A glossary lists trading terms related to finance and commerce with a brief explanation. The term is often used in financial reports, trade agreements, and business contracts to explain language for specific sectors. A dictionary is a broad collection of trading words and meanings in commercial terminology.
In addition, there is no glossary vs dictionary, as there is only one key difference. The glossary is limited to a single document, while the dictionary is a vast linguistic tool. In the below guide, you will see the terms used in the glossary and dictionary.
Asset Allocation
In this terminology, different investment assets, including bonds, cash, stocks, and commodities, are distributed strategically. Asset allocation aims to balance reward and risk based on market conditions, the goal of the investor, and risk tolerance. However, a diversified asset allocation strategy helps optimise returns and mitigate losses.
After-Hours Trading
Trading occurs after the standard market’s operating hours through ECNs (electronic communication networks). It enables investors to react to earning reports, news, and other global events before the market’s opening. Despite that, maximum volatility and minimum liquidity maximise the risk of fluctuations in price.
Active Trading
Frequent selling and buying of stocks, assets, bonds, cash, and other financial instruments to invest on short price moves is called active trading. Unlike long-term investments, traders in this terminology rely on market trends, technical analysis, and volatility to run profits. Under this trading, several strategies fall, like scalping, swing trading, and day trading.
Amortisation
In finance and trading, amortisation gradually reduces an asset’s value over time. For firm investment decisions, investors must assess financial instruments such as options and bonds where there is value depreciation. Understanding amortisation helps in evaluating expenses and long-term profitability.
Accumulation
Accumulation is a market phase where investors buy assets periodically. It happens before a significant rise in the market, as brilliant money positions itself before the public becomes aware of this trend. Having an understanding of this strategy helps in analysing accumulation patterns and anticipating price increases in future.
Annualised Return
A performance metric, an annualised return, reveals the yearly average investment return over a specified period. It permits traders to draw comparisons on numerous investments at different durations, depending on biases. By calculating the growth rate, it provides a picture of long-term profitability.
All-Or-Non Order
AON (all-or-non) is a specific type of trade instruction where the execution of an order is not guaranteed; it must be executed once or never. It offers fulfilment that ensures the traders buy a range of assets at a predefined price. Commonly, AON is used where there is a chance that execution will impact price strategies while trading larger quantities.
Asset
It refers to financial instruments such as bonds or stocks that have some value and can be sold, bought, or exchanged. The prices of these financial instruments fluctuate depending on investor sentiment, economic conditions, and market demand. However, investors should know the nature of asset for managing risk effectively.
All these terms are essential for a trader seeking to build a firm foundation to develop new effective trading strategies in market dynamics.
