A
Accrued Interest
The interest that has accumulated on a bond, or other fixed income debt instrument, since the principal investment or last interest payment up to, but not including, the settlement date.
Agent
Stock brokerage firm which does the buying/selling of shares on behalf of the investor in the stock market
Aggregate Demand
The total quantity of goods and services demanded within the overall economy at a particular price level, and a particular point in time.
Aggregate Supply
The total quantity of goods and services supplied within the overall economy at a particular price level, and a particular point in time.
Altcoins
You will also come across the term ‘Altcoin’ when talking about cryptocurrencies and this word is used to describe ‘Bitcoin Alternative’ and applies to the many other smaller coins that are in the market place. Many altcoins are much cheaper than Bitcoin or Ethereum, whereby investors are basically looking for the next Bitcoin type price increase by investing on cheaper prices. Whilst this may be appealing, it’s important to do your research as many coins fail.
Some may have logical economic reasoning behind them and can be easily mined compared to the large two of Bitcoin or Ethereum, which, paired with the fact that some altcoins may have more coins available, make them attractive. It is also key to have some sense of understanding of the programming protocols involved with altcoins, as they will be another key component that will affect investors’ choices. Investors will not want to be involved in an altcoin if it is hard to mine and isn’t easily available on an exchange to buy and sell. Furthermore, miners won’t want to mine it either so its life will be limited under such circumstances.
American Depositary Receipt (ADR)
A financial instrument, issued by a US financial institution, representing a single share or number of shares in a non-US stock traded on a US exchange.
Amortisation
The reduction of the value of an asset by spreading its costs over a certain time period.
Appreciation
An increase in value or price.
Arcade
An electronic trading facility which allows usually small investors to trade together from their own personal accounts.
Asset
Any item of economic value.
B
Balance of Payments
A record of accounts for all financial transactions, between one country and the rest of the world.
Balance Sheet
A record of accounts which summarises a company's financial condition, at a specific point in time, including assets, liabilities, and net worth.
Banker's Acceptance (BA)
A future payment promised by a non-financial institution, but which is guaranteed by a bank.
Bar Chart
A visual representation of price data using rectangular bars to depict market opens, closes, highs and lows over a particular time period.
Basis
The difference between the interest rate implied by a futures contract, and the interest rate implied by the underlying cash instrument on which it is based.
Basis Point
One-hundredth of a percentage point (or 0.01%).
Basis Risk
Risk associated with differences between the derivatives price, and the price of the underlying financial asset or commodity on which the derivative is based.
Bear
A market participant more inclined to sell than buy.
Behavioural Finance and Economics
The study of the social, cognitive, and emotional underpinnings of finance and economic theory.
Beige Book
A report on current economic conditions, issued by the US Federal Reserve eight times each year.
Bias
The tendency to discount other perspectives or viewpoints.
Bid
The price at which the market is willing to buy.
Bid-Offer Spread
The difference between the price at which the market is buying, and the price at which the market is selling.
Bid-to-Cover Ratio
The ratio between the value of bonds bid for, and the value of bonds sold during a bond auction.
Bills
A government-issued short-term bond with a maturity of less than a year.
Blue Chip
A term used to describe a company, whose stock is highly valued because of public confidence stemming from a long record of consistent earnings. Derived from blue casino counters or 'chips' which have the highest value.
Bollinger Bands
A technical analysis tool that plots two lines representing two standard deviations, above and below a moving average of the price.
Bond
A financial instrument in which an investor lends money to a single or group entity, for a specific period of time at a fixed interest rate.
Bond Premium
The price of a bond over and above its actual face value.
Boom
A period of rapid economic growth.
Brainstorm
The process of engaging in the free flow of ideas without constraints or limitations.
Bretton Woods Agreement
An international system for monetary and exchange rate management, agreed upon by the major Allied Powers in 1944 at a meeting at Bretton Woods, New Hampshire.
Broken Window Fallacy
A parable created by the French economist Frederic Bastiat, illustrating why destruction, and the money spent on recovering from that destruction, does not provide a net-benefit to society.
Broker
A financial agent that arranges and manages transactions between buyers and sellers.
Bull
A market participant more inclined to buy than sell.
Bull/Bear Trap
An overextended and unsustainable directional move, initiated by either buyers or sellers, which sees a subsequent reversal in market direction back to previous levels.
Bundesbank
The central bank of Germany.
Bundles
The simultaneous sale or purchase of one each of a series of consecutive STIRS contracts.
Bureau of Labour Statistics (BLS)
The statistical unit of the US Department of Labor, responsible on compiling data on employment and earnings.
Bushel
A unit of volume or capacity used within the agricultural commodity markets, equivalent to approximately 2200 cubic inches or 36 litres.
Business Cycle
Fluctuations in economic activity across the overall economy, which occurs over a period of time.
Bust
A period of rapid economic contraction.
Butterfly
A market-neutral spread strategy comprised of two offsetting, but interlinked calendar spreads, resulting in a 1:2:1 ratio of alternating positions across 3 derivatives contracts.
Bitcoin
Bitcoin is a type of electronic cash. But, unlike the fiat currencies, you’re used to, it’s not governed by a central bank. Instead, Bitcoin’s financial system is managed by thousands of computers all over the world. Downloading open-source software allows everyone to participate in the ecosystem.
The first cryptocurrency, Bitcoin, was created in 2008. (and launched in 2009). It allows users to send and receive digital money (bitcoins, with a lower-case b, or BTC). Its appeal stems from the fact that it cannot be censored, that funds cannot be spent more than once, and that transactions may be done at any time and from any location.
Bitcoin is used for a variety of purposes. Many people like it because it doesn’t require any permissions — anyone with an Internet connection may send and receive it. It’s similar to a currency in that no one can stop you from using it, but because it’s digital, it can be transferred over the world.
Many people don’t use their bitcoins, preferring to keep them in their wallets for the long term (also known as hodling). Due to the limited number of coins accessible, Bitcoin has been dubbed “digital gold.” Bitcoin is viewed as a store of value by certain investors. It’s been compared to valuable metals like gold and silver because it’s rare and difficult to make.
These characteristics, along with global availability and high liquidity, are seen to make it a perfect medium for keeping money for long periods of time, according to holders. They believe that the value of Bitcoin will continue to rise over time.
Bitcoin Cash
A peer-to-peer electronic cash system that formed from a fork of the original Bitcoin
Block
Groups of data within a blockchain. On cryptocurrency blockchains, blocks are made up of transaction records as users buy or sell coins
Blockchain
Blockchain is a cutting-edge database technology that powers almost all cryptocurrencies. Blockchain makes it incredibly difficult to hack or cheat the system by spreading identical copies of a database across an entire network. While cryptocurrency is now the most popular application for blockchain, the technology has the potential to serve a wide range of uses.
At its core, blockchain is a distributed digital ledger that stores data of any kind. A blockchain can keep track of bitcoin transactions and Non-Fungible Token ownership (NFTs).
The digital ledger is described as a "chain" made up of individual "blocks" of data in the blockchain. A new "block" is formed and attached to the "chain" as new data is periodically added to the network.
To keep their versions of the blockchain ledger identical, all nodes must update their versions of the blockchain ledger.
Blockchain is considered highly safe due to how these new blocks are formed. Before a new block can be added to the ledger, most nodes must check and certify the legitimacy of the new data. They might include verifying that new transactions in a block aren't fraudulent or that currencies haven't been spent more than once in a cryptocurrency.
A remote database or spreadsheet, on the other hand, allows a single individual to make changes without oversight.
Cryptography is used to secure transactions, which means nodes must solve complex mathematical equations to complete a transaction.
Nodes are often rewarded with new quantities of the blockchain's native currency, such as fresh bitcoin on the bitcoin blockchain, as a reward for validating changes to the shared data.
Both public and private blockchains exist. Anyone can participate in a public blockchain, which means they can read, write, or audit the data on the blockchain. Because no single authority controls the nodes, it is incredibly impossible to change transactions logged in a public blockchain.
On the other hand, a private blockchain is managed by a company or group. It is the only one who can select who is invited to the system, and it also has the power to change the blockchain. This private blockchain procedure is comparable to an in-house data storage system, except that it is distributed among numerous nodes to boost security.
While any traditional database can store this type of data, blockchain stands out because it is decentralised. Many identical copies of a blockchain database are held on various computers scattered throughout a network rather than being maintained in one spot by a centralised administrator - think of an Excel spreadsheet or a bank database.
C
CAC 40
The main French Stock Market Index, comprised of the largest 40 French stocks based on market capitalisation of the Paris Bourse.
Calendar Spread
A trading strategy consisting of a shorter-dated futures position, offset by the opposite position in a longer-dated futures contract.
Callable
A type of bond which gives the issuer the right to redeem before maturity.
Candlestick Chart
A visual representation of price data using coloured bars to depict market opens, closes, highs and lows over a particular time period.
Capital
Any asset which may be used to generate income.
Capital Market
A market in which debt, or equity securities, are traded.
Cash Market
A market in which financial instruments, or commodities, are traded for immediate delivery.
Cash Settled
The process whereby trade settlement is made in cash, to satisfy obligations between buyers and sellers, rather than actual delivery of a financial instrument or commodity.
Certificate of Deposit (CD)
A short or medium-term debt certificate, which entitles the bearer to receive interest.
Chancellor of the Exchequer
The British cabinet minister responsible for all economic and financial matters, within the UK economy.
Cheapest to Deliver (CTD)
The least expensive underlying financial instrument, or commodity, which can be delivered to satisfy the obligations of a derivatives contract upon expiration.
Clean Bond
A bond whose price is based on future discounted cash flows, not including any interest that has accrued since issue.
Clearing House
A financial institution that provides settlement services for market transactions.
Clearing House
A financial institution that provides settlement services for market transactions.
Coin
A representative store of digital value that lives on a given blockchain or cryptocurrency network
Cold Wallets
A cold wallet is a wallet for storing crypto that is not connected to the internet, making it difficult to remotely steal the assets stored in it. They store a user’s address and private key securely while allowing them to view their portfolio without putting their private keys at risk. Cold wallets are the most secure way to store your Bitcoin or other cryptocurrencies. Most times, they require a bit more knowledge to set up.
With cold storage, the creation and storage of the private keys is done offline. Most crypto assets stored online are vulnerable to hackers, who actively attack online crypto wallets.
Most exchanges and brokers store a large part of their cryptocurrency in cold wallets. This makes it impossible for hackers to steal the cryptocurrency from the wallets. Individual crypto owners can also store crypto in cold wallets as well.
Collateral
Any asset, or assets, pledged by a borrower to secure credit from a lender, which may be seized by the lender in the case of default.
Commercial Paper (CP)
A financial instrument, issued by a corporate entity, to finance short-term credit needs from 1 to 271 days.
Compounding
The process whereby the value of an asset increases, due to the reinvestment of the income which it generates.
Conscious
The aspect of the mind responsible for reasoning and logic.
Contrarian
Against the prevailing trend.
Conversion Factor
A value which converts the price of a futures contract, so that it may be compared to the price of the underlying financial instrument, or commodity, associated with it.
Convertible
A type of bond, issued by a company, which allows the buyer to convert the bond into a specific number of shares in that company.
Convexity
The second derivative of a bond's price, with respect to changes in interest rates, or a measure of the speed of a bond's sensitivity to changes in interest rates.
Correlation
The statistical relationship between two different variables or data sets.
Council of Economic Advisers
An executive agency responsible for advising the US President on economic affairs and policy.
Counter Cyclical
Moving in the opposite direction of prevailing economic trends.
Counterparty
The other party which participates in a financial transaction.
Coupon
The regular interest payment, received by a bondholder, from issue to maturity.
Coupon Rate
The interest payment associated with a particular bond, expressed as a percentage of the bond's face value.
Credit
Any agreement, in which a borrower receives funds, to be repaid to the lender at a future date.
Credit Rating
A quantitative indication of a debtor's credit worthiness.
Credit Risk
Risk associated with a debtor failing to make payments on its debt.
Credit Union
A cooperative organisation, responsible for extending credit to its members at low rates of interest.
Creditor
An entity to whom money is owed.
Cryptocurrency
A crypto is a digital asset in the form of a virtual currency designed to work as a medium of exchange. The cryptocurrencies use cryptography to verify and secure transactions in addition to controlling the creation of new units of a specific cryptocurrency. They are therefore essentially limited entries held within a database that no one can change unless specific conditions are fulfilled.
The creation and settlement of cryptocurrencies is made away from the traditional financial system operations where money is created, transferred, borrowed, settled and exchanged on an ongoing daily basis. Therefore cryptocurrencies are decentralised and work on a system similar to file sharing which is closely related to peer-to-peer networks.
Cryptocurrency transactions are merely a file which contains the senders and recipients public keys (aka wallet addresses) with the amount of coins transferred. These transactions must be signed off by the sender using their private key, so a broadcast of this transaction is made in the network and has to be confirmed.
Cryptocurrency mining
Many people are under the impression that mining means the physical extraction of coins or material from the ground as in the traditional sense of mining, but crypto coin mining is very different. Coin mining is the available coins that exist in the design of the protocol, but they have not been found yet. Think of it like gold which exists underground but hasn’t been found, to get to the gold you must mine it and the principle is the same with cryptocoin mining - it exists but it must be found (mined) from the system.
In Bitcoin for example, it’s protocol states that 21 million coins will exist and what miners do is find them, Ethereum on the other hand has a protocol that is infinite as it does not have a limited amount of coins that can be found. Various coins in the market place have different protocols in either limited or unlimited amounts that can be mined.
Since mining coins costs money by way of equipment, electricity and time why do people mine? Simply, miners try to find coins and bring them out to light and in return they are paid a reward for doing the job. The real question for miners simply comes down to the facts of how much can they mine and does the reward for mining make it profitable versus the costs? Mining requires computer power which consumes larger amounts of electricity, let alone the complicated mathematical cryptology puzzles that must be solved which are very, very hard.
Current Account balance
The difference between the value of a country's total exports and imports.
D
Dark Cloud Cover
A candlestick chart pattern, in which a long bullish candlestick is followed by a long bearish one.
DAX 30
The main German Stock Market Index, comprised of the largest 30 German stocks based on market capitalisation on the Frankfurt Stock Exchange.
Dealer
A market participant responsible for providing two-way (bid and offer) prices for a certain instrument or instruments.
Debt Service Coverage
The ratio between debt payment obligations a borrower is required to pay, and the cash flow available to the borrower to pay them.
Decentralisation
Principle of distributing power away from a central point. Blockchains are traditionally decentralized because they require majority approval from all users to operate and make changes, rather than a central authority
Decentralised Finance (DeFi)
Decentralized finance, or 'DeFi', is an emerging digital financial infrastructure that theoretically eliminates the need for a central bank or government agency to approve financial transactions. Regarded by many as an umbrella term for a new wave of financial services innovation, DeFi is deeply connected with blockchain -- the decentralized, immutable, public ledger on which Bitcoin is based -- that enables all computers (or nodes) on a network to hold a copy of the history of transactions. The idea is that no single entity has control over, or can alter, that ledger of transactions.
Default
The failure to repay a debt, including interest or principal, on a loan or security.
Deficit
The difference between revenue and expenditure.
Deflation
A decrease in the general level of prices across the overall economy.
Deflationary Gap
A negative difference, between potential and actual output, within the overall economy.
Delta
A measure of how sensitive an option's price is, to changes in the price of the underlying asset, or commodity, on which it is based.
Deposit Rate
The rate of interest, paid on deposits in the interbank market.
Depreciation
A decrease in value or price.
Derivative
A financial instrument, whose value is derived from one or more underlying asset or commodity.
Devaluation
A one-off official lowering of a country's exchange rate.
Direct Bidders
Domestic institutions and retail investors, who participate as bidders during the bond auction process.
Directional Movement Index (DMI)
A technical analysis tool, which aims to determine market direction and trend.
Dirty Bond
A bond, whose price is based on the present value of all future cash flows, including the value of the next interest payment.
Discount Rate
The interest rate a central bank charge to institutions which wish to borrow reserves from it.
Discount Window
The facility which allows institutions to borrow reserves from a central bank.
Discounting
A financial mechanism, which allows a borrower to delay payments to a lender, in exchange for a charge or fee.
Disinflation
A decrease in the rate of inflation, or a slowing down in the rate of increase in the general level of prices.
Distributed Ledger Technology (DLT)
Consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions. Unlike with a centralized database, there is no central administrator
Divergence
A term used to describe any deviation, which occurs between the behaviour of a technical analysis tool, and the behaviour of the overall market.
Diversification
The process by which risk is managed, by spreading exposure across a wide range of different assets and instruments.
Dividend
Payment made by a corporate entity, from current or retained earnings, to stockholders.
Doji Star
A candlestick chart trend reversal pattern, comprised of a long directional candlestick, followed by a doji which gaps in the opposite direction.
Dove
A member of a monetary policy making authority, who typically advocates lower interest rates.
Dow Jones Industrial Average (DJIA)
A benchmark US Stock Market Index, comprised of the largest 30 publicly owned US stocks.
Dow Theory
A theory of stock market behaviour, developed by US journalist Charles Dow in the 19th Century.
Dragonfly Doji
A candlestick chart pattern, with the same open and close price, a long lower tail but no upper head.
Duration
A weighted average of the times until all fixed cash flows are received, during the lifetime of a bond.
E
Earnings
The difference over time, between business revenues and business costs associated with production, operating expenses, and taxation.
Earnings Per Share (EPS)
Total earnings generated by a business, divided by the number of outstanding shares of common stock issued by the business.
Edge
A qualitative or quantitative advantage a trader has over other traders in the rest of the market.
Effective Duration
A form of duration used for bonds which have an embedded option, reflecting the option's impact on expected changes in future cash flows.
Efficient Market Hypothesis (EMH)
An academic theory or hypothesis, which asserts the impossibility of generating abnormal capital gains or trading profits, based on market information.
Engulfing
A candlestick chart trend reversal pattern, comprised on a long body which totally engulfs, and is in the opposite direction of the preceding candlestick.
Equity
The value of an ownership interest in a financial entity, such as a house or a business.
Ethereum
Ethereum is a platform for decentralised computing. It’s similar to a laptop or PC, but it’s not limited to a single device. Instead, it runs on thousands of machines worldwide at the same time, implying that it has no owner.
Ethereum, like Bitcoin and other cryptocurrencies, is a digital currency that can transfer. It can, however, do a lot more, including deploying your code and interacting with apps made by other users. Ethereum may be used to launch a wide range of sophisticated apps because of its flexibility.
Defined, Ethereum’s core notion is that developers can design and launch code that operates over a distributed network instead of existing on a centralised server. This means that these applications cannot be disabled or censored in theory.
As a result, third parties are unable to meddle with programmes. They’re stored in Ethereum’s database (the blockchain), and they can be coded to prevent the code from being changed. Furthermore, users can inspect the code before interacting with it because the database is open to anyone.
Therefore, programmes that cannot be taken down can be launched anywhere. Furthermore, because its native unit, ether, holds value, these applications can control how value is exchanged. Smart contracts are the programmes that makeup applications. In most circumstances, they can be programmed to work without human involvement.
EURIBOR
European Interbank Offered Rate, or the average interest rate at which a select group of Eurozone-based banks are willing to lend to each other.
EuroStat
The main statistical agency for the European Union, responsible for collecting a wide range of population, industry, transport, agricultural and finance data.
EuroStoxx
A European Stock Market Index, comprised of the largest 50 companies within the Eurozone by market capitalisation.
Evening Star
A bearish candlestick chart reversal pattern, comprised of a small candle which gaps higher after a long bullish candlestick, then followed by a large bearish candlestick in the next time period.
Exchange Delivery Settlement Price
The final price, upon expiry, for physical delivery of a certain underlying financial asset or commodity, or the price at which all derivatives contracts are cash settled.
Exchange Rate Mechanism (ERM)
A semi-pegged foreign exchange system, which allows currencies to fluctuate in value within a pre-defined band.
Exchange Traded Fund (ETF)
An investment fund comprised of assets such as stock, bonds, or commodities, but traded on a stock exchange like an ordinary stock.
Expiration
The day on which a particular derivatives contract ends.
F
Factors of Production
Resources necessary to produce economic goods and services, consisting of land, labour, capital, and entrepreneurship.
False Breakout
A failed attempt to break out of a trading range, where an initial directional move retraces back into the original range.
Federal Open Market Committee (FOMC)
A 12-member committee of the US Federal Reserve, responsible for the formulation of monetary policy for the US economy.
Fiat
A term used to describe a unit of exchange which derives its value from official government sanction.
Fibonacci Number
Fibonacci numbers are used by taking 2 extreme points (usually a major peak and trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%.
Fibonacci Sequence
A sequence of integers starting from 0 and 1, where each successive term of sequence is derived by the summation of the previous two terms.
Financial Conduct Authority (FCA)
Established in April 2013 and responsible for the conduct, regulation and supervision of the UK Financial Services sector.
Financial Stability Board
An international body responsible for overseeing and making recommendations on the global financial system.
Fiscal Policy
Government policy on the collection and spending of tax revenue.
Fixed Income
A type of investment which obliges the borrower, or issuer of the investment, to make periodic payments over a specific period of time.
Flash Estimate
An early estimate of an anticipated economic data release.
Floating Rate Notes
A type of bond that makes variable interest payments, which are derived from a money market benchmark such as LIBOR.
Forward
A financial transaction which involves an exchange of a particular financial asset or commodity, at a specific price at a specific time in the future.
Forward Rate Agreement (FRA)
A type of forward contract, in which the buyer pays a fixed interest rate but receives a floating interest rate.
Forward/Forward
A financial transaction, which involves a forward transaction being executed at a specific price and at a specific time in the future.
Four-Price Doji
A candlestick chart pattern with the same open, close, high, and low price.
Framing
The study of decision-making, based on how a particular problem or scenario is presented to the decision-maker.
FTSE 100
The main UK Stock Market Index, comprised of the largest 100 UK companies based on market capitalisation.
Fund Manager
A market professional responsible for managing an investment portfolio.
Fundamental Analysis
A method of market analysis based on ascertaining the intrinsic value of financial instruments, based on related economic and financial data.
Future
A standardised contract between two parties, to buy or sell a specified quality and quantity of a particular financial asset or commodity, at a specific price for delivery at a specific time in the future.
fork
When a blockchain’s users make changes to its rules. These changes to the protocol of a blockchain often result in two new paths one that follows the old rules, and a new blockchain that splits off from the previous one
G
Game Theory
A branch of economic theory, utilising quantitative methods to analyse conflict and co-operation between intelligent and rational decision-makers.
Gamma
A measure of how sensitive an option's delta is to changes in the price of the underlying asset, or commodity, on which it is based.
General Agreement on Trade & Tariffs (GATT)
A multilateral agreement on the terms of international trade.
General Agreement on Trade & Tariffs (GATT)
A multilateral agreement on the terms of international trade.
Genesis Block
The first block in a blockchain is known as a genesis block, and it is usually hardcoded into the application's software. A symbolic chain connects multiple "blocks" (containing confirmed transactions and activity data) in a blockchain.
A crypto asset's "block" contains referential data for the preceding one and derives its value/legitimacy. As a result, the genesis block refers to the initial block of a new blockchain (Block 0 or Block 1), to which all subsequent blocks are linked.
A genesis block is distinct since it is the only block in a blockchain that does not relate to a previous block, and the first mining rewards it unlocks are almost always unspendable.
Genesis blocks are significant because they are the building blocks of a blockchain and can include intriguing stories or hidden meanings. For example, Bitcoin's genesis block contains the now-famous message "The Times 03/Jan/2009 Chancellor on the brink of second bailout for banks" — a reference to the country's deteriorating financial conditions at the time, as well as the rationale for creating cryptocurrencies like Bitcoin and Ethereum. In 2009, the genesis block of Bitcoin held 50 BTC.
The Bitcoin genesis block is fascinating not only because of its content but also because the next block was timestamped nearly six days later (the average time is 10 minutes). The current theory is that Satoshi Nakamoto was tempted to disclose Bitcoin publicly by a catchy Times headline. He had already constructed the genesis block and had changed the timestamp accordingly. Satoshi may have erased all the test blocks and used the genesis block for his major net launch after testing his programme from January 3, 2009.
Giffen Good
A good or service which sees an increase in demand if its price increases.
Golden Ratio
The ratio between two integers. If the ratio of the sum of the integers to the larger integer, is equal to the ratio of the larger integer to the smaller one. This is known as phi and is equal to approximately 1.618.
Gravestone Doji
A candlestick chart pattern with the same open and close price, a long upper head but no lower tail.
Grey
A market which trades instruments which have been announced, but not yet issued.
Gross
Without deduction of tax or other contributions.
Gross Domestic Product (GDP)
The total value of all goods and services produced within the economy over a specific period of time.
Gas
A fee that developers must pay to the Ethereum network in order to use the system
H
Hammer
A bullish candlestick pattern appearing at the end of a downtrend, comprised of a relatively small body at the very top of the candlestick, and a long lower tail at least two to three times the length of the body.
Hanging Man
A bearish candlestick pattern appearing at the end of an uptrend, comprised of a relatively small body at the very top of the candlestick, and a long lower tail at least two to three times the length of the body.
Harami
A candlestick pattern, in which a long candlestick is followed by a shorter candlestick, entirely within the body of the previous candlestick's body.
Harami Cross
A Harami candlestick chart pattern, but followed by a small Doji candlestick that is fully within the previous candlestick's body length.
Harmonised Index of Consumer Prices (HICP)
A Consumer Price Index for the EU, which measures inflation and the general level of prices within the Eurozone.
Hawk
A member of a monetary policy making authority, who typically advocates higher interest rates.
Hedge Fund
A highly flexible investment fund, which can use a wide range of trading strategies to generate returns for investors.
Hedge Ratio
The number of derivative contracts needed to offset price risk in an underlying financial asset, or commodity.
Hedger
A market participant seeking to reduce investment risk, by implementing an offsetting investment transaction.
Heuristics
The study of decision-making based on approximate rules of thumb, as opposed to strictly rational analysis.
High-Yield Bond
A bond with a credit rating below investment grade.
Hyperinflation
Extremely rapid or uncontrollable inflation.
Hardware Wallet
Hardware wallets are physical electronic devices that produce public and private keys using a random number generator (RNG). The keys are then saved locally on the device, which is not linked to the Internet. As a result, hardware storage is classified as a sort of cold wallet and is considered one of the most secure options.
While digital wallets provide greater protection against internet attacks, they may pose hazards if the firmware is not properly implemented. In addition, when compared to hot wallets, hardware wallets are less user-friendly, and funds are more difficult to access.
If you plan to keep your Bitcoin for a long time or if you have a considerable amount of it, you should consider using a hardware wallet. Most hardware wallets currently allow you to set up a PIN code to protect your device as well as a recovery phrase in case your wallet is misplaced.
Hodl
Passive investment strategy in which people buy and hold onto cryptocurrency instead of trading it in the hopes that it increases in value
Hot Wallet
Any wallet that is connected to the Internet in some way is considered a hot wallet. When you send money to your wallets, for example, you’re depositing money into a hot wallet. These wallets are simple to set up and use, with funds available immediately, making them ideal for traders and other regular users.
Many exchanges only keep a limited fraction of coins in their hot wallets to protect users’ cash. The rest is stored in cold storage and is not connected to the Internet.
I
Initial Coin Offerings (ICO’s)
As a by-product of the incredible boom in cryptocurrencies, a new principle of raising money for companies and projects was born in the creation of ICO’s. An ICO is not dissimilar to an Initial Public Offering (IPO) which is simply a method of raising capital, except instead of selling shares for investment in a company, an ICO is offering crypto coins for investment.
Like cryptocurrencies themselves, ICO’s are unregulated and have been used to bypass the stringent and regulated process required to raise money for new cryptocurrency ventures. It is generally used by a cryptocurrency start-up who wish to raise funds through an ICO. Nearly every single ICO will be accompanied by a whitepaper. This is a document that explains what the project is about, what the project aims to achieve, how much money is needed, what type of money is accepted, how the new coins (tokens) are distributed, how investors can buy the coins and general details about the company wishing to raise money through an ICO. Coins in this sense are generally referred to as tokens which bear some resemblance to shares of a company sold to investors in an IPO.
The aim is to raise money for a project, this way if the money raised through the ICO does not meet the required minimum investment of the firm to undertake the project, it has failed and money is returned to investors. Likewise, if the funds raised meet the company’s expectations then the project will go ahead and be used for this purpose, bearing in mind that all ICO’s have an investment window or timeframe i.e. they are offered for a limited time only.
Indirect Bidder
Institutional investors and foreign central banks who bid during the bond auction process by proxy through other institutions, such as the Reserve Bank of New York.
Inflation
The rate of increase in general price levels within the overall economy.
Inflationary Gap
A positive difference between potential and actual output within the overall economy.
Initial Balance
A Market Profile concept and is the range established from the first two brackets of a Market Profile, usually traded during the first hour of the trading day or session.
Initial Public Offering (IPO)
First offering of a company's stock to the general public.
International Monetary Fund (IMF)
An international organisation which aims to promote international economic cooperation, trade, and stability.
Intervention
A unilateral attempt by a government or central bank to influence the financial markets.
Investment Grade
A term used to describe any bond with a strong credit rating.
Index
A financial instrument which derives its value from a cross-section of the stock market.
J
K
Key Rate Duration
The duration of a bond for a given maturity, holding all other maturities constant.
Keynes Effect
The effect of a change in interest rates, affecting spending more than saving.
Keynesian Cross
Economic equilibrium reached by the equalisation of aggregate demand and output.
Keynesian Inefficiency
An inadequate use of resources due to insufficient aggregate demand.
L
Law of Diminishing Returns
The concept stating that additional increases in resources, will result in successively smaller increases in output.
Lender of Last Resort
An institution willing to lend, when nobody else will do so.
Leverage
A term used to describe any means of multiplying gains or losses, usually in the form of borrowed money.
LIBOR
London Interbank Offered Rate, or the average interest rate at which a select group of London based banks are willing to lend to each other.
Line Chart
A visual representation of price data, using a line to connect successive closing prices over a particular time period.
Liquidity
The ability of a market to absorb trades without adversely affecting prices.
Long
To have bought a particular financial asset or commodity.
Long Day
A candlestick chart pattern with a relatively large body.
Long-Legged Doji
A candlestick chart pattern with the same open and close price in the middle, with a long upper head and a long lower tail.
Low Exercise Price Option (LEPO)
A call option that cannot be exercised until expiry, but which allows the purchaser to buy 1,000 units of the underlying asset at an exercise price of 1%.
M
M3
A measure of the supply of money within the overall economy, including currency in circulation, as well as easily accessed deposits within the financial institutions.
Macroeconomics
The study of the general economy, at a national or international level.
Margin
Money borrowed to trade a financial instrument.
Mark to Market
A form of fair value accounting, in which the value of a particular financial instrument is derived from current market prices.
Market Capitalization
The value of a corporate entity, or business, derived from multiplying the number of outstanding shares of company stock by the value of those shares.
Market Profile Chart
A visual representation of price data, using vertical columns of letters for prices traded within 30-minute periods, which are then aggregated to the left to produce distinctive patterns of market behaviour known as profiles.
Market Share-Weighted Index
An index weighted according to each company's number of outstanding shares.
Market Value-Weighted
An index weighted according to each company's market value or capitalisation.
Marshallian Cross
Economic equilibrium reached by the equalisation of aggregate demand and aggregate supply.
Marubozu
A candlestick chart pattern, consisting of a long body with no upper head or lower tail.
Marxian Unemployment
Unemployment arising from employers' desire to keep labour costs low and worker discipline high.
Maturity
The specific date at which a fixed income instrument's principal will be paid.
McJobs
A term used to describe low-paying jobs which require few skills or qualifications, and which offer little if any chance of promotion or advancement.
Menu Costs
Costs incurred by business owners having to rewrite price menus because of price rises.
Microeconomics
The study of the general economy at an individual or household level.
Mid-Curve
Short dated derivatives based on a longer dated financial instrument.
Modelling
The process of replicating certain behaviour, with the aim of achieving a certain level of skill and competency.
Monetarist
An economist who believes that changes in money supply are the sole determinant of economic fluctuations.
Monetary Policy
Economic policy which aims to influence the economy through changes to the overall money supply.
Monetary Policy Committee (MPC)
An eight-member body at the Bank of England, responsible for the formulation of monetary policy within the UK.
Monetary Theory
The economic theory which states that price levels within the overall economy are determined by the relative supply and demand of money.
Money Market
A market in which short-term debt instruments are traded.
Monopoly
A market entity which represents the sole supplier of a particular good or service.
Monopsony
A market entity which represents the sole purchaser of a particular good or service.
Morning Star
A bullish candlestick charts reversal pattern, comprised of a small candle which gaps lower after a long bearish candlestick, then followed by a large bullish candlestick in the next time period.
Moving Average Convergence Divergence (MACD)
A technical analysis tool, which shows the relationship between two moving averages of price data.
Mutual Fund
An investment fund comprised of a pool of funds collected from a group of investors.
Mutual Savings Bank
A co-operative financial institution, responsible for the savings and investments of its members.
More buyers than sellers
To say that the market or a stock is going up because there are “more buyers than sellers,” is wrong, there are simply different price levels at which a buyer and a seller are willing to trade.
N
NASDAQ 100
A US Stock Market Index comprised of the largest 100 non-financial companies in the US, based on market capitalisation.
National Debt
The total amount of government borrowing.
Neo-Keynesian
A school of economics (led by economists such as John Hicks, Franco Modigliani and Paul Samuelson) which provides a microeconomic basis to classical Keynesian economic theory.
Net Exports
Exports minus imports.
NIKKEI 225
The principal Japanese Stock Market Index, comprised of the largest 225 companies in Japan based on market capitalisation.
Nodes
Nodes are the computers that are used to run the cryptocurrency software. They are more powerful than your average PC as they need to run efficiently by processing and using the amount of information required to relay information. Anyone can run a node by downloading the software required for the coin, which are usually free, but as explained above they need a lot of energy to run and need larger than usual storage i.e. Bitcoin network currently takes up about 145GB. Nodes send information and transactions around the network, which generally happens on a small number of nodes it is familiar with, and that node relays the information to nodes that they know and so on. Eventually the information spreads across the network pretty efficiently and quickly.
Nodes can be mining nodes and are often referred to as ‘miners’ and they group transactions into a block which are added to the blockchain.
Miners, as part of the crypto coins protocol and program, must solve complex mathematical puzzles, which including the answer, are sent in the block. This puzzle then needs solving by finding a number. That number combined with the data in the block, passes through a hash function and produces a number within a certain range.
Whilst this may sound easy it is not! For example the number is called a ‘nonce’ which is a concatenation of a number used once and in the case of Bitcoin that number is an integer between 0 and 4,294,967,296!
Nominal
An unadjusted rate in value, such as interest rates or GDP.
Non-Acceleration Inflation Rate of Unemployment (NAIRU)
The level of unemployment which occurs within the overall economy when inflation is stable.
Nonce
A nonce in cryptography is a number used to protect private communications by preventing replay attacks.
Nonces are random or pseudo-random numbers that authentication protocols attach to communications. Sometimes these numbers include a timestamp to intensify the fleeting nature of these communications. If subsequent requests to a server, for example, during digest access authentication via username and password, contain the wrong nonce and timestamp, they are rejected. When used in this way, nonces prevent replay attacks that rely on impersonating prior communications to gain access.
Example :-
A nonce introduces randomness, and sometimes timestamping, into communications so that the application can verify the user. This uniqueness makes it impossible for hackers to use prior communications to impersonate the legitimate parties for nefarious purposes.
Non-Farm Payrolls
A US economic release, measuring total civilian employment and earnings.
Non-fungible Tokens (NFTs)
NFTs are digital tokens that can indicate ownership of one-of-a-kind goods. They enable us to tokenise items such as artwork, collectables, and even real estate. They can only have one official owner at a time, and they're protected by the Ethereum blockchain, which means no one can change the ownership record or create a new NFT.
The term "non-fungible token" refers to a token that is not fungible. Non-fungible is an economical word used for objects like furniture, music files, and computers. Because of their unique features, some goods cannot be substituted for other items.
On the other hand, Fungible goods can be swapped because their worth, not their unique features, characterise them. ETH or dollars, for example, are fungible because 1 ETH / USD 1 can be exchanged for another 1 ETH / USD 1.
NFTs and Ethereum address some of the current issues on the internet. As the world becomes more digital, tangible attributes like scarcity, uniqueness and proof of ownership must be replicated. Not to mention the fact that digital products are frequently only applicable when used in 11
conjunction with their product. For example, even if there is a market for it, you cannot resell an iTunes mp3 or trade one company's loyalty points for another platform's credit.
Note
A government issued short-term bond with a maturity of between one and ten years.
O
Off Balance Sheet
Any asset, debt or financing not included in a company's balance sheet.
Offer
The price at which the market is willing to sell.
Office for National Statistics
The executive office for the UK statistics authority, responsible for collecting economic and social data within the UK at national, regional, and local levels.
Okun's Law
The positive linear relationship between unemployment and GDP, proposed by the US economist Arthur Okun.
On Balance Sheet
Any asset, debt or financing included in a company's balance sheet.
Open Auction
A form of auction process in which buyers bid until the auction ends, at which point the items are sold to the highest bidders.
Open Interest
The number of derivative contracts which have not been immediately cash or delivery settled by the immediate counterparty.
Open Market Operations
Financial markets transactions initiated by a central bank, for the implementation of monetary policy.
Open Model
A version of the Circular Flow of Income model, incorporating international trade with other countries.
Opportunity Cost
The cost incurred by choosing a single option, in terms of the other options not chosen.
Option
A standardised contract between two parties that gives the purchaser the right, but not the obligation, to buy or sell a specified quality and quantity of a particular financial asset, or commodity, at a specific price, for delivery at a specific time in the future.
Options Premium
The price paid to purchase an options derivative.
Order Book
A list of buy and sell orders within a particular market.
Organisation for Economic Cooperation & Development (OECD)
An international body consisting of 33 member states, responsible for the spread of democracy and market economy system.
Organisation of Petroleum Exporting Countries (OPEC)
An international cartel of 13 crude oil producing nations, which formulate common policy on the supply, production, and sale of petroleum.
Oscillator
A technical analysis tool, which indicates overbought or oversold market conditions.
Output Gap
Any difference between potential and actual output and production, within the overall economy.
Outright
A trading position which is net long or net short.
Over The Counter (OTC)
A market transaction which occurs between two parties without exchange involvement.
P
Pack
The simultaneous sale, or purchase, of four consecutive STIRS contracts over a 12-month time period.
Paper Umbrella
A candlestick charts pattern with a small body, no upper head, and a long lower tail.
Par
A bond's face value.
Payment Day
The date on which an interest payment is scheduled to occur on a particular bond.
Pension Fund
An investment fund comprised of a pool of funds, collected from both employers and employees, from which pensions are paid.
Phillips Curve
A visual representation in Economics, indicating the inverse relationship between unemployment and inflation, within the overall economy.
Phillips Curve Inflation
Inflation occurring because of low levels of employment with the overall economy.
Physical Delivery
The actual delivery of the underlying financial asset, or commodity, associated with a derivatives contract upon its expiration.
Piercing Line
A bullish candlestick charts reversal pattern, comprised of a long bearish candle followed by a long bullish candle.
Point & Figure Chart
A visual representation of price data, using columns of X's and O's to denote prices rises and falls respectively.
Point of Control
The price displayed in Market Profile charts at which the market is spending the most time.
Portfolio
A group of financial investments.
Present Value (PV)
The current value of a given payment, or payments, which will be made at some point in the future.
Price Earnings Ratio
The ratio between a share price and it's per-share earnings.
Price Elasticity
A measure of sensitivity in the quantity of a product, or service, with respect to a change in price.
Price Index
A measure of inflation, which tracks price changes in a particular group of goods and/or services.
Primary Dealer
A group of 22 large investment banks which trade directly with the US Treasury.
Primary Market
A market where investors may execute transactions without intermediaries or commissions.
Principal
The face value of a bond, or the amount initially received by the borrower, from the lender, at the initial purchase of the bond.
Production Possibility Frontier (PPF)
A visual representation of all combinations of two goods, which may be produced by full utilisation of all resources.
Projected Price Earnings Ratio
The price to earnings ratio based on projected future earnings.
Protectionism
A term used to describe policies which seek to safeguard domestic economic interests, at the expense of foreign interests.
Put
An option giving the purchaser the right, but not the obligation, to sell a particular financial instrument at a certain strike price.
Puttable
A type of bond, which gives the investor the right to sell the bond back to the issuer before maturity.
Q
R
Raindrop
A bullish candlestick charts reversal pattern comprised of a small candle, which gaps lower after a long bearish candle.
Real
Nominal value adjusted for inflation.
Real Bid-to-Cover Ratio
The ratio between the value of bonds offered and the value of bonds bid for during a bond auction process.
Recession
Two consecutive quarters of negative economic growth.
Reflation
An attempt by policymakers to stimulate the economy to operate at a higher level of inflation.
Reinvestment Risk
The risk associated with having to reinvest and receive a lower rate of return in the future, compared to that received prior to reinvestment.
Repo
A repurchase agreement, whereby the buyer buys a particular security and the seller agrees to buy the security back, under certain terms at some point in the future.
Request For Quote (RFQ)
A request for two-way prices on a particular financial instrument, across multiple market-makers at the same time.
Reserve Bank
A group of 12 US Federal Reserve subsidiary banks, which operate at a regional level.
Resistance
A price level at which buyers are unwilling, or unable, to buy above.
Retracement
A price movement which occurs in the opposite direction of the prevailing market trend.
Rho
A measure of how sensitive an option's price is to changes in interest rates.
Robin Hood Effect
When the less well-off benefit economically at the expense of the better-off, this is known as the Robin Hood effect. According to folklore, the Robin Hood effect is named after the legendary English bandit Robin Hood, who stole from the affluent to give to the poor. When the better-off gain at the expense of the less fortunate, this is known as a reverse Robin Hood effect.
The Robin Hood effect is not confused with the Robinhood effect, which refers to the growing number and importance. It focuses on small retail investors who use low-entry-barrier trading apps like the Robinhood platform.
The Robin Hood effect is a well-known phenomenon in discussions about economic disparity. Income is redistributed in a Robin Hood effect, reducing economic inequality. A Robin Hood effect occurs when a government collects more significant taxes from the wealthy and lower or no taxes from the poor and then utilises the tax proceeds to give services to the needy.
Market-based phenomena or government economic and fiscal policies, not all explicitly focused on reducing inequality, might have a Robin Hood effect. Regardless of the reason, practically every change in the status quo of an economy can result in income redistribution; when such redistribution is in favour of lower-income people, it is known as the Robin Hood effect. In terms of economic efficiency, a Robin Hood effect is never Pareto efficient since it always makes at least some higher-income people worse off, even if it benefits lower-income people.
Rollover
The process of reinvesting from one derivatives contract to another upon expiry.
S
S&P 500
The main US Stock Market Index, comprised of the largest 500 companies in the US based on market capitalisation.
Safe Haven
An investment destination which provides safe and consistent returns.
Savings and Loan Association
A financial institution legally obliged to offer a certain percentage of its loans as home mortgages.
Scratch
To offset an existing trading position, at the same price at which it was initially executed.
Seasonal Adjustment
Any statistical adjustment to offset seasonal factors which may bias collected data.
Secondary Markets
A market which trades instruments which have been previously issued.
Self-Fulfilling Prophecy
A scenario which occurs because of the perception that it will occur.
Shoe Leather Costs
A humorous reference to the cost of inflation on consumers having to replace shoe leather, due to frequent visits to banks to withdraw cash because of frequent price rises.
Shooting Star
A bearish candlestick charts reversal pattern, comprised of a large bullish candle followed by an inverted hammer which gaps higher.
Short
To have sold a particular financial asset or commodity.
Short Day
A candlestick chart pattern with a relatively small body.
Short Term Interest Rates (STIRs)
A Futures contract, whose value is derived from a particular interest at expiration.
Smart Contract
Smart contracts were first described in the 1990s by Nick Szabo. He defined a smart contract back then as a mechanism for formalising and securing computer networks through the use of protocols and user interfaces.
Szabo explained how smart contracts could be used in a variety of industries involving contractual agreements, including credit systems, payment processing, and content rights management. These contracts are an application or programme that operates on a blockchain in the realm of cryptocurrency. Typically, they function as a digital agreement governed by a set of rules. Computer code defines these rules, which are duplicated and executed by all network nodes.
Smart contracts on the blockchain enable the establishment of trustless systems. This means that two parties can create promises on the blockchain without knowing or trusting one another. They can be assured that if the terms aren’t met, the deal will not be carried out. Aside from that, these contracts can eliminate the need for intermediaries, drastically lowering operational costs.
Although the Bitcoin protocol has supported smart contracts for many years, they were popularised by Vitalik Buterin, the creator and co-founder of Ethereum. It’s worth mentioning, though, that each blockchain may use a different approach to smart contract implementation.
Speculators
Investors seeking to generate returns from price movements.
Spillover Effect
Indirect consequences, which effect third parties because of economic actions or policy.
Spinning Top
A candlestick chart pattern with a relatively small body, but a longer upper head and longer lower tail.
Spot Transaction
A financial transaction, which involves immediate delivery of a certain financial asset or commodity.
Stablecoins
Stablecoins are digital assets that are intended to resemble the value of fiat currencies such as the dollar or the euro. They enable customers to send money throughout the world inexpensively and quickly while maintaining price stability.
These assets have very little price movement and closely reflect the value of the underlying asset or fiat currency they are modelled after. As a result, they act as dependable safe-haven assets in times of market volatility.
Stochastics
A technical analysis oscillator, which indicates closing prices relative to a high-low range over a certain time period.
Stock picker’s market
An analyst or investor makes a stock pick when they apply a systematic analysis method to determine whether a particular stock will be a good investment and, as a result, should be added to their portfolio. Active management is another term for this. The position can be long or short, depending on the analyst's or investor's expectations for the stock's price.
Stock selection can be a challenging task because there is no way to predict how a stock's price will change. On the other hand, an investor may be able to gain a better idea of future stock values by evaluating a variety of indicators rather than depending on guessing. Because forecasting isn't a precise science, any investor or analyst who uses a forecasting technique should factor in a margin of error.
Active management funds use teams of analysts that select equities for investment and update the portfolio regularly as market and corporate conditions change. Active management is distinct from passive management, aiming to replicate an index while minimising portfolio turnover.
Stocks
A synonym for equities or shares.
Stop
The lowest accepted bid price during the bond auction process.
Strike Price
The price at which a purchaser of an option has the right, but not the obligation, to buy or sell a particular financial asset or commodity.
Subconscious
The aspect of the mind, responsible for feelings and emotions.
Supply Shock Inflation
A rise in overall price levels, which occurs because of an exogenous shock to the economic system.
Supply-Side Economics
A school of economics, which advocates improving the capacity of the economy to produce goods and services, as a means to higher economic growth.
Support
A price level at which sellers are unwilling, or unable, to sell below.
Swap
A financial transaction, in which two parties agree to exchange the cash payments received from two different financial assets they hold.
System Open Market Account (SOMA)
An account kept by the US Federal Reserve Bank of New York, detailing all dollar denominated holdings purchased during open market operations.
T
Tail
The difference between the average price and the stop price, upon completion of the bond auction process.
Technical Analysis
A method of market analysis, using price and volume data to determine future market movements.
Technical Indicator
A technical analysis tool, which indicates bullish or bearish market conditions.
The Circular Flow of Income
An economic model, used to assess and analyse economic activity within the overall macroeconomy.
The GDP Deflator
A conversion factor used to adjust GDP for inflation.
Theta
A measure of how sensitive an option's price is, to changes in time to expiry.
TIBOR
Tokyo Interbank Offered Rate, or the average interest rate at which a select group of Tokyo based banks are willing to lend to each other.
Time Price Opportunity (TPO)
A single letter, shown on Market Profile charts, to indicate that the market has traded at a particular price within a particular 30-minute time period.
Token
The phrase "crypto token" refers to a unique virtual currency token or how cryptocurrencies are valued. These tokens are fungible and tradeable assets or utilities with their blockchains. Crypto tokens are frequently used to raise funds for crowd sales, but they can also be used to replace other items. The traditional initial coin offering (ICO) method, which comprises a crowdsourcing exercise to support project development, produces, distributes, sells, and circulates these currencies.
Crypto tokens, as previously stated, are cryptocurrency tokens. These tokens are denominated in cryptocurrencies or virtual currencies, and they have their own blockchains. Blockchains are specialised databases that store data in blocks that are subsequently connected in a chain. This means that crypto tokens, also known as crypto-assets, represent a specific monetary unit. This is how it works. Elliptical curve encryption, public-private key pairs, and hashing functions are examples of cryptography algorithms and cryptographic approaches that protect these entries. 2 Cryptocurrencies, on the other hand, are online payment systems that use virtual tokens to make safe payments. The system's internal ledger entries represent these tokens.
These digital assets are frequently used as transaction units on blockchains built using standard templates, such as the Ethereum network, which lets users generate tokens.
Such blockchains are based on smart contracts, or decentralised applications, in which programmable, self-executing code is used to handle and manage the blockchain's numerous transactions.
Trader's Remorse
A term used to describe a scenario where market participants aren't confident enough to sustain an initial directional move, resulting in the market retracing back to a previous price range.
Trading Stop
A type of market order, which executes as soon as the market trades at the price at which the order is placed.
Trailing Price Earnings Ratio
The price-to-earnings ratio, based on past earnings over the previous 12 months.
Transmission Mechanism
The process by which economic policy changes impact the overall economy.
Trend
A market movement, in which successive highs and lows occur in the same direction.
Triangle Model
A neo-Keynesian model of inflation, which states that rise in price levels within the overall economy occur because of 3 types of inflation: built-in inflation, demand pull inflation, and cost-push inflation.
Two-Way Prices
Prices which consist of both a bid and an offer.
U
Unconscious
The aspect of the mind responsible for involuntary actions, such as heart rate and breathing.
Underemployment
The utilisation of economic resources below maximum potential.
Unemployment Rate
The percentage of the civilian labour force willing to work, but unable to find employment.
Unit of Price
The minimum increment of price on a Point and Figure chart.
US Federal Reserve
The central bank of the US.
US Treasury
The department of the US government responsible for economic, financial, tax and fiscal policy.
V
Value Area
The range of prices displayed in Market Profile charts, where 70% of trades occurred within a particular trading day or session.
Vega
A measure of how sensitive an option's price is to changes in volatility.
Volatility
A measure of price fluctuation.
W
World Bank
A 181-nation international financial institution, responsible for the provision of financial and economic aid to member countries.
X
Y
Yield Curve
A visual representation of different yields or interest rates, across different points in time in the future, for bonds with equal credit ratings but different maturities.
Yield To Maturity
The rate of return expected on a bond if held until maturity.
Z
Zero-Coupon Bonds
A bond which does not make regular interest payments, and therefore trades at a price lower than its face value.