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Glossary Of Trading Terms

  • Arbitrage - The simultaneously purchase and sale of identical securities to benefit from a discrepancy in their price.
  • Ask - Also known as 'offer' - The price at which traders are prepared to sell a security.
  • Bear - Trader who believes prices will move lower.
  • Bear Market - A market that is in decline (falling). A succession of lower peaks and valleys.
  • Bid - The price at which traders are prepared to pay for a security.
  • Bull -Someone who expects the market to rise. One who trades from the long side.
  • Bull Market - A market in which prices are rising. A succession of higher peaks and higher valleys.
  • Buy On Close - To buy at the end of a trading session
  • Buy On Opening - An instruction to your broker to buy at the opening of the market within a certain range.
  • Cabinet Trade - Allows options traders to close deep out-of-the-money options by trading the option at a price equal to one-half tick. Also known as (CAB).
  • Call - An option to buy a commodity, future or security contract at a specific price from present until the expiration date of that contract.
  • Cash Commodity - The physical commodity as opposed to the financial commodity.
  • CFTC - The Commodities Futures Trading Commission. Regulates the commodities futures industry in the U.S.
  • Closing Range -The difference between the high and the low of that particular session of trading at the close.
  • Day Order - An order that is placed during the day that is good only for that day trading session. If the order can not be filled then the order is automatically canceled.
  • Floor Trader (Local) - A member of an exchange that mainly trades their own account or an account that they have under their direct control. Sometimes called a "local".
  • Holder - The person who purchases an option.
  • Market-To-Market - An adjustment made on a daily basis to reflect profit and loses.
  • OCO - One cancels the other - This order is know as a qualified order as there are two partsto the order. The trader will normally have two orders in the market at the same time. If one order is filled then the other is canceled.
  • Open Order - An order placed with you broker which remains in place until it is executed or canceled.
  • Spot Rate - The current average price for a pair of currencies, where one is exchanged for the other.
  • Spread - The difference in price between the bid (buy) and offer (sell).
  • Stop Order - An order placed above or below the current market price to protect further loses.
  • The Close - The last closing price or range at the end of a trading session in a particular market. For markets that are 24 hours, it usually means the end of the 24 hour period.
  • Usable Margin - Excess funds in an account, which can be used to open fresh or additional contracts.


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