Bull
A person who believes that the market will rise.
Bear
A person who believes that the market will decline.
Bull Market
An adjective used to describe that the market is on the rise. A positive or optimistic outlook.
Bear Market
The market with declining or negative outlook.
Bullish
A general term used for rising markets.
Bid Price / Ask Price
A price at which a buyer is willing to execute a contract.
Call Rate
The overnight interest rate.
Counterparties
The parties on either side of the transaction are known as counterparties.
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Day Order
This is a type of order, which instructs the broker/dealer to cancel any unfilled position or portion of the order at the close of trading on the day the order was first entered.
Day Trade
A position (buy/sell) (futures, options), which is opened and closed on the same day.
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EMS
European Monetary System.
ERM
Exchange Rate Mechanism.
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Flat Position
Where the client does not have an open position.
Forex
This is an abbreviation for Foreign Exchange.
Futures Contract
The right but no obligation to buy or sell a stock at a future date.
Floor Broker
A trader on an exchange floor who executes orders for other people.
Floor Trader
An exchange member of a trading floor who buys and sells for his/her own account.
Fundamental Analysis
This type of analysis is based on economic factors, such as earnings, sales, dividends, and interest rates.
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GTC (Good Till Cancelled) Order
This is a type of limit order that remains in effect until either it is executed (filled) by the dealer or cancelled by the client.
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Hedging
This is the position established with specific intent of protecting an existing position. This protects an asset or liability against the market fluctuation.
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Index
A composition of several stock prices into a single number. For instance, FTSE, DOW, S&P500, DAX.
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Leverage
This term is used to describe the greater percentage of profit or loss potential when a given amount of money controls a security with a much larger face value.
Limit Order
An order left with the broker to buy or sell a stock at a specific price. Long Position: A position where the client/ investor has already owned / purchased the stock.
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Margin
This is the minimum equity required from the client to support an investment position Maturity: The settlement date.
Maturity
The settlement date.
Market Makers
The exchange members on the trading floor who buys and sells for his/her own account and who has the responsibility of making bids and offers and maintain fair and orderly market.
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NASDAQ
Abbreviation for National Association of securities Dealers Automated Quotation System.
NYSE
New York Stock Exchange.
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Offer Price (ask price)
A price at which a seller is offering to sell a futures contract or stock.
Open Interest
This is the total number of outstanding options contract for a given underlying stock.
Option
This is the contract that gives the owner the right, but not the obligation to buy or sell a particular asset or underlying stock at a fixed price (strike price) for a specific period of time (until the expiry date) The contract also obligates the writer to meet the terms of the delivery, if the contract right is exercised by the owner.
OTC
Over the counter. Position Trading: This is the investment strategy where the open position is held for a long period of time.
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PIP
One basis point.
Premium
More expensive than the spot price.
Put Option
An options contract that gives the owner the right to sell the underlying stock at a specified price, i.e. strike price for a fixed period of time.
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Reverse
An investment strategy used by the professional options traders in which a short put and a long call with the same strike price and expiration date is combined with the short stock to lock in nearly risk less profit. This is also known as reversal arbitrage.
Resistance
A price level at which selling would begin.
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SEC
The Securities Exchange Commission.
Short Position
This is the market position where the client has sold the underlying stock, which he/she does not already own.
Stop Order (Stop Loss)
This is type of contingency order placed with a broker, becomes a market order when the stock trades through a specified price.
Strike Price
This is the price at which the owner of the option can purchase (call) or sell (put) the underlying stock.
Spot
The settlement date of a deal which is 2 business days forward.
Support Level
A price level where the buying is done.
Spread
The difference between the bid and offer prices.
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Technical Analysis
This is a method of forecasting future stock price movements based on the study of historical market data, taking into account the momentum, open interest, and volume etc.
Tick
This is the smallest unit price change.
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Underlying Stock
The stock, which is being purchased or sold.
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Volatility
This is a measure of stock price fluctuation. This is annualized standard deviation of a stock's daily change in price.
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Writer
Futures, Options contract writer.
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