Glossary

Asset

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Ask

This is the current market price of an asset at which the market will sell. Prices are quoted two-way as Bid/Ask. The Ask price is also known as the Offer. In CFD trading, the Ask price represents the price at which a trader can buy the contract. For example, in the quote for GOLD is 1250/1252 the product quoted is GOLD and the Ask price is 1252 for one unit of the underlying asset in this case it is gold.

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Asset

An asset is an economic value of a corporation or a country. It is also the type of financial instrument on available in the financial market. The primary assets categories in CFD trading are forex, commodities, indices and shares. The euro or a share of Apple are considered assets you can trade.

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Asset Index

This is a list of all our underlying assets with definitions regarding as to what each asset is.  To find out about our underlying assets, look at the asset index here.

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Bar chart

This is one of the most popular types of financial charts. Each bar on a chart represents the open, high, low and close for that time period displayed as a bar. This type of chart is sometimes referred to an OHLC.

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Bearish/bear market

Bears are the negative traders, those who expect the market or an asset to decline. In the battle of the bulls and the bears, it is the bears who weigh down the market. Bear prices are denoted in red and a bearish market is declining.

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Bid

The bid price is associated with the Ask price. Every asset traded is quotes in a bid/ask content. The Bid represents the price at which a trader can sell the product. Refer to spreads for more information.

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Bullish/bull market

Bullish or bull market is the positive side of the market or an asset, when things are expected to climb and remain positive.

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Candlestick/Japanese Candlestick

This is one of the oldest charting methods as well as a trading system. Japanese candlesticks were developed by rice traders in the 1700s. A candlestick is drawn on a financial chart to represent the movement of an asset in a specific time period. The wicks denote the highs and the lows. The body of the candle shows the move between the open and the close.

Candlesticks are colored in bullish and bearish color codes depend if the price moved up from the open to the close or declined from the open to the close. There are over 32 distinct candlestick patterns which all offer great trading insights

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Charts/Financial charts/forex charts

For each asset, you can plot a chart of price movements over a specific time period. This is an important tool, allowing traders to analyze historical prices and forecast future activity. A chart is a picture or image of price movements. Patterns develop on charts which help traders understand market movement and trader psychology.

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Close

Close means the end of a trading period, In the share market it is the end of the trading day but in forex which traders 24 hours a day, can be the end of a time period or the end of day at midnight. Close is also what you do when you want to end your position. The process of stopping (closing) a real trade by executing a trade that is the exact opposite of the open trade.

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Commodities

Commodities are marketable goods or services that are produced to meet a demand, whether that be a want or a need. Commodities from one source are also interchangeable with others of the same type. In the financial markets commodities generally refer to assets involving energy, metals, and agriculture. Speculators can buy and sell commodities but usually do not ever take delivery.

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Contract

In the commodities market, traders invest in contracts for assets. This is needed to keep the assets standardized and make speculating easier. In the context of CFDs, the contract is the definition of the asset being traded and the rules and specifications for that asset trade.

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Currency

One of the 4 types of underlying assets.  Currencies are always in pairs.  The three types of pairs are: major, minor, and exotic.  Examples include EUR/USD, USD/CAD, and more.

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CFD/Contract for Difference

A CFD is an investment style that defines a type of derivative that gives exposure to the change in value of an underlying asset. CFDs allow traders to leverage their capital and provides all the benefits of trading securities, without actually owning the product. Refer to margin or leverage for more information. CFDs or contracts for difference represent some of the fastest growing investment vehicles in the world.

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Demo

In most cases, a demo account is a risk-free trading account that uses demo money, not real money and allows a trader to test the platform and learn to understand how to execute a trade. Demo accounts are also used by experienced traders to backtest strategy and to develop new strategies in a risk-free environment.

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Expiry Price

The price of an asset when its contract ends.

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Expiry Time

The time and day at which your CFD will be closed and settled automatically, i.e. the end of the contract period. If you want to extend your position you can specify that you want it to roll over. There is no expiry date/time if your position is a Rolling Contract. Most CFD contracts do not have an expiry unless designed or requested.

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Forex/Foreign Exchange

Forex, Fx or the foreign exchange market is the buying and selling of currencies issued by governments around the globe and processed via central banks. The forex market is an over the counter market consisting of computers around the globe the facilitate transactions. An estimated $7 billion per day is traded through this marketplace.

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Index

Investopedia defines an index as a statistical measure of the changes in a portfolio of stocks representing a portion of the overall market. The DAX, the ASX200 and the Dow Jones are examples of indices. It’s important to note that an index is nothing more than a list of stocks; anybody can create one.

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Investment

The amount of money a trader is willing to put into a specific trading position.

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Leverage/Margin

This is one of the most important concepts a trader needs to understand and is the backbone of CFD and forex trading. Leverage, also known as margin, allows a trader to amplify their investment by only having to put up a small percentage of the value of the trade. The money needed to secure a trade is referred to as margin. For example, when you open a position with a value of $10,000 by putting down a margin deposit of $1000 you have a gearing ratio of 10:1.

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Long Term

This is a type of instrument that looks at making long term trades.  These positions may have an expiry time of days, weeks or even months.

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Long

Means you are buying or expecting the market to rise. The opposite side is a short or to short the market.

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Limit Order

Understanding the types of market orders is crucial when trading. A Limit order is an order to close your position should the market rise to a specified price. It can be also called a take profit. You can use a limit order to take your profit on a position automatically when the price reaches your specified target. This is the other side of a stop loss which protects you from losing your shirt.

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Out Of The Money

A trading position is out-of-the-money when the trader’s prediction was incorrect regarding the price direction or the profitability of an asset by expiry time.

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Open

In finance, there are two definitions of open, it is when a market opens each day or time segment, but it is also when you buy or sell an asset or open your CFD position.

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Oscillator

Oscillators are a technical analysis tool which denotes overbought and oversold conditions in the market. Some of the most well-known oscillators are RSI, Stochastics and MACD.

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Pip

Pips are the smallest unit of movement of an asset. A pip originated in the forex market and is also used in the price of a CFD. Pips refer to digits added to or subtracted from the fourth decimal place. One unit of the price is known as a point. Your profit/loss is determined by the change in points times your unit you have traded.

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Stocks

One of the four types of underlying assets.  Stocks refer to shares of a company that people can purchase.  Companies like Apple, Sony, Disney, and more are all commonly traded companies on the stock market.

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Short

This term is the opposite of long, it means selling an asset or a falling market. An investment position that benefits from a fall in market price. When the base currency in the pair is sold, the position is said to be short. You are hoping that the market falls.

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Slippage

This is the difference between the price that was requested, and the price obtained typically due to changing market conditions. Assets move continuously, and the price shown on the platform is up to the moment but the price when you book a trade could have changed slightly as it takes just a few seconds for you to enter and complete a trade while the market never sits still.

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Spread

The spread is the difference between the ASK and the BID price of an asset. All assets are quoted in a BID/ASK scenario. To better understand look up bid and ask in the glossary. The spread is small but can eat into your profits or magnify your losses as you must execute two sides of a trade to open and then close a position. Spreads for the most commonly traded assets are relatively small.

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Strike Price

The price that the market is at when a position is opened.

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Stop-loss

This is a crucial step in executing a trade to protect from unexpected negative market moves and is part of your risk managed strategy. A stop-loss is a computer command entered when you are executing your trade that instructs the platform to close your position if the market moves against you. You set the level and you can change this setting when you wish. It will protect you from unexpected headlines and panic in the marketplace.

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Trading Alerts

Trading alerts, also known as signals, are alerts that give suggestions to the traders as to what underlying asset and direction could be profitable to open a position on.

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CFDs trading carries a high level of risk and may lead to a loss of your invested funds. Therefore, CFDs trading may not be suitable for all investors. Traders should not invest money they cannot afford to lose. Prior to start trading, you are responsible for being aware and understand the risks associated with CFDs trading. Seek advice from a professional and independent financial advisor. Armenson Ltd., a company incorporated under the law of Vanuatu, with registration No. 14759, with registered address at PO BOX 1276, Port Vila, Vanuatu, Republic of Vanuatu shall not bear any liability whatsoever to any person or entity for losses or damage of any means relating to any transactions related to CFDs trading, whether direct, indirect, circumstantial, consequential or incidental actions resulting in damage or loss, whatsoever.

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