CHARTTHREAD

Glossary

Plain-language definitions of the terms used in the course.

  1. 1AskThe ask, also called the offer, is the lowest price a seller is currently willing to accept for an instrument. All the asks together form the sell side of the order book.
  2. 2BidThe bid is the highest price a buyer is currently willing to pay for an instrument. All the bids together form the buy side of the order book.
  3. 3BondA bond is a loan to a government or a company that pays interest, called the coupon, and returns the full amount on a set date. Bond prices move the opposite way to interest rates.
  4. 4CFDA contract for difference (CFD) is an agreement with a broker to exchange the difference in an asset's price between opening and closing the trade. You never own the asset.
  5. 5CommodityA commodity is a raw material traded in bulk, such as gold, silver, oil, natural gas, wheat or copper. Most commodity trading happens through futures contracts rather than the physical goods.
  6. 6Crypto assetA crypto asset is a digital asset recorded on a blockchain, such as Bitcoin or Ether. Crypto assets trade on exchanges around the clock, every day of the year.
  7. 7DerivativeA derivative is a contract whose value is derived from the price of something else, the underlying asset. Futures, options and CFDs are derivatives.
  8. 8ETFAn exchange-traded fund (ETF) is a fund whose units trade on a stock exchange like a share. One unit can hold hundreds of stocks, a basket of bonds or gold.
  9. 9ForexForex, or foreign exchange, is the market where one currency is traded against another, such as EUR/USD, the price of one euro in US dollars. By daily turnover it is the largest financial market.
  10. 10Futures contractA futures contract is an agreement to buy or sell an asset at a set price on a set future date. Both sides are bound, and each puts down only a deposit, called margin.
  11. 11GapA gap is a jump on a price chart where one candle opens well away from the previous candle's close, with no trades at the prices in between. Gaps appear mostly when a market reopens after being closed.
  12. 12MarginMargin is the deposit you put down to open a leveraged position, such as a futures contract, instead of paying the full price. It covers your losses; if it runs out, the position is closed.
  13. 13MarketA market is a place, physical or electronic, where buyers and sellers leave orders and trade with each other. Its price is simply the last trade between them.
  14. 14OptionAn option gives its buyer the right, but not the obligation, to buy (a call) or sell (a put) an asset at a set price, the strike, before or on a set date. The buyer pays a premium for that right.
  15. 15Order bookAn order book is the live list of every resting buy order (bid) and sell order (ask) for one instrument on one exchange, sorted by price.
  16. 16Perpetual futureA perpetual future is a futures contract with no expiry date, kept close to the spot price by regular funding payments between longs and shorts. It is the most traded instrument on crypto exchanges.
  17. 17Preferred shareA preferred share is a kind of share that usually pays a fixed dividend before common shareholders receive anything, and ranks ahead of them if the company is wound up, but normally carries no vote.
  18. 18REITA real estate investment trust (REIT) is a company that owns property earning rent, such as offices, warehouses or towers, and whose shares trade on a stock exchange.
  19. 19Stock (share)A stock, or share, is a small piece of ownership in a company. Common shares carry a vote and a claim on profits; preferred shares usually pay a fixed dividend first but carry no vote.
  20. 20Tokenized assetA tokenized asset is a token on a blockchain that stands for a real asset held by an issuer, such as gold, shares or Treasury bills. PAX Gold (PAXG) and Tether Gold (XAUT) are each backed by one troy ounce of gold.
  21. 21Trading instrumentA trading instrument is anything you can buy or sell on a market, such as a share, a futures contract, a currency pair, a commodity or a crypto asset.