Financial Glossary - A to D
An overview of the current balance and of changes in the balance of each account.
The status and trading activity of a specific account. If you maintain multiple accounts, the Account Summary shows information about individual accounts, as well as an aggregate of all the accounts.
The current value of the account, combining Cash balance, Unrealised value of positions, and Transactions not booked.
A list of all your SaxoTraderPRO activities. The Activity Log includes details of trades, orders, requested prices, chat dialogues, system messages and, for Demo accounts, account resets.
An option that can be exercised, at the holder’s choice, at any time until the option expires.
The study and analysis of historic price data to anticipate future movements in the price of an instrument
An increase in the value of an instrument.
The price at which you can buy the specified instrument. This is also called the Offer price. For Forex trading, it is the price at which you can buy the trade/base currency (quoted first) by selling the price currency of the pair. For example, if you buy EURUSD 100,000, you are buying Euro 100,000 against US dollars.
In Options trading, a common term for the underlying asset. This is the financial instrument upon which Options, a derivative product, are based. For example, the underlying asset for IBM stock Options is the IBM stock itself.
The obligation incumbent on an option seller to fulfil his contractual requirements (purchase or sale of underlying instrument), in response to a buyer’s decision to exercise an option.
At The Money (ATM)
An option is at the money when the value of the underlying instrument is the same or almost the same as the strike price of the option contract.
At The Money (ATM) forward strike
The ATM forward strike price of an Option is the strike price of the corresponding forward outright price at a specific forward date, as calculated via interest rate differentials.
The maximum amount of the instrument that can be automatically traded before manual confirmation from a dealer ('Live price') is required. In periods of volatile market conditions, automatic trade execution may be disabled.
Available for margin trading
The funds available for margin trading, derived from subtracting Used for margin requirements from Account Value.
A graphical representation of an instrument's movement that usually contains the open, high, low and closing prices for a set period of time.
Bar HLC technical study
A chart style that shows the highest, lowest and the closing prices for each chart period.
Bar OHLC technical study
A chart style that shows the opening, highest, lowest and the close prices for each chart period.
In Forex, this is the currency that the investor buys or sells. For example, in EURUSD the base currency is EUR, that means one unit of EUR is worth a variable amount of USD. When you buy EUR, you pay with USD, and when you sell EUR you receive USD. The other currency (USD in the example above) is called the variable currency.
A trader who believes that prices will fall. A bearish market is one in which prices are falling, whereas a bear market is when prices have fallen by 20% or more over a sustained period.
A measure of the sensitivity of an asset X to a benchmark index Y.
The price at which you can sell a specified instrument. For Forex trading, this is the price at which you can sell the trade/base currency (quoted first) by buying the price currency of the pair. That is, if you sell USDJPY 100,000, you are selling US dollars 100,000 and buying Japanese yen.
Black Scholes model
A formula that examines the price variation of financial instruments over time. It is often used to determine the price levels of European call Options. The formula takes into consideration the factors influencing the price of a call Option, including the price of the underlying asset, the exercise price of the Option, the interest rate, and the time until the Option's expiry.
When the price of an instrument trades through a specified level. For example, if a the execution price for a limit order to buy is set at 100, and the price jumps from 105 to 95, the 100 price level has been breached, the order will become a market order and be filled as soon as possible.
A trader who believes that prices will rise. A bullish market is one in which prices are rising, whereas a bull market is when prices have risen by 20% or more from a low point over a sustained period.
A limit order to buy at the current Offer (Ask) Price.
An option contract granting the holder the right to buy the underlying asset at the agreed strike price. A call obliges the writer too sell the underlying at the agreed strike price if he is assigned against.
You can buy or sell a call Option.
If you buy a call Option you have the right, but not the obligation to buy the underlying instrument at the agreed strike price on the agreed expiry date (European Option).
If you sell a call Option, you have the obligation to sell the underlying instrument at the agreed strike price on the agreed expiry date (European Option).
Candlestick technical study
A chart style where a thin line represents the price range for the instrument in the chart period. The opening and closing prices for the period are represented by a thicker line (red if the price finished lower and green if it finished higher). The overall effect can look like a candle. Many traders believe it is the easiest chart style to read.
The current value of the cash funds in your account.
Cash settlement is equivalent to a final margin call on the maturity date. Exercise give rise to the payment of:
- Call options: the difference between the closing settlement price and the call option strike price.
- Put options: the difference between the put option strike price and the closing settlement price.
When you hold a CFD (Contract for Difference), you agree to settle the difference between the price when you open the position and the price when you close the position. You do not pay anything up front when you open a position, but are instead charged a financing cost. Conversely, if you have a short position, you are credited/paid interest.
Close a position
Close an investment by transacting the opposite trade. For example, if you bought USDJPY 100,000, you would have to sell USDJPY 100,000 to close the position.
The price a position was closed at. This is not applicable to opening trades and will be the same as the trade rate.
Class (of options)
A set of traded options of the same category (American or European) within the same maturity range (short-term or long-term) and pertaining to the same instrument.
An organization that registers transactions and provides members with a guarantee of final settlement.
The last index calculated and published when the markets close, used as the basis of margin calculation.
Closing settlement price/Delivery settlement price
Computed on the expiration date (options) or the last day of trading (futures), the closing settlement price is the reference price for expiring options and for final payment of variation margin on futures.
Any fixed commissions and ticket fees that apply to trades of the specified trade size.
Contingent orders are the same as related trade orders. Several types are available: If Done (slave), where a slave order only becomes active if the primary order is executed. One Cancels the Other (O.C.O.) where the execution of one order cancels the other. Three-way contingent orders are also available where two orders are placed if (If Done) a primary order is executed. These orders are themselves related as O.C.O. orders, allowing both a stop loss and a profit taking order to be placed around a position.
Contract for Difference (CFD)
A CFD is a derivative of a stock product and is used for trading. The CFD price behaves exactly like the underlying stock price. CFD trading offers a number of advantages over traditional stock trading, for example, trading on margin and direct (immediate) trading instead of waiting for a trade order to be filled on an exchange.
The amount of the underlying asset in an option or future contract.
Obtained by multiplying the premium’s quoted price by the contract size (multiple).
Transfers and profit/losses from trades are converted into the base currency of the account based on the day's prevailing exchange rate.
Cost to close
The cost of closing your positions, for example, commissions and trading fees.
In Forex, the currency that the investor pays with or receives when trading. For example, in EURUSD the variable currency is USD, for example, one unit of EUR is worth a variable amount of USD. When you buy EUR, you pay with USD, and when you sell EUR, you receive USD. The other currency (EUR in the example above) is called the base currency.
Select the currency cross to trade, for example, USDJPY. USDJPY means that you trade U.S. dollars against Japanese yen. If you buy, you buy dollars and pay in yen, and if you sell, you sell dollars and receive yen.
A facility whereby initial margin is computed on the basis of a portfolio comprising either options and futures on the same product (option cross-margining) or several contacts (inter contract cross-margining). A portfolio is sometimes exposed to risk from diverging market movements: cross-margining captures this fact, making it possible to reduce initial risk.
Currency trading is an alternative term for Forex trading, FX trading and Foreign Exchange trading. Saxo Bank is the provider of an online currency trading platform.
Day order (DO)
An order that is valid until the end of the day. If it has not been filled before this, it is cancelled.
For Forex, the end of the day is 22:00 GMT on the day that you place the order.
For CFDs and Stocks, the end of the day is when the exchange on which the stock is traded closes.
Daily price limit
The maximum permitted price movement relative to the previous daily settlement set by the market operator. When the daily price limit is reached, trading can be suspended, a new price limit is set, variation margin is called and trading resumes.
Daily settlement price
Computed and disseminated each trading day, the daily settlement price is used to determine variation margin for futures contracts and fluctuation limits for the following trading day. It is also used as a reference for early exercise of American equity options.
A decrease in the value of an instrument.
The date on which delivery of the underlying goods of a Futures contract will take place. For speculative investing in Futures, the contract future position must be closed on or before this date.
A measure of how much an option’s price will vary for a change in the price of the underlying. Delta ranges from 0 to 1 for call options, and between -1 and 0 for put options.
A decrease in the value of an instrument.
Instruments that are constructed (derived) from another security. For example, CFDs are derivatives of physical Stocks.
Direct Market Access (DMA)
Direct participation in the order book maintained by an exchange. The order book contains orders to buy and sell a security, and is used to establish the current market Bid/Ask price.
The percentage of a company's stock value paid to shareholders. A stock selling for USD 100 a share with an annual dividend of USD 1 a share yields the investor 1%.
A downward movement of one tick or more in the price quote. Many stock exchanges have an uptick rule that states that a stock can only be sold if the stock price has ticked higher than the last price at which a transaction has taken place. This is aimed at traders who want to sell short, and is designed to prevent snowballing declines in the market. Other exchanges have tick test rules that are essentially the same as the uptick rule: Stocks may only be shorted on so-called zero-upticks, which means that the transaction price is either higher than the last transaction price, or that the transaction price is unchanged but higher than the transaction price that preceded it. This is known as a zero uptick or zero plus tick. CFDs are advantageous for traders that are bearish on a stock, because there are no uptick or tick test rules associated with CFDs.