Education
Trading language, explained.
Definitions with examples and limitations. Understand a term in context before using it in an exercise.
Tick: minimum price increment
The smallest price change allowed by an instrument’s specifications.
≈ 1 min readBid–ask spread
The distance between the best displayed buying and selling quotes.
≈ 1 min readSlippage
The difference between an expected reference price and the execution price.
≈ 1 min readLeverage
Economic exposure that can be large relative to the funds committed.
≈ 1 min readFutures margin
Funds required to support the obligations of a futures position.
≈ 1 min readLiquidity
The ease of trading a quantity without significantly affecting its price.
≈ 1 min readMarket order
An instruction seeking execution without setting a limit price.
≈ 1 min readLimit order
An instruction setting an acceptable price, with a possibility of remaining unfilled.
≈ 1 min readStop order
A threshold-activated instruction whose execution price can differ.
≈ 1 min readGross and net profit or loss: P&L
Profit or loss before and after the stated costs.
≈ 1 min readCandlestick
A summary of a period’s opening, high, low and closing prices.
≈ 1 min readBacktest
Applying rules to past data under execution and cost assumptions.
≈ 1 min read