A-Z of trading slang expressions and investment terms

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A-Z of trading slang expressions and investment terms

A-Z of trading slang expressions and investment terms.
American depository receipts. Certificates issued by a bank saying that a specific amount of a company’s shares have been deposited with them. Traded on US exchanges as if they were US securities.
AER.
Annual equivalent rate. The equivalent rate if interest were added to an investment yearly.
AGM.
Annual general meeting. When company directors present the annual report to shareholders. Listed companies must hold this meeting once a year.
AIM.
Alternative Investment Market. The London Stock Exchange’s market for smaller, newer companies.
APR.
Annual percentage rate. The rate of interest you pay on money you borrow.
Absolute return.
The gain or loss on an investment expressed as a percentage of invested capital. Focus on the return that an investment fund achieves over a period of time not in comparison to rivals or peers. Often employing diverse investment techniques including short selling, futures, options, derivatives, arbitrage, leverage and unconventional assets.
Accrue.
Accrued interest.
Interest earned either since the start of the investment or since the last interest payment date.
Alpha.
The performance of an investment compared with a suitable market index.
Altcoin.
Any cryptocurrency that isn’t Bitcoin.
Alternative investments.
Investments other than shares, bonds or cash.
Amortisation.
Decrease in an asset’s value over time.
Annual report.
Distributed yearly to a company’s shareholders. Contains the company’s accounts and runs through the past business year.
Annuity.
The purchaser of an annuity enters a contract with an insurer whereby an upfront lump sum payment is exchanged for a guaranteed income stream. Annuities are popular in retirement planning as they can allow retirees to lock in a given level of income for the remainder of their lives.
Appreciation.
The rise in the value of an asset.
Arbitrage.
Taking advantage of price differences of the same item in different markets.
Ask price.
Price to buy, such as a CFD or a forex base currency.
Asset.
Something that has a value to its owner. Often used to refer to a specific tradable item, such as an individual stock, commodity or currency pair.
Asset-backed securities.
Securities where the income comes from a pool of underlying assets.
Asset class.
Investments of a similar type, such as equities.
Asset stripping.
Selling off a company’s assets rather than developing the business.
ATH.
All-time-high – the highest price an assets or index has ever reached.
At the money.
When an option’s strike price is the same as the current price.
Authorised share capital.
The amount of share capital that a company is allowed to allocate to shareholders.
Average earnings growth.
An indicator of future inflation rates.
Averaging down.
A trading technique in which you buy a falling stock with sound fundamentals and keep buying as if falls further. It works on the basis that the more you buy at a cheaper price, the lower the average price of your stock and the more you will make, or the earlier you can sell at a profit, when the price rebounds.
BIS.
Bank for International Settlements. Based in Switzerland.
Backwardation.
Backwardation refers to the situation in which the spot or cash price of a commodity is higher than the forward price. It is the reverse of contango.
Balance of payments.
Money going into a country minus money going out during a particular period.
Balance sheet.
A summary of a company’s assets and liabilities taken at a particular point.
Ballot.
A way of allocating shares when issues are oversubscribed.
Bagholder.
Person left holding an asset that has become worthless.
Bank of England.
The UK’s central bank. Founded in 1694. Based on Threadneedle Street, London.
Base currency.
The first currency in a currency pair.
Base rate.
The minimum interest rate at which banks will lend to customers. Decided in the UK by the Bank of England’s monetary policy committee (MPC), and in the euro zone by the European Central Bank (ECB).
Basis point.
One hundredth of 1%.
Bear.
An investor who looks to profit from a downturn in the market or the price of a particular share.
Bearish.
Pessimistic that the market will fall.
Bear market.
A general decline in stock market prices over time. Usually accompanied by widespread pessimism.
Bear raid.
A concerted attempt to force down the price of a stock to cover a short position.
Benchmark.
Something that the performance of an investment can be compared against, such as an index.
Beta.
A measure of the volatility of an investment relative to the market as a whole.
Biases.
Specific sub-conscious behaviours (called representativeness heuristics) in trading psychology that affect individual trader’s actions. Common ones include overconfidence loss aversion, herding, confirmation, anchor bias, the disposition effect and the hot hand fallacy. Here is a list of 50 biases.
Bid-offer spread.
The difference between the buying price (offer) and the selling price (bid) of shares, currency etc.
Bid Price.
The price at which the market will buy the product.
Big Mac index.
Uses the cost of a Big Mac in different countries to compare purchasing power .
Bitcoin.
The original cryptocurrency.
The original cryptocurrency.
Black swan.
An event that is extremely hard to predict. Derives from Nassim Nicholas Taleb's book of the same name.
Black-Scholes model.
A way of pricing options.
Blockchain.
The digital ledger that records all cryptocurrency transactions.
Blue chip.
A high-quality company. Derived from blue being the highest value poker chip.
Bond.
A fixed-term loan to a company or institution.
Bonus issue.
Extra shares issued free to existing shareholders. Also known as a scrip issue.
Book cost.
The purchase cost of assets.
Bottom fishing.
Buying shares when the price is thought to have bottomed out after falling sharply.
Bottom-up.
An investment approach based on picking individual stocks.
Bourse.
Another name for a stock exchange.
Brent crude.
A benchmark oil.
Broker.
Buys and sells investments for clients.
Bubble.
When the price of an asset rises far higher than can be justified by fundamentals. Likely to be followed by a collapse in price.
Buck.
Budget.
Public spending and how it will be paid for.
Bull.
An investor who looks to profit from an upturn in the market or the price of a particular share.
Bullish.
Confident the market will rise.
Bull market.
A market with a general upward trend over time. Usually accompanied by widespread optimism.
Bundesbank.
Germany’s central bank.
Business cycle.
The move between boom and bust.
Buyer’s market.
Low prices and plentiful supply.
Buy-out.
When a controlling stake in a company is bought by a single party.
CAC 40.
France’s version of the FTSE 100 but with 40 companies in the index.
CDO.
Collateralised Debt Obligation. An asset-backed security where the underlying assets are various debt obligations. Doesn’t have a good reputation.
CFD.
Contract for difference. A derivative where the parties agree to settle the difference in opening and closing prices. Uses leverage.
CPI.
Consumer Price Index. A measure of consumer price inflation based on the cost of a basket of common household goods. The main measure of inflation in the UK.
Cable.
The US dollar/GB pound pair, represented as USD/GBP.
Call.
A further payment for partly-paid shares.
Callable bond.

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Source: A-Z of trading slang expressions and investment terms

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