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what is the indices trading ? | indices trading is the means by which traders attempt to make a profit from the price movements of indices | |
what is the inflation ? | inflation is the increase in the cost of goods and services in an economy as that in turn means that each unit of the currency s economy is worth less of any good or service inflation can also be viewed as a devaluing of currency | |
what is the inflation risk ? | inflation risk also referred to as purchasing power risk is the risk that inflation will undermine the real value of cash flows made from an investment | |
what is the interest ? | in finance interest can have more than one definition firstly it refers to the charge levied against a party for borrowing money which can be either a cost or a means of making profit for a trader secondly it can mean the portion of a company s stocks held by a particular shareholder | |
what is the interest rate swap ? | an interest rate swap is an agreement to exchange interest payments from a financial instrument for interest payments from another financial instrument | |
what is the interest rate ? | the amount that a lender charges to a borrower for the loan of an asset usually expressed as a percentage of the amount borrowed that percentage usually refers to the amount being paid each year known as annual percentage rate or apr but can be used to express payments on a more or less regular basis | |
what is the internal rate of return irr ? | internal rate of return irr is a capital budgeting measurement used by companies to determine the profitability of a potential investment or project based on predicted cashflows the irr formula is complex and relies on a certain amount of trial and error to get correct | |
what is the intrinsic value ? | intrinsic value is a way of describing the perceived or true value of an asset this is not always identical to the current market price because assets can be over or undervalued intrinsic value is a common part of fundamental analysis which investors use to assess stocks as well being used in options pricing | |
what is the investment appraisal ? | the point when a trading position automatically closes is known as the expiry date or expiration date | |
what is the investment grade ? | investment grade is a rating applied to a municipal and corporate bond with a low risk of default | |
what is the ipo ? | when a company embarks on an ipo which stands for initial public offering it goes public on a stock exchange this can also be known as floating flotation or just going public | |
what is the junior isa ? | junior isas are tax free savings accounts for those under the age of 18 and living in the uk as with isas for adults there are two types a cash junior isa and a stocks and shares junior isa money can be invested in both types as long as the total amount invested in one year doesn t go over an annual cap | |
what is the key feature document ? | a document that financial service providers are obliged to offer retail clients before they open certain investment or savings products it must outline the main characteristics of the financial service in a simple format so the potential client can decide whether it is right for them | |
what is the key investor information document kiid ? | the key investor information document kiid is a document that provides key information about investment funds in order to help a potential investor compare different investment funds and assess which fund meets their specific needs | |
what is the large cap ? | large cap stands for large capitalisation and is a term used to group stocks and shares sitting above mid cap and small cap stocks large cap stocks generally have a valuation or market capitalisation of more than 10 billion | |
what is the leverage ? | leverage is a concept that can enable you to multiply your exposure to a financial market without committing extra investment capital | |
what is the leveraged etfs ? | leveraged etfs are a form of exchange traded fund etf that seek to deliver multiplied returns of the underlying benchmark they track for instance if the ftse 100 increases 10 in a day a 2x ftse etf will aim to increase 20 | |
what is the leveraged products ? | leveraged products are financial instruments that enable traders to gain greater exposure to the market without increasing their capital investment they do so by using leverage | |
what is the liabilities ? | liabilities are the debts and obligations that detract from a company s total value which have to be paid over a certain period of time the form of the debt can vary common examples include business expenses loans unearned revenues or legal obligations | |
what is the limit order ? | a limit order is an instruction to your broker to execute a trade at a particular level that is more favourable than the current market price | |
what is the limit up and limit down ? | a limit up is the maximum amount that the price of a stock index future or commodity future will be allowed to increase in a single trading session a limit up is different to a limit down but both are used to prevent certain assets reaching excessively high volatility levels | |
what is the liquidity ? | liquidity is used in finance to describe how easily an asset can be bought or sold in the market without affecting its price it can also be known as market liquidity when there is a high demand for an asset there is high liquidity as it will be easier to find a buyer or seller for that asset | |
what is the the london interbank offered rate libor ? | libor or the london interbank offered rate is a benchmark that dictates daily interest rates on loans and financial instruments around the world | |
what is the long position ? | when used in trading long refers to a position that makes profit if an asset s market price increases usually used in context as taking a long position or going long | |
what is the lot ? | a lot is a standardised group of assets that is traded instead of a single asset | |
what is the m2 money supply ? | m2 is a classification of money supply it includes m1 which is comprised of cash outside of the private banking system plus current account deposits while also including capital in savings accounts money market accounts and retail mutual funds and time deposits of under 100 000 | |
what is the maintenance margin ? | maintenance margin is the amount that must be available in funds in order to keep a margin trade open it is also known as the variation margin | |
what is the margin call ? | a margin call is the term for when a broker requests an increase maintenance margin from a trader in order to keep a leveraged trade open | |
what is the margin ? | in trading margin is the funds required to open and maintain a leveraged position | |
what is the deposit margin ? | deposit margin is the amount a trader needs to put up in order to open a leveraged trading position it can also be known as the initial margin or just as the deposit | |
what is the market capitalisation ? | market capitalisation is the total market value of a company s shares on the market it is often abbreviated to market cap market capitalisation is an easy way for investors to determine a company s size which can help to assess the risk of investing in its shares | |
what is the market data ? | market data refers to the live streaming of trade related data it encompasses a range of information such as price bid ask quotes and market volume trading venues provide reports on various assets and financial instruments which are then distributed to traders and firms market data is available across thousands of global markets including stocks indices forex and commodities | |
what is the market maker ? | a market maker is an individual or institution that buys and sells large amounts of a particular asset in order to facilitate liquidity | |
what is the market order ? | a market order is an instruction from a trader to a broker to execute a trade immediately at the best available price | |
what is the market value ? | while the market value reflects what a business is worth according to market participants book value reflects what a business is worth according to its financials its books the calculation for the book value of a company is its total tangible assets minus its liabilities | |
what is the merger ? | when two or more companies decide to combine and become one entity it is called a merger | |
what is the metatrader ? | metatrader is an electronic trading platform which is popular among traders around the world | |
what is the mid cap ? | mid cap stands for middle capitalisation and is a term used to group stocks and shares sitting between large and small cap stocks mid cap stocks used to have a valuation of between 1 and 5 billion but more recently are defined as having a valuation of between 2 and 10 billion | |
what is the modified internal rate of return mirr ? | modified internal rate of return mirr is used to assess the cost and profitability of a future project for a company unlike the standard internal rate of return irr mirr assumes that positive cashflows are reinvested at the cost of capital and that cash outlays are funded at the current financing cost | |
what is the moving average convergence divergence macd ? | the moving average convergence divergence macd is a technical analysis indicator that aims to identify changes in a share price s momentum the macd collects data from different moving averages to help traders identify possible opportunities around support and resistance levels | |
what is the moving average ? | a moving average often shortened to ma is a common indicator in technical analysis used to examine price movements of assets while lessening the impact of random price spikes | |
what is the multilateral trading facilities ? | multilateral trading facilities mtfs offer traders and investment firms an alternative to traditional exchanges they allow trading of a wider variety of markets than most exchanges including assets that may not have an official market | |
what is the multiplier effect ? | the multiplier effect is the term used to describe the impact that changes in monetary supply can have on economic activity when an individual government or company spends money it has a trickle down effect to businesses and individuals the resulting impact can be much wider than the initial action | |
what is the mutual fund ? | a mutual fund is an investment fund of pooled money from many investors | |
what is the negative balance protection ? | negative balance protection ensures that traders do not lose more than the balance on their account even if the market moves quickly or gaps | |
what is the net asset value nav ? | a fund s net asset value nav refers to the underlying value of its holdings if they were all to be immediately sold usually divided by the number of shares in circulation | |
what is the net change ? | net change is the difference between the closing price of the current trading session compared to the closing price of the previous trading session net change can be positive or negative as it represents whether the markets are up or down on the previous day | |
what is the net income ? | net income is the total amount of profit often known as earnings made by a company listed in its earnings report | |
what is the nisa ? | nisa stands for new isa it is a variant of the individual savings account that was brought in by the chancellor of the exchequer at the time george osborne in 2014 | |
what is the nominal ? | the first definition refers to share prices every public company determines what the nominal price of its shares will be which can also be known as the par value of each share once a nominal share price has been set the company cannot sell any shares for an amount below that nominal value | |
what is the nominee ? | a nominee is an individual or business chosen to manage assets or undertake transactions in say securities or other assets on behalf of another individual or business which retain ownership of the asset in question for example a nominee account is often used by a stockbroker to hold shares that belong to its clients allowing the stockbroker to buy or sell shares on the client s behalf this gives the stockbroker the necessary control to conduct transactions while ensuring the client retains all rights over the securities such as voting rights and dividend entitlements | |
what is the non current assets ? | non current assets represent a company s long term investments for which the full value won t be realised during the accounting year this can also include items that don t have an inherent value intangible assets for example or assets with no fixed expiry such as property or land | |
what is the non farm payrolls ? | non farm payrolls are a monthly statistic representing how many people are employed in the us in manufacturing construction and goods companies they can also be known as non farms or nfp | |
what is the oeic ? | an open ended investment company oeic is a type of collective or pooled investment fund in the uk money from many investors is pooled together and professional fund managers will buy securities like stocks bonds and property according to an investment strategy | |
what is the off book ? | an off book trade refers to the process of trading shares away from an exchange or regulated body they are usually executed via the over the counter otc market off book transactions are made directly between two parties outside or off of the order books | |
what is the offer ? | offer is the term used when one trader expresses an intention to buy an asset or financial instrument from another trader or institution | |
what is the on exchange ? | on exchange is a term used to mean that a trade is taking place directly on an order book it differs from at quote which is a trade made at the price quoted by a market maker | |
what is the on balance volume obv ? | on balance volume obv is a form of technical analysis which enables traders to make predictions about future price movements based on the asset s previous trading volume obv is mostly used in shares trading because the volume has an especially large influence on the way share prices move | |
what is the ocf ? | investment funds charge two types of fees the first is a one off charge whereby the fund will take a percentage of an investor s money on entry the second refers to the ongoing charges figure which takes the wide variety of costs of running the fund into account such as operating costs annual management charge amc administrative costs and transaction charges incurred as a result of buying or selling investments | |
what is the opec ? | opec is the organisation of the petroleum exporting countries it was founded in 1960 by saudi arabia venezuela iraq iran and kuwait the other countries that have joined opec since are libya the united arab emirates algeria nigeria ecuador gabon angola equatorial guinea and the republic of the congo bringing opec s membership to 14 as of january 2019 | |
what is the open ? | open has several definitions within investing it can refer to the daily opening of an exchange and an order or position that has not yet been filled or closed | |
what is the open offer ? | an open offer is a secondary market offering that allows existing shareholders in a company to purchase new shares in the business on a pre emptive basis and at a lower price or discounted rate to the prevailing market value | |
what is the open position ? | an open position is a trade which is still able to generate a profit or incur a loss when a position is closed all profits and losses are realised and the trade is no longer active open positions can be either long or short enabling you to profit from markets rising as well as falling | |
what is the option ? | an option is a financial instrument that offers you the right but not the obligation to buy or sell an asset when its price moves beyond a certain price with a set time period | |
what is the options spread ? | there are three main types of options spread strategy vertical horizontal and diagonal | |
what is the order book ? | in trading an order is a request sent to a broker or trading platform to make a trade on a financial instrument | |
what is the order ? | in trading an order is a request sent to a broker or trading platform to make a trade on a financial instrument | |
what is the otc trading ? | otc stands for over the counter and refers to a trade that is not made on a formal exchange it is often also referred to as off exchange trading | |
what is the out of the money otm ? | out of the money otm is one of three terms used to address an option s moneyness with the other two being at the money and in the money an out of the money options contract has not yet reached the value of its strike price meaning it has no intrinsic value and will expire worthless | |
what is the overexposure ? | overexposure in trading is the term used to describe the mistake of taking on too much risk typically it s when a trader makes the technical blunder of investing too much capital in a single position or market | |
what is the p e ratio ? | the price to earnings ratio or p e ratio for short is a method of measuring a company s value the p e ratio is calculated by dividing the company s market value per share by the earnings per share eps | |
what is the parent company ? | a parent company is one which has a controlling or majority interest in another company which gives it the right to control the subsidiary s operations parent companies can be directly involved in the management of their subsidiaries or they can have a more hands off approach | |
what is the parity ? | the term parity can be used in a few ways when trading but always as an expression of equality | |
what is the participating preferred shares ? | participating preferred shares give the holder the right to receive dividends paid to preferred shareholders | |
what is the passive management ? | passive management is an investing style whereby investment portfolios try and generate returns that mirror the returns of the underlying constituents of the portfolios portfolios may be built using exchange traded funds etfs which track the performance of a stock index or other underlying security for this reason index investing is a type of passive strategy | |
what is the physical replication ? | physical replication refers to the situation in which an exchange traded fund etf tracks its benchmark by holding all or a portion of all the underlying securities that make up that benchmark for example the ishares ftse 100 etf holds underlying assets in the constituents of the ftse 100 | |
what is the pink slip ? | the term pink slip is thought to have originated in the us and is an informal term to refer to a termination notice | |
what is the pip ? | a pip is a measurement of movement in forex trading defined as the smallest move that a currency can make | |
what is the portfolio ? | a portfolio refers to group of assets that are held by a trader or trading company assets in a portfolio can come in many forms including stocks bonds commodities or derivatives | |
what is the portfolio risk ? | portfolio risk is a chance that the combination of assets or units within the investments that you own fail to meet financial objectives each investment within a portfolio carries its own risk with higher potential return typically meaning higher risk | |
what is the position ? | a position is the expression of a market commitment or exposure held by a trader it is the financial term for a trade that is either currently able to incur a profit or a loss known as an open position or a trade that has recently been cancelled known as a closed position profit or loss on a position can only be realised once it has been closed | |
what is the post market ? | post market means after the market some financial markets like foreign exchange markets never stop trading but most individual stock markets have defined trading hours that s because the stock exchanges are open generally for the working day of the time zone in which they are located post market generally refers to the late hours after the stock market closes in any jurisdiction see also pre market definition | |
what is the power of attorney ? | power of attorney gives another person the ability to act on your behalf in trading this means they can take over your trading accounts | |
what is the pre market ? | pre market means before the market while some financial markets like foreign exchange markets never stop trading most individual stock markets have defined trading hours that s because the stock exchanges are open generally for the working day of the time zone in which they are located pre market generally refers to the early hours just before that stock market opens | |
what is the preference shares ? | preference shares or preferred stock are seen as more attractive to investors than common stock | |
what is the profit and loss p l statement ? | a profit and loss p l statement is a financial report that provides a summary of a company s revenue expenses and profit it gives investors and other interested parties an insight into how a company is operating and whether it has the ability to generate a profit | |
what is the ptm ? | the ptm levy applies to any individual transactions conducted on the london stock exchange lse worth over 10 000 | |
what is the pullback ? | a pullback is a temporary pause or dip in an asset s overall trend the term is sometimes used interchangeably with retracement or consolidation however a pullback should not be confused with a reversal which is a more permanent move against the prevailing trend | |
what is the purchasing managers index pmi ? | a purchasing managers index pmi is an economic indicator comprised of monthly reports and surveys from private sector manufacturing firms the index surveys product managers who are the individuals that buy the materials needed for a company to manufacture its products | |
what is the put option ? | a put option is a contract that gives the buyer the right but not the obligation to sell an asset at a specific price at a specific date of expiry the value of a put option increases if the asset s market price depreciates | |
what is the quantitative easing or qe for short ? | quantitative easing or qe for short is an economic monetary policy intended to lower interest rates and increase money supply it saw an increase in profile and use after the 2008 financial crash and subsequent recession | |
what is the quote currency ? | the quote currency is the second currency listed in a forex pair it is also known as the counter currency | |
what is the quote price ? | a quote price is the price at which an asset was last traded it is often defined as the point where supply meets demand as it s the price that buyers and sellers agree on | |
what is the rally ? | a rally is a period in which the price of an asset sees sustained upward momentum typically a rally will occur after a period in which prices have been flat trading in a narrow band or experiencing a decline | |
what is the random walk theory ? | random walk theory is a financial model which assumes that the stock market moves in a completely unpredictable way the hypothesis suggests that the future price of each stock is independent of its own historical movement and the price of other securities | |
what is the range ? | range is the difference between a market s highest and lowest price in a given period it is mostly used as an indicator of volatility if a market has a wide range it s a sign that it was volatile over the period analysed | |
what is the rate of return ror ? | rate of return ror is the loss or gain of an investment over a certain period expressed as a percentage of the initial cost of the investment a positive ror means the position has made a profit while a negative ror means a loss you will have a rate of return on any investment you make | |
what is the ratio spread ? | a ratio spread is a strategy used in options trading in which a trader will hold an unequal number of buy and sell options positions on a single underlying asset at once | |
what is the investment exchanges ? | these are investment exchanges that are recognised by the relevant authority | |
what is the redemption yield ? | redemption yields are also known as the yield to maturity or the book yield |
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