Trading Glossary

Master the language of trading with our comprehensive A-Z glossary. Learn forex, CFD and financial market terminology to enhance your trading knowledge.

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A

Letter A

2 terms available

Algorithmic Trading

1

An algorithm is a set of instructions to be followed in a step-by-step manner by a computer. Algorithmic trading is the use of algorithms to automatically open and close trades according to predefined parameters. For instance, an algorithm can be programmed to observe the overbought and oversold conditions of a given market and to automatically open and close positions when certain criteria are met.

Arbitrage

2

Arbitrage is when traders take advantage of price inefficiencies between markets. If, for instance, you become aware that a certain asset is selling for a higher price on Market A than you are able to purchase it for on Market B, then buying it at the cheaper price and selling it on the more expensive market would be an example of arbitrage. In practice, arbitrage becomes harder to take advantage of the more interconnected markets become.

B

Letter B

2 terms available

Balance

1

Your balance is the amount of money you have available in your trading account.

Base Currency

2

Currencies are quoted in pairs. The base currency is the first currency in any currency pair. For example, in the EURUSD pair the base currency is the Euro. The exchange rate tells you how much of the second currency in the pair you need in order to buy a single unit of the first currency.

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