Trading glossary

Altcoins, short for "alternative coins", are cryptocurrencies other than Bitcoin. They often offer varied functionalities and technologies. Prominent examples include Solana, Avalanche, and Litecoin, each distinguished by unique attributes.

The ask price is the minimum price a seller is willing to accept for an asset. In forex trading, this is critical for currency pairs such as EURUSD, where the ask price indicates how much of the quote currency is needed to buy one unit of the base currency.

Asset is a resource that can be possessed and exchanged between parties. Currencies, equities, commodities, or cryptocurrencies are some examples of assets.

The bid price represents the maximum price a buyer is willing to pay for an asset. In the context of forex, for currency pairs like USDJPY, the bid price shows how much of the quote currency one can obtain for selling one unit of the base currency.

Bitcoin is a cryptocurrency created in 2009, based mainly on a self-published paper by Satoshi Nakamoto. Bitcoin enables immediate payments (and micropayments) at a very low cost, while avoiding the need for central authorities and issuers.

Blockchain is a decentralized digital ledger that records transactions across multiple computers. This technology underpins cryptocurrencies like Bitcoin, ensuring security and transparency by preventing alteration of transaction data once recorded.

UKOIL, often referred to as Brent Crude, is a major benchmark for global oil prices. It plays a crucial role in the commodities market, influencing the prices of related assets like USOIL. Monitoring UKOIL prices helps traders and investors understand supply and demand dynamics in the energy sector.

Commodities are basic goods used in commerce that are interchangeable with other foods of the same type. Key examples include oil, a primary energy source with significant impact on global markets; cocoa, essential for the production of chocolate and other food items; and natural gas, a major energy source for heating and electricity.

CPI is one of the most popular tools to measure inflation. It tracks the change of the prices customers pay for goods and services. It’s given in percentages. Traders often analyze the American market with CPI and other indicators, including FOMC and NFP.

Cryptocurrencies are digital or virtual currencies that use cryptography for security, making them difficult to counterfeit. The most well-known cryptocurrency is Bitcoin, recognized for its pioneering role. Other major cryptocurrencies include Ethereum, known for its smart contract capabilities, and Solana, famed for its high-speed transactions and scalability.

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 as well. The most popular are stablecoins tied to the U.S. dollar, such as Tether, USD Coin, or Binance Coin.

dApps are applications that run on a decentralized network, typically powered by blockchain technology. Ethereum is a popular platform for developing dApps, which are pivotal to sectors like DeFi (decentralized Finance). Users often access dApss using a crypto wallet.

Decentralized Finance, or DeFi, refers to a financial system built on blockchain technology that operates without central financial intermediaries. It utilizes smart contracts and cryptocurrencies to provide more open and transparent financial operations compared to traditional banking.

A derivative is a financial security whose value is dependent upon or derived from an underlying asset or group of assets. Common underlying instruments include equities, bonds, commodities, currencies, interest rates, and market indices.

A dividend is a portion of a company’s earnings distributed to shareholders, typically in cash or additional shares. Companies like Tesla and MicroStrategy may offer dividends as a way to return value to shareholders, affecting stock price and investor interest.

An economic indicator is a statistic about an economic activity, helping analysts assess overall economic health. Key indicators include the NFP (Non-Farm Payrolls), which signals employment trends; the FOMC (Federal Open Market Committee) announcements, influencing monetary policy; and the CPI (Consumer Price Index), measuring inflation.

Equities, commonly known as stocks, represent ownership shares in companies. Investors who buy equities become partial owners of these companies. Major equities like NVIDIA, JPMorgan, and Google often influence the broader market and are key components of various indices.

Ethereum is a decentralized platform known for its ability to execute smart contracts and develop decentralized applications (dApps). Unlike Bitcoin, which is primarily a digital currency, Ethereum allows for complex agreements coded directly into the blockchain.

The Euro (EUR) is the official currency of the Eurozone, which includes 20 of the 27 European Union countries. As one of the world’s major currencies, it plays a crucial role in global markets, particularly in forex trading. The EURUSD currency pair measures the value of the Euro against the U.S. Dollar, is among the most traded pairs.

GameFi refers to the blend of gaming based on blockchain with financial elements. These games often incorporate features from DeFi and operate as dApps, allowing players to earn real-world value through gameplay.

GMT (Greenwich Mean Time) is the mean solar time at the Royal Observatory in Greenwich, London. It serves as a global time standard, crucial for international trading activities. In the forex market, pairs like GBPUSD and indices such as the FTSE100 operate on schedules aligned with GMT.

Halving is a significant event in the Bitcoin network where the reward for mining new blocks is cut in half. This process occurs approximately every four years and is designed to control inflation by reducing the rate at which new bitcoins are generated.

A hash is a fixed-length code generated from data of any size, using a mathematical function. It is crucial in blockchain technology for ensuring data integrity and security. Hash functions are also foundational in various DeFi.

Indices are statistical measures that track the performance of a group of equities, representing a specific segment of the stock market. They are used by investors and economists to gauge market trends and compare the reuters of various assets. Key indices include the S&P500, which monitors the performance of 500 large companies listed on stock exchanges in the United States; the NASDAQ known for its high focus on technology stocks; the NIKKEI225, a major index tracking 225 top-rated companies listed in Japan; and the European STOXX 50.

The shortest definition of IPO is the stock exchange debut - the first sale of the equity in the public market. On the day a company goes public, traders can notice significant price movements. For instance, 1999 was the year for the IPO of NVIDIA, and Tesla debuted in the stock exchange in 2010.

The JP225, also known as the NIKKEI225, is a stock market index for the Tokyo Stock Exchange. It represents the performance of 225 large, publicly owned companies in Japan, making it a significant economic indicator.

The "Kiwi" refers to the New Zealand Dollar (NZD), named after the native bird of New Zealand, symbolizing the currency’s origin. As a major currency in the forex market, the Kiwi plays a crucial role in pairs such as AUDNZD and NZDJPY.

Depending on the popularity of the asset, trades can be conducted faster or slower. It is caused by the liquidity. The most popular financial assets such as Bitcoin, EURUSD or NVIDIA will be traded much faster than less familiar exotic currency pairs or equities.

Traders who want to buy an asset - for example a currency pair - open a long position. If an investor buys EURUSD, it means that a long position is opened.

Metals in the financial markets refer to precious and industrial metals that are traded on commodities exchanges around the world. Key precious metals include gold and silver, often traded as XAUUSD and XAGUSD, which serve as important investment assets and hedges against inflation. Industrial metals like palladium and platinum are crucial for various manufacturing processes.

In the context of cryptocurrencies, mining refers to the process of validating transactions and adding them to the blockchain ledger. This is achieved through a method known as proof of work, which requires miners to solve complex mathematical problems. Bitcoin is the most well-known cryptocurrency that uses mining to maintain network security and integrity.

In trading, a net position refers to the difference between total open long and open short positions in any asset, like in forex or crypto markets. This metric presents a trader’s overall exposure in the market.

In the context of crypto networks, a node is a computer that connects to a crypto network and suppros its functionality by verifying and relaying transactions. Nodes maintain a copy of the entire blockchain, ensuring the network’s decentralization and security.

Non-Farm Payrolls (NFP) is a key economic report that indicates the number of jobs added in the U.S. economy, excluding farm employees, government employees, private household employees, and employees of nonprofit organizations. It is closely monitored by the FOMC (Federal Open Market Committee) and investors as it influences monetary policy decisions and can impact the CPI (Consumer Price Index).

An NFT, or Non-Fungible Token, is a unique digital asset that represents ownership of a specific item or piece of content, such as art, music, or videos, using blockchain technology. NFTs are primarily built on the Ethereum blockchain, which supports these tokens through its smart contract capabilities. They are not interchangeable, making each token distinct and valuable in its own right.

An open position in trading refers to any trade that has been established, but not yet closed with an opposing trade. In forex and equities markets, an open position represents exposure to market movements.

Open-source refers to software whose source code is freely available for anyone to view, modify, and distribute. This approach promotes collaboration and transparency, allowing developers to improve the software and adapt it to new uses. In the context of DeFi and dApps, open-source is fundamental.

Peer-to-peer (P2P) refers to a decentralized network architecture where participants, or peers, share resources without the need for a centralized administrative system. This concept is fundamental in the Bitcoin network, where transactions are directly exchanged between users without intermediaries, facilitated by blockchain technology.

Proof of stake (PoS) is a consensus mechanism used by certain crypto networks to validate transactions and secure the blockchain. Unlike proof of work, which requires extensive power, PoS involves validators who are chosen to create nie blocks based on the number of coins they hold. Ethereum is a notable cryptocurrency that has transitioned to PoS.

Proof of Work (PoW) is a consensus algorithm foundational to many crypto networks, including Bitcoin. It requires participants, known as miners, to solve complex mathematical problems in order to validate transactions and secure the blockchain. The first miner to solve the problem earns the right to add the new block to the blockchain and receives a reward in cryptocurrency.

In forex trading, the quote currency is the second currency in a currency pair and represents how much of this currency is needed to exchange for one unit of the base currency. For instance, in the EURUSD pair, the USD is the quote currency. It means traders need to know how many U.S. dollars it takes to buy one Euro.

Risk management involves identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events. In trading crypto, indices, and commodities, effective risk management is crucial for protecting investments.

Technical analysis is a method of evaluating financial markets by analyzing historical price movements and trading volumes. It is widely used in crypto, forex, and indices markets to identify trends based on past data.

The unemployment rate measures the percentage of the labor force that is jobless and actively seeking employment. It is a vital economic indicator, closely monitored by entities like the NFP, FOMC, and CPI to assess economic health and guide policy decisions.

In trading, value refers to the worth of an asset, determined by factors like market demand, intrinsic attributes, and overall economic conditions. In the forex market, the value of currency pairs such as EURUSD is impacted by various economic indicators, interest rates, and geopolitical events.

Volatility measures the degree of variation in the price of an asset over time. High volatility indicates significant price swings, common in markets like crypto, particularly with assets like emerging altcoins.

Volume refers to the total number of shears or contracts traded for a particular asset within a specific period. In markets like crypto and equities, high trading volume can indicate strong interest and liquidity.

Wallets are an essential tool of every crypto trader. It enables them to connect with various blockchain and to send and receive crypto assets. Crypto wallets stand as the crucial tools especially due to the development of decentralized finance (DeFi).

Web3 represents the next generation of the internet, focusing on decentralization and user empowerment through crypto and blockchain technologies. It focuses on creating a more open and user-controlled digital ecosystem, integrating innovations from Bitcoin and other blockchain-based platforms.

A whitepaper is a detailed document that outlines the concept, technology, and purpose of a crypto or blockchain project. Foundational examples include the Bitcoin whitepaper by Satoshi Nakamoto and the Ethereum whitepaper by Vitalik Buterin, which have significantly influenced the crypto industry.

USOIL, often referred to as West Texas Intermediate (WTI), is a major benchmark for crude oil prices in the United States. It plays a significant role in the commodities market, influencing global oil prices alongside UKOIL.