A - Z Trading Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A sustained upward movement in the price of a security or market, often following a decline.

Describes an asset that trades between a defined high and low price over a period, without a clear trend.

The profit or loss on a completed trade. This means a position has been initiated and then closed. It also includes any and all fees and commissions associated with the transaction.

Adjusting the proportions of assets in a portfolio to maintain desired risk/reward profiles or asset allocations.
Example: Selling appreciated assets and buying underweighted ones.

An amount paid to the borrower of easy-to-borrow stocks as an incentive to borrow.

A substantial slip in economic output that impacts the broad economy and lasts for at least a few months. While a technical recession is defined as 2 consecutive quarters of real GDP declines, it is possible to experience two consecutive shallow declines in real GDP without being in recession.

A momentum oscillator used in technical analysis to measure the speed and change of price movements.
Scale: 0–100

  • 70 = Overbought
  • <30 = Oversold

An individual investor who buys and sells securities for personal accounts, not on behalf of an organization.

A performance metric used to evaluate the efficiency of an investment.
Formula: (Profit / Cost) × 100

A chart pattern indicating a potential change in trend direction.
Examples: Head and Shoulders, Double Top, Double Bottom

A process of identifying, analyzing, and controlling exposure to financial risk.
Includes:

  • Position sizing
  • Stop losses
  • Portfolio diversification
  • Hedging

Compares the potential reward of a trade to the potential loss.
Ideal: Traders often aim for at least 2:1. Example: Risking $100 to potentially gain $200 = 2:1.

In forex, it's the interest paid or earned for holding a position overnight. In futures, it means moving from a near-term contract to a longer-term one before expiry.

A complete trade cycle, including both opening and closing of a position.
Example: Buy 100 shares → Sell 100 shares = 1 round trip.