Special terms from the world of stock markets and crypto exchanges DragoFX

Key Concepts

Assets – any economic resources that can be used for investment or trading (e.g. stocks, bonds, commodities, real estate).

Stocks – securities that provide the owner with a share in the capital of a company and the right to participate in management.

Bonds – debt securities under which the issuer undertakes to pay the holder a certain amount after a set period with interest.

Futures – contracts to buy or sell an asset in the future at a predetermined price.

Options (Options) – derivative financial instruments that give the right (but not the obligation) to buy or sell an asset in the future.

Derivatives – financial instruments whose value depends on the underlying asset (e.g. options, futures).

Index – a statistical indicator reflecting the change in the value of a group of assets (e.g. S&P 500, NASDAQ).

Quote – the current market price of the asset.

Bid – the price at which a market participant is willing to buy the asset.

Ask – the price at which the seller is willing to sell the asset.

Spread – the difference between the purchase price (bid) and sales (ask).

Dividends – regular payments to shareholders of a company from its profits.

Issuance – the process of issuing new shares, bonds or other securities.

Bull Market – a market condition when asset prices are rising or are expected to rise.

Bear Market – a situation on the market when prices are falling or are expected to fall.

Volatility – an indicator reflecting the degree of change in the price of an asset over a certain period of time.

Liquidity – the ability to quickly sell or buy an asset at the market price.

Margin (Margin) – the amount a trader must deposit as collateral to open a margin position.

Leverage – the ability to trade using borrowed funds, increasing potential profits or losses.

Volume – the number of transactions or trading volume of an asset over a certain period.

Correction – a temporary decrease in the price of an asset after a long period of growth.

Portfolio – a set of assets owned by an investor or trader.

Hedging – a risk reduction strategy using derivatives.

Scalping – a trading style in which a trader makes a large number of short-term transactions.

Swing Trading is a trading style based on holding positions for several days or weeks.

Day Trading is a trading style in which positions are opened and closed within one trading day.

Long is opening a position to buy an asset in anticipation of its growth.

Short is opening a position to sell an asset in anticipation of its decline.

Risk Management is a risk management strategy, minimizing losses.

Money Management is capital management to increase profits and reduce losses.

Jargon and Technical Analysis

Breakout – a situation when the price breaks through an important resistance or support level.

Flat – price movement in a sideways range without a clearly defined trend.

Retest – retesting of the support or resistance level by the price.

Pullback – temporary price movement against the current trend.

Resistance – a level where the price has difficulty growing.

Support – a level where the price finds support and does not fall below.

Trend (Trend) – the general direction of price movement.

Pattern – a graphical representation of price movement used for analysis.

Candle – a chart element showing price movement over a certain period (with opening, closing, maximum and minimum).

Moving Average – an indicator that smooths out price fluctuations to determine the trend.

RSI (Relative Strength Index) – an indicator that measures the strength of the trend and possible overbought or oversold conditions.

MACD (Moving Average Convergence Divergence) – an indicator that shows the divergence of moving averages.

ADX (Average Directional Index) – an indicator of strength trend.

Gap – a break in the price chart due to a sharp change in price.

Sideways Trend – horizontal price movement.

Wedge – a narrowing price range on the chart.

Flag – a trend continuation pattern.

Triangle – a price consolidation figure.

Head and Shoulders – a trend reversal pattern.

Double Bottom – a figure indicating a price increase.

Double Top – a pattern indicating a price increase.

Double Top) – a figure indicating a price drop.

Bull Flag – a figure confirming growth.

Bear Flag – a figure confirming a decline.

Fibonacci – a tool for analyzing rollbacks and levels.

Divergence – a discrepancy between the price and the indicator.

Consolidation – a period of weak price movement.

Reversal – a change in the direction of price movement.

Chop – chaotic price movement in a narrow range.

Squeeze – a sharp price movement, often caused by low liquidity.

Continuation Pattern – a figure that signals the continuation of a trend.

Trading and Strategies

Take Profit – the level at which profit is automatically fixed when the set price is reached.

Stop Loss – the level at which the trade is automatically closed to limit losses.

Break-even – moving the stop loss to the trade entry level to eliminate losses.

Levels – key price marks where the price often stops, reverses or continues to move.

Channels – ranges in which the price moves between support and resistance lines.

Trend Lines (Trend Lines) – diagonal lines on the chart that show the direction of the trend.

Pyramiding – adding new positions as the price moves in the direction of the trend.

VWAP (Volume Weighted Average Price) – weighted average price of the asset taking into account the trading volume.

Aggressive Trading – high-risk trading style with large positions and quick decisions.

Conservative Trading – cautious approach with minimal risks.

Arbitrage – a strategy for making a profit due to the difference in prices for one asset in different markets.

Overtrading – an excessive number of transactions, which leads to an increase in losses due to poor analysis.

Forwards – over-the-counter contracts to buy or sell an asset in the future at a fixed price.

Paper Trading – training in trading on a virtual account without real money.

Manual Trading – a process in which a trader performs all operations independently.

Algorithmic Trading – the use of automated algorithms for trading.

Hype – increased attention to an asset, often accompanied by a sharp increase in price.

Taker – a trader who accepts the offered price (buys at ask or sells at bid).

Maker – a trader who creates liquidity by placing limit orders.

Margin Call – a broker’s requirement to replenish an account due to a lack of funds to maintain a position.

Collateral – assets provided as collateral for margin trading.

Settlement Price – the settlement price for closing futures contracts at the end of the day.

Contango – a situation when futures contracts are trading above the current market price of the asset.

Backwardation – a situation when futures contracts are trading below the current price of the asset.

Rollover – transfer of an open position to the next contract period.

Short-term Position – a transaction held from several minutes to several days.

Medium-term Position – a transaction held from several days to several weeks.

Long-term Position – a transaction held for months or years.

Cross Rate – the exchange rate of two currencies calculated through a third currency, usually the US dollar.

Floating Loss – a temporary loss on an open position that can be reduced or turned into profit.

Psychology of Trading

FOMO (Fear of Missing Out) – fear of missing out on a profitable opportunity, often leading to emotional trades.

Greed – desire to earn maximum profit without taking risks into account.

Fear – fear of losses, which can interfere with decision making.

Confidence – a trader’s faith in their strategy and actions.

Panic – a state in which a trader makes trades chaotically due to a sharp market movement.

Self-discipline – the ability to follow a strategy and plan without deviations.

Emotional Trading – making decisions based on emotions rather than analysis.

Patience – the ability to wait for the right moment to enter a trade.

Trading Addiction – an uncontrollable craving for trading, often leading to losses.

Accepting Losses – understanding the inevitability of losses as part of trading.

Psychological Barrier – a price level that influences traders’ behavior due to their beliefs (e.g. round numbers like 1000 or 10,000).

Self-analysis – assessing your decisions, emotions, and results to improve your trading strategy.

Emotional Control – the ability to remain calm in stressful market situations.

Confirmation Bias – the tendency to pay attention only to information that confirms your own expectations.

Risk Aversion – the tendency to avoid risk, even if it is justified in terms of profit.

Revenge Trading – the desire to quickly return lost money, which often leads to even greater losses.

Overconfidence – excessive belief in your abilities, which can lead to inflated risks.

Emotional Burnout (Burnout) – a state of fatigue and loss of interest due to the constant stress of trading.

Frustration – irritation due to unsuccessful trades or missed opportunities.

Loss of Focus – inability to effectively analyze the market due to external or internal factors.

Exit Strategy – a clear plan for exiting a trade to minimize emotional pressure.

Expectation Management – a realistic approach to potential profits and risks.

Regret Aversion – fear of missing out on a trade that could have been successful.

Discipline (Discipline) – a key skill of a trader that allows them to follow a set plan.

Herd Psychology – the behavior of traders that follows the actions of the majority without independent analysis.

Disappointment – a negative state after closing a losing trade.

Risk Control – a conscious limitation of risk for each trade.

Financial Independence – a state when a trader does not depend on other sources of income except trading.

Domino Effect – a series of unsuccessful trades due to wrong decisions or emotional state.

Advanced Concepts and Metrics

Volume Analysis – study of trading volumes to determine the strength of price movement.

Order Flow – analysis of the flow of buy and sell orders to assess market sentiment.

Liquidation – closing of a position by a broker due to insufficient funds in the account.

Sharpe Ratio – metric that evaluates the return of a portfolio taking into account risk.

Sortino Ratio – an improved version of the Sharpe ratio that takes into account only negative deviations.

Value at Risk (VaR) – the maximum expected loss of a portfolio over a certain period with a given probability.

Leading Indicators – tools that predict future price movements.

Lagging Indicators – tools that confirm price movements that have already occurred.

Beta – an indicator that reflects the volatility of an asset relative to the market.

Alpha – an indicator that measures the excess return of an asset compared to the market.

Inverse Quote – an expression of the exchange rate in another, inverse unit.

Momentum – the strength and speed of change in the price of an asset.

Benchmark – a standard for comparing the profitability of a portfolio or strategy.

Leverage Effect – an increase in profitability (or losses) due to the use of leverage.

Equity Curve – a graphical display of changes in a trader's capital over time.

Efficient Market – a theory that suggests that prices reflect all available information.

Liquidity Squeeze – a sharp decrease in liquidity, leading to strong price movements.

Market Cap – the total market value of all shares of a company.

Blockchain (Blockchain) – decentralized data storage technology that cryptocurrencies are based on.

Mining – the process of confirming transactions and creating new coins in the blockchain.

ICO (Initial Coin Offering) – the initial placement of tokens to attract capital in cryptocurrency projects.

DeFi (Decentralized Finance) – decentralized financial applications running on the blockchain.

Cold Storage – a method of storing cryptocurrencies without an internet connection.

Public Offering (IPO) – the initial placement of a company's shares on the stock exchange.

Secondary Market – a market where already issued assets are transferred between investors.

Stock Market – a platform for trading company shares.

Open Interest – the total number of unclosed contracts on the derivatives market.

Liquid Assets – assets that can be quickly converted into cash.

Diversification – distribution of capital between different assets to reduce risks.

Fundamental Analysis – analysis of an asset based on financial indicators, news, and economic factors.