Markets & Instruments
What can be traded and who is on the other side. These terms cover the main asset classes, from stocks and forex to futures and crypto, the products built on them, and the brokers, exchanges and regulators that stand between a trader and the market.
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23 terms, A to Z
- 13beginner
- 9intermediate
- 1advanced
- Asset classA group of similar assets, such as stocks, indices, forex, commodities and crypto.
- BrokerThe company that gives you access to markets and sends your orders on for execution.
- CFDA contract with your broker that pays the change in an asset's price; you never own the asset.
- CommodityA raw material such as gold, oil, silver or wheat, usually traded through futures or CFDs.
- CryptocurrencyDigital assets like Bitcoin and Ether that trade on crypto exchanges 24 hours a day, 7 days a week.
- Currency pairTwo currencies quoted against each other; the price shows how much of the second buys one of the first.
- ETFA fund that trades on an exchange like a stock and tracks an index, sector, commodity or theme.
- ExchangeAn organised marketplace where buy and sell orders meet in one central order book, under one set of rules.
- ForexTrading one currency against another, quoted in pairs like EUR/USD.
- Futures contractA standardised agreement to buy or sell something at a set price on a future date, traded on an exchange.
- HedgerA business that uses markets to reduce a risk it already has, rather than to bet on price.
- High-frequency tradingHFTComputer programs that send and cancel orders in microseconds to capture tiny price differences.
- IndexA single number that tracks a basket of stocks, like the S&P 500 or the Nasdaq-100.
- InstitutionA large professional participant, such as a pension fund, hedge fund or bank, that trades huge size.
- Market makerA firm that quotes both a buy and a sell price all day and earns the spread between them.
- Micro futuresFutures contracts one tenth the size of the standard ones, so smaller accounts can size positions properly.
- OptionA contract giving the right, but not the obligation, to buy (call) or sell (put) at a set price before a set date.
- Option chainA table of every available option on one asset for one expiry, with calls on one side, puts on the other and strike prices down the middle.
- OTCTrading directly between parties through dealers, with no single central exchange.
- Perpetual futuresCrypto futures with no expiry date, kept close to the spot price by regular funding payments.
- RegulatorA government body that licenses firms and polices markets, like the SEC and CFTC in the US or the FCA in the UK.
- Retail traderAn individual trading their own money through a broker or app.
- StockA small piece of ownership in a company, traded on an exchange.