Trading Glossary

A trader’s advantage that increases the chances of making consistent profits. It can come from better analysis, risk management, timing, or understanding of market behavior.

A graph showing the best possible mix of investments that offers the highest return for a given level of risk. Portfolios on the frontier are considered optimally diversified.

A measure of how much demand or supply changes when prices or income change. High elasticity means people respond strongly to changes, while low elasticity means they don’t.

A digital system that connects buyers and sellers in the financial markets directly. It allows fast, transparent trading without going through traditional brokers.

A trading approach that suggests markets move in repetitive patterns, or “waves,” driven by investor psychology. Traders use it to try to predict future price movements by identifying these wave patterns in charts.

Bonds issued by emerging markets based in them.

Countries with developing economies experiencing rapid growth and industrialization, often higher return but higher risk.

A monthly economic report tracking job growth and unemployment.

Refers to the market close, when prices are finalized for that session.

A measure of a company’s total value calculated as market capitalization plus debt, minus cash and cash equivalents. It represents what it would cost to buy the whole company, including its debt.

The price at which a trader enters a trade.

A technical tool that places two bands a set percentage above and below a moving average to show possible overbought or oversold levels. Traders often buy when the price nears the lower band and sell when it approaches the upper band.

Measures the sensitivity of an option's price to a change in the underlying asset's dividend yield. It represents the percentage change in the option's value for a one percent change in the dividend yield.

Ownership value in an asset or company, often represented as shares of stock; also net worth of a trading account.

A graph showing how the value of a trading account or portfolio changes over time — including profits and losses. A smooth upward-sloping curve generally signals consistent performance, while a downward curve may highlight risk or strategy issues.