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Financial Glossary

Financial glossary

A
Adjustment
The process of buying or selling instruments to bring your position delta back to zero and increase profits.
All Ordinaries Index
The major index of Australian stocks. This index represents 280 of the most active listed companies or the majority of the equity capitalization (excluding foreign companies) listed on the Australia Stock Exchange (ASX).

B
Back Months
The futures or options on futures months being traded that are furthest from expiration.
Bear
An investor who acts on the belief that a security or the market is falling or is expected

C
CAC 40 Index
A broad-based index of 40 common stocks on the Paris Bourse.
Call Premium
The amount a call option costs.
Capital
The amount of money an individual or business has available.

D
Daily Range
The difference between the high and low price of a security in one trading day.
Day Order
An order to buy or sell a security which expires if not filled by the end of the day.
Day Trade
The purchase and sale of a position in the same day.

E
Each Way
The commission made by a broker for the purchase and sale sides of a trade.
End of Day
The close of the trading day when market prices settle.

F
Fade
Selling a rising price or buying a falling price.
Fast Market
A stock with so much volume that the order entry systems have difficulty processing all of the orders.
Fill
An executed order.

G
Gamma
The degree by which the delta changes with respect to changes in the underlying instrument's price.
Gap
A day in which the daily range is completely above or below the previous day's daily range.
Go Long
To buy securities, options or futures.

H
Hammering the Market
The intense selling of stocks by speculators who think the market is about to drop because they think prices are inflated.
High (hi)
The highest price that was paid for a stock during a certain period.

I
Immediate/Cancel
An order which must be filled immediately or canceled.
Index
An index is a group of stocks which can be traded as one portfolio, such as the S&P 500. Broad-based indexes cover a wide range of industries and companies and narrow-based indexes cover stocks in one industry or economic sector.

L
LEAPS
Long-term stock or index options which are available with expiration dates up to three years in the future.
Leg
One side of a spread.
Limit Order
An order to buy a stock at or below a specified price or to sell a stock at or above a specified price.


M
Make a Market
A market maker stands ready to buy or sell a particular security for his/her own account to keep the market liquid.
Margin Account
A customer account in which a brokerage firm lends the customer part of the purchase price of a trade.

N
Narrowing the Spread
The closing spread between the bid and asked prices of a security as a result of bidding and offering.
NASDAQ
National Association of Securities Dealers Automated Quotations system -- a computerized system providing brokers and dealers with price quotations for securities traded over-the-counter as well as for many New York Stock Exchange listed securities.

O
Offer Down
The change of the offer of the market related to a downward price movement at that specific time.

P
Par
The stated or "nominal" value of a bond (typically $1,000) that is paid to the bondholder at maturity.
Perceived Risk
The theoretical risk of a trade in a specific time frame.

Q
Quickie
An order that must be filled as soon as it reaches the trading floor at the price specified, or be canceled immediately.
Quote
The price being offered or bid by a market maker or broker-dealer for a particular security.

R
Real-time
Data received from a quote service as the prices change.
Relative Strength
A stock's price movement over the past year as compared to a market index.

S
Security
A trading instrument such as stocks, bonds, and short-term investments.
Selling Short
The practice of could borrowing a stock, future or option from a broker and selling it because the investor forecasts that the price of a stock is going down.

T
Time Premium
The additional value of an option due to the volatility of the market and the time remaining until expiration.

U
Undervalued
A security selling below the value the market value analysts believe it is worth.

V
Variable Delta
A delta that can change due to the change of an underlying asset or a change in time expiration of an option.
Vega
The amount by which the price of an option changes when the volatility changes. Also referred to as volatility.

W
Wide Opening
Refers to an unusually large spread between the bid and asked prices.

Y
Yellow Sheets
A daily publication of the National Quotation Bureau detailing bid and asked prices

Z
Zeta
The percentage change in an options price per 1% change in implied volatility.

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