Traders and analysts use volume data to confirm price trends, assess market sentiment, and make informed trading decisions. These indicators are typically applied to price charts and can help traders identify potential entry and exit points, as well as gauge the strength and direction of price movements. Support levels are considered important because they indicate areas where traders and investors are willing to step in and purchase the asset, preventing further declines.

Price to sales ratioA company’s market cap divided by the company’s annual sales (or revenue) gives us the price to sales ratio Pairs tradePairs traders aim to profit from the change in the price of, say, one share relative to another. NAVThe net asset value (NAV) of a firm is the amount of money that would be left if it closed, sold its assets and paid its debts. Multiple compressionMultiple compression is when company’s price/earnings multiple falls as investors become wary of a company’s growth prospects.

We want the everyday person to get the kind of training in the stock market we would have wanted when we started out. Also, we provide you with free options courses that teach you how to implement our trades as well. These are stocks that we post daily in our Discord for our community members.

Counterparty Risk

The most heavily traded currency pairs in forex, all including the US Dollar as either base or quote currency. The negative difference between the purchase price and selling price of an investment, or when an investment’s value decreases. A price area with little to no trading activity where price can move quickly due to lack of orders. Users provide ETH and USDC to a Uniswap liquidity pool and earn fees from traders who swap between these tokens.

Trading Execution Terminology (26–

A firm or individual that provides liquidity to financial markets by buying and selling securities at publicly quoted prices. A type of financial chart that connects closing prices of an asset over a specified time period with a continuous line. An IPO allows a company to raise capital from public investors and become publicly traded on a stock exchange. Understanding fixed costs helps traders and investors assess a company’s financial stability. The estimated intrinsic value of an asset, determined based on its financial performance, market conditions, and future growth potential.

• The rate at which the general level of prices for goods and services rises, eroding purchasing power.
• The broker extends you credit so you can trade immediately after selling, rather than waiting for cash to clear.
• A cryptocurrency scam where developers abandon a project suddenly, often after draining liquidity or selling their tokens.
• A phase where institutional investors and smart money gradually sell their positions, often during sideways movement.

Accumulation fund definition

The most basic trades are long and short trades, with the price changes measured in pips, points, and ticks. So, a trader anticipating a currency change could short or long one of the currencies in a pair and take advantage of the shift. Interest rates, trade, political stability, economic strength, and geopolitical risk all affect the supply and demand for currencies. Locking in an exchange rate helps firms plan ahead, reduce losses, or even increase gains, depending on which currency in a pair is strengthened or weakened. These instruments can offer protection against risk when trading.

Financial market definition

Understanding the hurdles of the forex market is crucial for anyone considering Trading Terminology trading currencies. For example, if you buy euros at $1.20 and sell when the price reaches $1.22, you’d make 2 cents per euro traded. When a trader goes “long” on a currency pair like EUR/USD, they profit if the euro strengthens against the dollar. While the potential for profit exists, it’s crucial to understand that forex trading isn’t a get-rich-quick scheme. These interlocking exchange relations—some currencies growing stronger, others not—mean that forex trading reflects worldwide economic and political developments.

• Such resources provide clear definitions and explanations of over 150 key terms investors should know.
• Take-profit orders lock in gains and prevent potential reversals from eroding profits.
• Charlatans exploit the market’s complexity, high stakes, and lack of centralized regulation to deceive victims, often with false promises of easy profits and low risk.
• Highly volatile assets may offer opportunities for substantial gains but also carry higher risk, while assets with low volatility are typically considered safer but may offer lower profit potential.
• Its role is to give private investors a way to own a stake in a listed company, while providing the companies themselves with capital to reinvest in their business.

Unborrowable stock

Short selling without first borrowing the shares or ensuring they can be borrowed, which is illegal in most markets. Using market orders makes you a market taker, as you’re taking the prices offered by market makers. A market buy order for 100 shares of Apple will execute immediately at the current ask price. The standard trading hours when the stock market is officially open for regular trading. Going long on Tesla stock means buying shares because you believe the price will increase.

Paper Trading

A company’s bottom line is an important factor in share trading. Blue chip stocks – see full definition In trading and investing, the bid is the amount a party is willing to pay in order to buy a financial instrument.

This metric allows investors to compare the performance of different investments over time, regardless of the holding period. Your ultimate guide to mastering the language of the financial markets. Conversely, a negative skew indicates higher implied volatility for options with higher strike prices, implying a greater expectation of price increases. Synthetic assets are used for various purposes, including hedging, speculation, and gaining exposure to assets that might be difficult to trade directly.

An individual who buys and sells financial instruments, either for themselves or on behalf of others. Uniswap’s TVL of $5 billion means users have deposited $5 billion worth of cryptocurrency in its liquidity pools. A digital asset built on an existing blockchain, often representing utility, governance rights, or ownership. The portion of an option’s premium that exceeds its intrinsic value, representing the value of time remaining until expiration. Tape reading shows large blocks of 10,000 shares being bought at the ask, indicating institutional accumulation.

The current market price for a commodity or currency that is available for immediate delivery. A unit of ownership in a company, representing a claim on the company’s assets and earnings. Most stock trades settle T+2, meaning the actual exchange of securities and cash occurs two business days after the trade date. Securities and Exchange Commission – the US federal agency that regulates the securities markets and protects investors. If a stock consistently bounces between $50 support and $55 resistance, range traders buy at $50 and sell at $55. A contract giving the holder the right to sell an asset at a specific price within a certain timeframe.

The Role of Variance in Options Trading

Exotic options are complex derivatives with features beyond standard calls and puts. Common derivatives include options, futures, and swaps. CDS contracts became widely known during the 2008 financial crisis. Collars are often used by conservative investors to lock in gains. It limits downside losses but also caps upside potential.

Being bearish in trading means you believe that a market, asset or financial instrument is going to experience a downward trajectory. The asset will usually be sold in a different market, different form or with a different financial product, depending on how the discrepancy in the price occurs. An American Depositary Receipt (or ADR, for short) is a way in which US investors can trade shares of non-US companies without using their local exchanges.

This article is for informational purposes only and does not constitute financial advice. Over time, charts and option chains begin to look less crowded and more meaningful. Delta shows how the premium reacts to price moves. Volatility simply measures how much the price tends to swing. Time decay affects every option, whether or not the market moves.