The dictionary, A–Z

0DTE options are options traded on their expiry day — zero days to expiration. They are cheap and react violently to small price moves, so gains and losses build very quickly, and most expire worthless.

The 2s10s spread is the 10-year government bond yield minus the 2-year yield. When it turns negative, the yield curve is inverted; in the US, inversions have often preceded recessions, though the timing has varied widely.

When an online checkout pauses and your banking app asks you to confirm the purchase, that is 3-D Secure at work. In the EU and UK it is how banks meet the strong-authentication rules for most card payments on the internet.

The AB=CD pattern is a simple harmonic structure in which the CD leg matches the AB leg in length, and often in time. C typically retraces 61.8–78.6% of AB, and D is where the move is expected to stall or reverse.

An abandoned baby is a rare three-candle reversal: a doji that gaps away from the candle before it and the candle after it, leaving it isolated. A bullish one forms after a decline, a bearish one after a rally.

An abnormal return is the part of a stock's move that the market's or its peers' move does not explain — for example a 6% jump on earnings day when the index rose 1%. Researchers add these up around events to measure how news moved prices.

Absorption is when large passive orders soak up heavy aggressive buying or selling without the price moving much.

Your account balance is the cash recorded in your account from deposits, withdrawals and closed trades; the available balance is the part you can currently use or withdraw.

Account equity is your balance plus or minus the unrealized result of open positions — what the account would be worth if everything were closed now.

Accounts receivable is money customers owe a company for goods already delivered; accounts payable is what the company owes its suppliers. Receivables growing much faster than sales can mean customers are slow to pay or that sales are being pulled forward.

In the US, an accredited investor meets income or wealth tests — for individuals, broadly over $200,000 in annual income ($300,000 with a spouse) or over $1 million in net worth excluding the home — and may invest in private offerings closed to the public.

Rules differ between countries; this is general information, not tax or legal advice.

Accrued interest is the interest a bond has earned since its last coupon payment. When you buy a bond between coupons you pay the quoted (clean) price plus accrued interest, which together make the dirty price.

Accumulation describes a period when large buyers are thought to build positions without pushing the price up; distribution is when they are thought to sell into strength.

Active addresses count the unique addresses that sent or received a transaction in a period. It is a rough measure of network use; one person can control many addresses, and one exchange address can serve many people.

Active managers pick investments and timing to try to beat a benchmark; passive managers simply hold the benchmark, usually through index funds. Passive funds charge far less, and after fees most active funds have historically trailed their index over long periods.

An activist investor buys a significant stake in a company to push for changes — in strategy, management, capital returns or the board — that it believes will raise the share price.

Address poisoning sends you a tiny transaction from an address that looks almost identical to one you use, hoping you copy it from your history next time. Dusting sends tiny amounts to many wallets to track or target them. Always check the full address before sending.

Agency bonds are issued by US government-sponsored enterprises and agencies, such as Fannie Mae, Freddie Mac and the Federal Home Loan Banks. They usually yield a little more than Treasuries because most lack an explicit government guarantee.

Aggressive buyers and sellers cross the spread with market orders and take liquidity; passive orders wait in the book as limit orders and provide it.

An airdrop is a free distribution of tokens to wallet addresses, often to reward early users — and a common disguise for scams asking you to connect your wallet.

Airdrop farming is using protocols in the hope of qualifying for a future token distribution. Points programmes reward activity with points that may or may not convert into tokens later. Sybil farming — using many wallets to claim more — is commonly detected and excluded.

Algorithmic trading uses computer programs to place orders automatically according to predefined rules.

An all-time high (ATH) is the highest price an asset has ever traded at; an all-time low (ATL) is the lowest. A retest of the ATH is a return to that level.

Alpha is the part of a return that beats what the market or a benchmark delivered for the same risk. Positive alpha suggests skill or an edge; Jensen's alpha measures it against the return the CAPM would predict from the portfolio's beta.

An altcoin is any cryptocurrency other than bitcoin.

Altcoin season is informal slang for a period when many altcoins outperform Bitcoin. There is no agreed threshold; some websites publish their own index.

Alternative investments are anything outside ordinary stocks, bonds and cash — hedge funds, private equity, real estate, commodities, collectibles and, by many definitions, crypto. They can diversify a portfolio but are often less liquid, less transparent and pricier.

The Altman Z-score, developed by Edward Altman in 1968, combines five balance-sheet and income ratios into one number that estimates a company's risk of bankruptcy. For the original manufacturing model, below about 1.8 signals distress and above about 3 looks safe.

American-style options can be exercised at any time up to expiry; European-style options only at expiry. Most US stock options are American, while many index options, such as those on the S&P 500 index, are European.

An American depositary receipt is a certificate issued by a US bank that represents shares of a foreign company. It lets that company's shares trade on US markets in dollars, though holders still carry currency risk and may pay depositary fees.

An analyst rating is a research analyst's recommendation on a security, such as buy, hold or sell, often with a price target.

Anchoring is relying too heavily on the first number you saw — such as your entry price or a stock’s old high — when judging what something is worth now.

Many exchanges let you choose a private word that they then print in all of their real emails to you. If a message claiming to come from the exchange lacks that word, treat it as a fake and do not click anything in it.

The exact rules and formulas differ between brokers and exchanges — check your platform’s documentation.

To let a bot, tax tool or portfolio app talk to your exchange account, you create an API key — a credential that works without your password. Grant the narrowest rights the tool needs, never withdrawal rights, and lock the key to specific IP addresses.

The exact rules and formulas differ between brokers and exchanges — check your platform’s documentation.

If the issuer allows it, a crypto card can be loaded into Apple Pay or Google Pay and used with a tap of a phone or watch. Behind the scenes the payment works like any card purchase, with your crypto sold for regular money at that moment.

APR (annual percentage rate) is a yearly rate without compounding; APY (annual percentage yield) includes compounding. A 12% APR compounded monthly equals an APY of about 12.68%. In crypto, advertised rates are often variable and can change or disappear quickly.

Arbitrage is profiting from a price difference for the same asset in two places by buying the cheaper and selling the dearer at the same time.

The Arms Index, or TRIN, compares how many stocks are rising versus falling with how much volume flows into each group. A reading near 1 is balanced; well above 1 means heavy volume in falling stocks, which short-term traders often read as oversold.

The Aroon indicator measures how many periods have passed since the latest high (Aroon-Up) and low (Aroon-Down) within a look-back window, usually 25. Readings near 100 mean a fresh extreme; Aroon-Up above Aroon-Down suggests an uptrend.

An asset is anything with economic value that can be owned or traded, such as a share, a currency, gold or a cryptocurrency.

Asset turnover divides a company's revenue by its total assets, showing how many dollars of sales each dollar of assets produces. Retailers often score above 2, while utilities and heavy industry sit well below 1, so compare within an industry.

Assets under management is the total market value of the money a fund or firm invests for clients. It shows size and, because fees are usually a percentage of it, roughly how much the manager earns; large inflows can also make a strategy harder to run.

In an at-the-market offering, a company sells new shares gradually into the open market at current prices through a broker, instead of in one large deal. It raises cash flexibly but dilutes existing shareholders.

If a liquidated position cannot be closed in the market and the exchange's insurance fund runs dry, the exchange may shrink the winning positions on the other side to cover the gap — auto-deleveraging. Traders with the biggest profits and leverage are usually first in the queue.

The exact rules and formulas differ between brokers and exchanges — check your platform’s documentation.

Autocorrelation measures how strongly a series is related to its own past values. The Hurst exponent estimates whether a series tends to persist (above 0.5), revert (below 0.5) or behave randomly (about 0.5). Cointegration means two series that wander individually stay linked over the long run — the statistical basis of many pairs trades.

An automated market maker is a smart contract that prices trades from a formula instead of an order book. In the common constant-product design, a pool holds two tokens whose quantities multiply to a constant (x × y = k), so buying one token makes it progressively more expensive.

Availability bias is judging how likely something is by how easily examples come to mind. A recent, vivid crash makes another crash feel more likely than the evidence suggests.

The average daily range is the average distance between each day’s high and low over a period, such as 14 or 20 days. Unlike the average true range, it ignores gaps between one day’s close and the next day’s open.

The Average Directional Index (ADX) measures the strength of a trend, not its direction; readings above about 25 are commonly read as a strong trend.

The average entry price is the weighted average price of all purchases in a position — buying 10 at $100 and 10 at $90 gives an average of $95.

Average hourly earnings measure the average wage per hour for a group of workers. In the US the figure is released with the monthly jobs report and is watched as a sign of wage-driven inflation.

The Average True Range (ATR) measures how much an asset typically moves per period, including gaps; traders use it to size stops and positions.

Average win and average loss are the mean profit of winning trades and the mean loss of losing trades; combined with win rate they determine expectancy.

Averaging down is buying more of a position that has fallen, which lowers the average entry price but increases exposure to a trade that is already going wrong. Averaging up is buying more as the price rises.

Backtesting is applying a strategy's rules to historical data to see how it would have performed — useful, but easy to fool yourself with if the test is not honest.

A balanced fund holds stocks and bonds in a fairly steady mix, such as 60% stocks and 40% bonds, to give growth with fewer swings than an all-stock fund.

The Baltic Dry Index tracks what it costs to ship bulk raw materials such as iron ore, coal and grain by sea. Rising rates can signal strong demand for raw materials, but the index also jumps and slumps with the supply of ships, so read it with care.

Net interest margin (NIM) is a bank’s interest income minus interest expense, relative to its earning assets. CET1 is the ratio of a bank’s highest-quality capital to its risk-weighted assets. The liquidity coverage ratio (LCR) checks that a bank holds enough liquid assets for 30 days of stressed outflows; the net stable funding ratio (NSFR) checks its funding over one year.

The Bank of England (BoE) sets interest rates for the UK through its Monetary Policy Committee; the Bank of Japan (BoJ) sets policy for Japan. Their decisions move the pound and the yen in the same way that the Federal Reserve’s decisions move the dollar.

Bankruptcy is the legal process for a company that cannot pay its debts. In the US, Chapter 11 lets it reorganise while operating and Chapter 7 liquidates it. Shareholders are paid last and usually lose most or all of their investment.

Rules differ between countries; this is general information, not tax or legal advice.

In a pair such as EUR/USD, the base currency is the first one (EUR) and the quote currency is the second (USD); the price is the amount of quote currency per one unit of base currency.

Basel III is the international set of bank capital and liquidity rules written after the 2008 crisis by the Basel Committee on Banking Supervision. It makes banks hold more and better-quality capital and enough liquid assets to survive a 30-day funding squeeze.

Rules differ between countries; this is general information, not tax or legal advice.

The basis is the difference between a futures price and the spot price of the same asset; it narrows toward zero as the contract approaches expiry.

A basis point is one hundredth of a percentage point, or 0.01%. A rate rise from 4.00% to 4.25% is 25 basis points; using basis points avoids confusion between a change of one percentage point and one percent.

Basis risk is the chance that a hedge does not move exactly opposite to what it protects, because the gap between the hedge's price and the exposure's price changes. A jet-fuel user hedging with crude oil futures carries it.

A basis trade buys an asset in the spot market and sells its futures (or the reverse) to earn the gap between the two as they converge. In crypto it is called cash-and-carry; in Treasuries hedge funds run it with heavy leverage, which can unwind violently in stress.

The Bat is a harmonic pattern defined by Scott Carney in which B retraces 38.2–50% of XA and D completes at the 88.6% retracement of XA. Its deep D point lets traders keep stops tight just beyond X.

Battery arbitrage is charging a battery when electricity is cheap and discharging it when power is more valuable. Profit depends on the price gap and the round-trip efficiency — the share of stored energy that comes back out, often around 85–90% for lithium-ion systems.

A bear market is a sustained period of falling prices, commonly defined for stock indices as a decline of 20% or more from a recent high.

A bear raid is an attempt to drive a stock down through heavy short selling, often combined with negative rumours, so the raiders can buy back cheaply. Spreading false information to do so is illegal market manipulation.

Behavioral finance studies how real people make money decisions — with biases, emotions and rules of thumb — instead of assuming everyone is perfectly rational. It explains patterns such as panic selling, herd buying and holding losers too long.

The Beige Book is the Federal Reserve's summary of economic conditions in its 12 districts, based on reports from businesses and contacts. It is published eight times a year, about two weeks before each FOMC meeting.

A bellwether is a company whose results are seen as a signal for its whole industry or the economy — for instance a major chipmaker for tech demand or a big logistics firm for trade. Its earnings often move peers' shares too.

A bullish belt hold opens at or near its low after a decline and closes near its high, with little or no lower wick; a bearish belt hold opens at its high after a rally and closes near its low. It shows one side taking control from the open.

A benchmark is the yardstick a portfolio or strategy is judged against — often an index such as the S&P 500 for US stocks. Beating your benchmark after costs is what shows skill; a 10% gain is poor if the benchmark rose 20%.

Best execution is a broker’s obligation to seek the most favourable terms reasonably available for a client’s order, considering price, speed, likelihood of execution and costs. The precise rules differ by jurisdiction.

Beta measures how much an asset tends to move relative to a benchmark: a beta of 1.5 has historically meant moving about 1.5 times as much as the market.

The bid-ask spread is the gap between the highest price a buyer is offering (the bid) and the lowest price a seller will accept (the ask).

The bid-to-cover ratio divides the amount bid at a bond auction by the amount actually sold. A ratio of 2.5 means bids were two and a half times the offering; a weak ratio at a Treasury auction can push yields up because demand looked thin.

A binary option pays a fixed amount if a yes-or-no condition is true at expiry — say, the price is above a level — and nothing otherwise. Many online binary platforms have been fraudulent, and EU and UK regulators banned their sale to retail clients.

Rules differ between countries; this is general information, not tax or legal advice.

Bitcoin (BTC) is the first and largest cryptocurrency, launched in 2009, with a supply capped at 21 million coins and secured by proof-of-work mining.

Bitcoin dominance is Bitcoin’s market capitalisation as a share of the whole crypto market. Stablecoin dominance is the same for stablecoins; a rising figure often means money is moving out of riskier coins.

The Bitcoin halving is the scheduled cut in half of the new bitcoin paid to miners per block, every 210,000 blocks — roughly every four years. It slows the creation of new coins toward the fixed 21 million cap.

A black swan is a rare, hard-to-predict event with extreme market consequences that people often rationalise only after it has happened.

Blockchains record transactions in bundles called blocks. Each new block carries a fingerprint (hash) of the block before it, so tampering with any old entry would visibly break the whole chain after it.

Paste a transaction ID or address into a block explorer and you can see exactly what happened on the chain: when it was sent, the fee, the amount and how many confirmations it has. It settles “did you send it?” disputes in seconds.

Block time is the average or target time between new blocks — about 10 minutes on Bitcoin and 12 seconds on Ethereum. Block height is a block’s position in the chain, counting from the first block.

A block trade is a very large order — for shares, often 10,000 or more — usually negotiated privately between institutions and reported afterwards, so the size does not move the market as it would on the open order book.

A blockchain is a shared record of transactions grouped into blocks, where each block is cryptographically linked to the last, making past entries very hard to alter.

Smart contracts cannot look up a price or a sports result on their own; oracles deliver that outside data on-chain. Because loans and derivatives settle on those numbers, a manipulated or broken oracle can trigger unfair liquidations.

A blow-off top is a final, near-vertical surge on exploding volume that exhausts the buyers, followed by a sharp reversal. Its mirror image at the bottom of a sell-off is a selling climax. Both are clear mostly in hindsight.

Blue-chip stocks are shares of large, well-established and financially strong companies with a long record of steady results, often paying dividends. They are seen as relatively stable, but they can still fall sharply.

A boiler room is a high-pressure sales operation that cold-calls people to push dubious or worthless investments, often with scripted urgency and promises of quick profits.

Bollinger Bands are lines drawn a set number of standard deviations above and below a moving average, widening and narrowing with volatility.

A bond is a loan to a government or company. The issuer usually pays regular interest (the coupon) and repays the face value at maturity. Bond prices move opposite to interest rates: when yields rise, existing bonds lose value.

A bond ladder spreads money across bonds maturing in different years, so some cash comes back regularly to reinvest. A barbell instead holds only very short and very long bonds, skipping the middle, to mix safety with higher long-term yields.

Book value is a company’s total assets minus its total liabilities, as shown in its accounts. Dividing the share price by book value per share gives the price-to-book ratio.

Bookbuilding is how underwriters collect orders from investors at different prices before an offering, then use that demand to set the final price and decide who gets shares.

A borrowing fee is what a short seller pays to borrow shares, usually quoted as an annual rate and charged daily.

Bottom fishing is buying assets after a big fall in the hope they have reached their low. It can pay off, but trying to “catch a falling knife” often means buying too early, so many traders wait for a base or a change in trend first.

A box spread combines a bull call spread and a bear put spread with the same strikes, so its value at expiry is fixed at the difference between the strikes. In effect it lends or borrows at an implied interest rate.

A break of structure (BOS) usually means price moving beyond the last swing high in an uptrend, or below the last swing low in a downtrend, confirming the trend continues.

Break-even is the price at which a trade neither makes nor loses money once all costs are included; moving a stop to break-even means exiting there if the price returns.

Breakeven inflation is the yield on a regular government bond minus the yield on an inflation-protected bond of the same maturity. It is the inflation rate at which both would earn the same, and is used as a market estimate of expected inflation.

A breakout is when the price moves decisively beyond a support or resistance level, or out of a trading range.

Breakout trading means entering when the price moves out of a range or past a key level, expecting the move to continue.

A broadening formation, or megaphone, shows higher highs and lower lows, so the range keeps widening. It reflects rising volatility and indecision, and it is hard to trade because both sides keep getting stopped out.

A broker is a regulated firm that gives you access to markets and executes your orders, usually for a commission, a spread or other fees.

On raw-spread forex and CFD accounts, the broker earns a fixed charge per lot instead of padding the spread. Add spread and commission together — per round trip — to compare accounts fairly.

A broker's licence decides how well you are protected: strong regulators require capital buffers, separate client money, fair-dealing rules and complaint schemes. Verify the licence number on the regulator's own website — offshore licences offer little help if things go wrong.

Rules differ between countries; this is general information, not tax or legal advice.

A bucket shop takes customers' orders without sending them to the real market and instead bets against its own customers. The practice is illegal, but some unregulated online brokers behave in a similar way.

A bull trap is a breakout above resistance that fails and falls back, catching the buyers who jumped in; a bear trap is the same failure below support, catching sellers. Waiting for a close beyond the level, or a retest, filters out many of them.

A bull market is a sustained period of rising prices, often defined for stock indices as a rise of 20% or more from a recent low.

A bullish candle closes above its open and a bearish candle closes below it; colours vary by platform, so always check the chart's settings.

Burn rate is how fast a loss-making company spends its cash, usually per month. Divide cash on hand by the burn rate to get the runway — the months left before it must raise money, which often means diluting shareholders.

The business cycle is the economy's repeating swing through expansion, peak, contraction and recovery. Different assets and sectors tend to lead in different phases, which is why traders watch indicators that hint at where the cycle stands.

Common metrics for growth companies: total addressable market (TAM) is the revenue available if a product won its whole market; customer acquisition cost (CAC) is the cost of winning one customer; monthly and annual recurring revenue (MRR, ARR) measure subscription revenue; gross merchandise value (GMV) is the value of goods sold through a marketplace.

The Butterfly is a harmonic pattern in which B retraces about 78.6% of XA and D extends beyond X, to roughly 127–161.8% of XA. Because D makes a new extreme, it is used to spot reversals at fresh highs or lows.

A butterfly spread combines three strikes: buy one lower-strike option, sell two middle-strike options, and buy one higher-strike option, all with the same expiry. It costs little, risks only the premium and pays most if price ends exactly at the middle strike.

Buy and hold is a long-term approach of buying assets and keeping them through market ups and downs, rather than trading frequently.

To buy is to acquire an asset or open a long position; to sell is to dispose of an asset you own or, in short selling, to sell one you have borrowed.

These labels say whether an order opens or closes a position: buy to open and sell to close for long positions, sell to open and buy to close for short positions — common in options trading.

A buy-in is the forced purchase of shares to close a short position or settle a failed delivery, made by a broker or clearing firm, often without the account holder’s consent and at the prevailing market price.

Buying power is how much you can currently spend on new positions: your cash in a cash account, or cash plus available margin in a margin account. High buying power from leverage is not money you can afford to lose.

Cable is traders' nickname for the GBP/USD exchange rate, from the transatlantic telegraph cable once used to send its quotes between London and New York. Other nicknames include “fibre” for EUR/USD and “loonie” for the Canadian dollar.

A calendar spread sells a near-dated option and buys a longer-dated one at the same strike. It profits mainly from the short option's faster time decay, ideally with price near the strike at the first expiry.

A callable bond lets the issuer repay it early, usually when rates have fallen — bad for the investor, so callable bonds offer higher yields. A putable bond lets the investor sell it back to the issuer early, which protects the investor and usually means a lower yield.

The Calmar ratio divides annualised return by maximum drawdown. A strategy returning 15% a year with a worst drawdown of 30% has a Calmar ratio of 0.5. It rewards returns earned without deep losses.

A candle's body is the thick part between its open and close; its wicks (or shadows) are the thin lines that reach the high and the low.

A candlestick is a chart symbol that shows an asset’s open, high, low and close prices for one period of time.

Capacity utilisation is the share of an economy’s or industry’s productive capacity that is in use. High readings suggest little spare capacity, which can add to inflationary pressure.

Capital expenditure (capex) is spending on long-lasting assets such as equipment and buildings, recorded as an asset and depreciated over time. Operating expenditure (opex) is day-to-day running costs such as wages and rent, deducted in full when incurred.

The capital asset pricing model says an asset's expected return equals the risk-free rate plus its beta times the market's extra return over that rate. It is a simple, widely taught way to estimate the cost of equity, though real returns often stray from it.

Capital flight is a rapid, large movement of money out of a country or market, usually because investors fear losses from a crisis, devaluation or political events. It tends to weaken the currency and push up local interest rates.

Capital gains tax is tax on the profit from selling an asset for more than its cost basis; rates, holding-period rules and reporting duties vary by country.

Capital structure is how a company funds itself — the mix of debt and equity, and the order in which each gets paid. More debt can lift returns to shareholders but raises the risk of distress when profits fall.

A carbon allowance is a permit to emit a set amount of greenhouse gas — in the EU Emissions Trading System, one tonne of CO₂ equivalent. Total allowances are capped, and companies that emit less can sell spare allowances, which gives carbon a market price.

Issuers cap how much a card can spend, withdraw at ATMs or receive within set periods. Topping up — adding money from a bank transfer, another card or a crypto wallet — can differ in speed and fees, so check both before relying on a card for travel.

The exact rules and formulas differ between brokers and exchanges — check your platform’s documentation.

A carry trade borrows in a low-interest-rate currency and invests in a higher-yielding one, earning the difference unless exchange rates move against it.

A cash account is a brokerage account in which you pay for every purchase in full with your own money, with no borrowing. It rules out margin and most short selling, and you may have to wait for sales to settle before reusing the cash.

A cash position is one paid for entirely with your own funds, without borrowing; it also refers to the part of a portfolio held in cash.

A cash-secured put is selling a put option while keeping enough cash to buy the shares at the strike if assigned. The seller collects the premium and may end up owning the stock at a price they were happy with — the first leg of the “wheel” strategy.

A catalyst is an event or piece of news — such as earnings, a data release or a regulatory decision — that can trigger a large price move.

A central bank manages a country's or region's money supply and sets its key interest rate, mainly to keep inflation under control and support the economy.

A central bank digital currency is a digital form of a country's money issued directly by its central bank, unlike stablecoins issued by private companies. China's e-CNY is among the most advanced pilots.

A central counterparty (CCP), or clearing house, sits between the two sides of a trade so each side deals with the CCP instead of each other — a step called novation. It collects margin from its members so one default does not spread through the market.

A centralised exchange (CEX) is a company that holds customers’ funds and matches their orders in its own order book. A decentralised exchange (DEX) runs on smart contracts: you trade directly from your own wallet, usually against liquidity pools rather than an order book.

A certificate of deposit is a bank deposit locked for a fixed term at a fixed interest rate, with a penalty for withdrawing early. In the US, CDs at insured banks are covered by FDIC insurance up to the legal limit.

Chaikin Money Flow measures buying and selling pressure by summing money flow volume over a set period, usually 20 or 21 days, and dividing by total volume. It swings above and below zero: positive suggests accumulation, negative suggests distribution.

A change of character (CHOCH) usually describes the first break in the opposite direction to the trend — an early hint that the trend may be ending.

Change-point detection is a set of statistical methods for finding moments when a series’ behaviour — its average, volatility or trend — changes. Traders use it to spot shifts in market regime.

A channel is formed by two parallel lines that contain the price: a trendline plus a parallel line on the opposite side of the swings.

If a seller never delivers or a charge was fraudulent, you can ask your card issuer to claw the money back — a chargeback. Nothing equivalent exists for blockchain transfers, which is why scammers so often insist on crypto.

Churning is a broker trading excessively in a client's account to earn commissions rather than to serve the client. It is illegal; warning signs are frequent trades you did not expect and commissions that eat most of the returns.

A trading halt is a temporary stop in trading. Circuit breakers trigger halts automatically after large moves: in the US, market-wide halts apply if the S&P 500 falls 7%, 13% or 20% in a day, and limit up–limit down price bands pause individual stocks that move too far too fast.

Circulating supply is the number of tokens currently tradable; total supply includes locked tokens; max supply is the most that can ever exist, if a cap is set.

A closed-end fund issues a fixed number of shares that then trade on an exchange. Because supply does not expand or shrink with demand, its price can sit well above or below the value of its holdings.

Coattail investing means copying the trades of famous investors, usually from their published holdings such as US 13F filings. Those reports arrive weeks after the quarter ends, so followers buy late and miss later changes.

These on-chain metrics track how long coins have stayed unmoved. Dormant supply is the amount untouched for a set period; Coin Days Destroyed weights each spent coin by how long it had been held; HODL waves chart Bitcoin’s supply by age band. Old coins moving is often read as long-term holders selling.

A coin is the native asset of its own blockchain, such as BTC or ETH; a token is issued by a smart contract on an existing blockchain.

Collateral is money or assets pledged to secure a loan or a leveraged position; the lender can take or sell it if you cannot cover losses.

A collateralised debt obligation pools loans or bonds and slices the cash flows into tranches, from safest to riskiest. CDOs built on subprime mortgages were central to the 2008 crisis; collateralised loan obligations (CLOs) apply the idea to corporate loans.

Commercial paper is short-term, unsecured debt issued by companies to fund day-to-day needs, usually maturing within a few months (at most 270 days in the US). Money market funds are major buyers.

The Commitments of Traders report, published weekly by the US CFTC, breaks down open interest in futures markets by type of trader, such as commercial hedgers and speculators. It is released on Fridays with data as of the preceding Tuesday.

Commodities are raw materials traded in bulk: energy such as oil and gas, metals such as gold and copper, and farm products such as wheat and coffee. Traders mostly reach them through futures contracts, ETFs or CFDs rather than physical delivery.

The Commodity Channel Index (CCI) measures how far the price is from its recent average relative to its typical deviation; despite the name, it is used on any market.

Commodity currencies belong to countries whose exports lean heavily on raw materials, so they tend to move with those prices: the Australian dollar with iron ore, the Canadian dollar and Norwegian krone with oil, the New Zealand dollar with dairy.

The Commodity Futures Trading Commission is the US federal agency that regulates futures, options on futures and most swaps. It was created in 1974 to protect market users from fraud and manipulation in derivatives markets.

Commodity indices track a basket of futures across energy, metals and farm goods. The S&P GSCI weights by world production, so oil dominates it; the Bloomberg Commodity Index caps sectors for balance. Index funds roll futures, so returns differ from spot prices.

A commodity trading advisor manages or advises on futures trading for clients. Many CTAs run systematic trend-following strategies, known collectively as managed futures.

The compound annual growth rate is the steady yearly rate that would turn a starting value into an ending value: (end ÷ start) raised to 1/years, minus 1. Doubling $10,000 to $20,000 over 5 years is a CAGR of about 14.9%.

Compound interest means earning returns on your earlier returns as well as on the original amount. At 10% a year, $1,000 grows to $1,100 after one year and $1,210 after two, because the second year's interest is also paid on the first year's $100.

Concentrated liquidity lets a liquidity provider place funds only within a chosen price range. It earns more fees per dollar while the price stays in the range, but earns nothing outside it and increases impermanent loss.

Concentration risk is the danger of having too much money in one asset, or in assets that tend to fall together, such as several tech stocks.

Concept drift is when the relationship a model learned changes over time, so a model that worked in the past stops working. In markets it can follow changes in regulation, participants or market regimes.

Confirmation bias is the tendency to favour information that supports a trade you already hold and dismiss information that contradicts it.

Confluence is when several independent reasons point to the same price level or trade idea, such as support, a moving average and a Fibonacci level together.

A public blockchain has no boss to decide which transactions count, so it needs a rule set for agreeing on the next block — its consensus mechanism. Proof of work relies on computing power, proof of stake on coins put up as a deposit.

The consolidated tape is the combined real-time feed of trades and quotes from every US exchange and trading venue for a stock. It is the basis for the NBBO and for the volume figures most charts show.

Consumer confidence surveys ask households how they feel about the economy, their finances and their spending plans. Examples are the Conference Board index and the University of Michigan sentiment survey in the US.

The Consumer Price Index (CPI) tracks the price of a typical basket of consumer goods and services; its change over time is the most-watched measure of inflation.

Contango is when futures prices are above the spot price, typically rising with later expiries; backwardation is when futures trade below spot.

Contingent convertible bonds, or CoCos, are bank bonds that turn into shares or are written down if the bank's capital falls below a trigger. They pay high coupons for that risk — Credit Suisse's AT1 bonds were wiped out in its 2023 rescue.

A continuation is a pause in a trend after which the price resumes in the same direction; patterns such as flags are called continuation patterns.

A contract for difference is an agreement with a broker to exchange the change in an asset's price, so you can trade it without owning it.

In power markets, a contract for difference is a long-term arrangement that pays a generator the difference between a market reference price and an agreed strike price when the market is lower, and usually requires it to pay back when the market is higher. It is different from the leveraged trading CFDs offered by brokers.

Contrarian trading means deliberately going against the prevailing crowd sentiment, buying when others are fearful and selling when they are euphoric.

Convenience yield is the benefit of physically holding a commodity — for example, being able to keep a factory running during a shortage. A high convenience yield helps explain why near-term futures can trade above later ones (backwardation).

A convertible bond can be swapped for a set number of the issuer's shares. Investors accept a lower coupon in exchange for the chance to share in a rising stock price, while keeping the bond's repayment if the shares do poorly.

Convexity describes how a bond’s duration changes as yields change. Because of convexity, an ordinary bond’s price rises more when yields fall than it drops when yields rise by the same amount.

Copy trading automatically mirrors another trader's positions in your own account, in proportion to the amount you allocate. It saves effort, but past results do not guarantee future ones and you still carry every loss.

Cornering a market means buying up so much of an asset or its futures that others who need it — such as short sellers — must buy from you at your price. The Hunt brothers' attempt on silver in 1979–80 is the classic case; such schemes are illegal manipulation today.

Corporate bonds are loans to companies. They pay more than government bonds to make up for the risk that the company cannot pay, and that extra yield — the credit spread — widens when investors worry about defaults.

Correlation measures how closely two prices move together, from +1 (always together) to −1 (always opposite); highly correlated positions add up to one bigger bet.

Cost basis is the original value of an investment for tax purposes — usually the price paid plus costs — used to calculate the taxable gain or loss when it is sold.

Cost of carry is the net cost of holding an asset until a future date: financing, storage and insurance, minus any income such as dividends or interest. In theory, a futures price equals the spot price plus the cost of carry.

Demand-pull inflation happens when spending outruns what the economy can produce; cost-push inflation when rising costs such as energy or wages force prices up. Central banks respond more readily to the first, since higher rates cool demand but cannot add supply.

Counterparty risk is the danger that the other side of a deal — a broker, exchange or trading partner — fails to meet its obligations, for example by becoming insolvent.

The coupon rate is the annual interest a bond pays as a percentage of its face value. A $1,000 bond with a 4% coupon pays $40 a year, whatever its market price.

A covered call means owning shares (usually 100 per contract) and selling a call option on them. The premium gives extra income, but if the price rises above the strike, the shares can be called away and the upside is capped.

The Crab is a harmonic pattern with an extreme D point at the 161.8% extension of XA, with B retracing 38.2–61.8% of XA. The Deep Crab variant has B near 88.6%. Its far-reaching D makes it one of the most precise but least frequent patterns.

A crack spread is the difference between the price of refined products, such as gasoline and diesel, and the crude oil used to make them. It approximates a refiner’s margin; a common version is the 3-2-1 spread (three barrels of crude into two of gasoline and one of distillate).

A credit crunch is a sudden drop in the availability of loans, as banks tighten lending standards or lose the capacity to lend. Businesses and households struggle to borrow even at higher rates, which can tip an economy into recession, as in 2008.

A credit default swap is a contract in which one party pays a regular premium and the other agrees to compensate it if a named borrower suffers a credit event such as default. The annual premium, the CDS spread, is a market gauge of that borrower’s credit risk.

A credit rating is an agency's opinion of how likely a borrower is to repay its debt. The main agencies — S&P Global, Moody's and Fitch — use scales from AAA (strongest) down to D (in default); downgrades usually push bond prices down.

A credit spread is the extra yield a bond pays over a comparable government bond. It compensates investors for default risk and lower liquidity; widening spreads signal rising worry about borrowers.

With isolated margin, only the collateral assigned to a position can be lost if it is liquidated; with cross margin, all available funds in the account support every open position.

A cross rate is the exchange rate between two currencies, derived from each one's rate against a third currency — usually the US dollar. If EUR/USD is 1.10 and USD/JPY is 150, then EUR/JPY is about 1.10 × 150 = 165.

Sending money to another country — often called a remittance — can go through banks, specialist transfer apps or stablecoins. The fair comparison is how much actually lands in the recipient's account after fees and the exchange-rate markup.

A bridge moves assets between blockchains, usually by locking them on one chain and issuing a representation on another — bridges have been a frequent target of hacks.

Through the OECD's Common Reporting Standard, banks and brokers tell tax offices about accounts held by foreign residents, and countries swap that data. The Crypto-Asset Reporting Framework, CARF (DAC8 in the EU), brings crypto platforms into similar reporting.

Rules differ between countries; this is general information, not tax or legal advice.

WTI (West Texas Intermediate) and Brent are the two main crude oil benchmarks. WTI is a US crude priced for delivery at Cushing, Oklahoma; Brent is based on North Sea crude and is used to price much of the world’s oil. Their price difference is called the Brent–WTI spread.

Crypto ATMs let you swap cash or a card payment for coins on the spot, and some pay out cash too. They charge far more than online exchanges, and fraudsters often send victims to these machines because the payments cannot be reversed.

A crypto card lets you spend crypto, often stablecoins, at any shop that takes Visa or Mastercard: the provider sells the needed amount at checkout. Compare spending and conversion fees, limits and rewards — and remember that each sale may count for tax.

Rules differ between countries; this is general information, not tax or legal advice.

Tax authorities in most countries expect a share of crypto profits. Typically selling for money, trading one coin for another or paying with crypto realises a gain or loss, while staking, mining and airdrops may be taxed as income. Keep records of every trade.

Rules differ between countries; this is general information, not tax or legal advice.

A crypto wallet is software or hardware that holds the keys controlling your crypto; the wallet address is the public identifier others send funds to.

Whales are holders of very large amounts of a cryptocurrency. Because their trades can move prices, on-chain watchers track big wallet transfers, especially to and from exchanges.

Informal slang, mostly from crypto and social-media trading communities.

A cryptocurrency is a digital asset recorded on a blockchain and transferred directly between users, without a bank keeping the record.

A cup and handle is a rounded, U-shaped recovery followed by a small downward drift (the handle), often read as a pause before a breakout higher.

An FX swap pairs a spot currency exchange with a reverse exchange at a later date. A cross-currency swap also exchanges interest payments in the two currencies over its life. Both let firms borrow in one currency against another.

A currency appreciates when it buys more of another currency than before, and depreciates when it buys less. If EUR/USD rises from 1.08 to 1.10, the euro has appreciated against the dollar and the dollar has depreciated against the euro.

Whenever money changes currency — a card payment abroad, a deposit to a broker in dollars, a withdrawal back to euros — someone charges for the swap, either as a visible percentage or through a worse exchange rate. Many traders lose more here than they notice.

Currency intervention is a central bank buying or selling its own currency to move or steady the exchange rate. A peg goes further and fixes the rate to another currency — the Hong Kong dollar, for example, is held between 7.75 and 7.85 per US dollar.

Currency risk is the chance that exchange-rate moves eat into returns from an asset priced in another currency. A US stock up 10% gives a euro investor less if the dollar fell 8% against the euro; hedged funds and FX forwards reduce the effect.

The current account records a country’s trade in goods and services plus income and transfers with the rest of the world. A persistent deficit must be financed by capital inflows, which can leave the currency vulnerable if those inflows stop.

Current yield is a bond’s annual coupon divided by its current price. A bond paying $40 a year and trading at $950 has a current yield of about 4.2%. It ignores any gain or loss at maturity.

CUSIP and ISIN are codes that identify a specific security. A CUSIP is a 9-character code for US and Canadian securities; an ISIN is a 12-character international code that often contains the CUSIP.

With a custodial wallet, such as an exchange account, a company holds your keys; with self-custody you hold them yourself — more control, and full responsibility.

Cyclical stocks — carmakers, airlines, builders, luxury goods — rise and fall with the economy. Defensive stocks — utilities, food, healthcare — sell things people buy anyway, so they hold up better in downturns but usually lag in booms.

The Cypher is a harmonic pattern in which C extends beyond A, to about 127–141.4% of XA, and D completes at the 78.6% retracement of the whole X-to-C move. It is popular with forex traders but is not part of the original harmonic set.

A loss limit is a pre-set amount of loss after which you stop trading — for the rest of the day or week. It caps the damage from bad days and from emotional decisions after losses. Many prop-firm and funded accounts enforce them.

A daily price limit is the most a futures contract may rise or fall in one session under exchange rules. When price hits it the market is “limit up” or “limit down”, and trading may pause or be allowed only within the limit.

A dark pool is a private trading venue that does not show orders before they trade. Institutions use dark pools to buy or sell large blocks without revealing their intentions; trades are reported after execution.

Data snooping is testing so many ideas on the same data that some look profitable purely by chance. The more variations you try, the more likely the best one is luck rather than a real edge.

Day trading means opening and closing positions within the same trading day, so that no positions are held overnight.

A dead cat bounce is a brief recovery inside a steep decline that fizzles before the fall resumes. It is only obvious afterwards; a bounce that cannot reclaim the levels where the selling started is a warning sign.

A dealing-desk broker fills your orders from its own book and often holds the opposite position, so it profits when clients lose (the B-book). An STP or ECN broker instead passes orders to banks and other liquidity providers (the A-book). Many firms mix both models.

A death spiral convertible is financing that converts into shares at a discount to the market price at conversion time. The lower the stock falls, the more shares the holder receives and sells, pushing the price lower still — a classic warning sign in small caps.

In the US, a debenture is a bond backed only by the issuer's general creditworthiness, not by specific assets. In the UK the word can also describe secured debt, so check what a particular debenture is actually backed by.

The US debt ceiling is a legal cap, set by Congress, on how much the federal government may borrow. Stand-offs over raising it periodically raise fears of a missed payment — in 2011 one led S&P to cut the US credit rating — and can unsettle short-term Treasury bills.

Rules differ between countries; this is general information, not tax or legal advice.

Seniority sets who is repaid first when a company fails: secured lenders, then senior unsecured bonds, then subordinated debt, then preferred shares, and common shareholders last. Junior debt pays more because it recovers less in a default.

The debt-to-equity ratio compares a company’s debt with its shareholders’ equity. A ratio of 1.5 means $1.50 of debt for every $1 of equity. What counts as high depends heavily on the industry.

Decentralised finance (DeFi) is lending, trading and other financial services run by smart contracts on public blockchains instead of by banks or brokers.

The more independent operators share control of a network, the harder it is for any one of them to block payments or rewrite the rules. Few projects are fully decentralised; check who runs the validators, holds the admin keys and controls the code.

Decision fatigue is the decline in decision quality after making many decisions. Analysis paralysis is overthinking until you cannot act at all. Rules, checklists and fewer trades reduce both.

Default risk is the chance that a borrower fails to make interest or principal payments on time. Credit ratings and credit spreads are the most common ways markets express it.

On DeFi money markets such as Aave, depositors earn interest and borrowers pledge more crypto than they take out. If the pledged collateral falls too far in value, the protocol sells it automatically to repay the loan — no phone call, no grace period.

Delivery versus payment is a settlement method where securities are delivered only if payment is made at the same time, so neither side can be left with nothing. Payment versus payment (PvP) applies the same principle to the two legs of a currency trade.

A deposit moves money into your trading account and a withdrawal moves it out; transfers between accounts or platforms may take time and carry fees.

A depression is an unusually deep and long economic downturn, far worse than a normal recession. In the Great Depression of the 1930s, US output fell by roughly a quarter and unemployment passed 20%.

A derivative is a contract whose value comes from the price of something else — a share, index, currency, commodity or cryptocurrency — such as futures and options.

Devaluation is a government or central bank deliberately lowering the official value of a pegged currency; revaluation is raising it. Unlike market-driven depreciation, it happens by decision, often overnight, and can jolt prices and capital flows.

A DEX aggregator searches many pools and exchanges and splits a swap across them to get a better overall price. A router contract is the smart contract that carries out the swap through the chosen path of pools.

A diagonal spread buys and sells options of the same type with different strikes and different expiries — a mix of a vertical and a calendar spread. A common version is buying a longer-dated call and selling a nearer, higher-strike call against it.

A diamond pattern starts as a broadening formation and then narrows like a symmetrical triangle, forming a diamond shape. It usually appears at major tops (diamond top) and is confirmed when price breaks out of the narrowing half.

Diluted earnings per share divides profit by the number of shares there would be if options, warrants and convertible securities were turned into shares. It is lower than or equal to basic EPS.

In a direct listing, a company’s existing shares start trading on an exchange without a traditional underwritten offering. The opening price is set by the exchange’s opening auction rather than by banks.

Directional trading means profiting from correctly predicting whether a price will rise or fall, as opposed to strategies that profit from spreads or volatility.

A discount broker executes your trades cheaply, often online and commission-free, but leaves the decisions to you. A full-service broker adds advice, research and planning for higher fees. Many firms now offer both styles of account.

The discount window is the Federal Reserve's lending facility for banks that need short-term cash, at a rate set a little above the fed funds target. Heavy use signals stress in the banking system, as in March 2023.

Discounted cash flow values a company or project as the sum of its expected future cash flows, each discounted back to today at a rate that reflects risk. The result depends heavily on the growth and discount-rate assumptions, so small changes move it a lot.

Distressed debt is the bonds or loans of companies in, or close to, financial trouble or bankruptcy. It trades at deep discounts, and specialist investors buy it hoping for recovery or influence in a restructuring.

Divergence is when the price and an indicator disagree — for example a higher high in price but a lower high in RSI — suggesting the move is losing strength.

Diversification is spreading money across assets that do not all move together, so that a loss in one holding has a smaller effect on the whole portfolio.

A dividend is a payment a company makes to its shareholders, usually in cash, out of its profits or reserves.

Dividend aristocrats are S&P 500 companies that have raised their dividend every year for at least 25 consecutive years. A long record of increases suggests stable cash flow, but it is no guarantee the next increase will come.

Dividend capture means buying a stock just before its ex-dividend date to collect the payout, then selling soon after. The price usually drops by about the dividend on the ex-date, so after taxes and costs the strategy rarely earns much.

The dividend discount model values a share as the present value of all its future dividends. Its simplest form, the Gordon growth model, is next year's dividend divided by (required return − dividend growth rate); it only suits steady dividend payers.

A dividend reinvestment plan automatically uses each dividend to buy more shares of the same company or fund instead of paying it out as cash, so holdings compound over time. Reinvested dividends are usually still taxable.

Dividend yield is the annual dividend per share divided by the share price. A stock paying $2 a year and trading at $50 yields 4%. A very high yield can be a warning that the market expects the dividend to be cut.

Dogs of the Dow is a simple yearly strategy: buy the ten Dow Jones stocks with the highest dividend yields in equal amounts and rebalance once a year. The idea is that high yields flag out-of-favour blue chips due for a recovery.

A doji is a candle whose open and close are almost equal, leaving a very small body; it shows that neither buyers nor sellers won the period.

Dollar-cost averaging (DCA) is investing a fixed amount at regular intervals regardless of price, which spreads purchases over time.

“Don't fight the Fed” is a market saying: when the central bank is cutting rates and adding liquidity, stay bullish; when it is tightening, be cautious. Its cousin, “don't fight the tape”, warns against betting against a strong trend.

Donchian Channels plot the highest high and lowest low over a set number of periods, usually 20, with a midline between them. A close above the upper band signals a breakout; the Turtle traders famously used them for trend-following entries.

A double top is two similar peaks with a dip between them that can signal a turn lower; a double bottom is the mirror image that can signal a turn higher.

Dow Theory is a classic framework for reading market trends, built from Charles Dow's work. It says the market moves in primary, secondary and minor trends, that prices reflect all known information, and that a trend is confirmed when the industrial and transport averages agree.

Drawdown is how far an account or investment has fallen from its previous peak, usually expressed as a percentage.

Drawdown duration — or time under water — is how long an account stays below its previous peak before making a new high. A strategy can have a modest maximum drawdown but a very long recovery.

A dual-listed company has its shares traded on two or more exchanges, often in different countries and currencies. Prices on each venue are tied together by arbitrage but can drift slightly because of exchange rates and trading hours.

A dual-class structure has two or more share classes with different voting rights, often letting founders keep control with a minority of the economic ownership.

Due diligence is the homework done before committing money: checking a company's or project's finances, management, risks, legal position and claims. For individual traders it means verifying the broker, the asset and the story before buying.

Durable goods orders measure new orders for products meant to last three years or more, such as machinery, vehicles and aircraft. The figure is volatile, so analysts often watch the version excluding transportation.

Duration measures how sensitive a bond’s price is to interest rates. Modified duration gives the approximate percentage price change for a one-percentage-point change in yield: a bond with a duration of 7 loses about 7% if yields rise by 1 point.

In a Dutch auction for securities, bids are collected and a single clearing price is set at which all the shares offered can be sold, and every successful bidder pays that price. It is used for some IPOs, share buybacks and government bond auctions.

DV01 is the money gained or lost on a bond position if yields move by one basis point (0.01%). CS01 is the same idea for a one-basis-point change in the credit spread. Traders use them to size and hedge interest-rate and credit risk.

DYOR means “do your own research” — a reminder not to rely on someone else's tip, and sometimes a disclaimer attached to one.

Earnings are a company's profit for a period; listed companies publish them in regular earnings reports that can move the share price sharply.

Earnings per share is a company's profit available to ordinary shareholders divided by its number of shares outstanding.

Earnings season is the few weeks after each quarter ends when most listed companies publish their results.

An earnings surprise is the difference between a company’s reported earnings and the analysts’ consensus estimate. Share prices often react more to the surprise, and to updated guidance, than to the earnings themselves.

Earnings yield is earnings per share divided by the share price — the P/E ratio turned upside down. A P/E of 20 is a 5% earnings yield, which investors compare with bond yields to judge whether stocks look cheap or expensive.

EBITDA is earnings before interest, taxes, depreciation and amortisation — a rough measure of operating profit before financing and accounting charges. Dividing enterprise value by EBITDA gives the EV/EBITDA multiple. It ignores capital spending, so it can flatter capital-heavy businesses.

An economic calendar lists the dates and times of upcoming data releases and central-bank decisions, so traders know when volatility may spike.

An economic indicator is a regularly published statistic, such as inflation, employment or GDP, that shows how an economy is performing and can move markets on release.

An economic moat is a lasting competitive advantage that protects a company's profits from rivals — for example a strong brand, network effects, high switching costs or a cost advantage. Warren Buffett made the term popular.

EDGAR is the SEC's free online database of company filings, including annual and quarterly reports, insider-trading reports and fund holdings. It is the primary source for US company disclosures.

The efficient market hypothesis, associated with Eugene Fama, says prices already reflect available information, so it is hard to beat the market consistently. Its weak, semi-strong and strong forms differ in which information counts.

An electronic communication network automatically matches buy and sell orders between participants without a traditional market maker. Some brokers advertise “ECN accounts”, which pass orders to such venues for raw spreads plus a commission.

Elliott Wave theory, developed by Ralph Nelson Elliott in the 1930s, holds that markets move in repeating patterns: five waves in the direction of the trend, then three corrective waves against it. Wave counts are subjective, and two analysts often disagree.

Emerging markets are economies moving towards developed status, such as India, Brazil or Indonesia. They can offer faster growth but also more political, currency and liquidity risk.

An emission schedule is the planned rate at which new tokens are created, for example as mining or staking rewards. Bitcoin’s issuance halves roughly every four years; other tokens set their own rules.

An engulfing pattern is a two-candle pattern where the second candle's body completely covers the first candle's body in the opposite direction — bullish after a fall, bearish after a rise.

Enterprise value is a company’s market capitalisation plus its debt minus its cash. It estimates what it would cost to buy the whole business, and allows comparisons between companies with different amounts of debt.

The equity risk premium is the extra return investors expect from stocks over a risk-free asset such as government bills, as payment for bearing stock-market risk. A thin premium suggests stocks are expensive relative to bonds.

ESMA, the European Securities and Markets Authority, is the EU's securities-market regulator, based in Paris. It sets common rules across member states — for example the 2018 limits on CFD leverage for retail traders — and supervises some firms directly.

Rules differ between countries; this is general information, not tax or legal advice.

Ethereum is a blockchain that runs smart contracts — programs that power tokens, DeFi applications and more; its native currency is ether (ETH).

The Ethereum Virtual Machine is the computing environment that runs smart contracts on Ethereum. Many other blockchains are “EVM-compatible”, so the same contracts and wallets work on them.

A Eurobond is a bond issued outside the country whose currency it uses — for example a dollar bond sold to investors in London. The name has nothing to do with the euro; the market lets borrowers reach international investors in a currency of their choice.

Eurodollars are US dollar deposits held at banks outside the United States. Eurodollar futures were for decades among the world's most traded contracts, until they were replaced by SOFR futures in 2023.

The European Central Bank (ECB) sets monetary policy for the countries that use the euro.

To receive a dividend you must own the shares before the ex-dividend date; buying on or after it means the seller gets the payment. The record date is when the company checks its list of shareholders, and the payment date is when the cash arrives.

An exchange is an organised marketplace with set rules where buyers' and sellers' orders are matched, such as a stock exchange or a crypto exchange.

On-chain data providers estimate how much crypto moves into exchanges (inflows), out of them (outflows) and their difference (netflow), as well as the total held on exchanges (reserves). Large inflows are often read as potential selling, but the estimates depend on how addresses are labelled.

An exchange for physicals is a privately agreed swap of a futures position for an equal position in the physical commodity, reported to the exchange. Commercial users use it to set up or unwind hedges.

An exchange rate is the price of one currency in another; trading assets priced in a foreign currency adds currency conversion costs and exchange-rate risk.

An exchange-traded fund is a fund whose shares trade on an exchange like a stock. Most ETFs track an index, sector or commodity, giving broad exposure in a single trade.

Execution is the moment an order is actually filled — when a matching buyer or seller is found and the trade takes place at a specific price.

Exercise is when an option holder uses the right to buy (call) or sell (put) the underlying at the strike price. Assignment is the other side: the option seller is chosen to fulfil that obligation and must sell or buy the shares at the strike.

Exotic options have non-standard terms, such as Asian options (paid on the average price), barrier options (that switch on or off at a level), lookback options and chooser options. They mostly trade over the counter between institutions.

Expectancy is the average amount a strategy makes or loses per trade: (win rate × average win) − (loss rate × average loss).

A fund's expense ratio is its annual running cost as a percentage of assets. At 0.10%, you pay about $10 a year on every $10,000 invested; the cost is taken from the fund, so it quietly reduces your return.

The expiration date is the last day an option or futures contract exists; after it, the contract is exercised, settled or becomes worthless.

Exposure is how much of your money is affected by a change in a price: a $10,000 position has $10,000 of exposure even if you used only $1,000 of margin.

Exposure at default is the amount a lender expects to be owed at the moment a borrower defaults, including undrawn credit lines that may be used before then. Expected loss is often estimated as probability of default × loss given default × exposure at default.

Factor investing targets traits that research links to long-run excess returns — such as value, size, momentum, quality and low volatility. The Fama–French three-factor model made the idea mainstream; “smart beta” ETFs package single factors.

Fading a move means trading against it in the expectation that it will stall or reverse — selling into a sharp rally or buying a sharp drop. “Sell the rip” is the counterpart of “buy the dip”: selling after a bounce in a weak market.

A fail to deliver happens when a seller does not deliver securities by the settlement date. US rules require brokers to close out persistent fails, and the SEC publishes fails data.

A fair value gap (FVG) is usually defined as a three-candle sequence where the middle candle moves so fast that the wicks of the first and third candles do not overlap.

A fallen angel is a bond downgraded from investment grade (BBB− or above) to high yield. A rising star is the opposite: a high-yield bond upgraded to investment grade. Both can see forced buying or selling by funds with rating limits.

A fast market is a period of such heavy, rapid trading that quotes lag behind real prices. Brokers may warn that fills can differ widely from the prices on screen and that stop orders may be filled far away.

A fat-finger error is a keying mistake — an extra zero, the wrong price — that sends a wildly wrong order. In 2005 a Mizuho trader sold 610,000 shares at ¥1 each instead of one share at ¥610,000. Order-size limits and confirmations guard against it.

Fear and greed are the two emotions most often blamed for trading mistakes: fear makes people exit too early or freeze, greed makes them over-size or hold too long.

FOMO is the urge to jump into a trade because a price is moving fast and others seem to be profiting, often without a plan.

The dot plot is a chart in the Federal Reserve’s quarterly Summary of Economic Projections showing where each FOMC participant expects the policy rate to be at the end of coming years. It shows officials’ views, not a commitment.

Fed funds futures are exchange-traded contracts whose price reflects the expected average federal funds rate in a given month. Traders use them to infer the market-implied probability of future Federal Reserve rate changes.

The Federal Open Market Committee (FOMC) is the Federal Reserve body that votes on US interest rates at scheduled meetings throughout the year.

The Federal Reserve (the Fed) is the central bank of the United States; its interest-rate decisions affect markets around the world.

Dollars, euros and pounds are fiat money: they are valuable because governments declare them legal tender and people trust the central bank, not because they can be swapped for gold. Crypto traders use “fiat” for any such government currency.

Fibonacci arcs are curves centred on the end of a move, drawn at the 38.2%, 50% and 61.8% distances of that move. They combine price and time, but their shape depends on the chart's scale, so they look different on different screens.

A Fibonacci channel draws a trend channel and then adds parallel lines at Fibonacci multiples of its width, such as 0.618, 1.618 and 2.618. Traders use the lines as possible targets when price leaves the original channel.

A Fibonacci fan draws three lines from the start of a move through the 38.2%, 50% and 61.8% retracement levels of that move, measured at its end. The sloping lines act as possible support or resistance that changes over time.

Fibonacci tools draw levels at ratios such as 38.2%, 50% and 61.8% of a previous move (retracements) or beyond it (extensions), which traders watch as possible turning points.

Fibonacci time zones are vertical lines spaced at Fibonacci intervals (1, 2, 3, 5, 8, 13, 21… bars) from a major high or low. They mark periods when a turn might come, but say nothing about price or direction.

A fiduciary must put a client's interests ahead of their own — avoiding conflicts, keeping costs reasonable and disclosing what they are paid. Not every adviser or broker is held to that standard, so it is worth asking.

Rules differ between countries; this is general information, not tax or legal advice.

Finality is the point after which a transaction cannot realistically be reversed. Before that, a chain reorganisation (reorg) can replace recent blocks with a different version of history. Exchanges wait for several confirmations before crediting deposits for this reason.

The Financial Conduct Authority regulates financial firms and markets in the UK. Before using a UK broker, traders can check the FCA register to confirm the firm is authorised and see which activities it is allowed to carry out.

A financial instrument is a tradable contract or product with monetary value, such as a share, a bond, a futures contract or an option.

FINRA, the Financial Industry Regulatory Authority, is the self-regulatory organisation that oversees US broker-dealers under the SEC. It licenses brokers, writes conduct rules, and runs BrokerCheck, where investors can look up a broker's record.

First notice day is the first day on which holders of a long futures position can be told to take physical delivery. Speculators who do not want the commodity usually roll or close their positions before it.

Fiscal policy is the government's use of spending and taxes to steer the economy, alongside the central bank's monetary policy. Stimulus — tax cuts or extra spending — supports growth but can lift inflation and bond yields; austerity does the reverse.

Flags and pennants are short pauses after a sharp move — a small sloping rectangle (flag) or a small symmetrical triangle (pennant) — often treated as continuation patterns.

A flash crash is a collapse in prices over seconds or minutes, often recovering almost as fast, caused by vanishing liquidity, automated selling or a huge erroneous order. The US stock market's May 2010 crash is the best-known example; stops can fill at shocking prices.

A flash loan is an uncollateralised DeFi loan that must be borrowed and repaid within the same blockchain transaction; if it is not repaid, the whole transaction is reversed. Flash loans are used for arbitrage, and also in attacks that borrow huge sums to manipulate a vulnerable protocol.

Float rotation is a day’s trading volume divided by the number of shares available to trade (the float). A stock that trades more than its whole float in a day has rotated it, which usually signals extreme speculative activity.

A floating exchange rate is set by supply and demand in the currency market rather than fixed by the government. Most major currencies float, though central banks sometimes intervene.

Floating-rate notes pay a coupon that resets regularly to a benchmark rate such as SOFR plus a fixed margin. Because the coupon tracks current rates, their prices barely move when rates change — the opposite of long fixed-rate bonds.

A follow-on offering is a sale of shares by a company that is already listed. If the company issues new shares, existing holders are diluted; if insiders or early investors sell their own shares, there is no dilution but a lot of stock comes to market.

A footprint chart shows, inside each candle, how much volume traded at each price and on which side — buyers or sellers.

The forex market is the global market for exchanging currencies, and the largest financial market by trading volume. It has no central exchange, trades around the clock from Monday to Friday, and quotes currencies in pairs such as EUR/USD.

Trailing P/E divides the share price by earnings over the past twelve months; forward P/E uses analysts’ estimates for the next twelve months. Forward P/E depends on forecasts that may prove wrong.

A forward contract is a private agreement to buy or sell an asset at a set price on a future date. Unlike futures, forwards are customised, trade over the counter and are not marked to market daily, so each side carries the other's credit risk.

Forward points are the amount added to or subtracted from the spot exchange rate to get the forward rate. They mainly reflect the interest-rate difference between the two currencies over the contract’s life.

A forward rate agreement locks in an interest rate for a future period. At the start of that period, the two sides settle in cash the difference between the agreed rate and the market rate on a notional amount.

Forward testing is running a strategy on new, live market data — with paper money or small size — to check that backtest results hold up.

Fractional shares let you own part of a single share, so you can invest a set amount such as $50 in a stock priced at $500. Not every broker offers them, and they may not be transferable between brokers.

Free cash flow is the cash a company generates from operations after paying for capital expenditure. It is the money available for dividends, buybacks, debt repayment or acquisitions. Definitions vary slightly between analysts.

Free float is the part of a company's shares available for public trading, leaving out stakes held by insiders, governments or strategic owners. Most index providers weight companies by free float, and a small float can make a stock very volatile.

Free margin is the part of your equity not tied up as margin for open positions, and therefore available for new trades or to absorb losses.

The front month is the futures contract closest to expiry, usually the most traded; back months are the later expiries. Traders roll from the front month into the next one before it expires.

Front running is trading ahead of a large order you know is coming — for example a broker buying before filling a client's big buy order — to profit from the price move it causes. It is illegal for brokers; in crypto, a related practice appears as MEV.

FUD stands for fear, uncertainty and doubt — negative news or rumours, sometimes spread deliberately, that push people to sell.

Fully diluted valuation (FDV) is a token's price multiplied by its maximum supply — what it would be worth if every possible token were in circulation.

A fund of funds invests in other funds rather than directly in securities. It offers diversification across managers, but you pay two layers of fees.

A load is a sales charge on a mutual fund: front-end loads are taken when you buy, back-end loads when you sell. No-load funds charge neither.

Fundamental analysis estimates what an asset is worth from underlying data — company results, the economy, interest rates — rather than from price charts alone.

The funding rate is a periodic payment exchanged between long and short holders of a perpetual futures contract to keep its price close to spot.

Fungibility means units are interchangeable: one share of a company, one dollar or one standard futures contract is identical to another. It is what lets assets trade easily — and why tainted or unique items, such as NFTs, are harder to trade.

A futures commission merchant is a firm that accepts customers' futures orders and holds their margin money — in effect, a futures broker. In the US, FCMs must register with the CFTC and keep customer funds segregated.

A futures contract is a standardised, exchange-traded agreement to buy or sell an asset at a set price on a future date.

Convergence is the futures price moving towards the spot price as the contract approaches delivery, so the basis shrinks to almost zero at expiry. If it did not, traders could profit from the gap with little risk.

Fair value is the theoretical price of a futures contract given the spot price, interest rates and expected dividends. Pre-market commentary compares stock index futures with fair value to judge where the cash market will open.

A futures spread holds a long and a short futures position at once: in different months of the same commodity (calendar spread) or in related markets (inter-commodity spread). Because the legs offset, spreads usually need less margin.

The G7 brings together the leaders and finance ministers of the US, Japan, Germany, the UK, France, Italy and Canada; the G20 adds major emerging economies such as China, India and Brazil, plus the EU and African Union. Their statements can move currencies when they hint at coordinated action.

GAAP are the accounting standards US companies must follow, set by FASB; most other countries use IFRS. Companies often add “non-GAAP” or adjusted figures, which leave out certain costs and deserve a sceptical read.

The gambler’s fallacy is believing that a random outcome is “due” after a streak — for example, that five losing trades in a row make a win more likely. The hot-hand fallacy is the opposite mistake: believing a winning streak will continue without evidence.

A Gann fan, from the trader W. D. Gann, draws lines at set angles from a major high or low, such as the 1×1 line (one unit of price per unit of time). The angles depend on the chart's scale, which makes the method hard to apply consistently.

Gap risk is the danger that the price jumps past your stop level — for example overnight or after news — so the order fills at a much worse price than planned.

A GARCH model is a statistical model of volatility that changes over time, in which today’s volatility depends on recent shocks and recent volatility. It captures volatility clustering and is widely used in risk models.

The Gartley is the original harmonic pattern, named after H. M. Gartley. In its usual form, B retraces about 61.8% of the XA leg and the pattern completes at D, near the 78.6% retracement of XA, where a reversal is expected.

A gas fee is the transaction fee paid to a blockchain network, such as Ethereum, to have a transaction processed; it rises when the network is busy.

In a private fund, the general partner (GP) manages the money and makes decisions, while limited partners (LPs) supply most of the capital with liability limited to what they invest. Multiple on invested capital (MOIC) is total value returned divided by money invested: $25 million back on $10 million is 2.5×.

Gilts are bonds issued by the UK government. They are the UK's equivalent of US Treasuries, and index-linked gilts adjust their payments for inflation.

Safe-haven assets are ones investors buy when markets are in turmoil because they expect them to hold their value — classically gold, US Treasuries, the Swiss franc and the Japanese yen. They often, but not always, rise when stocks fall.

Under a gold standard, a currency can be exchanged for a fixed amount of gold, which limits how much money can be created. The US ended the last link between the dollar and gold in 1971; today's currencies are fiat money.

A Goldilocks economy is “not too hot, not too cold”: growth strong enough to support jobs and profits, but not so strong that inflation forces the central bank to raise rates. It is usually a friendly backdrop for stocks.

A good loss follows the plan and stays within the planned risk — sometimes it is simply an unlucky trade. A bad win makes money while breaking the rules — a lucky trade. Rewarding bad wins teaches habits that eventually cost money.

Governance tokens give holders votes on a protocol’s decisions, such as fee changes or treasury spending, usually through formal proposals. Voting power is typically proportional to tokens held, so large holders can dominate.

Granger causality is a test of whether past values of one series help forecast another. Despite the name it shows predictive usefulness, not true cause and effect.

The greater fool theory describes buying something overpriced in the belief that someone else will pay even more later. It works until the buyers run out — which is why bubbles that rest on it end abruptly.

Trader shorthand for a day that ended with a net profit (green), a net loss (red) or roughly break-even (flat). Likewise, a green or red trade is a winning or losing trade.

Green and social bonds raise money for specified environmental or social projects. Sustainability-linked bonds work differently: the money can be used for anything, but the coupon changes if the issuer misses agreed sustainability targets. Labels follow voluntary guidelines, so the details vary.

Greenium is the possible price premium — and so lower yield — of a green bond compared with an otherwise similar conventional bond from the same issuer. Studies disagree on how large it is, and it is often small or absent.

A greenshoe, or over-allotment option, lets the underwriters of an offering sell up to 15% more shares than planned. It helps them support the price in the first weeks of trading.

A grey market is unofficial trading in shares before they are formally listed, most often new IPO shares, through dealers or informal deals. Grey-market prices hint at first-day demand but carry no exchange protections.

Grid trading places buy and sell orders at fixed intervals above and below a price, profiting from back-and-forth movement but suffering in strong trends.

Gross profit or loss is the result from the price difference alone; net profit or loss is what remains after commissions, fees, interest, financing and other costs.

Gross return is the result before costs; net return is what remains after fees, spreads, financing and slippage — the only figure that ends up in your account.

Gross domestic product (GDP) is the total value of goods and services an economy produces in a period; its growth rate is the broadest measure of economic health.

Growth stocks belong to companies expected to grow sales and profits faster than average, so they often trade at high valuations. Value stocks trade cheaply relative to earnings or assets. The two styles tend to take turns leading the market.

Guidance is a company's own forecast of future results, such as expected revenue; changes to guidance often move the stock more than past results.

A haircut is a reduction applied to the value of an asset used as collateral. With a 20% haircut, $100 of bonds counts as only $80 of collateral, which protects the lender if the asset's price falls.

A hammer is a candle with a small body near the top and a long lower wick, appearing after a decline: sellers pushed the price down but buyers drove it back up.

A hanging man looks like a hammer — small body, long lower wick — but appears after a rise, where it can warn that buying pressure is weakening.

A harami is a two-candle pattern in which a small body sits entirely inside the previous candle's larger body. After a decline it hints that selling is fading (bullish harami); after a rally that buying is fading (bearish harami). A harami cross uses a doji as the second candle.

A fork is a change to a blockchain’s rules. A hard fork is not backward-compatible, so nodes that do not upgrade can split into a separate chain; a soft fork tightens the rules in a way old nodes still accept.

Harmonic patterns, such as the Gartley, Bat, Butterfly and Crab, are price structures of five points (X, A, B, C, D) whose swings fit specific Fibonacci ratios. Traders use them to mark zones where a reversal may start, which still need confirmation.

Feed any data into a hash function and you get a short code of fixed length — the hash. The tiniest edit to the input produces a totally different code, and the input cannot be rebuilt from it, which is what lets blockchains detect tampering.

A hawkish central banker leans towards higher interest rates to fight inflation; a dovish one leans towards lower rates to support growth. Markets react to the tone of statements as much as to decisions, and a hawkish surprise usually lifts the currency.

Head and shoulders is a reversal pattern of three peaks with the middle one highest; the inverse version, with three troughs, can mark the end of a downtrend.

Degree days measure how much heating or cooling demand the weather creates. A heating degree day counts how far the daily average temperature falls below a base (65°F in the US, often around 18°C elsewhere); a cooling degree day how far it rises above it. They drive natural gas and power forecasts and weather derivatives.

A hedge fund is a private investment fund for wealthy and institutional investors that can use leverage, short selling and other flexible strategies. It faces fewer rules than mutual funds and usually charges a management fee plus a share of profits.

Hedging is opening a position that is expected to gain when another of your positions loses, reducing your overall risk.

Heikin-Ashi is a chart type whose candles are calculated from averages of current and previous prices to smooth out noise; its prices are not actual traded prices.

High-frequency trading (HFT) is algorithmic trading at extremely high speed, holding positions for fractions of a second, usually by specialised firms.

A high-water mark is the peak value an account or fund has ever reached. Performance fees are usually charged only on gains above that peak, so investors don't pay twice for winning back the same losses.

High-yield bonds, or junk bonds, are rated below investment grade. They pay higher interest to compensate for a higher risk of default, and their prices tend to move more like stocks than like government bonds.

An uptrend makes higher highs (HH) and higher lows (HL); a downtrend makes lower highs (LH) and lower lows (LL). These four labels describe trend structure.

The Hindenburg Omen is a breadth-based warning signal that fires when an unusually large number of NYSE stocks hit both 52-week highs and 52-week lows while the market is still rising — a sign of a split, unhealthy market. It gives many false alarms.

Hindsight bias is the feeling, after the fact, that an outcome was obvious all along. It makes traders overestimate how predictable markets are and blame themselves unfairly for missed moves.

Hitting the bid means selling immediately at the best price a buyer is offering; lifting the offer means buying straight away at the best asking price. Both trade off price for speed and pay the spread.

HODL is crypto slang for holding an asset through volatility instead of selling; it began as a typo of “hold” and was later read as “hold on for dear life”.

Hollow candles combine two signals in one candle: the fill shows whether the close was above the open (hollow) or below it (filled), and the colour shows whether the close was above or below the previous close. That gives four candle types instead of two.

Home bias is investors' tendency to hold mostly assets from their own country, even when it is a small slice of the world market. It feels familiar and safe but concentrates risk in one economy and currency.

A honeypot token looks like a rising coin, but code hidden in its contract stops ordinary holders from selling. Buyers keep pushing the price up while their money stays locked inside; token scanners and a tiny test sale can reveal the trap before you buy.

A hot wallet is connected to the internet and convenient for frequent use; a cold wallet keeps keys offline, such as a hardware device, and is safer for long-term storage.

Hot money is capital that moves quickly between countries or markets chasing the best short-term returns, such as higher interest rates. It can pump up a currency or market fast and leave just as fast, as in many emerging-market crises.

House price indexes track home values over time; the S&P CoreLogic Case-Shiller indexes, for example, compare repeat sales of the same homes. Falling house prices hit consumer wealth and bank balance sheets, so traders watch them as an economic signal.

Housing starts count new residential construction projects begun in a month. Because housing is sensitive to interest rates, the figure is an early sign of how monetary policy is affecting the economy.

Hyperinflation is price growth so extreme — often defined as more than 50% a month — that money rapidly becomes worthless, as in Germany in 1923 or Zimbabwe in 2008. It usually follows governments printing money to cover deficits.

An iceberg order is a large order that shows only a small part in the order book at a time, hiding its true size; such hidden liquidity can absorb big moves.

The Ichimoku Cloud is a Japanese indicator system of five lines; the shaded cloud between two of them is used to judge trend, momentum and support or resistance.

An initial coin offering (ICO) is a sale of new tokens to raise money for a crypto project; an initial exchange offering (IEO) is run through an exchange. Many early ICOs failed or were scams, and regulators have treated many as unregistered securities offerings.

Idiosyncratic risk is the risk specific to one company or asset — a failed product, a fraud, a lawsuit — rather than the market as a whole. Holding many unrelated positions largely diversifies it away; market risk cannot be removed that way.

An impairment, or write-down, cuts the value of an asset on a company's balance sheet when it is worth less than recorded — for example goodwill from an acquisition that disappointed. It lowers reported profit without using cash, but signals a past mistake.

Impermanent loss is how much worse off a liquidity provider is compared with simply holding the two tokens, caused by the pool rebalancing as their relative price changes. In a 50/50 constant-product pool, a 2× price change in one token means roughly 5.7% less value than holding. It becomes permanent when you withdraw.

Implementation shortfall is the difference between the price when you decided to trade and the result you actually achieved, including spreads, market impact, fees and any part of the order that was never filled.

Implied volatility (IV) is the future volatility that the market is pricing into an option; higher IV means more expensive options.

Index arbitrage trades the gap between stock index futures and the stocks in the index: buying whichever is cheap and selling whichever is dear, then waiting for the prices to converge.

An index fund is a mutual fund or ETF that tries to match the return of a market index, such as the S&P 500, by holding the same securities. It trades less and usually charges far lower fees than actively managed funds.

When an index adds, removes or reweights a stock, funds that track it must trade to match. Inclusion can create heavy buying on the effective date, which traders try to anticipate and which often fades afterwards.

Futures exchanges blend spot prices from several venues into an index price, then derive a mark price from it. Your unrealised profit and liquidation are judged on the mark price, so a sudden wick on one exchange should not wipe out your position.

The exact rules and formulas differ between brokers and exchanges — check your platform’s documentation.

Index weighting decides how much each company counts in an index. The S&P 500 weights by market value, so giants dominate; the Dow weights by share price; equal-weight versions give every member the same share, which tilts toward smaller companies.

Industrial production measures the monthly output of factories, mines and utilities; in the US the Federal Reserve publishes it together with capacity utilisation. It is a timely gauge of the manufacturing side of the economy.

Inflation is the general rise in prices over time, which reduces what money can buy; it shapes interest rates and moves almost every market.

An inflation hedge is an asset expected to hold its real value when prices rise — inflation-linked bonds most directly, and often commodities, real estate or gold. None works reliably every time; stocks and bonds both struggled in the 2022 inflation surge.

An information barrier, traditionally called a Chinese wall, separates parts of a financial firm — for example deal-making bankers from traders and analysts — so confidential information cannot be used for trading or research.

Tracking error is the volatility of the difference between a portfolio’s returns and its benchmark’s. The information ratio divides the average excess return by the tracking error, showing how consistently a manager beats the benchmark.

An initial public offering is when a company first sells shares to the public and lists on a stock exchange. Underwriting banks help set the price, which is why first-day trading can open far above or below the offer price.

An inside bar's whole range sits within the previous candle's range, showing contraction; an outside bar's range covers the previous candle entirely, showing expansion.

Insider ownership is the share of a company held by its executives and directors; institutional ownership is the share held by funds, pension plans and other institutions. In the US, large holders and insiders must report positions and trades in public filings.

Illegal insider trading is buying or selling a security while holding material, non-public information about it. Insiders such as directors may trade legally within the rules, but in the US they must report their trades, usually within two business days.

Rules differ between countries; this is general information, not tax or legal advice.

An institutional trader trades on behalf of an organisation such as a bank, pension fund, hedge fund or insurance company, usually in large size.

The interbank market is where big banks trade currencies with each other in large sizes at the tightest prices, mostly over electronic platforms. Retail brokers' quotes are ultimately built on these prices plus a markup.

The interest coverage ratio divides operating profit (EBIT) by interest expense. A ratio of 5 means profits cover interest five times; below about 1.5 the company has little room if earnings slip or rates rise.

An interest rate is the price of borrowing money; central banks set short-term policy rates, which ripple through bonds, currencies and stocks.

In an interest rate swap, one side pays a fixed rate and the other a floating rate on the same notional amount, which itself never changes hands. Companies use them to switch loans between fixed and floating rates.

The internal rate of return is the discount rate at which the present value of an investment’s cash flows equals zero. It is a single annual return figure for investments with irregular cash flows, such as private funds or projects.

Internalisation is when a broker or dealer fills a customer’s order from its own inventory or against another customer, instead of sending it to an exchange.

An option's premium has two parts: intrinsic value, what it would be worth if exercised now, and time value, the extra paid for the chance of a better move before expiry.

The invalidation level is the price or condition at which your trade idea is clearly wrong. It is the natural place for a stop-loss.

The inventory-to-use ratio (or stocks-to-use) compares the stock of a commodity with how much is expected to be used over a period. Low ratios mean thin buffers, which tends to make prices higher and more volatile.

An inverted hammer has a small body near the bottom and a long upper wick, appearing after a decline as a possible early sign that buyers are testing higher prices.

An investment bank helps companies and governments raise money by underwriting stock and bond issues, advises on mergers, and often runs trading and research divisions. It earns fees rather than mainly lending like a commercial bank.

Investment grade describes bonds rated BBB− or higher by S&P and Fitch, or Baa3 or higher by Moody's. Many funds and insurers may only hold investment-grade debt, so falling below that line can force selling.

An iron condor sells an out-of-the-money put spread and an out-of-the-money call spread on the same expiry. It earns the premium if price stays between the short strikes, and the bought options cap the maximum loss.

The International Swaps and Derivatives Association is the industry body for over-the-counter derivatives. Its standard ISDA Master Agreement sets the legal terms — including what happens on default — for most swaps between institutions.

An island reversal is a group of bars cut off by a gap on each side: price gaps in the trend's direction, trades for a while, then gaps the other way. It leaves recent buyers or sellers trapped and can mark a sharp turn.

The January effect is the historical tendency for stocks, especially small caps, to rise in early January, often explained by tax-loss selling in December followed by buying back. It has weakened since it became widely known.

Jobless claims count people filing for unemployment benefits. In the US, initial claims are published weekly, which makes them one of the most timely signs of whether the labour market is weakening.

JOLTS — the Job Openings and Labor Turnover Survey from the US Bureau of Labor Statistics — reports job openings, hires, quits and layoffs each month. A high quits rate signals workers confident about finding new jobs.

Journal tags are labels added to each trade — the setup used, the mistake made, your emotional state, the market condition — so that results can later be filtered and compared. Annotations are notes drawn or written on the chart itself.

A Kagi chart draws one continuous line that changes direction only when price reverses by a set amount, ignoring time. The line turns thick when price breaks above a previous high and thin when it breaks below a previous low, which marks shifts in supply and demand.

The Kelly criterion is a formula for the fraction of capital to risk that maximises long-run growth, given a known win probability and payoff. For a bet with win probability p and payoff b to 1, the fraction is p − (1 − p) ÷ b. Because real edges are uncertain, many traders use a fraction of it (“fractional Kelly”).

Keltner Channels are volatility bands drawn above and below an exponential moving average, usually a 20-period EMA plus and minus two times the Average True Range. The EMA shows direction and the ATR sets the width.

A kicker pattern is a sharp two-candle reversal: a candle in one direction is followed by a candle that gaps the other way and keeps going, often after sudden news. It is rare but treated as one of the strongest candlestick signals.

Killzones come from the ICT (Inner Circle Trader) school: a few hours around the Asian, London and New York opens when volume and volatility usually peak. Followers only look for setups inside those windows.

Trading-community term: educators use it in different ways and there is no universally agreed definition.

Know Your Customer (KYC) rules require brokers and exchanges to verify who their customers are; anti-money laundering (AML) rules require them to watch for and report suspicious activity. They are why platforms ask for ID and proof of address.

Last look is a practice in currency markets where a liquidity provider gets a brief window after receiving an order to fill it or reject it. It protects dealers from stale prices but can mean rejected or delayed fills when markets move quickly.

A layer 1 is a base blockchain such as Bitcoin or Ethereum; a layer 2 is a network built on top of one to make transactions faster and cheaper.

The LBMA Gold Price, once called the gold fix, is a benchmark price for gold set twice each London business day through an electronic auction. Many contracts and central banks use it for valuation.

Lagging indicators, such as moving averages, confirm moves after they start; leading indicators, such as some oscillators, try to anticipate them but give more false signals.

The Conference Board's Leading Economic Index combines ten forward-looking measures — such as jobless claims, new orders, building permits and the yield curve — into one number meant to signal turns in the US business cycle months ahead.

LEAPS are long-dated options with expirations up to about three years away. A LEAPS call gives exposure to a stock's rise for less capital than buying the shares, while the long time frame gives the trade more time to work.

A legal entity identifier is a 20-character code that uniquely identifies a company or other legal entity in financial transactions. In some jurisdictions, such as the EU, firms need one before they can trade securities.

Leverage means controlling a position larger than your own money — through borrowing or a contract that needs only a deposit — so that gains and losses are both multiplied.

A leveraged buyout is the purchase of a company funded largely with borrowed money, with the company’s own cash flows used to repay the debt. In a management buyout, the company’s existing managers are among the buyers.

LIBOR was the benchmark interest rate at which banks said they could borrow from each other, used to price trillions in loans and derivatives. After a rate-rigging scandal it was phased out, with publication of almost all settings ending by 2023; SOFR and SONIA replaced it.

The Lightning Network is a layer-2 system for Bitcoin: users open payment channels and send many fast, cheap payments off-chain, settling only the final balances on the Bitcoin blockchain.

A limit order buys or sells only at a price you specify or better, so you control the price — but the order may never be filled.

A line chart connects one price per period — usually the close — into a single line, which makes the overall direction easy to see.

With USDT-margined (linear) futures your margin and profit are counted in stablecoins. With coin-margined (inverse) futures they are counted in the coin itself, so a long BTC position on BTC margin is hit twice when bitcoin falls.

On a linear price scale equal distances mean equal amounts of money; on a logarithmic scale equal distances mean equal percentage changes, which suits long histories.

A linear regression channel draws the best-fit straight line through prices over a period, with parallel lines a set number of standard deviations above and below it. It shows the trend's slope and how far price has stretched from it.

Liquidation is the forced closing of a leveraged position by a broker or exchange when your collateral no longer covers the required margin.

Liquidity describes how easily an asset can be bought or sold quickly, in size, without moving its price much.

A liquidity sweep is a quick move beyond an obvious high or low, where many stop orders sit, followed by a sharp reversal; some traders call it a stop hunt.

A liquidity trap is when interest rates are near zero and cutting them further no longer encourages people and firms to borrow and spend, because they prefer to hold cash. Japan in the 1990s is the classic example; it is why central banks turned to QE.

When a major exchange starts offering a coin, the extra access often sends the price jumping; when it drops one, the price usually suffers and holders get a deadline to sell or move their coins elsewhere. Stocks are listed and delisted by stock exchanges in the same way.

Loan-to-value compares the size of a loan with the value of the collateral behind it. A $6,000 crypto loan against $10,000 of bitcoin is 60% LTV; if bitcoin falls and LTV crosses the lender's limit, the collateral is sold.

A locational marginal price is the cost of delivering one more megawatt-hour of electricity to a specific point on the grid. It combines the energy price with the cost of transmission congestion and losses, so prices differ by location.

A market is locked when the best bid equals the best ask, and crossed when the bid is higher than the ask. Both are usually brief, caused by quotes on different venues or delays in data.

A long position means you own an asset — or a contract that behaves like owning it — because you expect its price to rise.

A long squeeze is a sharp fall that forces over-leveraged buyers to sell or be liquidated, and their forced selling pushes the price down even further.

Exchanges publish how their futures traders lean: the share of accounts or positions betting up versus down. When nearly everyone leans one way, a sharp move against the crowd becomes more likely — but each venue measures it differently.

The exact rules and formulas differ between brokers and exchanges — check your platform’s documentation.

Look-ahead bias is using information in a backtest that was not available at the time — for example, trading at a day’s close using a signal calculated from that same close, or using revised economic data. It makes results look better than reality.

Loss aversion is the tendency to feel losses more strongly than equal gains, which leads traders to hold losing positions too long and close winners too early.

Loss chasing is raising risk to win back losses quickly — larger positions, lower-quality setups or extra trades. It is closely related to revenge trading and often turns a bad day into a disastrous one.

Loss given default is the share of an exposure that is lost if a borrower defaults. It is one minus the recovery rate: if lenders recover 40 cents on the dollar, the loss given default is 60%.

Lot size is the standard trading unit of an instrument — for example 100,000 units of currency in a standard forex lot.

Lump-sum investing puts the whole amount in at once; dollar-cost averaging spreads it over time. Because markets rise more often than they fall, a lump sum has historically come out ahead more often, while spreading purchases reduces regret if prices drop soon after.

MACD (Moving Average Convergence Divergence) tracks the gap between two exponential moving averages to show changes in a trend's momentum.

Macroeconomics studies the economy as a whole — growth, inflation, unemployment, interest rates and trade — rather than single companies. Macro traders bet on how these forces move currencies, bonds, stocks and commodities.

The Magnificent Seven is market shorthand for the giant US tech stocks Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla, which make up a large share of the S&P 500 and Nasdaq. An older label, FAANG, covered Facebook, Apple, Amazon, Netflix and Google.

Forex pairs are sorted by how much they trade. The seven majors all include the US dollar, such as EUR/USD and USD/JPY; minors or crosses pair two big currencies without the dollar, like EUR/GBP; exotics add an emerging-market currency, like USD/TRY, and cost more to trade.

Exchanges often charge a lower maker fee to orders that add liquidity by resting in the order book, and a higher taker fee to orders that remove liquidity by executing immediately.

A managed account is an investment account in which a professional manager makes the trading decisions for you, under authority you grant, usually for a fee based on assets or performance.

Margin is the money you put up as collateral so that a broker lends you funds, or an exchange lets you hold a position larger than your cash.

A margin call is a demand from your broker to add money or reduce positions because your account equity has fallen below the required margin.

Margin level is a ratio of your equity to the margin in use, typically equity ÷ used margin × 100%; platforms close positions when it falls below a set level.

Margin of safety means buying an asset well below your estimate of its intrinsic value, so the investment can still work if your estimate is too optimistic. The idea comes from Benjamin Graham, the father of value investing.

A market is any place or system where buyers and sellers meet to exchange an asset at a price they both accept.

Market breadth measures how many stocks take part in a move. The advance-decline line adds up advancing minus declining stocks each day; if an index rises while fewer stocks do, the rally is narrow and may be weakening.

A bubble is a run-up in which prices race far beyond any reasonable value because buyers expect to sell higher to someone else, not because of the asset's earnings or use. Famous examples include the dot-com stocks of 1999–2000 and US housing before 2008.

Market capitalisation is the total market value of a company's shares: the share price multiplied by the number of shares outstanding.

Market hours are the times when a market is open for trading; many stock exchanges trade only on weekdays, while crypto markets trade around the clock.

Market impact is the price movement caused by your own order. A large market order uses up the best prices and moves the market against you; the bigger the order relative to available liquidity, the larger the impact.

A market maker is a firm that continuously quotes both a buying and a selling price, earning the spread and making it easier for others to trade.

Market microstructure studies how the mechanics of trading — order types, matching rules, market makers, fees and information — shape prices, spreads and liquidity. It explains why the same trade can cost different amounts on different venues.

Noise is the random back-and-forth of prices — and the flood of headlines and opinions — that carries no real information about direction. Higher timeframes, moving averages and clear rules all help separate signal from noise.

A market order buys or sells immediately at the best price currently available, without setting a price limit.

A market participant is anyone who trades or provides services in a market, from an individual trader to banks, funds, brokers and market makers.

The market price is the price at which an asset can be bought or sold right now — in practice, the best available bid or ask.

Market Profile organises price by time: each time period (often 30 minutes) is shown as a letter, called a time-price opportunity (TPO), at every price traded in that period. The result shows where the market spent the most time — the value area and point of control.

Market sentiment is the prevailing mood of investors — greedy, fearful or undecided — measured with surveys, positioning data, volatility indexes and options activity. Extremes are often read contrarily: when everyone is bullish, few buyers are left.

Market structure is the pattern of swing highs and swing lows that shows whether a market is trending up, trending down or ranging.

Market-neutral strategies hold long and short positions sized so that overall exposure to the market, or beta, is close to zero. Returns then come from the gap between winners and losers rather than from the market's direction.

A marubozu is a candle with little or no wick, meaning it opened at one extreme and closed at the other — one side controlled the whole period.

A maturity wall is a large amount of debt coming due around the same period. If interest rates are higher than when the debt was issued, refinancing it can be expensive or difficult for weaker borrowers.

Max pain is the strike price at which option buyers, taken together, would collect the least at expiry. Some traders believe prices drift towards it into expiry, but the evidence for that is weak.

Maximal extractable value is the profit that can be made by choosing which transactions go into a block and in what order. Examples include arbitrage, liquidations and sandwich attacks, in which a trader’s swap is placed between the attacker’s buy and sell.

Maximum adverse excursion (MAE) is the largest open loss a trade showed before it closed; maximum favourable excursion (MFE) is the largest open profit. Comparing them across many trades helps judge whether stops are too tight or targets too close.

The McClellan oscillator is a breadth indicator: the difference between the 19-day and 39-day exponential moving averages of net advances (advancing minus declining stocks). Readings above zero show broad buying, below zero broad selling.

Mean reversion is the idea that prices that stretch far from their average tend to return toward it, and strategies that trade on that assumption.

Memecoins are cryptocurrencies built around a joke, meme or online community, such as Dogecoin, with little or no use beyond speculation. Their prices are driven by hype and social media, so huge rallies and near-total collapses are common.

For coins such as XRP, XLM or ATOM, an exchange may give every customer the same deposit address and tell them apart by a short number or text. Leave that memo or tag out of the transfer and the coins arrive without an owner, often needing a slow support ticket to recover.

The mempool is the waiting area of transactions that have been broadcast but not yet included in a block. Transactions offering higher fees are usually picked first.

Mental accounting is treating money differently depending on where it came from — for example, taking bigger risks with “house money” from recent profits. Every dollar in the account is worth the same.

Merger arbitrage is buying a takeover target after a deal is announced, when it trades a little below the offer price, to earn that spread if the deal closes. The main risk is the deal failing, which can send the price sharply lower.

Mergers and acquisitions are deals in which companies combine or one buys another. The target's shares usually jump towards the offer price, while the buyer's shares often fall if investors think it is overpaying.

MetaTrader, made by MetaQuotes, is the platform many forex and CFD brokers hand to clients. MT4 (2005) and MT5 (2010) offer charts, indicators and Expert Advisors that trade automatically; your broker, not the software, decides the prices and fills.

The EU's Markets in Crypto-Assets regulation, in full force since 30 December 2024, licenses crypto service providers and sets rules for issuers. A provider licensed in one member state can serve the whole EU, and euro and dollar stablecoins must meet reserve and disclosure rules.

Rules differ between countries; this is general information, not tax or legal advice.

Indicators based on Bitcoin miners. The Puell Multiple divides daily miner revenue by its 365-day average; hash ribbons compare short and long moving averages of hash rate to flag miner capitulation; miner reserves and outflows estimate how much miners hold and sell.

Mining is how proof-of-work blockchains add new blocks: computers compete to solve a puzzle and earn a reward. Hash rate measures the total computing power doing this.

The misery index adds the unemployment rate to the inflation rate to give a rough gauge of economic hardship for ordinary people. It peaked in the US around 1980, when both were high at once.

A missed trade is a valid setup under your plan that you did not take. Recording missed trades shows whether hesitation is costing you, but chasing them after the fact is a common mistake.

Momentum is the speed and persistence of a price move; strong momentum means the price is moving quickly in one direction with little pullback.

Momentum trading means buying assets that are rising strongly — or shorting those falling strongly — expecting the move to persist for a while.

The Money Flow Index is a 0–100 oscillator that combines price and volume to measure buying and selling pressure, often called a volume-weighted RSI. Readings above 80 are overbought and below 20 oversold; the default period is 14.

A money market fund invests in short-term, high-quality debt such as Treasury bills and commercial paper. It aims to keep its value stable and the money easy to withdraw, but it is not a bank deposit and can, rarely, lose value.

Money supply is the total amount of money in an economy. M1 counts cash and checking deposits; M2 adds savings deposits, small time deposits and retail money-market funds. Fast growth can foreshadow inflation, though the link is loose.

Moral hazard arises when someone protected from the consequences of risk takes more of it — for example banks expecting a government rescue, or traders betting with other people's money. It is the main argument against bailouts.

Morning and evening stars are three-candle reversal patterns: a large candle, a small indecisive one, then a large candle in the opposite direction.

Mortgage-backed securities pool home loans and pass the borrowers’ payments to investors. Asset-backed securities do the same with other loans, such as car loans, credit cards or student loans. Early repayment by borrowers is a key risk.

A moving average is the average price over a fixed number of recent periods, recalculated each period to smooth out short-term noise.

MPC (multi-party computation) wallets never assemble a full private key anywhere. Separate key pieces sit on different devices or servers, and they jointly produce each signature, so no single device or seed phrase can be stolen to empty the wallet.

MSCI publishes widely tracked stock indexes, including MSCI World for about two dozen developed markets, MSCI Emerging Markets and MSCI ACWI for both. Changes to their country or stock weights force index funds to trade, moving prices.

A multisig wallet only releases funds when several separate keys sign off, for example two out of three. A thief needs more than one key, and losing one does not lock you out, which makes it popular for company treasuries and large personal holdings.

Municipal bonds are issued by US states, cities and other local governments to fund public projects. Their interest is often exempt from federal income tax, which is why they appeal to investors in high tax brackets.

Rules differ between countries; this is general information, not tax or legal advice.

A mutual fund pools money from many investors and invests it in a portfolio of stocks, bonds or other assets run by a professional manager. Shares are bought from and sold back to the fund at its net asset value, calculated once a day.

On-chain valuation ratios: MVRV divides market cap by realised cap; NVT divides network value by on-chain transaction volume; SOPR compares the value of coins when spent with their value when last moved (above 1 means sold at a profit); NUPL estimates holders’ total unrealised profit or loss. Readings are interpretive, not signals on their own.

A naked option is one sold without owning the underlying or holding an offsetting position. A naked call has theoretically unlimited risk, so brokers allow it only at their highest approval levels and with large margin.

Narrative bias is preferring a convincing story over the quality of the evidence. A compelling explanation for why a stock must rise can make it easy to ignore data that says otherwise.

The NBBO is the highest bid and lowest offer for a US stock across all exchanges at a moment in time. Under US rules, brokers generally must not execute customer orders at prices worse than the NBBO.

The National Futures Association is the self-regulatory organisation for the US derivatives industry. Futures brokers, commodity trading advisors and forex dealers serving US customers must register with it, and its BASIC database shows their records.

If a weekend gap or flash move pushes a leveraged account below zero, negative balance protection means the broker absorbs the shortfall and you owe nothing more. EU and UK rules make it compulsory for retail CFD accounts; elsewhere it depends on the broker.

Rules differ between countries; this is general information, not tax or legal advice.

A negative electricity price means generators pay to deliver power. It happens when supply from inflexible or subsidised sources, such as wind and solar on a sunny, windy day, exceeds demand and shutting down is more costly than paying buyers.

Net asset value is the value of a fund’s holdings minus its liabilities, usually expressed per share. An ETF can trade slightly above (a premium) or below (a discount) its NAV.

Net income is what remains of revenue after all expenses, interest and taxes — the company's profit, or “bottom line”.

Your net position is what remains after offsetting longs against shorts in the same asset — long 10 and short 4 is a net long position of 6.

Netting offsets what two parties owe each other so only the net difference changes hands. Close-out netting does the same for all open contracts if one side defaults, which greatly reduces counterparty exposure.

News trading and event-driven trading aim to profit from price reactions to scheduled or unexpected events such as data releases or earnings.

No-trade conditions are rules that tell you not to trade — such as major news in the next hour, a hit loss limit, poor sleep or a market that does not fit your strategy. A no-trade day is a day you sit out deliberately.

Nodes are the machines that make up a blockchain network. Each one holds its own copy of the ledger, rejects anything that breaks the rules and relays valid data to its peers; running your own means you verify the chain instead of trusting someone else's.

A non-deliverable forward is a currency forward settled in cash: instead of exchanging the full amounts, the parties pay the difference between the agreed rate and the market rate at maturity. NDFs are common for currencies with capital controls.

On account-based blockchains such as Ethereum, a nonce is a counter that orders the transactions sent from an address, so each is processed once and in sequence. In Bitcoin mining, a nonce is the number miners change while searching for a valid block.

Nonfarm payrolls (NFP) is the monthly US figure for jobs added or lost outside farming, published in the employment report and often a major market mover.

The normal distribution is the symmetric bell curve in which about 68% of outcomes fall within one standard deviation of the average and 95% within two. Many risk models assume returns are normal, but real markets have more extreme days.

A round lot is the standard trading unit — traditionally 100 shares for US stocks — and an odd lot is any smaller order. Odd lots used to be treated less favourably, but in fractional and commission-free trading they are now routine.

An OHLC bar chart draws each period as a vertical line from low to high, with a tick on the left for the open and on the right for the close.

The Omega ratio compares probability-weighted gains above a chosen threshold return with probability-weighted losses below it. Because it uses the whole return distribution, it captures skew and fat tails that the Sharpe ratio misses.

An omnibus wallet holds many customers’ assets together in one address or account, with the custodian keeping track of who owns what. It is efficient, but customers rely entirely on the custodian’s records.

On-balance volume (OBV) adds a period's volume when the price closes up and subtracts it when it closes down, creating a running total of volume pressure.

On-chain analysts read the public ledger itself: how many coins move onto exchanges, whether long-term holders are selling, how active addresses are. It reveals behaviour on the blockchain but misses trades that happen inside exchanges' own books.

On-chain activity is recorded publicly on a blockchain; off-chain activity, such as trades inside an exchange's own books, is not.

On-ramps are the doors into crypto — a card purchase or bank transfer to an exchange. Off-ramps are the way out, back to a bank account, card or cash. Leaving usually involves identity checks, and the cash-out can be reported to tax authorities.

On-the-run Treasuries are the most recently issued bonds of each maturity; they are the most liquid and the prices most often quoted. Older off-the-run issues trade a little less and usually yield slightly more.

A one-cancels-the-other (OCO) order links two orders so that when one executes, the other is cancelled. The classic use is a stop-loss and a take-profit on the same position.

OPEC, the Organization of the Petroleum Exporting Countries, is a group of oil producers that coordinates output policy. Since 2016 it has also worked with other producers, including Russia, as OPEC+. Its production decisions can move oil prices sharply.

An open position is a trade you still hold, whose result changes with the price; a closed position has been exited, so its profit or loss is final.

Open interest (OI) is the total number of futures or options contracts that are open and not yet closed or settled; rising OI means new money entering positions.

Open market operations are a central bank's purchases and sales of government securities, or repo deals, to add or drain bank reserves and keep short-term rates near its target. Large-scale versions of the same tool are called QE and QT.

Open outcry is the traditional way of trading in which floor traders in a pit shouted bids and offers and used hand signals. Electronic trading has replaced almost all of it.

OHLC are the four prices recorded for each period on a chart: the first traded price (open), the highest (high), the lowest (low) and the last (close).

Many stock exchanges open and close the trading day with an auction: orders are collected and matched at a single price that maximises the volume traded. Market-on-open (MOO) and market-on-close (MOC) orders are designed to execute in these auctions. Closing prices from the auction are used to value funds and indices.

Operating cash flow is the cash generated by a company’s core business in a period, shown in the cash flow statement. When it is persistently below reported profit, analysts look closely at the quality of those earnings.

Operating leverage describes how much a company's profits swing when sales change, because of fixed costs. A software firm with mostly fixed costs sees profits jump when sales rise — and fall hard when they drop.

Optimal trade entry (OTE) usually refers to entering during a pullback into roughly the 62–79% Fibonacci retracement zone of the previous move.

Rollups process transactions off the main chain and post them back in batches. Optimistic rollups assume batches are valid unless someone submits a fraud proof during a challenge period; ZK (zero-knowledge) rollups attach a cryptographic validity proof to every batch. A sequencer orders the transactions in both.

The Greeks measure how an option's price reacts to changes: delta (underlying price), gamma (change in delta), theta (time), vega (volatility) and rho (interest rates).

The option premium is the price the buyer pays the seller for an option; it is the most an option buyer can lose.

Option pricing models estimate an option’s fair value. Black-Scholes (1973) gives a closed-form price assuming constant volatility; binomial models use a tree of up and down moves and handle early exercise; Monte Carlo methods simulate many price paths; the Heston model lets volatility itself change randomly.

An option writer is the seller of an option. The writer collects the premium up front and takes on the obligation to buy or sell the underlying if the option is exercised.

An option gives its buyer the right, but not the obligation, to buy (a call) or sell (a put) an asset at a set price until or on a set date.

An options chain is the table of every listed call and put for an underlying asset, grouped by expiry date and strike price. Each row shows prices such as bid, ask and last, plus volume, open interest and often implied volatility and the Greeks.

A collar protects shares you own by buying a put below the current price and paying for it by selling a call above it. Losses are capped at the put's strike, but so are gains at the call's strike — a common way to hedge a big position cheaply.

Options on futures have a futures contract as their underlying: exercising one gives you a long or short futures position. They are widely used on commodities, interest rates and stock index futures.

An order is an instruction to a broker or exchange to buy or sell a specific quantity of an asset under conditions you set, such as price or timing.

An order block is usually described as the last opposite-direction candle before a strong move, treated as a zone where large orders may have been placed.

An order book is the live list of buy and sell limit orders waiting at each price on an exchange.

Order book imbalance compares the volume of resting buy orders with resting sell orders near the current price, as a hint of short-term pressure.

Order flow is the stream of buy and sell orders reaching a market; order-flow traders study who is trading aggressively and where large orders sit.

An oscillator is an indicator that swings within set bounds or around a centre line, such as RSI, Stochastic or CCI. Oscillators help spot stretched moves and fading momentum in ranges, but they can stay overbought or oversold for long stretches in strong trends.

The output gap is the difference between what an economy actually produces and an estimate of what it could produce at full, sustainable capacity. A positive gap points to inflation pressure; a negative one to slack. It cannot be measured directly, so estimates differ.

Over-the-counter trading happens directly between two parties or through dealer networks instead of on an exchange. Most bonds, currencies and swaps trade this way, as do small stocks not listed on a major exchange.

Overbought and oversold describe prices that have risen or fallen unusually far, unusually fast — often judged with oscillators such as RSI. Neither guarantees a reversal.

Overconfidence is believing your knowledge or skill is greater than it is. In trading it shows up as oversized positions, excessive trading and ignoring risk after a run of wins.

Overfitting is tuning a strategy so closely to past data that it captures noise rather than a real pattern, so it fails on new data.

An overnight fee is the financing cost a broker charges for holding certain leveraged positions, such as CFDs or forex, past the daily cut-off time.

Overtrading is trading too often or too large, usually out of boredom or emotion, which raises costs and the number of mistakes.

As analyst ratings, overweight means the analyst expects a stock to beat its sector or market and underweight that it will lag. In portfolios, overweight means holding more of something than the benchmark does.

On a P2P marketplace you trade crypto with another user rather than with the exchange: the platform locks the seller's coins in escrow until the buyer's bank payment arrives. It allows many payment methods but brings risks such as fake payment proofs and bank freezes.

Painting the tape is placing trades — often between colluding parties — to create a false picture of activity or price, luring others in. Marking the close, trading to push the closing price, is a related trick. Both are illegal manipulation.

Pairs trading means going long one asset and short a closely related one, betting on the gap between them rather than on the market's direction.

Paper trading is practising with simulated money, often in a broker's demo account, before risking real money in live trading.

Par value is a bond's face value — the amount repaid at maturity, often $1,000 or quoted as 100. A bond trading at 98 is below par, at 102 above par. For shares, par value is a nominal legal figure with little meaning.

Parabolic SAR plots dots above or below the price that move closer as a trend continues and flip sides when it reverses, often used for trailing stops.

A partial fill happens when only part of your order is executed, usually because there was not enough volume available at your price.

Some merchants accept crypto directly to a wallet address; others use a payment processor that converts it to their currency at once; and crypto cards work anywhere cards do. Paying in stablecoins removes the risk of the price moving mid-purchase.

Payment for order flow is when a broker is paid by a market maker for sending it customers’ orders. It helps fund commission-free trading but raises conflict-of-interest questions; US brokers must disclose it in routing reports, and some jurisdictions restrict or prohibit it.

A payoff diagram plots a position's profit or loss at expiry across a range of prices for the underlying. It makes option strategies easy to read: a bought call is flat below the strike and rises above it, minus the premium paid.

The payout ratio is the share of a company’s earnings paid out as dividends. Paying $1.50 a share from earnings of $3.00 is a 50% payout ratio. Ratios close to or above 100% are hard to sustain.

The Personal Consumption Expenditures price index measures how prices of what US consumers buy change over time. Published by the Bureau of Economic Analysis, it is the Federal Reserve's preferred inflation gauge, and the Fed's 2% target is set in PCE terms.

The PEG ratio is the P/E ratio divided by the expected annual earnings growth rate in percent. A P/E of 30 with 20% expected growth gives a PEG of 1.5. It depends heavily on the growth estimate.

A pending order waits for price to reach a level before it becomes a trade. Buy limit and sell limit orders aim for a better price than now; buy stop and sell stop orders wait for price to break through a level first.

Penny stocks are shares of very small companies that trade at low prices, often on over-the-counter markets. They are cheap per share but thinly traded, poorly researched and a frequent target for manipulation, so they carry very high risk.

Perpetual bonds have no maturity date: they pay interest indefinitely unless the issuer chooses to redeem them. With no principal repayment in sight, their prices are very sensitive to interest rates; many bank capital bonds are perpetual.

Perpetual futures are futures contracts with no expiry date, kept close to the spot price by regular funding payments between longs and shorts.

The Phillips curve describes a trade-off between unemployment and inflation: tighter labour markets push wages and prices up. The link broke down in the 1970s stagflation and has looked flat in some decades since, but central banks still watch it.

Phishing tricks you into handing over access yourself. A message, ad or website dressed up as your exchange, wallet or a friend asks you to log in, “verify” a seed phrase or sign something — and whatever you enter goes straight to the attacker.

A piercing line forms after a decline: a long bearish candle is followed by a bullish one that opens lower but closes above the midpoint of the first body. Dark cloud cover is the bearish mirror image at the top of a rally.

The name describes the method: victims are “fattened” with weeks of friendly or romantic chat, then guided onto a fake trading app whose dashboard shows steady gains. When they try to cash out, new fees and taxes appear until the money is gone.

A pin bar has a small body and one long tail, like a pin: price stabbed into a level and was thrown back. A long lower tail at support hints buyers are defending it; a long upper tail at resistance hints sellers are. Hammers and shooting stars are pin bars.

A pip is the standard unit of price movement in a currency pair — 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen.

Pip value is how much money a one-pip move is worth for a given position. For a pair quoted in US dollars, one pip on a 100,000-unit position is worth $10; for other pairs it depends on the exchange rate and your account currency.

Most brokers now quote currencies to one decimal place beyond the pip. That extra digit is the pipette: in USD/JPY at 151.234, the final 4 is pipettes. Platforms that call it a “point” mean the same unit.

Pivot points are support and resistance levels calculated from the previous period's high, low and close, widely used by intraday traders.

A point and figure chart plots rising prices as columns of Xs and falling prices as columns of Os, ignoring time. A new column starts only when price reverses by a set number of boxes, often three, so only meaningful moves show.

A point of interest (POI) is a price zone a trader has marked in advance — such as an order block or gap — where they plan to look for a trade.

A poison pill, formally a shareholder rights plan, lets existing holders buy extra shares cheaply if a hostile bidder crosses an ownership threshold. The dilution makes a takeover far more expensive and pushes the bidder to negotiate with the board.

A Ponzi scheme pays earlier investors with money from new investors instead of real profits, so it collapses once new money dries up. A pyramid scheme pays people mainly for recruiting others. Both promise high, steady returns with little risk.

A portfolio is the full collection of assets and positions you hold, viewed together for risk and performance.

Portfolio allocation is how your money is divided between assets or strategies, such as 60% shares and 40% bonds.

Portfolio heat is the total amount you would lose if every open position hit its stop at once, usually as a percentage of the account. Five trades each risking 1% give 5% heat. Traders cap it to avoid large combined losses.

Portfolio insurance is a dynamic hedging strategy that sells index futures as prices fall to protect a minimum portfolio value. Its mass selling was blamed for deepening the October 1987 crash.

A position is the amount of an asset or contracts you currently hold or owe, together with its direction — long or short.

Position limits cap how many futures or options contracts one trader can hold in a market. Exchanges and regulators set them to stop any single participant from cornering or manipulating the market.

Position sizing is deciding how many shares, contracts or coins to trade so that, if your stop is hit, you lose only an amount you chose in advance.

Position trading means holding trades for weeks to months or longer, aiming to capture large trends rather than daily swings.

A post-only order is a limit order that is cancelled instead of executed if it would trade immediately, so it only ever adds liquidity (and usually pays maker fees). A reduce-only order can only shrink an existing position, never increase or reverse it — useful for stops and targets on derivatives exchanges.

The potential reversal zone is the price area where several Fibonacci measurements from a harmonic pattern's legs cluster, marking where point D should complete. The tighter the cluster, the more significant the zone, but price must still confirm the turn.

A power purchase agreement is a long-term contract to buy electricity, often from a specific wind or solar project, at an agreed price or formula. It gives the generator predictable revenue and the buyer a known cost.

A megawatt (MW) measures power — the rate of producing or using energy — and a megawatt-hour (MWh) measures energy: 1 MW for one hour. 1 gigawatt (GW) is 1,000 MW, and 1 terawatt-hour (TWh) is 1,000,000 MWh. Wholesale power is usually priced per MWh.

Pre-commitment is deciding your rules — entries, stops, size, loss limits — before emotions are involved. A cooling-off period is a planned break after a big loss or stressful event before you trade again.

A pre-trade checklist lists the conditions a trade must meet before you enter — setup, trend, risk, news. A post-trade checklist reviews what happened afterwards: whether you followed the plan, what went well and what to change.

Pre-trade risk checks automatically block orders that break limits on size, price or exposure before they reach the market. A kill switch cancels all open orders and stops an automated system at once. Both are standard protections for algorithmic trading.

Precious metals are rare metals with high value per ounce — gold, silver, platinum and palladium. Gold trades mainly as money and a safe haven; silver, platinum and palladium also depend on industrial demand, so they swing more with the economy.

Preferred stock is a class of shares that usually pays a fixed dividend and ranks ahead of common stock for dividends and in bankruptcy, but behind bonds. Holders usually have no voting rights, and the price moves less than common stock.

With a prepaid card you can only spend what you loaded beforehand, so there is no debt. A virtual card is card details without the plastic, living in an app — convenient for online shopping, and simple to freeze or swap for a new number.

Prepayment risk is the chance that borrowers repay early — usually when rates fall — so holders of mortgage-backed securities or callable bonds get their money back just when it can only be reinvested at lower rates.

Future value is what money grows to at a given rate; present value is what a future amount is worth today. $100 at 5% a year becomes $110.25 after two years, so $110.25 due in two years is worth $100 today at that rate.

The presidential election cycle theory says US stocks tend to do worst in the first two years of a presidential term and best in the third, as administrations push for growth before re-election. It is a loose historical tendency, not a rule.

Price action is the study of raw price movement — candles, swings, levels and trends — to make trading decisions with few or no indicators.

Price alerts notify you — by app, email or text — when a market reaches a level, crosses an indicator or jumps in volume. They let you wait for your setup without staring at screens, but unlike orders they do not trade for you.

Price discovery is how a market settles on a price as buyers and sellers react to new information and to each other's orders. It is fastest in deep, open markets and around news; in thin or closed markets, prices can lag reality.

A price gap is a jump between one candle's close and the next candle's open, leaving an empty space on the chart where no trades took place.

Price improvement is an execution at a better price than the best quote at the time the order arrived — for example, buying at $50.01 when the best ask was $50.02.

The price-to-book ratio is the share price divided by book value per share. It is most useful for asset-heavy businesses such as banks; for companies whose value lies in brands or software it says little.

The price-to-earnings ratio divides a share's price by its earnings per share, showing how much investors pay for each unit of profit.

The price-to-sales ratio is a company’s market capitalisation divided by its annual revenue. It is used for companies without profits, but ignores costs, so two companies with the same ratio can have very different margins.

News is “priced in” when markets already expected it, so prices barely move when it arrives. That is why a stock can fall on good earnings: investors had already bought in anticipation of results that were even better.

In the primary market, companies and governments sell newly created securities to investors, as in an IPO. In the secondary market, investors then trade those securities with each other, which is what most exchange trading is.

Primary dealers are about two dozen banks and broker-dealers that trade directly with the New York Fed and must bid at every Treasury auction. They act as the core market makers in US government bonds.

Rules differ between countries; this is general information, not tax or legal advice.

A prime broker is a large bank that bundles services for hedge funds: financing and leverage, lending shares for short sales, custody, clearing and reporting. When a big client fails, as Archegos did in 2021, its prime brokers can take heavy losses.

The prime rate is the base interest rate US banks charge their most creditworthy customers, and many consumer loans are priced as prime plus a margin. By convention it sits three percentage points above the top of the fed funds target range.

Rules differ between countries; this is general information, not tax or legal advice.

A private placement sells securities directly to a select group of investors, such as funds or wealthy individuals, instead of through a public offering. It is faster and cheaper but usually comes with resale restrictions and less disclosure.

Rules differ between countries; this is general information, not tax or legal advice.

Judging a trade by its process rather than its result: a good trade follows the plan with controlled risk, whatever the outcome. Process goals (follow the checklist, respect the stop) are under your control; outcome goals (make $1,000 this week) are not.

The Producer Price Index (PPI) measures changes in the prices producers receive for their output, and is sometimes an early signal of consumer inflation.

Profit and loss (P&L) is how much a trade or account has gained or lost, after costs, measured in money or as a percentage.

Profit factor is gross profit divided by gross loss; above 1 means the strategy made more on winners than it lost on losers.

Profit margins show how much of each dollar of sales a company keeps. Gross margin subtracts the direct cost of goods; operating margin also subtracts running costs; net margin is what is left after interest and tax. Rising margins usually mean pricing power or efficiency.

Profit taking is selling after a rise to lock in gains. When many traders do it at once — after a big rally or ahead of a holiday — prices can pull back even without bad news.

Program trading is computer-executed buying or selling of a large basket of stocks at once, often for index arbitrage or portfolio rebalancing. The NYSE historically defined it as trading 15 or more stocks worth $1 million or more together.

Proof of reserves is an attempt by an exchange or custodian to show it holds the customer assets it claims, often using on-chain addresses and cryptographic proofs. Without proof of liabilities — what is owed to customers — it shows only half the picture.

Proof of work secures a blockchain through computing power (mining); proof of stake secures it through participants locking up the network's own coins.

Proprietary trading firms trade with their own capital. Retail “prop firms” sell evaluation challenges: pass the profit target without breaking drawdown rules and you trade a funded account for a share of profits. Most participants fail, and the fees are the firm's income.

A prospectus is the formal document that describes securities being offered to the public: the business, its finances, the terms and the risks. Funds and IPOs must provide one.

A private key is the secret that proves ownership and authorises transactions; the public key, from which the address is derived, can be shared safely.

A pullback is a temporary move against the prevailing trend, such as a dip during an uptrend; its depth measured in percent is often called a retracement.

Pullback trading means entering in the direction of a trend after a temporary move against it, aiming for a better price than chasing.

A pump and dump is a fraud where promoters buy a cheap, thinly traded asset, hype it with false or misleading claims to push the price up, then sell their holdings to the buyers they attracted. The price usually collapses afterwards.

A purchasing managers’ index is a monthly survey of companies about orders, output, employment and prices. Readings above 50 indicate expansion compared with the previous month, below 50 contraction. Well-known versions include the ISM Manufacturing and Services PMIs in the US and S&P Global’s PMIs.

Purchasing power parity is the idea that exchange rates should, over the long run, move towards the rate that makes the same basket of goods cost the same in both countries. Currencies can stay far from PPP for years, so it is a valuation guide, not a timing tool.

A pure play is a company focused almost entirely on one business or theme, such as a single-product chipmaker. Investors buy pure plays to get clean exposure to that theme, without the other businesses a conglomerate would bring.

Put-call parity links European call and put prices with the same strike and expiry: call − put = share price − present value of the strike (without dividends). If prices drift out of line, arbitrage pushes them back.

The put-call ratio divides the volume (or open interest) of puts by that of calls. A high ratio shows heavy demand for protection; traders often read extremes as contrarian sentiment signals.

Pyramiding is adding to a winning position as it moves in your favour, usually in smaller amounts each time and with the stop raised so the total risk stays controlled.

Quality of earnings asks how much of a company's reported profit comes from repeatable operations backed by cash, rather than one-off gains or accounting choices. Profits that rise while operating cash flow falls are a classic warning sign.

Quantitative easing (QE) is a central bank buying large amounts of bonds to push down longer-term interest rates and ease financial conditions. Quantitative tightening (QT) is the reverse: shrinking those holdings, usually by not reinvesting maturing bonds.

Quantitative trading uses statistical models and data, rather than judgement, to decide what to buy and sell; the people who build the models are called quants. Strategies range from slow factor portfolios to high-frequency market making.

The Quasimodo pattern is a reversal setup in which price makes a higher high, then breaks below the previous low, and traders then look to sell a retest of the left shoulder's level. In shape it resembles an uneven head and shoulders.

Trading-community term: educators use it in different ways and there is no universally agreed definition.

Queue position is your place in line among limit orders at the same price; orders placed earlier are usually filled first.

A quiet period is a time when a company and its advisers limit public comments: around an IPO, and in the weeks before quarterly results. Afterwards, analysts at the underwriting banks often begin coverage.

Quote stuffing is flooding an exchange with huge numbers of orders that are cancelled almost at once, to clog data feeds and slow down other traders. Regulators treat it as manipulative, and exchanges cap message rates to prevent it.

An R-multiple expresses a trade's result in units of its initial risk: if you risked $100 and made $250, the trade returned 2.5R.

A rally is a period of rising prices after a decline or a pause. A rally inside a bear market — a relief or bear-market rally — can be sharp but short-lived.

Random walk theory holds that price changes are unpredictable, so past prices cannot forecast future ones. It was popularised by Burton Malkiel's book A Random Walk Down Wall Street.

A range is a period when the price moves sideways between a fairly stable high and low instead of trending; traders also call it consolidation.

Range bars give every bar the same high-to-low size, ignoring time: a new bar starts only when price has moved the full range. Quiet periods produce few bars and fast markets many, which makes trends and breakouts easier to see.

Range trading means buying near the bottom and selling near the top of a sideways range, until the price breaks out of it.

A rate hike is a central bank raising its key interest rate, usually to fight inflation; a rate cut lowers it, usually to support a slowing economy.

A ratio spread buys one number of options and sells a different number at another strike, such as buying one call and selling two higher-strike calls. It can be cheap or even pay a credit, but leaves open-ended risk on one side.

A re-entry is opening a new position in the same idea after a previous one was closed — for example after being stopped out, if the setup forms again.

The real effective exchange rate is a currency’s average value against its trading partners, weighted by trade and adjusted for differences in inflation. It shows whether a country’s goods are becoming more or less competitive abroad.

Net operating income (NOI) is a property’s rental income minus operating costs, before financing. Funds from operations (FFO) adds depreciation back to a REIT’s net income and removes gains on property sales; adjusted FFO (AFFO) also deducts recurring capital spending. The debt service coverage ratio (DSCR) is NOI divided by loan payments.

A real yield is a bond yield after inflation. It can be calculated from expected inflation, or observed directly in inflation-protected bonds such as TIPS. Rising real yields tend to weigh on gold and long-duration growth stocks.

Real-world assets (RWAs) are traditional assets such as government bonds, credit, real estate or commodities represented as tokens on a blockchain. They bring outside yields on-chain but depend on the issuer and the legal structure holding the real asset.

Realised capitalisation values each coin at the price it last moved on-chain, instead of today’s price; realised price is that total divided by the supply. It approximates the average cost basis of holders.

Unrealized P&L is the paper gain or loss on a position you still hold; it becomes realized P&L when you close the position and the result is locked in.

Rebalancing is buying and selling to bring a portfolio back to its target allocation after price moves have shifted the weights.

Recall risk is the chance that the lender of shares you have shorted asks for them back. If your broker cannot find replacement shares, your short position may be closed, sometimes at a bad moment.

Recency bias is giving too much weight to the most recent events, such as assuming a strategy is broken after three losses in a row.

A recession is a significant, widespread decline in economic activity lasting more than a few months; two quarters of falling GDP is a common rule of thumb, not an official definition everywhere.

The recovery factor divides a strategy's net profit by its maximum drawdown. A value of 3 means it made three times its worst peak-to-trough loss; higher values show the strategy earns back its drawdowns more convincingly.

A rectangle pattern forms when price bounces between flat support and resistance, showing a pause in which buyers and sellers are balanced. A close outside the box sets the direction, and the box's height is a common target.

Two common smart-contract exploits. A reentrancy attack calls back into a contract before its first execution has finished, for example to withdraw funds twice. Oracle manipulation feeds a protocol a false price — often by briefly moving a thin market — so it lends or liquidates on wrong data.

Reflation is a policy push — rate cuts, money creation or government spending — to lift growth and inflation back up after a slump or a bout of deflation. “Reflation trades” favour cyclical stocks, commodities and higher bond yields.

Regular trading hours are an exchange’s main session — for US stocks, 9:30 a.m. to 4:00 p.m. Eastern time. Sessions before and after are extended hours, with thinner liquidity and wider spreads.

Rehypothecation is a broker or lender reusing collateral that clients pledged to it, for example lending it out to raise its own funding. It is limited for regulated US brokers, but unchecked reuse helped sink several crypto lenders in 2022.

Reinvestment risk is the chance that coupons or repaid principal can only be reinvested at lower rates than before. It bites when rates fall and is why callable bonds, which issuers redeem early in that situation, pay more.

A REIT is a company that owns or finances income-producing property and trades like a stock. US REITs must distribute at least 90% of their taxable income to shareholders, so they are often held for income. They are usually valued with funds from operations (FFO) rather than earnings.

The Relative Strength Index is an oscillator from 0 to 100 that compares recent gains with recent losses to gauge the momentum of a move.

A Renko chart is built from bricks of a fixed price size and ignores time: a new brick appears only when price moves a full brick beyond the last one. This filters out small moves and makes trends easier to see, at the cost of lag.

In a repurchase agreement, or repo, one party sells securities — usually government bonds — and agrees to buy them back shortly after at a slightly higher price, which makes it a short-term loan backed by collateral. Repo funds much of the financial system; spikes in repo rates, as in September 2019, signal cash shortages.

You click buy at one price and the platform answers with a different one, asking you to accept it — that is a requote. It mostly happens with dealing-desk brokers in fast markets; brokers using market execution fill at the new price with slippage instead.

A reserve currency is one that central banks hold in large amounts and that is used to price global trade. The US dollar makes up more than half of the world's disclosed central-bank reserves, followed by the euro; this status keeps demand for dollars high.

Restaking reuses already staked assets to help secure additional protocols in return for extra rewards. It adds layers of risk, because the same stake can be slashed under several sets of rules. Liquid restaking tokens represent such positions.

Restricted securities are shares bought in unregistered private sales, often by insiders and early investors, that cannot be freely resold until conditions are met — in the US, typically a holding period under Rule 144.

Rules differ between countries; this is general information, not tax or legal advice.

The monthly US retail sales report from the Census Bureau measures sales at stores, online retailers and restaurants. Because consumer spending drives much of the US economy, a surprise in either direction can move bonds, the dollar and stocks.

A retail trader is an individual who trades with their own money through a broker or exchange, rather than on behalf of an institution.

A retest is when the price returns to a level it has just broken — for example falling back to old resistance — before deciding whether to continue.

A return of capital is a payout that gives back part of your original investment rather than income. It is usually not taxed as income at once but lowers your cost basis, which raises the taxable gain when you sell.

Rules differ between countries; this is general information, not tax or legal advice.

Return on capital employed measures how well a company turns its capital into operating profit: EBIT divided by capital employed (total assets minus current liabilities). It is useful for comparing capital-heavy businesses.

Return on equity (ROE) is net income divided by shareholders’ equity; return on assets (ROA) is net income divided by total assets. ROE can be pushed up by borrowing, so it is best read alongside debt levels.

Return on invested capital measures after-tax operating profit relative to the capital invested in the business by both shareholders and lenders. A company whose ROIC is above its cost of capital is creating value.

Return on investment measures profit as a percentage of the money put in: gain ÷ cost × 100. Buying for $1,000 and selling for $1,150 after $10 of fees is a 14% ROI. It ignores how long the money was tied up, so compare annualised figures for different holding periods.

Revenge trading is taking impulsive, often larger trades straight after a loss in an attempt to win the money back quickly.

Revenue is the total income a company earns from selling goods or services before any costs are deducted — the “top line”.

A reversal is a change in the direction of a trend — an uptrend turning into a downtrend or the reverse — as opposed to a brief pullback.

In a reverse merger, a private company goes public by merging into a company that is already listed, often a dormant shell. It is quicker and cheaper than an IPO but skips much of the scrutiny, so reverse-merger stocks have a patchy record.

A rights issue lets existing shareholders buy new shares, usually at a discount, in proportion to what they already own. Taking up the rights avoids dilution; shareholders who do not can often sell the rights instead.

Rising three methods is a continuation pattern: a long bullish candle, three small candles drifting down inside its range, then another long bullish candle to a new close high. Falling three methods is the bearish version.

In trading, risk is the possibility of losing money — and, more precisely, how much you could lose and how likely that outcome is.

A risk budget is the amount of risk allocated to a portfolio, strategy or position. Risk contribution is how much of the portfolio’s total risk comes from each holding — which can differ greatly from its share of the money, because volatile, correlated holdings contribute more.

Risk management is the set of rules that limits how much you can lose — through position size, stop losses, leverage limits and diversification — so that no single mistake ends your trading.

Risk of ruin is the probability that losses shrink an account to a point where you can no longer trade your plan; it rises quickly with larger risk per trade.

The efficient frontier is the set of portfolios offering the highest expected return for each level of risk, under a model’s assumptions. A minimum variance portfolio aims for the lowest possible volatility; risk parity allocates so each asset contributes equally to risk rather than equally in money.

Risk per trade is the amount you accept losing if a trade hits its stop, often set as a small fixed percentage of the account such as 1%.

Risk stacking is holding several positions that all depend on the same underlying risk — for example, long three technology stocks and a Nasdaq index future. They will tend to lose together, so the real risk is larger than each position suggests.

Risk tolerance is how much loss and volatility you can accept — both financially and emotionally — without abandoning your plan. Many people overestimate it until they live through a real drawdown.

The risk-free rate is the return on an investment treated as having no default risk, usually proxied by short-term government bills such as US Treasury bills. It is the baseline every riskier investment must beat and a key input in CAPM, the Sharpe ratio and valuation.

Risk-on describes periods when investors favour riskier assets such as stocks and crypto; risk-off describes moves toward safer assets such as government bonds.

The risk-to-reward ratio compares how much you could lose on a trade, down to your stop, with how much you aim to gain, up to your target.

Crypto exchanges show a position's return on the margin you committed, labelled ROE. Because margin is small, ROE magnifies price moves: with 20× leverage a 2% price move reads as a 40% ROE, in either direction.

A rounding bottom is a slow, U-shaped reversal pattern in which selling fades, price levels out and buyers gradually take control. It forms over weeks or months and is confirmed when price breaks above the pattern's starting level.

A rug pull is a scam in which a project's creators suddenly withdraw funds or liquidity and disappear, leaving the token close to worthless.

Rule adherence is how closely you follow your written trading plan; a rule violation is any trade or action that breaks it. Tracking adherence separately from profit shows whether results come from the method or from luck.

The rule of 72 estimates how long money takes to double: divide 72 by the yearly return in percent. At 8% a year it doubles in about 9 years; at 3% it takes about 24. It works for inflation too, showing how fast purchasing power halves.

The Russell indexes rank US stocks by size: the Russell 1000 covers large companies and the Russell 2000 the next 2,000 smaller ones, making it the standard small-cap benchmark. Their annual reconstitution in June causes some of the year's heaviest trading.

Sample size is how many trades a result is based on; small samples produce misleading statistics, and statistical significance asks whether a result could be luck.

The Santa Claus rally is the historical tendency for US stocks to rise over the last five trading days of the year and the first two of January. It is a seasonal quirk, not a promise, and has failed in plenty of years.

Bitcoin divides into a hundred million satoshis, or sats, so 0.001 BTC is 100,000 sats. The unit honours Satoshi Nakamoto, the unknown author of the bitcoin white paper, and network fees are usually counted in sats per virtual byte.

Scaling in is building a position in several planned stages; scaling out is closing it in stages, for example taking partial profit at a first target and leaving a “runner” for a bigger move.

Scalping is a very short-term style that aims to take many small profits from tiny price moves, often holding for seconds or minutes.

Under the Greenhouse Gas Protocol, scope 1 emissions come directly from sources a company owns or controls, scope 2 from the electricity, heat or steam it buys, and scope 3 from everything else in its value chain, such as suppliers and the use of its products.

A scratch trade is one closed at or near break-even, usually because the idea stopped looking right. After costs it is often a small loss.

Seasonality is a tendency for prices to behave in a certain way at certain times of year, such as harvest effects in agricultural commodities.

Seasonally adjusted figures strip out predictable calendar swings — holiday shopping, summer hiring, harvests — so underlying changes stand out. US data are often shown as a seasonally adjusted annual rate (SAAR), scaling one month or quarter up to a full year.

US public companies file a 10-K annual report with audited financials, a 10-Q for each other quarter, and an 8-K within four business days of major events such as a merger or a CEO change. All are free to read on the SEC's EDGAR database.

The Securities and Exchange Commission is the US federal regulator of securities markets, created in 1934. It writes and enforces securities laws, oversees exchanges and brokers, and requires public companies to disclose their financial results.

Securities lending is the loan of shares or bonds to another party — often to support short selling — in exchange for collateral and a fee. Brokers may lend customers' shares, sometimes sharing the income with them.

A seed phrase is a list of 12 or 24 words that can restore a wallet and all its keys — anyone who sees it can take the funds, so it must never be shared.

Some wallets let you add your own extra word or sentence on top of the recovery phrase, nicknamed the “25th word”. Each passphrase unlocks a different hidden wallet, so a found seed alone is useless — but forget the passphrase and those funds are unrecoverable.

Well-regulated brokers must hold customers' money in bank accounts separate from the firm's own cash. If the broker goes bust, that money is not available to its creditors, which makes it far easier to get back.

Rules differ between countries; this is general information, not tax or legal advice.

A self-regulatory organisation is a non-government body with the power to write and enforce rules for its own members, under a government regulator's oversight. FINRA, the NFA and the exchanges themselves are examples.

Self-trade prevention is an exchange feature that stops a trader’s buy and sell orders from executing against each other, which would create artificial volume.

Settlement is how a contract is completed: cash settlement pays the price difference in money, while physical delivery transfers the actual asset.

The settlement period is the time between a trade and the final exchange of cash and assets; in the US most stock trades settle one business day after the trade (T+1).

The settlement price is the official end-of-day price an exchange sets for each futures contract. It is used to mark every open position to market and calculate the day's margin gains and losses.

Many traders grade setups by how well they match their criteria: an A setup meets every condition, a B setup most, a C setup only some. Grading helps decide position size, or whether to trade at all.

Shadow banking is lending and borrowing that happens outside regulated banks — through money-market funds, hedge funds, private-credit funds and other vehicles. It adds credit to the economy but can suffer runs without a bank's safety nets.

A share buyback is a company repurchasing its own shares. Fewer shares outstanding lifts earnings per share; repurchased shares are cancelled or held as treasury stock. Buybacks return cash to shareholders without paying a dividend.

Dilution is the fall in existing shareholders’ percentage ownership when a company issues new shares — for capital raising, employee stock awards or conversions. Unless the new money creates enough value, earnings per share fall too.

Shares outstanding are all the shares a company has issued that investors currently hold, insiders included. Multiply by the share price for market cap; authorised shares are the legal maximum the company may issue, and float is the part freely traded.

The Shark is a newer harmonic pattern introduced by Scott Carney. Point C overshoots X, at about 113–161.8% of the XA leg, and the pattern completes near an 88.6–113% retracement of the move into C. It is often treated as an early stage of another pattern.

The Sharpe ratio measures return per unit of risk: excess return over a risk-free rate divided by the volatility of returns.

A shell company has few or no operations or assets. Listed shells are used for reverse mergers and SPACs; offshore shells can be legitimate holding structures but are also used to hide ownership, so they draw scrutiny.

A shooting star is a candle with a small body near the bottom and a long upper wick after a rise, showing that buyers pushed higher but sellers forced the price back down.

Short interest is the number of a company’s shares that have been sold short and not yet bought back. It is often shown as a percentage of the float. Days to cover divides short interest by average daily volume to estimate how long short sellers would need to close.

Before a short sale, US brokers generally must have reasonable grounds to believe the shares can be borrowed — a “locate”. Borrow availability is how many shares lenders have available, and hard-to-borrow stocks have few, which makes borrowing expensive.

A short rebate is interest paid back on the cash collateral from a short sale. For easy-to-borrow stocks it can be positive for large institutions; for hard-to-borrow stocks the borrow fee can make it negative. Retail brokers often pay no rebate.

Short selling means selling something you have borrowed, hoping to buy it back later for less and keep the difference.

A short squeeze is a rapid price rise that forces short sellers to buy back their positions, which pushes the price up even further.

In a SIM swap, a criminal persuades or bribes a mobile carrier to transfer your number to a SIM card they control. From then on your texts — including login and reset codes — arrive on their phone, which is why authenticator apps beat SMS for 2FA.

The Securities Investor Protection Corporation protects customers of a failed US brokerage firm, generally up to $500,000 per customer, including up to $250,000 in cash. It returns missing assets; it does not cover losses from falling prices.

Rules differ between countries; this is general information, not tax or legal advice.

Skewness measures whether returns lean towards big gains or big losses; kurtosis measures how heavy the tails are. Market returns typically have fat tails — extreme days happen far more often than a normal distribution predicts.

Slippage is the difference between the price you expected when placing an order and the price at which it was actually filled.

Slippage tolerance is the maximum percentage difference from the quoted price you accept for a swap; if the price moves further before execution, the transaction fails. A setting that is too high leaves you exposed to sandwich attacks.

A smart contract is a program stored on a blockchain that runs automatically when its conditions are met; bugs in the code are a real risk to funds held in it.

Before launch, many protocols pay outside security firms to read their contract code and report bugs. An audit report is useful evidence, not a guarantee: it covers only the code version reviewed, and audited protocols have still been exploited.

Smart Money Concepts, or SMC, is a social-media-born approach that reads charts as the footprints of banks and funds, using ideas such as breaks of structure, liquidity sweeps, order blocks and fair value gaps. Its vocabulary varies from teacher to teacher.

Trading-community term: educators use it in different ways and there is no universally agreed definition.

Smart order routing is software that decides where to send an order — or how to split it across venues — to get the best available price and fill, taking into account quotes, fees and depth.

Social engineering attacks the person, not the software: a fake support agent, a rushed “security alert” or a friendly stranger talks the victim into giving up access or sending funds. No legitimate company will ever ask for your seed phrase or password.

SOFR, the Secured Overnight Financing Rate, is a benchmark for the cost of borrowing US dollars overnight against Treasury collateral. It is published daily by the Federal Reserve Bank of New York and replaced USD LIBOR in most contracts.

A soft landing is when a central bank slows the economy enough to bring inflation down without causing a recession. A hard landing is when the slowdown turns into a sharp downturn or recession.

The Sortino ratio is like the Sharpe ratio but counts only downside volatility, so large gains are not penalised as risk.

Exchanges and banks may freeze a large deposit or withdrawal until you show where the money came from — payslips, a property sale, trade history. Keeping exports of your trades and transfers makes these checks quick.

Rules differ between countries; this is general information, not tax or legal advice.

A sovereign wealth fund is a state-owned investment fund, usually built from oil revenue or trade surpluses, that invests globally for the long term. Norway's, worth well over a trillion dollars, owns a small slice of most large listed companies.

A special purpose acquisition company is a listed shell company that raises money to buy a private business, usually within a deadline of around two years. Completing that merger — the “de-SPAC” — takes the private business public.

SPAN (Standard Portfolio Analysis of Risk) is a widely used method, developed by CME, that sets futures and options margin from the worst likely loss of a whole portfolio across a range of price and volatility scenarios.

The spark spread is the power price minus the cost of the gas burned to make that power; the dark spread does the same for coal. “Clean” versions also deduct the cost of carbon allowances. Together they approximate a power plant's gross margin.

A special purpose vehicle is a separate legal entity created for one narrow purpose, such as holding assets for a securitisation or a single investment, so that its risks are kept apart from the parent company.

Speculation is taking on price risk in the hope of profiting from price changes, rather than to offset an existing exposure, as hedgers do. Speculators supply much of the liquidity that lets hedgers trade.

A spin-off is when a company separates one of its businesses into a new, independently listed company and gives its shares to existing shareholders.

A spinning top is a candle with a small body and upper and lower wicks of similar length. Buyers and sellers both pushed price around but neither won, so it signals indecision — a possible pause or turn when it appears after a strong move.

Spoofing is placing orders you intend to cancel to trick others about supply or demand; layering does this with several orders at different prices. Wash trading is trading with yourself or a related party to create fake volume. All three are forms of market manipulation and are illegal in regulated markets.

A spot Bitcoin ETF holds actual bitcoin and trades on a stock exchange, so investors get bitcoin's price moves through an ordinary brokerage account without handling wallets. US regulators approved the first ones in January 2024.

Spot trading is buying or selling the asset itself for immediate delivery at the current price, rather than trading a derivative contract on it.

Spread betting, offered mainly in the UK and Ireland, lets you bet an amount per point on a market's move without owning the asset. Like a CFD it is leveraged, and in the UK profits are currently free of capital gains tax for most individuals.

Rules differ between countries; this is general information, not tax or legal advice.

A stablecoin is a cryptocurrency designed to hold a steady value, usually one US dollar, typically by holding reserves.

Stagflation is weak or falling economic growth combined with high inflation and often rising unemployment. It is hard for central banks, because fighting inflation with higher rates also weakens growth.

Staking is locking crypto to help secure a proof-of-stake network in return for rewards; liquid staking issues a tradable token that represents the staked amount.

Standard deviation measures how widely returns spread around their average, and is the most common measure of volatility. Daily figures are annualised by multiplying by the square root of the number of trading days, about 252.

The stochastic oscillator shows where the latest close sits within the recent high–low range, on a scale from 0 to 100.

A stock, or share, is a unit of ownership in a company. Shareholders own a slice of the business, can profit when its value rises and may receive dividends, and common shares usually come with voting rights.

A stock dividend pays shareholders in extra shares instead of cash — for example 5 new shares for every 100 held. Like a split, it does not change the company's value; the share price adjusts down.

A crash is a sudden, steep fall in a market, usually driven by panic as well as bad news. On Black Monday, 19 October 1987, the Dow lost 22.6% in a single day; other crashes include 1929, 2008 and March 2020.

A stock market index tracks the combined price of a group of shares, such as the S&P 500 (about 500 large US companies), the Dow Jones Industrial Average (30 companies) or the Nasdaq Composite. You cannot buy an index itself, only funds, futures or CFDs that follow it.

Stocks are grouped into sectors by business type. The GICS system used by S&P and MSCI has 11 sectors, such as information technology, financials and energy. Sector moves show where money is flowing.

A stock split increases the number of shares and lowers the price per share in the same proportion: after a 2-for-1 split, 100 shares at $80 become 200 shares at $40. A reverse split does the opposite. Neither changes the total value of your holding by itself.

Stop distance is the gap between your entry and your stop-loss, in price, pips or percent. It sets your risk per unit: with $100 to risk and a $2 stop distance, you can buy 50 shares. Wider stops mean smaller positions for the same risk.

A stop loss is an exit you set in advance — usually an order — that closes a losing trade automatically once the price reaches a level you chose.

A stop order stays inactive until the price reaches a trigger level and then becomes a market order — used to limit losses or to enter when price breaks a level.

Brokers set a margin-level floor — 50% for EU retail CFD accounts — at which they start closing your positions without asking, usually the biggest loser first. It is the last line of defence after a margin call.

The exact rules and formulas differ between brokers and exchanges — check your platform’s documentation.

A stop-limit order becomes a limit order once a trigger price is reached, giving control over the price but no guarantee of a fill.

A long straddle buys a call and a put with the same strike and expiry; a strangle uses an out-of-the-money call and put, which costs less. Both profit from a big move in either direction and lose if price stays still. Selling them is the opposite bet.

Stranded asset risk is the chance that an asset, such as a coal plant or oil reserves, loses value or must be written off earlier than expected because of new regulation, falling demand or cheaper technology.

Holding shares in street name means your broker is the registered owner on the company's books while you are the beneficial owner in your account. It makes trading and transfers easy; protection depends on the broker's segregation rules.

Stress testing checks how a portfolio would fare under severe, hypothetical shocks, such as a 2008-style crash. Scenario analysis compares results under several possible futures; sensitivity analysis changes one input at a time to see which assumptions matter most.

The strike price is the fixed price at which an option holder can buy (call) or sell (put) the underlying asset.

Structured products are pre-packaged notes that combine a bond with options to deliver a set payoff — capital protection, a capped upside or a high coupon that ends early (autocallables). Returns depend on the issuing bank staying solvent, and the pricing is often opaque.

Exchanges often let one login hold several walled-off accounts. Running each strategy or bot in its own sub-account keeps balances, positions and API keys apart, so a mistake or a leaked key in one does not touch the others.

The exact rules and formulas differ between brokers and exchanges — check your platform’s documentation.

Subprime describes loans to borrowers with weak credit histories, charged higher rates for the extra risk. Bundles of subprime mortgages turned into securities were at the heart of the 2007–08 financial crisis.

A sudden stop is an abrupt halt in foreign capital flowing into an economy. Countries that depend on those inflows to fund a current-account deficit may be forced into a sharp adjustment, often with a falling currency and a recession.

The sunk cost fallacy is continuing with a losing idea because of what you have already put in, rather than judging it on what happens next.

SuperTrend is a trend-following line built from the Average True Range. It sits below price in an uptrend and above it in a downtrend, and flips when price closes through it — which makes it popular as a trailing stop.

Supply and demand zones are price areas, drawn as bands rather than lines, where price previously turned sharply because of heavy selling (supply) or buying (demand).

Support is a price area where falling prices have tended to stop; resistance is an area where rising prices have tended to stall.

Survivorship bias is drawing conclusions only from what survived — successful traders or companies still listed — while ignoring the failures that disappeared.

A swap is a derivative in which two parties agree to exchange streams of cash flows, for example fixed interest payments for floating ones. Swaps trade over the counter and are mostly used by banks, companies and funds to manage risk.

A swaption is an option to enter into an interest rate swap on agreed terms at a future date. Banks and companies use swaptions to protect against interest rates moving before they need to borrow.

A swing high is a peak with lower highs on both sides; a swing low is a trough with higher lows on both sides. Together they map a market's structure.

Swing trading aims to capture price moves that last from a few days to a few weeks.

A synthetic position uses options to mimic another position. Buying a call and selling a put at the same strike and expiry behaves like owning the stock (a synthetic long); the reverse mimics a short. Put-call parity is what links them.

Systematic risk is market-wide risk that diversification cannot remove — what beta measures. Systemic risk is the danger that one failure spreads and brings down the financial system, as in 2008.

Tactical asset allocation shifts a portfolio away from its long-term mix for a while — say from 60/40 to 70/30 stocks — to lean into markets that look attractive. It differs from strategic allocation, which sets the long-run mix and rebalances back to it.

A take profit is a pre-set exit — usually a limit order — that closes a winning trade automatically once the price reaches your target.

A takeover premium is how much more an acquirer offers than the target’s market price before the deal. Offering $65 for a stock trading at $50 is a 30% premium.

Tape reading is judging supply and demand in real time from the time and sales feed and the order book — the size, speed and price of trades as they print. It is the modern form of reading the old ticker tape.

Tax-loss harvesting means selling investments that are below their purchase price to realise a capital loss, then using that loss to reduce the tax on capital gains. In the US, leftover losses can offset up to $3,000 of ordinary income a year and carry forward.

A taxable event is the moment the tax clock starts: usually a sale, a swap or a payment made with an asset, or the receipt of income such as dividends, interest or staking rewards. Buying and simply holding usually triggers nothing.

Rules differ between countries; this is general information, not tax or legal advice.

The Taylor rule, proposed by economist John Taylor in 1993, suggests where a central bank's policy rate should be based on how far inflation is from target and how far output is from its potential. It is a benchmark, not a rule central banks follow mechanically.

Technical analysis is the study of past prices and volume, usually on charts, to judge market behaviour and plan trades — as opposed to analysing a business or economy.

A technical indicator is a calculation based on price, volume or both, plotted on or beneath a chart, that summarises some aspect of market behaviour.

The TED spread was the gap between the 3-month LIBOR rate and the 3-month US Treasury bill yield. It widened when banks distrusted each other, peaking in the 2008 crisis, and lost its basis when LIBOR was retired.

A tenbagger is a stock that rises to ten times its purchase price, a term popularised by fund manager Peter Lynch. “Multibagger” is used for any stock that multiplies several times.

A tender offer is a public offer to buy shares directly from shareholders at a stated price, usually above the market price, for a limited time. It can come from an acquirer or from the company buying back its own stock.

Terms of trade compare a country’s export prices with its import prices. When export prices rise faster — for example, oil prices for an oil exporter — the terms of trade improve, which often supports the currency.

Developers try new code on a testnet, a practice copy of a blockchain whose coins cost nothing and are worth nothing. Real value only moves on mainnet. Free “testnet coins” offered for sale are a common scam.

The three drives pattern is three successive pushes in the same direction, each separated by a pullback, with the drives and pullbacks in Fibonacci proportion (often 127.2% or 161.8% extensions). The third drive is expected to exhaust the move.

Three inside up is a bullish harami followed by a third candle that closes above the first candle's high; three inside down is the bearish version. The third candle confirms the reversal that the harami only hinted at.

A three line break chart adds a new line only when the close goes beyond the previous line, and reverses direction only when price breaks the extreme of the last three lines. Like Renko, it ignores time and filters out small moves.

Three outside up is a bullish engulfing pattern followed by a third candle that closes higher still; three outside down is the bearish version. The extra candle confirms the engulfing signal.

Three white soldiers are three consecutive strong bullish candles, each closing higher; three black crows are the bearish mirror image.

The NYSE TICK index counts how many stocks last traded on an uptick minus how many on a downtick, moment by moment. Day traders read extreme readings, such as above +1,000 or below −1,000, as signs of broad buying or selling pressure.

Tick size is the smallest price increment an instrument can move in, such as $0.01 for many US shares or 0.25 points for some index futures.

Real volume counts the units actually traded; tick volume counts price changes and is used as a proxy where real volume is unavailable, as in spot forex.

A ticker is the short code used to identify a tradable asset, such as AAPL for Apple shares or BTC for bitcoin.

Tilt is an emotional state, usually after losses, in which you stop following your rules and start taking impulsive, oversized trades.

Time and sales is the live list of every executed trade with its price, size and time; reading it to gauge buying and selling pressure is called tape reading.

Your time horizon is how long you expect to hold an investment before you need the money. Longer horizons can ride out deeper drops; short ones call for steadier assets.

Time-in-force tells the venue how long an order stays active. Immediate-or-cancel (IOC) fills what it can at once and cancels the rest; fill-or-kill (FOK) must fill completely at once or not at all; good-till-cancelled (GTC) stays open until filled or cancelled, although many brokers limit how long.

Time-weighted return removes the effect of deposits and withdrawals, so it measures the strategy itself. Money-weighted return — the internal rate of return of your cash flows — includes their timing, so it measures your actual experience.

The timeframe is the period of time each bar or candle on a chart represents, such as one minute, one hour or one day.

HTF, MTF and LTF mean higher, middle and lower timeframe — for example a daily chart for direction, a 4-hour chart for structure and a 15-minute chart for entries.

Before a DEX or other app can move your tokens, you sign an approval granting it a spending allowance — often unlimited. That permission lasts until you cancel it, so check and revoke old approvals regularly with a token-approval checker.

A token burn permanently removes tokens from circulation by sending them to an address no one can spend from. Some protocols burn part of their fees, which offsets new issuance.

Tokenomics is the economic design of a crypto token: its supply, how new tokens are issued, who holds them and when locked tokens are released.

Tom-next (“tomorrow to next day”) is a short currency swap that rolls a spot position forward by one business day. Forex brokers use it, or something similar, to work out the daily financing charge or credit on positions held overnight.

Top-down investors start from the economy and sectors and then pick companies that fit the big picture. Bottom-up investors start from individual companies' strengths, paying less attention to the wider economy. Many combine both.

Total return counts everything an investment earns: price change plus dividends or interest, usually assuming they are reinvested. Comparing total returns matters because a high-dividend stock can look flat on a price chart while still paying well.

Total value locked is the market value of the crypto assets deposited in a DeFi protocol or blockchain. It is a rough gauge of usage, but it rises and falls with token prices and can double-count assets used in several protocols.

TOTAL2 and TOTAL3 are chart symbols for the total crypto market capitalisation excluding Bitcoin (TOTAL2) and excluding both Bitcoin and Ethereum (TOTAL3). Traders use them to follow the altcoin market as a whole.

A trade is a single purchase or sale of an asset; traders also use the word for the whole round trip of opening and later closing a position.

The trade balance is the value of a country’s exports minus its imports over a period. Exporting more than it imports is a trade surplus; the opposite is a trade deficit.

A trade bust is the cancellation of an executed trade by the exchange, usually because the price was clearly erroneous under the venue’s rules.

Trade efficiency compares the profit you actually captured with the maximum favourable move during the trade (MFE capture). Taking $3 of a $5 move is 60% efficiency. Consistently low numbers suggest exits are too early or too late.

Trade frequency is how often you trade. Higher frequency multiplies costs and decisions, so it only makes sense if each trade has an edge after those costs.

Trade management is everything you decide after entering: moving or trailing the stop, taking partial profits, adding to the position or closing early. Rules decided in advance work better than decisions made in the moment.

A trade review is a structured look back at closed trades to check whether you followed your plan and what to change, judged on process rather than outcome alone.

A setup is the set of market conditions your strategy looks for, such as a pullback to support in an uptrend. The entry trigger is the specific event that tells you to act on it, such as a candle closing back above the level.

A trade thesis is the reason you expect a trade to work, written down before you enter it, together with what would prove it wrong.

Trading is buying and selling financial assets with the aim of profiting from changes in their price, usually over shorter periods than long-term investing.

An API (application programming interface) lets software place orders and receive data from a broker or exchange. FIX is the long-standing industry protocol for electronic trading messages; WebSocket feeds stream live prices over a persistent connection. APIs usually have rate limits on how many requests you can send.

A trading bot is software that places trades automatically according to programmed rules, often through an exchange's API. Bots execute without emotion or fatigue, but they still need a real edge, and bots sold with promised returns are a common scam.

Trading capital is the money set aside for trading — ideally money whose loss would not affect your essential finances.

A trading chart is a picture of an asset's price history, with time running from left to right and price from bottom to top.

Discipline is following your trading plan consistently — waiting patiently for valid setups and respecting your exits — even when emotions push the other way.

A trading edge is a repeatable advantage that produces a positive expectancy over many trades, after costs. It can come from a pattern, information, speed or execution, and it must be shown with enough data to rule out luck.

Trading fees are what you pay to trade — commissions charged per order, the spread, and in some products financing or exchange fees — and they reduce every result.

A trading journal is a record of every trade you take — the setup, the reasons, the result and what you felt — kept so you can learn from patterns in your own behaviour.