Trading Glossary

American-style options: an option which can be exercised at any time between the date of purchase and the expiry date
At-the-money: situation in which the strike price of an option is equal to the market price of the underlying asset
Bear market: when prices of securities and/or commodities are falling (usually by 20% or more)
Bull market: when prices of securities and/or commodities are rising or expected to rise
Call option: an option contract which gives the holder the right to buy a stock/commodity at a certain price
Carry trading: investors sell a financial instrument with low interest rate and use the funds to buy something yielding a higher interest rate
European-style Option: an option which can be exercised only at the date of the expiry of the option
Forward price: the buying or selling price at a specific later date
Fundamental analysis: evaluation of the securities by analyzing all information which can influence the price (macroeconomic factors of the market and the sector and company specific data like earnings, profit, assets, management etc.)
Hedging: making an investment to limit the probability of loss caused by fluctuation of prices
In-the-money: situation in which the strike price of the option is below (for a call option) or above (for a put option) the market price of the underlying asset
Long: buying of a stock, commodity, bond etc. expecting a rise in value (opposition of short)
Option: it is a right (but not the obligation) to buy (for a call option) or to sell (for a put option) a specific amount of stock/commodity at a specified price during a period (American-style) or at an expiry date (European-style)
OTC (Over-the-Counter): a security which is not traded on an exchange, so the deals are negotiated bilaterally and privately between the parties
Out of the money: situation in which the strike price of the option is lower (for a call option) or higher (for a put option) than the market price of the underlying asset
PIP: the smallest unit the price can change
Put option: an option contract which gives the holder the right to sell a stock/commodity at a certain price
Quote: the current price offered or asked for a stock/commodity
Scalping: this is the shortest trading style based on technical analysis. Scalpers can trade in real time or can be system driven. They want to make many small profits during a day with trades active only for minutes or no more than one hour.
Short: selling a stock, commodity etc. (which the investor does not own) to make a profit after a fall in price (opposite of long). They anticipate that can buy the financial instrument at a lower price later).
Speculate: buying or selling stock, commodity, derivative etc. without fundamental business or other need only to attempt to profit from fluctuations in its price
Spot price: the buying or selling price for immediate delivery
Stop-loss: an order placed with a broker to sell a security when it reaches a certain price in order to limit any loss
Strike price (also called exercise price): the price at which the options holder can buy or sell
Swing trading: traders want to realize profit from trades active only from one to a few weeks, based only on technical analysis. They attempt to make profit on the price volatility investigating price trends and patterns.
Technical analysis: analyzing the value of securities through market activity like history of prices and volume. Use little or no information of the real business behind the financial instrument.
Underlying asset: the specific security, financial instrument or commodity represented in a derivative that gives the holder the right to buy or to sell
Value date: the date when the settlement is made on the account