Financial Glossary for Traders & Investors
Explore the key trading and market terms and their meanings in this comprehensive glossary. Whether you're new to trading or looking to refine your knowledge, our financial glossary provides clear definitions of essential terminology used across global markets. From fundamental concepts to advanced trading strategies, discover the language of finance and enhance your understanding of the markets.
A
Algorithmic trading can be understood as using advanced computer formulas and algorithms (pre-programmed trading instructions) to execute financial trades automatically.
The extra profit (or loss) an investment makes compared to a benchmark, usually a market index, e.g. USA 500. A positive alpha indicates that the investment outperformed the benchmark, while a negative alpha suggests underperformance.
The annualised return, also known as the Compound Annual Growth Rate (CAGR), measures the average annual growth rate of an investment over a specified period, expressed as a percentage. It is used to compare investment performance across different timeframes.
The simultaneous buy in one market and sell in another instantly to exploit price gaps (the key is speed).
The lowest price a seller will accept for an instrument and the minimum price a trader must pay to buy an asset.
An Options contract whose strike is the same as the prevailing market price.
Buying more shares after a price fall to lower average entry cost.