Below is a glossary of terms that are used in the online trading industry. Select the first letter of the word you are seeking from the list above to jump to the appropriate section of the glossary.
A type of chart, widely used by traders and financial professionals, which is represented by horizontal rectangular bars with lengths proportional to the magnitudes of what they represent. The top of the bar is the highest point the price reached during a defined period and the bottom of the bar is the lowest. A dash on the left-hand side of the bar denotes the opening price and a dash on the right-hand side the closing price for that period.
In currency pairs, the first currency is the “base” currency (numerator) and the second currency is the “quote” currency (denominator). The value of the base currency is always one. Therefore, the quoted currency expresses the amount of the second currency compared to one base currency. In the British pound sterling/United States dollar currency pair (GBP/USD), for example, the value of the dollar is expressed in terms of one pound.
A market condition in which the prices of securities are falling 20% or more. It is generally accompanied with widespread pessimism that, in turn, sustains the flow of negative sentiments. Its opposite is a bullish market, in which the sentiment towards prices is positive.
A trader who believes that the price of a particular security will fall. The opposite of bull/bullish.
A standard or average used for comparison or to indicate an overall trend of a certain stock, bond, commodity or other security.
What is the best bid?
The Bid, also known as the Sell, is the highest price that a bank or a brokerage is willing to buy an asset from a trader. That is to say, it is the most a trader can receive when he sells an asset or security. Along with the Ask (also known as the Buy), the Bid is one half of a price quotation, which is the indicative cost upon which the buyer and seller agree when trading forex and CFDs.
The Bid rate is always lower than the Ask rate, and the difference between the two is referred to as the Spread. Each broker and bank has its own bid, that is to say, its own highest price that it is willing to pay for an asset, and different banks may have different bids. The highest bid offered by any bank or broker is known as the best bid.
How do forex traders use best bid?
Seeing the best bid (and its counterpart, the best ask), enables traders to choose with which brokerage or bank they wish to trade forex and CFDs, so that they may see the highest potential earnings, while minimizing their risks and losses as much as possible.
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A nickname for the Euro-Russian rubble (EUR/RUB) pair.
In the over-the-counter market, the term “bid” refers to the highest price at which a market maker or broker is willing to pay in order to buy a security (e.g. currency, stock, index or commodity) at any given time. The bid price will almost always be lower than the “ask” price (= the lowest price a market maker or broker is willing to sell a security at any given time). Market makers and brokerage firms make money on the difference between the bid price and the ask price. This difference is called the “bid ask spread”.
The amount by which the “ask” price exceeds the “bid” price. This is essentially the difference in price between the highest price that a broker is willing to pay for a security and the lowest price for which it is willing to sell the security. The bid-ask spread is also referred to as a bid-offer spread; a buy-sell spread or simply as bid-ask.
What is Bitcoin?
Bitcoin is the world’s largest cryptocurrency and digital payment system. It operates using blockchain technology, which is a public ledger recording all transactions. While Bitcoin is completely unregulated, which might make some investors think twice, it has also proven to be extremely secure, as no hackers have succeeded in compromising the blockchain technology.
How does one use Bitcoin?
Using a hashing algorithm, “miners” can discover bitcoins, although there is a limited number (21 million) Bitcoins that will ever be mineable. Of the bitcoins already on the market and in circulation, they can be traded like any other asset, and many forex brokers – including Fortrade.com – do enable traders to trade Bitcoin CFDs on their platforms.
An abbreviation for Bolsas y Mercados Españoles, the Spanish company that runs the four major stock exchanges in Spain.
The central Bank of Canada.
The central Bank of the United Kingdom.
The central Bank of Japan (also known as Nippon Ginko).
A legal contract in which a borrower (bond issuer) such as a government, credit institution or company issues a certificate by which it promises to pay a lender (bondholder) a specific rate of interest for a fixed duration and then redeem the contract at its principal value once it reaches maturity. Click here to learn about the government bonds Fortrade offers.
The amount of money given to a trader by a broker for online trading purposes. Redeeming and withdrawing bonus credit typically requires the trader to meet certain trading volumes.
What is Brent crude oil?
Brent crude oil is crude oil that is drilled in one of the four oil fields in the North Sea, between England, Germany and Scandinavia. It is one of the two major benchmark oils in the world, the other being WTI (West Texas Intermediate) crude. Crude oil is defined as natural, unrefined petroleum that can be refined into thousands of products, known as petrochemicals. The most common uses of refined crude oil include gasoline, diesel fuel, kerosene, heating oil and kerosene.
Because crude oil is a nonrenewable source, and poses many dangers to the environment and world eco-system, in recent years, much progress has been made in finding alternative energy sources – including solar and wind – which are safer and will never run out. As a result, it is difficult to know how much longer crude oil will be considered a critical commodity. However, for now, it certainly is, and many countries are major suppliers, including the United States, Russia, and Saudi Arabia.
Like most commodities, the price of Brent and WTI is driven primarily by supply and demand, and is extremely vulnerable to external factors. If, for example, members of OPEC (Organization of Petroleum Exporting Countries) decide to limit production of oil, the global supply will dwindle, and the price of Brent and WTI will rise. Alternately, when oil-rich countries (OPEC and others) produce excessive amounts of oil, the supply outweighs the demand, and the prices can drop.
How do CFD and commodities traders use Brent crude oil?
While some traders purchase spot contracts on Brent crude (in which ownership of the oil changes hands at the moment of trade, and the price reflects the cost of crude at that moment), it is far more common for traders to purchase futures contracts. With futures contracts, the price agreed upon reflects what both the buyer and seller believe will be the price of Brent crude at a predetermined future date. Those who trade on oil CFDs are essentially predicting how the price of oil will move before the position closes.
An individual agent or party who arranges transactions between buyers and sellers for a predetermined fees or commission rates.
The currency code for Bitcoin.
A slang term for one million dollars.
A market condition in which the prices of securities are rising, the general public’s views on the market are positive. Its opposite is a bearish market, in which the sentiment towards prices is negative.
A trader who believes that the price of a particular security will rise. The opposite of bear/bearish.
Taking a long position on a tradable security such as a currency pair, stock, index or commodity. Opposite of “sell” (or short position).
What is a buy limit order?
When a trader sees a financial instrument that he wishes to purchase, but only at a price lower than where it currently stands, he may place a buy limit order, which would instruct his broker to automatically open the position if and when the price reaches what the trader is willing to pay for it. In essence, it is the trader’s way of instructing his broker to open a position at a better rate than the current market price.
The advantage to a buy limit order is that the trader decides how much he is willing to pay for an asset, and not have to spend more than that amount. The disadvantage is that if the price drops close to his limit, yet without touching it before shooting back up, he will not have spent anything, but he will have missed the opportunity to earn a profit when the asset price reversed direction.
How do traders use a buy limit order?
Imagine a trader sees that the stocks of a company that he has been following are trading at $35 per share, and he believes that when the price hits $29, it will rise again. He might place a buy limit order for 100 shares of that stock at $30. If and when the price reaches $30, his broker will automatically open the position, and if his prediction was accurate, he can earn a nice profit on his 100 shares. if the price reaches $32 without hitting/ reaching as low the Limit level of $30, the Limit Order will not be triggered.
Please note: No brokerage, including Fortrade, can guarantee that a buy limit order will be filled at exactly the price requested by the trader. Rather, the broker will execute the order at the requested price, and the position will be opened at the first available price in the market from that time. When conditions are especially volatile, there may be slippage – which is a change in price – between the time that the broker executes the order to open a position and the time the position is open, thus resulting in a lower profit for the trader.
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