Trade Dictionary

TRADE DICTIONARY

A

• Altcoin – An alternative digital currency to Bitcoin
• Analyst – A person who conducts analysis
• Application Programming Interface (API)  – A set of functions and procedures allowing the creation of applications that access the features or data of an operating system, application, or other service.
• Ascending Channel – An ascending channel occurs when visually analyzing an overall uptrend in between two parallel lines.
• Ascending Trend Line – A chart pattern containing two or more higher lows (valleys) that can be connected with a straight line.
• Ask Price – The price a trader will buy a currency pair at
• Asset – An economic resource that can be owned or controlled that holds value.
• Austerity – Difficult economic conditions created by government measures to reduce a budget deficit, especially by reducing public expenditure.

 

B

• Bail-In – An arrangement in which creditors of a failing financial institution are required to cancel some of its debts as part of a plan to save it from collapse.
• Bailout – When governments begin lending, or outright giving, capital to an entity that is in danger of failure due to bankruptcy or insolvency.
• Banking Institutions – Any state or national bank, state or federal savings and loan association, mutual savings bank or state or federal credit union or any of their holding companies.
• Bank Levy – Occurs when a creditor (a person or business that is owed a debt) instructs a bank to withdraw money from an account without the account holder’s permission.
• Bank Run – The concerted action of depositors who try to withdraw their money from a bank because they fear that the bank will fail.
• Bar Chart – A chart in which place is displayed as a vertical line in which the top denotes the high price of the period and the bottom denotes the low. Off on the left of the bar is a horizontal line denoting the opening price and off on the right is another horizontal line denoting the close. A bar therefore includes all four of the key price components — the open, high, low and close, sometimes abbreviated OHLC.
• Base Currency – The first currency that appears in a forex pair quotation.
• Bear – A bear is an investor who expects prices to decline in the future.
• Bearish – Characterized by or associated with falling asset prices.
• Bear Market – A market in which prices are falling, encouraging selling.
• Bid Price – The Bid price is the price a forex trader is willing to sell a currency pair for
• Bitcoin (BTC) – A type of digital currency in which a record of transactions is maintained and new units of currency are generated by the computational solution of mathematical problems, and which operates independently of a central bank.
• Block – Blocks are files where data pertaining to the blockchain network are permanently recorded.
• Blockchain – A system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.
• Blue Chip – Denoting companies or their shares considered to be a reliable investment, though less secure than gilt-edged stock. (highest of quality)
• Breakeven – Having no net profit or net loss.
• Breakout – When price breaches some kind of support or resistance (zones, levels, trendlines or channels).
• Broker – A financial services company that provides traders access to a platform for buying and selling foreign currencies.
• Bull – Traders who expect that price will rise.
• Bullish – Characterized by rising asset prices.
• Bull Market – A market in which prices are rising, encouraging buying.
• Buying Pressure – Occurs when there are more buy orders than sell orders outstanding.

C

• Catalyst – An event that causes the price of a specific asset to change sharply or aggressively (high impact news releases).
• Central Bank – A national bank that provides financial and banking services for its country’s government and commercial banking system, as well as implementing the government’s monetary policy and issuing currency.
• Closed Position – An executed transaction that is the exact opposite of an open position, thereby nullifying it and eliminating the initial exposure.
• Cloud Mining – A mechanism to mine a cryptocurrency, such as bitcoin, using rented cloud computing power and without having to install and directly run the hardware and related software.
• Cold Storage – A way of holding cryptocurrency tokens offline, such as on a USB drive, to prevent malicious hackers from gaining access to one’s cryptocurrency.
• Commodity – A raw material or primary agricultural product that can be bought and sold, such as gold or corn.
• Confirmation – A signal dependent on price movements based on various technical analysis tools.
• Confluence – Any circumstance where you see multiple trade confirmations lining up on your charts and telling you to take a trade.
• Consolidation – illustrates the lack of a trend in a particular trading range.
• Consumer Price Index – a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
• Continuation – An indication traders look for to signal that a price trend is likely to remain in play.
• Correlation – The relationship between two units (currency pairs) over a period of time. A positive correlation between two currency pairs indicates that the two pairs tend to move in the same direction at the same time.
• Cross Pair – A pair that consists of a pair of currencies traded in forex that does not include the U.S. dollar.
• Cryptocurrency – A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
• Cryptography – The art of writing or solving codes.
• Currency – A system of money in general use in a particular country.
• Currency Pair – The quotation of the relative value of a currency unit against the unit of another currency in the foreign exchange market
• Currency Trading – Often referred to as foreign exchange or Forex, is the purchasing and selling of currencies in the foreign exchange marketplace, and is done with the objective of making profits.

 

D

• Day Trader – A trader who indulges in day trading. A day trader buys and subsequently sells financial instruments like stocks or currencies within the same trading day, which means all the positions that he/she creates are closed on the same trading day.
• Day Trading – Buying and selling financial instruments within the same trading day, such that all positions are closed before the market closes for the trading day.
• Decentralized – Not controlled by any single entity or institution.
• Deficit – An excess of expenditure or liabilities over income or assets in a given period.
• Deflation – Reduction of the general level of prices in an economy (value of currency rises).
• Depreciation – A reduction in the value of an asset with the passage of time.
• Depression – A long and severe recession in an economy or market.
• Descending Channel – A descending channel occurs when visually analyzing an overall downtrend in between two parallel lines.
• Descending Trend Line – A chart pattern containing two or more lower highs (peaks) that can be connected with a straight line.
• Dip – A decline in price of a specific asset.
• Downtrend – A downward trend, tendency, or movement.
• Drawdown – A decline in an investment or fund.
• Dump – When a person or group sell a bunch of coins at a market value, driving the price of the coins down.

 

E

• Economic Calendar – An economic calendar shows the scheduled news events or data releases related to the economy and financial markets.
• Elliott Wave Theory – A form of technical analysis that traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors.
• Ether – An open-source, blockchain-based, decentralized software platform used for its own cryptocurrency, ether.
• Ethereum – An open-source, blockchain-based, decentralized software platform used for its own cryptocurrency, ether.
• European Union (EU) – International organization comprising 27 European countries and governing common economic, social, and security policies.
• Exchange – An act of giving one thing and receiving another (especially of the same type or value) in return.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Exotic Pair – currency pairs that are thinly traded in foreign exchange markets and are not widely used in global financial transactions. Exotic currencies are illiquid, lack market depth, can be extremely volatile, and trade at low volumes.

 

F

• Fakeout – A situation in which a trader enters into a position in anticipation of a future transaction signal or price movement, but the signal or movement never develops and the asset moves in the opposite direction.
• Federal Open Market Committee (FOMC) – The monetary policymaking body of the Federal Reserve System. The FOMC is composed of 12 members–the seven members of the Board of Governors and five of the 12 Reserve Bank presidents.
• Federal Reserve – Central banking authority of the United States. It acts as a fiscal agent for the U.S. government, is custodian of the reserve accounts of commercial banks, makes loans to commercial banks, and is authorized to issue Federal Reserve notes that constitute the entire supply of paper currency of the country.
• Fiat Currency – Money is a government-issued currency that isn’t backed by a commodity such as gold.
• Fill – The satisfying of an order to trade a financial asset.
• Foreign Exchange – An institution or system for dealing in the currency of other countries.
• Forex (FX) – Foreign Exchange
• Forex Trading – The means through which one currency is changed into another. When trading forex, you are always trading a currency pair – selling one currency while simultaneously buying another.
• Fundamental Analysis – A method of measuring an asset’s intrinsic value by examining related economic and financial factors.
• Fundamentals – Macroeconomic factors that affect the currency markets.

 

G

• Going Long – Buying of a stock, commodity, or currency with the expectation that it will rise in value.
• Gross Domestic Product (GDP) – The total value of goods produced and services provided in a country during one year.

 

H

• Hardware Wallet – A special type of bitcoin wallet which stores the user’s private keys in a secure hardware device.
• Hash Function – any function that can be used to map data of arbitrary size to fixed-size values.
• HODL – A term derived from a misspelling of hold that refers to buy-and-hold strategies in the context of bitcoin and other cryptocurrencies. “Hold On for Dear Life”.
• Hot Wallet – A cryptocurrency wallet that is online and connected in some way to the Internet.
• Hybrid Wallet – A cryptocurrency wallet that generally uses JavaScript in the user’s browser to manage private keys and create payments. These wallets differed from traditional online wallet services because the user actually owns the private keys inside their wallet.
• Hyperinflation – monetary inflation occurring at a very high rate.

 

I

• ICO – An Initial Coin Offering (ICO) is the cryptocurrency industry’s equivalent to an Initial Public Offering (IPO). ICOs act as a way to raise funds, where a company looking to raise money to create a new coin, app, or service launches an ICO.
• Inflation – A general increase in prices and fall in the purchasing value of money (value of currency falls).
• Institutional Trader – Person who buys and sells securities for accounts they manage for a group or institution.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
• Intraday Trading – Trading within the day (day trading).

 

L

• Latency – the delay between the transmission of information from a source and the reception of the information at its destination.
• Ledger – a record-keeping system. The ledger maintains participants’ identities anonymously, their respective cryptocurrency balances, and a record of all the genuine transactions executed between network participants.
• Level – A price zone or a particular price point that is significant from a technical standpoint (support or resistance).
• Leverage – The use of borrowed money to invest in a currency, stock, or security. The concept of leverage is very common in forex trading. By borrowing money from a broker, investors can trade larger positions in a currency.
• Limit Order – An order placed to either buy below the market or sell above the market at a certain price.
• Liquidity – a high volume of activity in a market.
• Long – A position that makes a profit if an asset’s market price increases.
• Lot – the number of currency units you buy or sell. The standard lot size is 100,000 units of currency (1.00 lot size), and now, there are also mini (0.10 lot size) and micro (0.01 lot size) lot sizes that are 10,000, 1,000, and 100 units.

 

M

• Margin – A small amount of capital to open and maintain a new position. The broker uses your initial investment as collateral to open a new position and keep it open.
• Margin Call – occurs when the value of an investor’s margin account falls below the broker’s required amount. When this happens, your open trades will automatically be closed with a net loss.
• Market Cap – The aggregate valuation of the company based on its current share price and the total number of outstanding stocks.
• Market Impact – the effect on a market caused by an asset being either bought or sold.
• Market Maker – A company or an individual that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid–ask spread.
• Market Order – an order to buy or sell an asset immediately.
• Market Risk – The risk that the value of an investment will decrease due to changes in market factors.
• Maximum Supply (Cryptocurrency) – The maximum number of coins or tokens that will be ever created.
• MetaTrader 4 (MT4) – An electronic trading platform widely used by online retail traders.
• MetaTrader 5 (MT5) – An electronic trading platform widely used by online retail traders.
• Mining – the process of adding transaction records to Bitcoin’s public ledger of past transactions and a mining rig is a colloquial metaphor for a single computer system that performs the necessary computations for mining.
• Momentum – The strength of an upward or downward trend.
• Monetary Policy – The macroeconomic policy laid down by the central bank.
• Money Management – The process of budgeting, saving, investing, spending or otherwise overseeing the capital usage of an individual or group.
• Money Supply – All the currency and other liquid instruments in a country’s economy on the date measured.
• Moon – The price of a certain cryptocurrency raising in price rapidly and sharply.
• Multiple Time Frame Analysis – The process of viewing the same currency pair under different time frames.

 

N

• Node – A computer that connects to a cryptocurrency network. The node or computer supports the network.
• Non-Farm Payroll (NFP) – An economic indicator that represents the number of jobs added, excluding farm employees, government employees, private household employees and employees of nonprofit organizations.

 

O

• Open Order – An un-filled, or working order that is to be executed when an, as yet, unmet requirement has been met before it is cancelled by the customer or expires.
• Open Position – any established or entered trade that has yet to close with an opposing trade.
• Open Source Software – software that uses an open development process and is licensed to include the source code.
• Overnight Position – Trading positions that are not closed by the end of the trading day.
• Over-The-Counter (OTC) – The process of how securities are traded for companies not listed on a formal exchange. Securities that are traded over-the-counter are traded via a dealer network as opposed to on a centralized exchange.

 

P

• Pending Order – An order that instructs your broker to automatically buy or sell a currency when the market reaches a certain price in the future. This type of order differs from a market order, which instructs your broker to immediately buy or sell at the current price.
• Pip – A unit of measurement that measures the amount of change in the exchange rate for a currency pair, and is calculated using last decimal point. Short for “Percentage In Points”.
• Pivot Points – A technical analysis indicator, or calculations, used to determine the overall trend of the market over different time frames. The pivot point itself is simply the average of the high, low and closing prices from the previous trading day.
• Position Trading – Holding an investment for an extended period of time with the expectation that it will appreciate in value. The average time frames for holding positions can be measured in weeks to months.
• Price Action – The movement of price plotted over time. Price action forms the basis for all technical analysis of a currency pair, commodity or other asset chart. Many short-term traders rely exclusively on price action and the formations and trends to make trading decisions.
• Private Key – A variable in cryptography that is used with an algorithm to encrypt and decrypt code. Secret keys are only shared with the key’s generator, making it highly secure.
• Proof of Stake (PoS) – A different kind of consensus mechanism blockchains can use to agree upon a single true record of data history.
• Proof of Work (PoW) – A system that requires a not-insignificant but feasible amount of effort in order to deter frivolous or malicious uses of computing power, such as sending spam emails or launching denial of service attacks.
• Psychology – The emotions and mental state that help to dictate success or failure in trading securities. Trading psychology represents various aspects of an individual’s character and behaviors that influence their trading actions.
• Public Key – A cryptographic key that can be obtained and used by anyone to encrypt messages intended for a particular recipient, such that the encrypted messages can be deciphered only by using a second key that is known only to the recipient (the private key).
• Pullback – A temporary pause or dip in an asset’s overall trend. The term is sometimes used interchangeably with ‘retracement’.
• Pump – When a person or group with lots of money buy a bunch of coins at market value, driving the price of the coins up.

 

R

• Rally – A period in which the price of an asset, market or index sees sustained upward momentum.
• Range – Occurs when a security trades between consistent high and low prices for a period of time. The top of a security’s trading range often provides price resistance, while the bottom of the trading range typically offers price support.
• Recession – A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
• Reserve Currency – A large quantity of currency maintained by central banks and other major financial institutions to prepare for investments, transactions, and international debt obligations, or to influence their domestic exchange rate.
• Resistance – A price level where rising prices stop, change direction, and begin to fall. Resistance is often viewed as a “ceiling” keeping prices from rising higher.
• Retail Trader – A person who buys or sells assets for their own personal accounts.
• Return on Investment (ROI) – A ratio that compares the gain or loss from an investment relative to its cost.
• Revaluation – Adjustment of the value of a currency in relation to other currencies.
• Reversal – A change in the price direction of an asset.
• Reward-To-Risk Ratio – Measures how much your potential reward is, for every dollar you risk.
• Ripple (XRP) – A peer-to-peer powered cryptocurrency designed to work seamlessly with the Internet to allow a fast, direct and secure way to send payments on the web.
• Risk Management – Individual actions that allow traders to protect against the downside of a trade. More risk means higher chance of sizeable returns – but also a greater chance of significant losses.
• Rollover Fee – The interest rate differential between the two currencies of the pair you are trading. It is calculated according to whether your position is long or short. Also known as the “Swap fee”.
• Rollover Rate – The net interest return on a currency position held overnight by a trader. That is, when trading currencies, an investor borrows one currency to buy another. The interest paid, or earned, for holding the position overnight is called the rollover rate.

 

S

• Scalping – To buy or sell a currency pair and then hold it for a short period of time in an attempt to make a profit.
• Selling Pressure – Occurs when the majority of the traders are selling, indicating that the majority think the market price will decrease.
• Sell-Off – A large volume of a specific asset is sold in a short period of time. Due to the law of supply and demand, this causes a corresponding decline in the price of the asset.
• Sentiment – Refers to the overall attitude of investors toward a particular security or financial market.
• Sentiment Analysis – The process of identifying the positioning of traders, whether net long or net short, to influence your own trading decisions in the currency market. While sentiment analysis can be directly translated to forex, it is also used for stocks and other assets.
• Short – A position that makes a profit if an asset’s market price decreases.
• Sideways Market – The price of an asset trades within a fairly stable range without forming any distinct trends over some period of time. Also known as ‘consolidation’.
• Slippage – A market order is executed or a stop loss closes the position at a different rate than set in the order. Slippage is more likely to occur in the forex market when volatility is high, perhaps due to news events, or during times when the currency pair is trading outside peak market hours.
• Spread – The difference between the bid (sell) price and the ask (buy) price of a currency pair. This is the cost of any pair you trade and the reason you always start every trade in the negative.
• Stop Loss – An order that closes out your trade automatically if a specific price point is reached. This is meant to protect investors from substantial losses when a trade does not go in their favor.
• Stopped Out – A phrase that usually means traders had to exit their position with a loss on a stop-loss order.
• Supply And Demand – The amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.
• Support – Occurs when falling prices stop, change direction, and begin to rise. Support is often viewed as a “floor” which is supporting, or holding up, prices.
• Swap – The interest that you either earn or pay for a trade that you keep open overnight.
• Swing Trading – The medium to long term trading style that is used by traders who try to profit from price swings. Trades can be held for a few days to a few years.

 

T

• Take Profit – An order that you send to your broker, notifying them to close your position or trade when a certain price reaches a specified price level in profit.
• Tank – Occurs when price suffers a sudden decline.
• Technical Analysis – The framework in which traders study price movement. The theory is that a person can look at historical price movements and determine the current trading conditions and potential price movement.
• Trading Volume – The number of lots traded in a currency pair or in the entire market within a specified time period.
• Trend Line – Dynamic resistance connect significant lows in an uptrend and they connect significant highs in a downtrend.

 

U

• Unemployment Rate – The percent of the labor force that is jobless.
• Uptrend – An upward trend, tendency, or movement.

 

V

• Volatility – The measure of how drastically a market’s prices change.

 

W

• Whale – A trader with a substantial amount of capital, usually one who is bullish (believes prices will rise) on the price of a specific cryptocurrency. These people are also referred to as bullish whales. Whales are often the market movers for small illiquid altcoins due to their huge capital.
• Whipsaw – A slang term used by traders that describes the condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.
• Whitelist – A list of registered and approved participants that are given exclusive access to contribute to an initial coin offering (ICO) or a presale.
• Whitepaper – Explanation of the purpose and technology used for a cryptocurrency. A white paper is created by the founders and/or developers of a crypto to help sell the crypto. But instead of pushing emotional buttons, they provide facts, diagrams, statistics, and quotes.
• World Bank – An international organization dedicated to providing financing, advice, and research to developing nations to aid their economic advancement.