The expanded glossary.
100 terms, from your first bid–ask spread to the machinery behind derivatives and decentralized markets.
Give each definition a context
After looking up a term, use it in a sentence that identifies the instrument, time period and unit of measurement. Margin is not the same as maximum loss; traded volume is not a promise of liquidity when you need to exit. Similar words can hide different questions.
Check the arithmetic as well as the wording. A rate rising from 2% to 3% increases by one percentage point, but by 50% relative to its starting value. Write which comparison you mean before carrying a definition into a lesson or calculator.
100 terms
Accrual accounting
Recording income and expenses when earned or incurred rather than only when cash changes hands. It makes cash-flow reconciliation important, not optional.
Ask
The lowest quoted price at which a seller is currently offering to sell, or the price a dealer quotes for your purchase. Available quantity matters.
Asset allocation
The way a portfolio is divided among asset classes such as shares, bonds and cash. It shapes risk more than any single ticker choice.
Automated market maker
A trading mechanism that uses a rule and liquidity reserves to quote prices. Constant-product pools are one design; concentrated-liquidity and other designs behave differently.
Base currency
The first currency in a forex pair. In EUR/USD, EUR is the base; the quote tells you how many dollars buy one euro.
Basis
The difference between related prices, often a futures price and a cash reference price. State the subtraction convention and instruments before interpreting it.
Basis point
One hundredth of a percentage point. A change from 4.00% to 4.25% is 25 basis points, not 25%.
Bear market
A broad, sustained decline in market prices. A 20% fall from a recent peak is a common convention, not a universal rule.
Bid
The highest quoted price a buyer currently offers, or the price a dealer quotes to buy from you.
Bid–ask spread
The difference between the ask and the bid. It is one component of trading cost and can widen when liquidity deteriorates.
Blockchain
A ledger whose records are grouped into linked blocks. Networks differ in validation rules, governance, privacy and security assumptions.
Bond
A debt instrument. The issuer promises payments under specified terms; the promise still carries credit and other risks.
Book value
Accounting assets minus liabilities. It is not the same as a company’s market value or the cash you could necessarily recover.
Bridge
A mechanism for moving representations of assets or messages between blockchains. Its security depends on validation, custody, contracts and administrative controls.
Broker
A firm that provides access to trading. Its role, execution model, legal entity, custody arrangements and protections depend on the service.
Bull market
A period of broadly rising prices. Labels describe a trend; they do not tell you how long it will last.
CFD
A contract for difference: a derivative that settles a price change without giving ownership of the underlying asset. Financing, leverage and counterparty risk matter.
Candlestick
A chart mark summarizing open, high, low and close over a selected interval. A candle’s shape is not a reliable prediction on its own.
Capital gain
An increase realized when an asset is sold above its relevant cost basis. Tax treatment and calculation rules depend on jurisdiction.
Cold wallet
A setup intended to keep signing keys offline. It can reduce some online risks but does not remove loss, theft, backup or human-error risks.
Convexity
The curvature of a bond’s price–yield relationship. Duration gives a first-order estimate; convexity can improve an approximation but does not remove credit or liquidity risk.
Correlation
A statistical measure of how returns move together in a sample. It can change, particularly during stress.
Counterparty risk
The risk that the other party to a transaction cannot or will not meet its obligations.
Covenant
A contractual promise or restriction in a debt agreement. Its wording can affect creditors’ rights and a borrower’s flexibility.
Custody
The safeguarding and administration of assets or the keys needed to control them. Legal ownership and recovery rights are important.
Decentralized exchange
A service that uses blockchain transactions or smart contracts to facilitate trades. Front ends, governance and infrastructure may still be centralized.
Dilution
A reduction in an existing shareholder’s proportional ownership when additional shares are issued, unless that holder participates proportionally.
Diversification
Spreading exposures so one source of loss has less influence. It can reduce concentration risk, but it cannot eliminate market risk.
Dividend
A distribution a company makes to shareholders. It is not guaranteed and is not a free addition to a stock’s economic value.
Drawdown
The percentage decline from a previous peak to a later lower value. It can describe a portfolio, strategy or asset.
Duration
A measure related to the timing of bond cash flows and sensitivity to yields. Modified duration approximates percentage price response to a small yield change under specified assumptions.
ETF
An exchange-traded fund: a pooled investment with shares that trade on an exchange. Its underlying holdings, costs and structure determine its exposures.
Earnings per share
A company’s earnings allocated to each relevant share. Basic and diluted calculations differ, and adjusted figures may exclude material costs.
Enterprise value
A measure commonly combining equity market value and debt-like claims, less cash. Definitions and adjustments vary; it is not a substitute for reading the balance sheet.
Exchange
A marketplace or venue where transactions are organized. Rules, access, transparency and legal protections vary substantially.
Expectancy
The probability-weighted average outcome of a trade model. In a simple two-outcome model it combines win rate, average win, average loss and costs.
Fiat currency
Money issued under a government monetary system, rather than backed by a fixed quantity of a commodity.
Fixing
A benchmark rate or price established under a stated methodology at a specified time or window. It is not necessarily a price available for every trade.
Float
Shares available for public trading, after accounting for certain restricted or closely held shares. Definitions may differ by data provider.
Forex
The foreign-exchange market, where one currency is exchanged for another. Retail products can differ greatly from institutional spot markets.
Forward points
The difference added to or subtracted from a spot FX rate to express a forward rate under the quotation convention. They reflect pricing inputs, not a simple forecast of the future spot rate.
Free cash flow
A measure of cash generated after specified spending, often operating cash flow minus capital expenditure. Always check the calculation used.
Free float
The portion of a company’s shares considered available for public trading under a provider’s definition, excluding specified restricted or strategic holdings.
Fundamental analysis
Studying economic, business or asset-specific drivers to understand value and risk. A sound thesis can still be early or wrong.
Funding rate
A periodic transfer commonly used in perpetual derivatives to help align the contract with a reference price. The sign, frequency and calculation vary by venue.
Futures
Standardized derivative contracts with specified terms for a future transaction or cash settlement. Margin does not represent the full economic exposure.
Gap
A jump in price between trading opportunities or observations. A stop order may fill far from its trigger when the market gaps.
Gas fee
A network transaction fee on certain blockchains, often reflecting computational work and demand for block space.
Hedging
Taking an offsetting exposure to reduce a specified risk. Hedges can be imperfect, costly and introduce other risks.
Impermanent loss
The difference between a liquidity-pool position and holding the starting assets, under a comparison with defined assumptions. The underperformance can become realized and may exceed fee income.
Index
A rules-based measure of a selected group of securities or other assets. An index itself is not a directly owned investment.
Intervention
Official transactions intended to influence a currency or market conditions. Effects depend on size, credibility, policy consistency and the market response.
Layer 2
A system built around another blockchain to expand capacity or change execution. Security, data availability, withdrawal and governance assumptions vary by design.
Leverage
Exposure larger than the capital committed to support it. It magnifies gains and losses relative to that capital.
Limit order
An order to buy at a specified price or lower, or sell at that price or higher. Price control does not guarantee execution.
Liquidation
A forced closing or reduction of a position when margin requirements are breached under a platform’s rules.
Liquidity
The ability to trade a meaningful quantity without moving the price substantially. It varies by instrument, venue, time and market conditions.
Long position
An exposure that generally benefits from a price increase, before costs. Its specific payoff depends on the instrument.
Look-ahead bias
Using information in a historical test that would not have been available at the simulated decision time. It can make an unusable strategy look persuasive.
Margin
Collateral required to support a leveraged position. Initial and maintenance requirements differ, and requirements can change.
Market capitalization
Share price multiplied by shares outstanding. In crypto, reported market cap usually uses circulating token supply, which may be uncertain.
Market order
An instruction to trade at available prices. It prioritizes execution over price control, subject to venue rules and liquidity.
Maximal extractable value
Value that can be obtained by selecting, ordering or excluding blockchain transactions. It can affect execution and user costs without appearing as an explicit commission.
Maximum drawdown
The largest peak-to-trough decline within a specified observation period. A backtest’s worst drawdown is not a bound on future losses.
Moving average
An average of a rolling set of prices or other observations. It smooths noise but responds with a lag.
Oracle
A mechanism that supplies outside information to a blockchain application. Data quality, freshness, incentives and failure procedures are part of the risk.
Order book
A collection of displayed buy and sell orders at a venue. Hidden orders, cancellations and other venues mean it is not the whole market.
Overfitting
Tuning a model so closely to historical data that it learns noise rather than a relationship that survives new data.
Overnight index swap
An interest-rate swap exchanging a fixed rate against a compounded overnight benchmark over a period. Its price reflects expectations and other pricing influences, not certainty about policy.
P/E ratio
Price divided by earnings per share. Interpretation depends on the earnings period, accounting quality and business; negative earnings complicate the ratio.
Perpetual contract
A derivative without a conventional expiry date, often using funding payments. It is not the same as owning the underlying cryptoasset.
Pip
A conventional forex price increment, commonly 0.0001 for many pairs and 0.01 for yen pairs. Check the instrument’s quotation convention.
Position size
The quantity of an asset or contract held. A meaningful size calculation also needs the contract multiplier and loss scenario.
Private key
A cryptographic secret that authorizes transactions for associated addresses. Losing it or exposing it can lead to irrecoverable loss.
Quote currency
The second currency in a forex pair. In EUR/USD, the USD quote expresses the price of one euro in dollars.
Rebalancing
Adjusting a portfolio back toward selected target exposures. It can create costs and tax consequences.
Repo
A repurchase agreement, economically a form of collateralized financing. Collateral, haircuts, term, legal structure and counterparty exposure matter.
Resistance
A chart area where selling previously appeared. It is an observation about past behavior, not an invisible barrier prices must respect.
Risk–reward ratio
A comparison of a planned loss and planned gain. Be clear about which is the numerator; Trade151 displays reward divided by risk.
Rollover
Extending a position into a later settlement period or contract. Depending on the product, financing, swaps or contract price differences can apply.
Self-custody
Controlling the keys used to authorize cryptoasset transactions yourself. Control comes with backup, security and recovery responsibilities.
Sequencer
A component that orders transactions in certain scaling systems. Its outage, censorship resistance and fallback mechanisms depend on the system design.
Shareholder yield
A measure commonly combining cash returned through dividends and net repurchases relative to equity value. Definitions vary, and repurchases can be offset by issuance.
Short selling
Selling borrowed securities, typically aiming to repurchase them later. Borrow costs, recalls and theoretically unlimited losses can matter.
Slashing
A protocol penalty that can reduce staked assets for specified validator behavior. The exact triggers and delegated-holder exposure depend on the network and service.
Slippage
The difference between an expected or reference execution price and the actual fill. It can be favorable or unfavorable.
Smart contract
Code executed under a blockchain’s rules. Bugs, unsafe permissions, oracle failures and governance changes can create material risk.
Stablecoin
A token designed to track a reference asset such as a currency. A target price is not a guarantee of redemption or stability.
Staking
Participating directly or through a service in proof-of-stake validation. Rewards can coexist with price, lock-up, operator and slashing risks.
Stock-based compensation
Compensation paid through equity-linked awards. It may not require current cash payment but can dilute shareholders and affects how valuation measures should be interpreted.
Stop order
An order activated when a trigger condition is reached. A stop-market order does not guarantee the execution price.
Stop-limit order
A stop-triggered limit order. It limits acceptable execution prices but may remain unfilled when the market moves beyond the limit.
Stress test
A calculation of outcomes under deliberately adverse assumptions. A chosen scenario is not automatically a probability estimate, and missing risks can dominate the result.
Support
A chart area where buying previously appeared. It can fail, especially when new information changes participants’ expectations.
Survivorship bias
Distortion caused by studying only assets, funds or strategies that remain available, while omitting failures or delistings from the original opportunity set.
Tick
The smallest permitted price increment for an instrument on a venue. Tick size and tick value are different concepts.
Tokenomics
The rules and incentives governing a token’s supply, distribution and uses. Unlocks, insiders and governance rights need careful scrutiny.
Volatility
A measure of variation in returns or prices. It does not capture every kind of risk, such as fraud, illiquidity or custody failure.
Volume
The quantity traded during a period. Coverage depends on the venue and data source; fragmented markets rarely have a single complete figure.
Working capital
In common accounting usage, current assets minus current liabilities. For operating analysis, narrower definitions often exclude cash and financing items; state the definition used.
Definitions are general. Check contract and jurisdiction details. Follow the primary sources linked in the corresponding lessons for a fuller account.