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.
What is the daily change?
The daily change represents the fluctuation of any given security over the course of a trading session. It is measured very simply by comparing the price of the security at the end of a trading session to its closing price at the end of the previous session.
How does one use the daily change?
The importance of the daily change is quite straightforward.
- It enables traders to track how much money they have earned or lost during a day’s trading.
- It is used, together with the daily changes of previous and subsequent days to determine long-range trends of the security, thus providing traders with an excellent technical analysis tool for building trading strategies.
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The highest price at which a security or financial instrument has traded during the day.
The lowest price at which a security or financial instrument has traded during the day.
What are derivate markets?
Derivatives are contracts whose values are based on underlying assets, and are determined by the rise and fall of that underlying asset. Prime examples of this include futures contracts and Contracts for Difference (CFDs). Derivative markets are markets on which these derivatives can be traded. Most derivatives are traded over-the- counter (OTC), and are not regulated by government authorities, which means they are far riskier than the derivatives that are traded on regulated exchanges.
How do derivate markets affect forex traders?
The most commonly traded derivatives are futures contracts, in which the buyer and seller mutually agree on a price that reflects what they believe will be representative of the asset at a predetermined future date. Other derivatives include CFDs, forward contracts, options, and interest rate swaps.
A financial instrument or security whose value is derived from and is dependent on the value of another underlying asset or financial instrument (such as an exchange rate, commodity, stock, index, bond or mortgage contract). The main use of derivatives is to lower risk for one party while offering a potentially high return at a higher risk to another party. There are four main types of derivatives contracts: forwards, options, futures and swaps.
Markets for buying and selling derivative instruments. There are two major types of derivative markets: regulated futures and option markets and over-the-counter markets.
A downloadable software through which traders can access financial markets, open, edit and close online trading positions and receive live streaming of quotes, graphs and other technical indicators, via a PC or Mac desktop or laptop computer.
What is the Deutsche Börse Group?
The Deutsche Börse Group owns and operates all seven stock exchanges in Germany, the largest of which is the Frankfurt Stock Exchange. Since 1997, the Frankfurt Stock Exchange has used a completely electronic trading platform, called Xetra, which was developed by the Deutsche Börse Group, and has since been adopted by several other European exchanges.
The Deutsche Börse Group has approximately 600 companies listed, with a combined domestic market capitalization of over $1.7 billion. Since 2014, it has been a member of the U.N. Sustainable Stock Exchanges initiative. The Deutsche Börse Group oversees the German stock exchanges, and is regulated by the European Securities and Markets Authority, the Federal Financial Supervisory Authority, and the Trading Surveillance Office.
How do forex traders use Deutsche Börse Group?
As with any stock exchange, the most obvious use of the Deutsche Börse Group is for forex and CFD traders to see the market prices for all financial instruments on the group’s stock exchanges. While banks and brokers each provide their own bid and ask prices for assets, exchanges allow traders to see the general range of what each price should be. By watching whether the exchanges operated by the Deutsche Börse Group are bullish or bearish, traders gain a strong tool for developing a trading strategy.
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The central Bank of the Federal Republic of Germany (equivalent to the Federal Reserve Bank), and the most important member of the European System of Central Banks (ESCB).
An official change in the price of a security or financial instrument, especially in regards to a currency (where it means a decrease in the value of its exchange rate). The opposite of revaluation.
A dividend is a way of a company to distribute a percentage of its net earnings to its shareholders. The dividend amount is decided by the company’s board of directors, and can be issued as a cash payment, shares or other assets.
Most commonly, the dividend is determined in terms of money per share, which means that each shareholder will get a dividend respectively to his holdings, for example:
In case you own 1,000 shares, and the dividend announced is $3 per share – you will get $3,000.
Other common way of quoting a dividend is terms of percentage of current market price, which is also known as “yield”, for example:
If you hold 1,000 shares, the current market price is 100, and the dividend announced is 2% – it means you will get $2 for every share you hold, which are $2,000.
Other ways to pay a dividend are: Shares (giving out shares instead of cash), property, interim and more.
When a dividend is paid, the company’s value is immediately effected for the simple reason that the cash it is giving out as a dividend will no longer belong to the company, so its share price decreases in the rate of the dividend payment.
The change in the share’s price is taking place in the ex-dividend date.
As a result, Fortrade needs to credit/debit the clients holding the dividend paying share during the ex-date, in order to cover for the paid dividend and making sure that all of our shareholding clients will receive the dividend and won’t be effected by “fake” declines of the share’s price.
* The term “fake” refers to market price movements that are not a result of real market conditions, but a result of a synthetic conditions like dividend payout.
All client holding a dividend paying share in a short position during the ex-dividend day will be debited in the size of the dividend.For example:If you hold 1,000 shares in a short position in an opening price of $110 while the current market price is $100, and the paid dividend is equal to $2 per share → The share price will drop in $2 in the ex-dividend day, meaning that you will earn more money in your short position due to the “fake” share price movement, so Fortrade will have to charge that exact amount (with no further fees or commission) to your commission.
P&L before the ex-dividend day → 1,000 * (110 – 100) = $10,000
<shares amount * (opening price – market price before the dividend payout)>
P&L after the ex-dividend day (assuming there were no other real market effects on the share price) → 1,000 * (110 – 98) = $12,000
<shares amount * (opening price – current market price)>
Dividend charge → 1,000 * $2 = $2,000 <shares amount * dividend paid per share)>
Final P&L calculation → 1,000 (110 – 98) – 2,000 = $10,000
<shares amount * (opening price – current market price) – Dividend amount>
All client holding a dividend paying share in a long position during the ex-dividend day will be credited in the size of the dividend.For example:If you hold 1,000 shares in a long position in an opening price of $90 while the current market price is $100, and the paid dividend is equal to $2 per share → The share price will drop in $2 in the ex-dividend day, meaning that you will lose money in your long position due to the “fake” share price movement, so Fortrade will have to credit you with that exact amount (with no further fees or commission) to your commission.
P&L before the ex-dividend day → 1,000 * (100 – 90) = $10,000
<shares amount * (market price before the dividend payout – Opening Price)>
P&L after the ex-dividend day (assuming there were no other real market effects on the share price) → 1,000 * (98 – 90) = $8,000
<shares amount * (Current market price – Opening Price)>
Dividend credit → 1,000 * $2 = $2,000
<shares amount * dividend paid per share)>
Final P&L calculation → 1,000 (98 – 90) + 2,000 = $10,000
<shares amount * (Current market price – Opening Price) + Dividend amount>
** All dividends credits/charges will appear in the “commission” column of the position.
The official currency code for Danish krone.
A situation in which each successive peak or trough on a security’s price chart is lower than the ones preceding it. The opposite situation is an uptrend.
A downward trend opportunity refers to events in which our research department believes the technical analysis of an underlying product indicates that it may decrease in price. It is your decision to trade if you feel you agree, we always recommend you to consider other external sources and only open a trade if it is appropriate for you. Visit our research analysis page for more information.