Trading glossary

What is arbitrage in trading? It happens when you can take advantage of price difference - buy an asset at one place and immediately sell it in another market with profit.

What does ask price refer to in trading? It’s the price a seller asks from buyers in a market. When the asking price matches the bid price (offered by potential purchasers) usually a transaction happens.

What is an asset in trading? It’s a resource that can be possessed and exchanged between parties. A bond, currency, equity, commodity, or cryptocurrency - are some examples of assets. In practice traders exchange assets themselves (spot market) or contracts tied to assets (ie. futures market).

Traders can teach computer programs to make trade orders for them. The practice is called algorithmic trading. The orders can be executed by simple rules, ie. decision tree, or by deep learning algorithms that are able to teach themselves.

What is a base rate. Central banks, such as Fed, Bank of England or European Central bank, set the rate they charge commercial banks for loans. Higher base interest rates slows inflation, rises income from bank deposits, but also rise the cost of borrowing, and negatively influences the stock market.

Bull and bear are symbols of uptrend and downtrend. Bears are skeptical, they expect the prices of an asset (cryptocurrency or stock) to go down, or even collapse. They usually try to short the companies or cryptos at the right time. On the other hand, bulls are optimistic about the future price. They want to buy low and sell in future.

What does it mean that one currency is pegged to another? Usually currencies used in different countries can be freely exchanged between buyer and sellers. It is less common that they are pegged, tied to the price of another currency, usually at the 1:1 ratio. Cryptos can be pegged aswell. The most popular are stablecoins tied to US dollar, such as Tether, USD Coin, or Binance Coin. Pegging a currency is tricky, as the central bank (or stablecoin issuer) needs to control the price.

What is CPI? It’s one of the most popular tool to measure the inflation. It tracks the change of the prices customers pay for goods and services. It’s given in percentages. If it is too high central banks need to act and raise interest rates. The move can slo the economy down, but will help to curb inflation.

What is fundamental analysis? It’s one of the most popular approach to assessing the value of an asset. For companies it takes into account their cashflow, reserves, financial and market results, as well as future potential. Traders who can correctly measure the fundamentals of an asset can see market opportunities as the current market price may be lower or higher than the intrinsic value of a stock, commodity, or cryptocurrency.

You might have heard of futures. These are derivatives. Buyers and sellers agree to a transaction at a specific price at a specific time in the future. Futures are a good way to hedge current positions. They are also often more volatile than the spot market, as futures prices sometimes can drop to negative.

What is GDP? Gross domestic product is the sum of the value of the goods and services produced in a country (or region). Usually economists measure annual GDP to check if the economy is growing or shrinking, and to compare the economic power of a territory.

Some trades, positions or investmets are done to make profit, other to reduce ones exposure to risk. Companies, countries, and individuals can hedge making a move opposite to their main position. You may hedge by shorting futures of an asset you own (Bitcoin, Tesla stocks), or by investing in an asset which price usually moves inversely.

What is HFT? The use of computers introduced algorithmic trading and high frequency trading. Automatic algorithms can perform trades faster than humans, and find a better price, buy and sell faster than a trader acting manually. HFT strategies can lead to “flash crashes”, when algorithms make the same mistake at the same time.

What does IPO mean? The shortest definition is the stock exchange debut - the first sale of the equity in the public market. IPO turns a private owned company into a public company as anyone can buy a stake in it. Companies raise new investment capital through IPO, the owners decide to sell part of their firm. Before an IPO investment banks and owners asses the value of the company and propose a price per share. However, on the day a company goes public big price movements are very common.

If you borrow money, you are supposed to pay interest to the lender. The price of the credit is usually expressed by annual percentage rate (APR). A second meaning of interest is the stake a stockholder has in a company, also expressed as a percentage.

What is intrinsic value? In finance the term is used to describe the true value of an asset, which usually is different from the market price. Companies, commodities, or currencies are undervalued or overvalued as it is difficult to assess the intrinsic value. Traders try to do it using fundamental analysis.

What is a limit order? Traders can open orders at a more attractive price than the current one. If you want to buy an asset, you can place a limit order at a lower price. If you are selling at a higher price. The limit order will be fulfille only when the market reaches your desired level.

What is leverage in finance? It’s a method of making more profit without investing more money. Traders can open a position using margin, which can be just a fraction of the value of an order. The margin trading provider lends the missing funds to their clients. Leverage allows you to make much more money if you are on the right side of the market, but if the market goes against you, you can quickly loose the margin.

When trading different assets you will quickly realize, that in some markets transactions happen very often, an don the others you’d need to wait several minutes for a price to change. This is the concept of liquidity. Liquid assets can be bought and sold any time, while less liquid assets (ie. expensive yachts) need a specific buyer.

When the funds on a trading account fall below the level needet to keep a position open, the owner receives a margin call warning. Unless more money is added to an account, the position will be automatically closed. In the past brokers would literally call their clients to inform about the situation, that’s where the term derives from.

When placing a stop order you want to execute a trade when the price is less attractive for you than the current one. Why would you want to do it? To stop loss. If you are holding an asset, you may want to sell if the price goes down before it crashes for good.

In forex trading, FIFO (First In, First Out) is a rule requiring that you exit your first (or oldest) open trade if you have multiple trades of the same pair and size open. This can impact hedging strategies where you aim to open opposite positions (BUY and SELL) on the same instrument for risk management. If FIFO is enabled on your platform, opening a new position in the opposite direction will close the oldest position of the same size, preventing simultaneous BUY and SELL positions. To maintain both positions,, you need to disable the FIFO option, available in the Symbols panel next to the trade calculator.

Rollover is an automated process engineered to transfer your position to the next available contract on futures-based CFDs, such as BUND or TNOTE. It's free of charge and enables you to hold your position open past its expiration date without the need to close and reopen it at a new rate manually. More details, examples and upcoming rollover dates can be found here.

El tamaño de la operación se refiere al tamaño de la posición que le gustaría abrir, NO la cantidad de sus fondos que le gustaría utilizar. Depende del instrumento.

El término "tamaño de la orden" se refiere al número de lotes estándar que desea negociar. 1.00 se refiere a 1 lote estándar o 100.000 unidades de la moneda base, por lo que 0.10 se refiere a 1 mini lote o 10.000 unidades de la moneda base. 0.01 se refiere a 1 lote micro o 1.000 unidades de la moneda base.

Margen de llamada (Margin Call) es una alerta para el trader cuando el saldo de la cuenta cae por debajo del 80% del nivel de margen. Esto significa que la cuenta se queda con sólo el margen suministrado y debe ser financiado con más dinero para evitar que se enfrente a un Stop Out o un cierre forzado. La plataforma de negociación comenzará a cerrar las posiciones de negociación en el nivel de Stop Out, que se establece en un 30% del nivel de margen.

Tomar ganacias (TP - Take Profit) es una orden para cerrar una posición previamente abierta a un precio más rentable para el cliente que el precio en el momento de realizar el pedido. Cuando se alcanza el take profit, la orden se cerrará.

El Margen es un monto porcentual del tamaño total de la orden que un corredor requiere como un depósito de buena fe para permitir que un comerciante abra esa posición. Esta cantidad no es una tarifa o costo de transacción; Es simplemente una porción de su cuenta de capital propio puesta de lado en su cuenta como un depósito hacia el comercio. Los requisitos de margen se calculan tomando un porcentaje del tamaño de la orden nocional y son determinados por el corredor de antemano en las condiciones de operación.

El deslizamiento o slippage ocurre cuando hay brechas del mercado sobre los precios o porque la liquidez disponible a un precio dado se ha agotado. Las brechas de mercado normalmente ocurren en los mercados de rápido movimiento cuando el precio puede saltar varios pips sin operar a precios intermedios. De manera similar, cada precio tiene una cierta cantidad de liquidez disponible. Por ejemplo, si el precio es de 50 y hay 1 millón disponible a 50, entonces una orden de 3 millones se reducirá, ya que 3 millones es más que el 1 millón disponible al precio de 50.

Spread es la diferencia entre la oferta (bid price) y el precio de venta (ask price). El precio de la oferta es la tasa a la que se puede vender un par de divisas, y el precio de venta es la tasa a la que se puede comprar un par de divisas. Con nosotros, puede intercambiar una amplia gama de instrumentos con pliegues flexibles. Esto le da un mayor grado de transparencia de precios en sus operaciones.

Detener pérdidas (SL - Stop Loss) es una orden para cerrar una posición previamente abierta a un precio menos rentable para el cliente que el precio en el momento de realizar el pedido.Stop loss es un punto límite que estableció en su pedido. Una vez alcanzado este punto límite, su pedido se cerrará. Es útil si desea minimizar sus pérdidas cuando el mercado va en contra de usted. Los puntos de stop loss siempre se establecen por debajo del precio ASK actual en la compra o por encima del precio actual BID en la venta.

Trailing stop es un tipo de orden de stop loss. Se fija a un nivel porcentual por debajo del precio de mercado (para las posiciones long) o superior al precio de mercado (para las posiciones short).

Bitcoin es una moneda digital creada en 2009, basada principalmente en un artículo autopublicado por Satoshi Nakamoto. Bitcoin permite pagos rápidos (y micropagos) a un costo muy bajo, evitando al mismo tiempo la necesidad de autoridades centrales y emisores.

Un corredor de Forex es un intermediario entre usted y el escritorio interbancario, las redes de los bancos que el comercio entre sí. Por lo general, un corredor de Forex le ofrecerá un precio de los bancos, actuando como su proveedor de liquidez. SimpleFX utiliza múltiples bancos para los precios y le ofrecemos las mejores cotizaciones de precios con una rápida ejecución.

Los mercados spot se refieren a los mercados que tenen que ver con el precio actual de los instrumentos financieros.

Si está comprando un par de divisas, está abriendo una posición 'long', si está vendiendo - una 'short'. Por ejemplo, si compra 1 lote de EUR/USD, significa que abre una posición long por 100.000 unidades de EUR. Y si vende 10 lotes de AUD/CAD, significa que abre una posición short por 1.000.000 de unidades de USD.