Glossary of Trading Terms and Definitions For Beginners

Breakout trading is one of the most exciting and most used trading strategies, relying on price action without technical indicators. Some traders prefer to confirm a breakout or breakdown with a technical indicator, but the purest form uses candlestick charts and support or resistance levels. Breakout trading falls under naked trading, referring to a clean chart. Some traders use a 20-DMA to gauge the trend, but the fine-tuning of any breakout trading strategy depends on individual preferences.

The Black-Scholes Model, sometimes referred to as the Black-Scholes-Merton Model, is a mathematical model using six variables to calculate the theoretical value of a European-style option contract.

Clearing, and settlements, which are often used in the same sentence but refer to something different, are the building blocks of today's payment systems.

Big figure applies to highly liquid and volatile markets, like the Forex market, where rapid moves in price action are frequent. Abbreviations and synonyms of big figure are big fig and handle, respectively.

At Best is nothing more than a set of instructions that forces an order to be executed at only the most desirable price. While they are mostly market orders, sometimes they also require some degree of discretion from the concerned broker.

The bid price and ask price are the two components of a two-way price quotation system, the norm in financial markets. The bid price represents the price a market participant offers to buy an asset, while the ask price is the selling price. Market makers continuously offer bid prices for trading instruments, which are generally lower than ask prices.

A bear market and a bull market are phrases most people have heard before, but what is a bear market? Most investors fear a bear market. They run for the exits, hoard cash, and hope their portfolio allocations can weather the storm.

A trader or investor who believes the price of an asset, sector, industry group, or the market, in general, will decrease in value is known as a bear. A bear in trading terms seeks to profit from a contraction in prices and stands opposite of a bull who believes price action will increase.

Basket trading is an active strategy primarily used by institutional traders, hedge funds, and algorithmic or quantitative traders and fund managers, but is it suitable for retail traders?

Understanding the term basis and basis finance is essential for every trader, and we will outline why it matters. Basis can refer to three distinct terms in finance, one referring directly to trading costs, another associated with a trading strategy, and one essential basis definition finance with tax implications and potential fines if not reported accordingly.

Businesses that deal with foreign currency average rate options to pay or receive money in foreign currencies. These options give businesses a hedge against potential fluctuation in prices of foreign currencies

Most of us have heard about or seen auctions, but few of us are aware of their mechanics. More importantly, auctions are also a key event in forex markets. Today, we will look at what an auction is, how it is conducted in live and online events, and other important things everyone must know about auctions. Let us find out more.

At the money refers to the situation where the strike price of an option is the same as or very similar to the current market price of the security. Both the call and put options can be at the money at the same time. ATM options describe the relationship between the strike price and the market price of a security.

Understanding forward point in Forex is especially important for anyone who is in the market or wants to get into it. There are diverse types of forward points, and it is also known as forward spread.

At-or-better, also written as At or better, refers to orders executed at a specific price, or more than that. At or better orders are a variation of limit orders. Limit orders also set a limit on the price at which the order would be executed. When you place an at or better order, you are implying that you are looking for a breakthrough or are willing to go to the next level.