Trading Glossary Explained

Trading is a complex process, which includes many actions that a person unfamiliar with the financial world will find puzzling. Once you launch your trading career, you will be swamped with trading terms whose meaning you will not know. You will not immediately grasp how the market value of a business differs from its book value. Nor will you understand what CPI stands for and how it is different from IPO, unless we supply you with a glossary of all confusing terms that you meet in a trading business.

To help you avoid confusion, we have compiled a comprehensive glossary of financial terms used at the markets. All trading glossary is presented in our glossary in the alphabetical order and is explained with linguistic precision. Any financial term that sounds baffling to you now will become crystal clear once you read its definition in our glossary below.

All | # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

There are currently 15 names in this directory beginning with the letter S.

Scalp

It is the act of opening and then closing a position very quickly, in the hope of profiting from small price movements.

Share Buyback

This term refers to a company’s repurchasing of its own shares from investors. This is a tax-efficient way to return money to shareholders. When shares have been repurchased, they are considered cancelled. However, they can be kept for redistribution in the future.

Share Price

It is the price of one share in a company. The prices of a share fluctuate according to market conditions. They usually increase if a company is estimated to be doing well; they fall, when a company is not meeting expectations.

Shares

These are the units of the ownership of a company, usually traded on the stock market. They are also called stocks and equities.

Shares Trading

It is the process of buying or selling of a company’s stock or derivative products based on stock to make a profit.

Short

This term refers to a trade that will incur a profit if the traded asset falls in price.

Short Selling

It is an act of selling an asset that traders do not currently own, because they hope that its value will drop and they will close a trade at a profit.

Slippage

This term refers to a situation where an order executed does not match the price at which it was made.

Spot

This term refers to the price of an asset for immediate delivery or to the value of an asset at any exact given time. It differs from an asset’s futures price, defined as the price for delivery at some date in the future.

Spot Price

This term refers to the current value of an underlying asset, for which it can be bought or sold with the expectation of immediate delivery. This term is often used in the forex and commodities market.

Spread

This is the difference in price between the buy (bid) and sell (offer) prices quoted for an asset.

Stock Exchange

It is a centralized location where the shares of publicly traded companies are bought and sold. Stock exchanges differ from other exchanges in that the tradable assets are limited there to stocks, binds, and exchange traded products (ETPs).

Stock Index

It is a group of shares used to give an indication of a sector, exchange, or economy. A stock index is made up of a set number of the top shares from a given exchange.

Stop Order

This is a type of order that instructs a broker to execute a trade when it reaches a particular level, usually one which is less favorable than the current market price. They are also called stop-loss orders.

Strike Price

This is the price at which an option can be executed. It is a fixed price under which an underlying asset can be bought or sold.

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Trading Glossary Explained