How to Turn $ 5,000 into a Million

S&P 500 (Standard & Poor’s 500): Stock index comprising the shares of 500 of the largest US listed companies

Spread: The spread between bid and ask prices

Stock index: Indicator of the performance of the stock market as a whole, or of individual stock groups (e.g. Dow Jones)

Stop Buy Order: An order to buy or sell securities, which will only be executed when the price reaches a certain price level

Stop Loss Order: A sell order that is best executed when a specific price is reached

Stop Management: Active management of stop orders during a trade

Swing trading: A trading strategy in which a security is held for between one and several days, in order to take advantage of price changes or fluctuations

Subprime crisis: Refers to a global banking and financial crisis as part of the global economic crisis as of 2007

Take Profit Order: Automated stock market order, triggered when a predetermined price target has been reached

Target price: Stock market price that a security should achieve, on the basis of an analysis

Tick: Smallest price change on a futures market

Trailing-Stop: Automatic stop-loss order

Trend Following: Trading strategy that focuses on following a trend that has been identified

Ukraine crisis: Political, at times armed conflict over the Crimean Peninsula

USD/CAD: Currency ratio between the US Dollar and the Canadian Dollar

USD/RUB: Currency ratio between the US Dollar and the Russian Ruble

Volatility: Standard deviation. Indicates how much a price fluctuates

Global macro: Investment strategy based on the interpretation and forecasting of major events related to economies, history and international relations.

Hedging: Method of securing a transaction against financial risks, such as price fluctuations

Heikin Ashi Chart: Japanese: “balancing on one foot”. Japanese representation of price changes

Hit rate: The hit rate describes the ratio of winning trades to losing trades

Initial Margin: Amount of collateral required to open a position

Interest rate: Fixed by a central bank within the framework of its monetary policy, based upon which it concludes transactions with its affiliated banks

Leverage effect: The use of borrowed capital increases the return on the use of one’s own capital

Lira Crisis: The Turkish Currency and Debt Crisis 2018

Long: Being Long means buying and holding securities holdings

Margin: Secured position for exchange transactions by depositing a certain pledge

Market Efficiency Hypothesis: According to this theory, financial markets are efficient insofar as existing information is already priced in, and thus no market participant is able to achieve above-average profits through technical analysis, fundamental analysis, insider trading or otherwise

Money management: Money management is a value preservation strategy that aims to manage the risk of a portfolio of securities by sizing each trade position

Nymex: The New York Mercantile Exchange (NYMEX) is the world’s largest commodity futures exchange, based in New York

Option: Indicates a right to buy or sell a particular item at a later date, at an agreed price

Path dependence: Inverse effect, which applies from closing price to closing price. If the period becomes longer, deviations occur

Pip: Percentage in point, smallest change in the price in forex trading

Pyramiding: In stock trading, refers to the gradual establishment or reduction of positions

Quarterly earnings: Report of a stock corporation at the end of a quarter

Range: Price range in which a value is traded in one phase (one day, one week, several months)

Resistance: Price level, where more sellers emerge, than buyers

Reversal: Reversing a price trend within a trading day

Risk Management: Includes all measures for the systematic detection, analysis, assessment, monitoring and control of risks

Risk Reward Ratio (RRR): Serves as an indicator of the usefulness of a speculation. It is calculated by dividing the expected profitability by the largest possible loss

Scalping: Trading technique in which the trader tries to trade minimal movements in the market

Short position: a trader is short when he sells a position that he doesn’t own (short sale)

SNB: Swiss National Bank

Glossary

AEX: Stock index of the Netherlands, which is calculated on Euronext Amsterdam

Averaging down: Process of buying additional shares of a stock at lower prices than the original purchase price. This lowers the average price an investor pays for the whole position

Bond: A bond, also known as a fixed-income security, is an interest-bearing security

Book profit: Difference between the purchase price and the current price. This profit initially exists only on paper. Only when the stock is sold, can it be realized

Bovespa: (Índice Bovespa, abbreviated Ibovespa) leading stock index in Brazil. It consists of 71 companies

Break Even: Point at which there is neither profit nor loss

Brexit: The withdrawal of the United Kingdom from the European Union

Broker: A financial service provider responsible for executing securities orders from investors

CAC 40: French benchmark index of the 40 leading French companies listed on the Paris Stock Exchange

Candlestick: Representation of price changes based on a Japanese analysis technique

Cash Flow: The difference in revenue and expenditure over a period of time

CFD: Payment agreement, the value of which is the difference between the prices of the underlying value, such as a share or currency, at the time of purchase and sale of the CFD

CME: The US-based CME Group is one of the world’s largest option exchanges and the world’s largest derivatives exchange, based in Chicago, Illinois

Commissions: costs incurred on the purchase and sale of securities

Credit Default Swaps: (CDS) Credit derivative in which default risks of loans are traded

Day trading: describes short-term speculative trading in securities. Positions are opened and closed within the same trading day

Dividend: part of the profit that a public company distributes to its shareholders

Dow Jones: The oldest surviving stock index in the US, today comprising 30 of the largest US companies

Doji: Frequently occurring pattern in a candlestick chart. It is characterized in that it has a short length, which means a small trading margin, with the opening and closing price being almost the same

Downgrading: Downgrade of a security

Entry Strategy: A strategy that determines the entry into a market

ESMA: European Securities and Markets Authority

ETF: Exchange Traded Funds

Euro crisis: describes a complex crisis of the European Monetary Union from the year 2010

Exit strategy: A strategy that determines the exit from a market

EUR/CHF: Currency ratio between the Euro and the Swiss franc

EUR/TRY: Currency ratio between the Euro and the Turkish Lira

European Exchange Rate Mechanism: a form of monetary cooperation between the countries of the European Community, from March 13, 1979 to December 31, 1998

Fait accompli: A French term that is often used to describe an action that is completed before those affected can question or reverse it

Financial Crisis: Global Banking and Financial Crisis as Part of the Global Economic Crisis as of 2007

Flat: Flat position

Francogeddon: On January 15, 2015, the Swiss National Bank lifted the minimum euro exchange rate of 1.20 without warning. The Swiss franc increased in price by almost 20 percent

Forex: Forex Exchange Market, International Currency Market

Forwards: Non-exchange-traded, unconditional forward transactions

Futures: Standardized contract for the purchase or sale of a certain quantity of a commodity, at a fixed price, on a given date

Gap: price gap between two trading days