scalpers are traders who hold their positions in the market for only a short period of time and only cut out very small price changes from the market.

Short position – with a short position the investor speculates on a falling price of the security.

Spread – the difference between bid and ask price is called spread.

Sterling – Sterling is the colloquial term for the English pound

Stop Loss Order – Stop Loss Order is a type of order that automatically liquidates an open position at a certain price. This order is often used to minimize the risk of losses when the market moves against the investor’s position.

Support Levels – Support levels, also called support levels, are price markers used in technical analysis to describe certain limits in the price movement. Often the price will turn down after testing the support lines.

S&P 500 – The S&P 500, also known as the Standard and Poors 500, is a US stock index that tracks the 500 most important American companies.

Spot market – the spot market or cash market is where trading takes place within a short period of time. Delivery or payment of transactions on the spot market are usually due immediately.

Stock – Stock is the English term for share.

Stock Exchange – Stock Exchange is the English term for the stock exchange.

T

Technical Analysis – in technical analysis, the trader attempts to forecast future price movements based on historical price data.

Forward contract – in a forward contract, the owner has the obligation to buy or sell a commodity or security at a specified price on a specified date.

Forward rate – by forward rate is meant the predetermined exchange rate for a foreign exchange contract that will be executed at an agreed time in the future.

Transaction costs – transaction costs are the costs incurred in buying and selling a security.

Turbo certificate – a security that represents the underlying asset in a linear fashion is referred to as a turbo certificate. Due to the leverage, however, the capital investment is lower than the direct purchase of the security.

U

Turnover – turnover is the amount of revenue received by an enterprise from the sale of goods or services over a given period.

Acquisition – acquisition – usually refers to the takeover of one enterprise by another enterprise. In the case of listed companies, a takeover can take the form of the acquisition of a majority of shares.

US discount rate – The US discount rate is the interest rate at which US banks lend money to their business customers.

V

Volatility – volatility is a measure of the movement of a market price in a given time frame.

Venture capital – venture capital, also known as risk capital or venture capital, is an investment in mostly young companies or start-ups, where the total loss of the investment often cannot be ruled out.

Clearing account – a clearing account is an account that is usually placed before a fixed-term deposit account. The savings amount is debited from the clearing account and paid back to the clearing account at the end of the term.

W

Wall Street – Wall Street is the colloquial name for the New York Stock Exchange (NYSE), as it is located on Wall Street in the Manhattan district of New York. The NYSE is the largest stock exchange in the world with 5 million shares traded daily.

Venture capital – venture capital, also known as venture capital or venture capital, refers to an investment in mostly young companies or start-ups, where the total loss of the investment often cannot be ruled out.

Wave – Waves are leveraged products issued by Deutsche Bank, such as certificates with limited maturity.

Currency – A currency is any form of money that is put into circulation by a government or central bank and is regarded as a means of payment in the respective country.

Currency risk – currency risk is the possibility of a negative change in the exchange rate.

Securities account – all types of securities can be traded and managed in a securities account.

Resistance – Resistance is the price marker used in technical analysis to describe certain marks in the price trend at which investors may sell.

Economic Indicator – an economic indicator is a statistic produced by the government that shows the current growth and stability of the economy. The indicators used usually include data such as employment rates, gross domestic product (GDP), inflation, retail sales, etc.

X

Xetra – Xetra is the fully electronic trading platform of Deutsche Börse AG.

Y

Yield – Yield is the return generated on an investment.

Z

Certificate – a certificate is a participation certificate that grants its holder a share in the company’s assets but does not confer voting rights.

Central bank – a central bank, also called a central bank, is a bank that has the right to put money into circulation. The tasks of central banks are to regulate the supply of money and credit to the economy and to keep the value of money stable.

Leave a Reply

Your email address will not be published. Required fields are marked *