Last update 2020.08.07
Get to know the most important financial terms, including stocks, bonds, forex and other investment markets.A
AI-SIGNALS, is an Artificial Intelligence system designed by Wiseinvest.ai, by which forex signals are emitted for live trading.
AI-TRADING, is an Artificial Intelligence system able to analyze the market and invest automated in forex brokers. Wiseinvest is a provider of AI trading solutions for forex.
ANGEL INVESTOR, is a net worth individual who provides financial backing for small startups or entrepreneurs. Also known as a private investor, angel funder or seed investor.
ASSET, in financial trading, it relates to what is being exchanged on markets, such as stocks, bonds, currencies or commodities.
ASSET TURNOVER RATIO, calculates the value of a company’s sale or revenues relative to the value of its assets.
ASK PRICE, is the price at which an asset can be bought, also known as the offer price. It represents how much you will get in the quote currency for selling one unit of base currency. For example: when the bid/ask for EUR/USD currency pair are listed as 1.08892/1.08897, 1 Euro costs $1.08897.
AVERAGE TRUE RANGE (ATR), is an indicator of technical analysis that calculates market volatility. It is measured by decomposing all the range of an asset price for that period.B
BALANCED SCORECARD is a strategic management performance metric used to identify and improve internal business functions and their resulting external outcomes. Balanced scorecards are used to measure and provide feedback to organizations.
BANKRUPTCY is a legal proceeding involving a person or business that is unable to repay their outstanding debts.
BAR CHART, is type of chart which consists of four significant points: the high and the low prices, which form the vertical bar; the opening price, which is marked with a horizontal line to the left of the bar; and the closing price, which is marked with a horizontal line to the right of the bar.
BASE CURRENCY, is the first currency in a currency pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6215, then one USD is worth CHF 1.6215.
BASIS POINT, is a unit of measurement used to describe the minimum change in the price of an asset.
BEARISH/BEAR MARKET, is the negative for price direction. For example, “We are bearish EUR/USD” means that we think the euro will weaken against the dollar.
BID/ASK SPREAD, is the difference between the bid and the ask (offer) price.
BID PRICE, is the price at which the market is prepared to buy a product. In FX trading, the Bid represents the price at which a trader can sell the base currency, shown to the left in a currency pair. For example, in the quote USD/CHF 1.4527/32, the base currency is USD, and the Bid price is 1.4527, meaning you can sell one USD for 1.4527 Swiss francs. In CFD trading, the Bid also represents the price at which a trader can sell the product.
BOT, is a software application that runs automated tasks (scripts) over the Internet. In the investment field, a bot is commonly used to automate manual activities such as market analysis and trading. The use of bot have increased to trade forex, stocks and other financial instruments. Wiseinvest provides an AI forex trading solution that is a bot powered by artificial intelligence to automate the process of trading in forex brokers.
BUDGET DEFICIT occurs when expenses exceed revenue and indicate the financial health of a country.
BULLISH/BULL MARKET, is favoring a strengthening market and rising prices. For example, “We are bullish EUR/USD” means that we think the euro will strengthen against the dollar.
BREAKOUT, is a situation where the price moves through an identified level of support or resistance. It is often followed by increased volatility and heavy volume.
BROKERS, are individuals or firms that act as intermediaries between buyers and sellers. In forex, brokerage providers individual traders access to a trading platform that allows them to buy and sell currency pairs. Brokers can be compensated through commission or spread. Depending on the execution model applied, brokers can be divided into ECNs, Market Makers, Dealing Desk and Non-dealing Desk.
BUY, is taking a long position on an asset.C
CANDLESTICK CHART, is a chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.
CFD, is a type of derivative that gives exposure to the change in value of an underlying asset (such as an index or equity). It allows traders to leverage their capital (by trading notional amounts far higher than the money in their account) and provides all the benefits of trading securities, without actually owning the product.
CHART PATTERN, is a distinct formation on a chart that creates a trading signal or indicates the further price movement.
CLOSED POSITION, is the exposure to a financial contract, such as currency, that no longer exists.
COEFFICIENT OF VARIATION (CV) is a statistical measure of the dispersion of data points in a data series around the mean. The coefficient of variation represents the ratio of the standard deviation to the mean, and it is a useful statistic for comparing the degree of variation from one data series to another, even if the means are drastically different from one another.
COMMISSION, is a fee that is charged for buying or selling a product.
COMMODITY CURRENCIES, are currencies from economies whose exports are heavily based in natural resources, often specifically referring to Canada, New Zealand, Australia and Russia.
COMMODITY FUTURES CONTRACT is an agreement to buy or sell a predetermined amount of a commodity at a specific price on a specific date in the future. Commodity futures can be used to hedge or protect an investment position or to bet on the directional move of the underlying asset.
COMPOUND ANNUAL GROWTH RATE (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year of the investment’s lifespan.
CONTRACT, is the standard unit of forex trading.
CONTRACT SIZE, is the notional number of shares an asset represents.
CORRECTION, In investing, is a decline of 10% or more in the price of a security from its most recent peak.
COUPON RATE is the yield paid by a fixed-income security; a fixed-income security’s coupon rate is simply just the annual coupon payments paid by the issuer relative to the bond’s face or par value. The coupon rate, or coupon payment, is the yield the bond paid on its issue date.
COUNTER CURRENCY, is the second listed currency in a currency pair.
COPY-TRADING, is a service that allows traders (Copiers) to copy trades from others. For example, traders can copy Wiseinvest’s forex signals and paste into the brokerages.
CPI, also known as the Consumer Price Index, is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
CURRENCY PAIR. The two currencies that make up a foreign exchange rate. For example EUR/USD.
CURRENCY SYMBOLS, is a three-letter symbol that represents a specific currency. For example, USD (U.S. Dollar).D
DAY TRADING. Making an open and close trade in the same product in one day.
DEBENTURE is a type of debt instrument unsecured by collateral. Since debentures have no collateral backing, debentures must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds.
DEBT RATIO is defined as the ratio of total debt to total assets, expressed as a decimal or percentage. It can be interpreted as the proportion of a company’s assets that are financed by debt.
DEFERRED COMPENSATION is a portion of an employee’s compensation that is set aside to be paid later.
DEMO ACCOUNT, is a risk- free trading account that allows a trader to become familiar with a trading platform without making a deposit.
DIMINISHING MARGIN. A margin call may occur even when an account is fully hedged, since spreads may widen, causing the remaining margin in the account to diminish. Should the remaining margin be insufficient to maintain any open positions, the account may sustain a margin call, closing out any open positions in the account. Although maintaining a long and short position may give the trader the impression that his exposure to the market’s movement is limited, if insufficient available margin exists and spreads widen for any period of time, it may result in a margin call on all positions.
DOWNTREND, is a price action consisting of lower lows and lower highs.
DRAWDOWN, is a volume expressed as a percentage below which the equity of your investment. It can equal any percentage from 1% to 100%. For example, when it is set to 20%, new trades won’t be copied if your current equity falls below 80% of your current balance. The drawdown percentage is calculated as follows: Equity < (100% – Deposit Percentage) × Balance.E
FAANG STOCKS is an acronym that refers to the stocks of five prominent American technology companies: Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX); and Alphabet (GOOG) (also known as Google).
FILL, is when an order has been fully executed.
FOREIGN EXCHANGE/FOREX/FX, is the global market where it’s possible to trade currencies.
FOREX SIGNAL, is the set of information used to trade in forex, consisting of a symbol or currency pair (for example EUR / USD), direction (buy or sell), amount to invest (or position size), take profit and stop loss. Wiseinvest is forex signal provider through AI.
FUNDAMENTAL ANALYSIS, is a method of analysis based on examining current economic conditions, government policy and societal factors within a business cycle framework in an attempt to predict future market conditions.G
GOING LONG, is the purchase of a stock, commodity or currency for investment or speculation – with the expectation of the price increasing.
GOING SHORT, is the selling of a currency or product not owned by the seller – with the expectation of the price decreasing.
GOVERNMENT BOND is a debt security issued by a government to support government spending and obligations. Government bonds can pay periodic interest payments called coupon payments. Government bonds issued by national governments are often considered low-risk investments since the issuing government backs them.
GROSS PROFIT is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.H
HEDGING, is a trading strategy used to minimize the risk in forex trading. A forex hedge is opening a trade in opposite direction to protect the existing one from an unfavorable move.I
INDENTURE refers to a legal and binding agreement, contract, or document between two or more parties.
INTEREST RATE is the amount a lender charges for the use of assets expressed as a percentage of the principal.
INTEREST RATE FUTURE is a futures contract with an underlying instrument that pays interest. The contract is an agreement between the buyer and seller for the future delivery of any interest-bearing asset.
IRA, or individual retirement account, is a tax-advantaged investing tool that individuals use to earmark funds for retirement savings.
IRR, or internal rate of return, is a metric used in capital budgeting to estimate the profitability of potential investments. The internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.
ISLAMIC ACCOUNT (SWAP FREE), is an account specifically designed for traders of Islamic Faith that has no swap applied during a rollover but a fixed fee instead. The fixed fee is not an interest. It primarily depends on whether the order is buy or sell.J
JAPANESE CANDLES, is a type OHLC chart visualized in the form of rectangular shaped “body” with a vertical line on both the top and bottom (the “wicks”). Each candle represents a specific time period and shows whether the closing price was higher or lower than opening price.
JAPANESE GOVERNMENT BOND (JGB) is a bond issued by the government of Japan. The government pays interest on the bond until the maturity date. Japanese government bonds play a key role in the financial securities market in Japan.
LEVERAGE, also known as margin, this is the percentage or fractional increase you can trade from the amount of capital you have available. It allows traders to trade notional values far higher than the capital they have. For example, leverage of 100:1 means you can trade a notional value 100 times greater than the capital in your trading account.
LIMITS/LIMIT ORDER, is an order that seeks to buy at lower levels than the current market or sell at higher levels than the current market. A limit order sets restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/JPY is 117.00/05, then a limit order to buy USD would be at a price below the current market, e.g. 116.50.
LONG POSITION, is a position that appreciates in value if market price increases. When the base currency in the pair is bought, the position is said to be long. This position is taken with the expectation that the market will rise.
LOT, is a unit to measure the amount of the deal. The value of the deal always corresponds to an integer number of lots.M
MAJOR PAIRS, are the most commonly traded currencies: EUR, USD, GBP, JPY, CAD, AUD, CHF, NZD. Major currency pairs comprise of US dollar another major currency from the list.
MARGIN, denotes the amount of funds required to deposit in the account in order to open a position and to maintain Open Positions, as determined in the Contract Specifications for each Instrument.
MARGIN CALL, is a request from a broker or dealer for additional funds or other collateral on a position that has moved against the customer.
MARKET MAKER, is a dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial product.
MARKET ORDER, is an order to buy or sell at the current price.
MICRO LOT, is the equivalent of 1000 units of the base currency expressed in lots (0.01).
MetaTrader5, is a new generation MetaTrader platform, that, unlike its predeccesor, offers more tools for technical and fundamental analysis.
MUNICIPAL BOND is a debt security issued by a state, municipality or county to finance its capital expenditures, including the construction of highways, bridges or schools.N
NET PRESENT VALUE (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.
NET PROFIT MARGIN is equal to how much net income or profit is generated as a percentage of revenue. Net profit margin is the ratio of net profits to revenues for a company or business segment.
NYSE, or New York Stock Exchange, is a stock exchange located in New York City that is the largest equities-based exchange in the world, based on the total market capitalization of its listed securities.
ORDER, is an instruction from the trader to open, close or modify a position.
ORDER BOOK, is a system used to show market depth of traders willing to buy and sell at prices beyond the best available.
OVER THE COUNTER (OTC), is a market where transactions are not conducted via an exchange.
OVERNIGHT POSITION, is a trade that remains open until the next business day.P
PENDING ORDERS, is an instruction to buy or sell an instrument when certain preconditions specified by the trader are met. Essentially, when placing a pending order a trader informs their broker that they do not want the current market price, but rather they only want their order executed if the market price reaches a certain level. Pending orders fall into two categories, limit orders and stop orders.
PIP, is the smallest unit of price for any foreign currency, pips refer to digits added to or subtracted from the fourth decimal place, i.e. 0.0001 or 0.01 for Pairs with JPY.
PORTFOLIO, is a collection of investments owned by an entity.
PROFIT, is the difference between the cost price and the sale price, when the sale price is higher than the cost price.
PULLBACK, is the tendency of a trending market to retrace a portion of the gains before continuing in the same direction.Q
QUOTE, is an indicative market price, normally used for information purposes only.R
RALLY, is a recovery in price after a period of decline.
REALIZED PROFIT/LOSS, is the amount of money you have made or lost when a position has been closed.
RESISTANCE LEVEL, is a price that may act as a ceiling. The opposite of support.
RETAIL INVESTOR, is any individual investor who trades with money from personal wealth, rather than on behalf of an institution.
RISK, exposure to uncertain change, most often used with a negative connotation of adverse change.
RISK MANAGEMENT, is the employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.
ROLLOVER, is the simultaneous closing of an open position for today’s value date and the opening of the same position for the next day’s value date at a price reflecting the interest rate differential between the two currencies.S
SCALP, is the act of opening and then closing a position very quickly, in the hope of profiting from small price movements.
SELL, Taking a short position in expectation that the market is going to go down.
SENTIMENT, is the prevailing attitude toward a particular security or larger financial market based on a variety of fundamental and technical factors, including price history, economic reports, seasonal factors, and national and world events.
SIGNAL, is a sign with information for a trader to open buy or sell order. It is usually based on spread technical indicators and often combined with fundamental analysis. Wiseinvest provides you signals emitted by AI, to reach for better results.
SHORT POSITION, is an investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.
SLIPPAGE, is The difference between the price that was requested and the price obtained typically due to changing market conditions. Slippage most commonly occurs during fundamental news events or periods of high volatility or limited liquidity. Instances such as trade rollover (5pm EST) is a known period in which the amount of liquidity tends to be limited as manyliquidity providers settle transactions for that day.
SPOT PRICE, is the current market price.
SPREAD, is the difference between the bid and offer prices.
STOP LOSS ORDER, this is an order placed to sell below the current price (to close a long position), or to buy above the current price (to close a short position). Stop loss orders are an important risk management tool. By setting stop loss orders against open positions you can limit your potential downside should the market move against you.
SWAP, is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.
SUPPORT, is the price at which an asset may find difficulty falling below as traders look to buy around that level.T
TECHNICAL ANALYSIS, is the process by which charts of past price patterns are studied for clues as to the direction of future price movements.
TRADE SIZE, is the number of units of product in a contract or lot.
TICK, is the minimal upwards or downwards movement in a trading instrument price; tick value is not fixed and fluctuates depending on the market conditions.
TRAILING STOP, is a tool that allows a trade to continue to gain in value when the market price moves in a favorable direction, but automatically closes the trade if the market price suddenly moves in an unfavorable direction by a specified distance. Placing contingent orders may not necessarily limit your losses.
TREND, is when a market is making a clear, sustained move upwards or downwards, it is called a trend. Identifying the beginning and end of trends is a key part of market analysis.U
VOLATILITY, refers to active markets that often present trade opportunities.
VOLUME, is a number of lots or other position size, traded in a currency pair within a period of time.W
Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.
The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. The forex broker Fxcm warns that 69.66% of retail forex traders lose money trading CFDs.
The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.