A-Book is a type of execution forex model. It is also known as an STP (Straight Through Processing) Broker or a non-dealing desk Broker. In this model, Brokers earn money by charging commission or making a slight change in the spreads. It works through a bridge that connects a trader’s terminal directly to a liquidity provider. When a Broker operates under the A-Book model, it passes the orders directly to the Liquidity Provider. Depending on the LP’s set up it can stay within its liquidity pool or be passed to other LP’s pools. A liquidity pool consists of many entities acting as a counterpart to the trades flowing out from your forex Broker.
A trading account balance is the number of funds available to the trader to make trades.
If you are performing well and you meet all Challenge’s criteria, you are eligible to buy an Extension. For example, you have 3 days before the challenge ends, you have the option to extend your trading period timeframe by an additional 30 days. This will allow you enough time to reach the Profit Target(s) without having to start over.
An account number is an identification number linked to a specific trading account.
If you run the risk of breaching the trading parameters during your challenge, you are eligible for a Reset at a discounted price. A new account will open with the remaining days of the challenge. If you have chosen to reset your account 5 days after your initial purchase, then your fresh account will start with the remaining 25 days. There are no limits as to how many resets you can get. If you breached your account, don’t worry, we will email you a unique link that will still allow you to reset and resume your challenge.
Is a process where publishers earn a commission by promoting a product or service made by another retailer or advertiser.
Aggregation is the consolidation of an individual's financial data from multiple institutions to one singular institution. Account aggregation, as a finance management concept, is typically completed by an individual's financial planner to create cohesion, clarity, and simplicity
Agricultural trade involves the buying and selling of products that have been produced through the forestry and farming industries. It can give consumers greater access to a variety of agriculture goods, often at more affordable prices.
Algorithmic Trading (algo-trading)
Automated transactions where a computer algorithm decides the order of submission and execution with little or no human intervention.
Application Programming Interface, a software interface that allows two applications to talk to each other.
a method of trading a security or commodity in which the trader attempts to profit from price differences between several markets, generally with a view to making a purchase on one market and selling it on another at a higher price.
This is the type of asset a trader is trading. Asset classes include stocks, bonds, indices, cryptocurrencies, and forex.
ATAS (Advanced Trading Analytical Software), a professional prop trading and analytical platform
a trading approach where human capabilities are augmented with self-learning AI. The augmented trading expert moves into the role of a designer, combining market knowledge with the latest AI technology to deliver unmatched trading performance, to discover new ways of trading, and to stay ahead of the constantly changing market.
Average Daily Trading Volume
Average daily trading volume refers to the average number of shares or contracts that change in a day in a given market.
Average Directional Index
The average directional index (ADX) is an average of expanding price range values and is a part of the Directional Movement System.
B-Book forex model is also known as a Market Maker. In this model, a Broker chooses to trade against his clients. There is no external liquidity pool where the Broker executes trades. In this case, it acts as a counterparty to his trades. In simple terms, if a trader places a buy order, a Broker will be selling to him and vice versa. Thus, it is clear that this type of model generates conflicts of interest between Brokers and their clients.
A 'bearish' market is one where prices are consistently falling.
Bloomberg is a major American-based, international business news network and is highly regarded.
Board of Directors
A board of directors is the senior management responsible for running a company.
Broker neutral means the trading system is provided by an independent vendor that will connect to any broker that you require. You are their client, and they are not affiliated or loyal to a specific broker.
A 'bullish' market is one where prices are consistently rising.
Purchasing power is the value of a currency expressed in terms of the number of goods or services that one unit of money can buy.
A candlestick chart is a financial chart used to illustrate the price movements of a security, derivative, or currency.
Capitulation means panic selling or liquidating a position despite making a loss as the trader feels they will create additional losses if they hold the position.
Financial institution that exercises control over key aspects of the financial system. Central banks include the following entities: national central banks, central banks of a currency union, currency boards and government-affiliated agencies that are a separate institutional unit and primarily perform central bank activities. In the LBS, the BIS is classified as a central bank
In the context of The Trading Pit, challenge duration refers to the time a trader has to pass our Trading Challenges.
Closing a position means executing a trade that is the exact opposite of an open position. This effectively cancels the open class and stops your initial exposure.
A closed market does not do business with companies from other countries.
A raw material or primary agricultural product that can be bought and sold, such as copper or coffee.
Contract between two parties to purchase or sell a commodity or commodity index at an agreed price on a future date.
A commodity market is a marketplace for buying, selling, and trading raw materials or primary products.
Contract that gives the buyer the right (but not the obligation) to purchase or sell a commodity or commodity index at an agreed price at or by a specified date.
Contract between two parties to exchange sequences of payments during a specified period, where at least one sequence of payments is tied to a commodity price or commodity index.
Conflict of Interest
A conflict of interest occurs when two parties, for example, a trader and their brokerage, do not share the same goals or aims.
Contracts or Financial Contracts
A financial contract is a deal in the form of an independently arranged agreement, contract, or an option to sell, buy, swap, lend, or repurchase, or some other similar independently arranged transaction that is typically entered into between parties participating in the financial markets.
Cryptos / Cryptocurrency
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.
A system of money used by a country. In the case of trading, forex traders trade different international currencies, e.g., euros and dollars.
Contract between two parties to exchange sequences of payments during a specified period, where each sequence is tied to a different currency. At the end of the swap, principal amounts in the different currencies are usually exchanged.
All orders are 'day orders' unless a trader specifies a timeframe for the order's expiration. This means a 'day order' is only suitable for the day it is placed.
Day trading is when a trader buys and sells an asset within the same day and closes all positions before the market closes, intending to avoid excessive risks and negative price gaps between one day's close price and the next day's open price.
In the context of The Trading Pit, 'demo' refers to the period in which a trader will trade in a virtual trading scenario while attempting to pass one of our Trading Challenges.
Depth of Market
Depth of market (DOM) measures the supply and demand for liquid, tradeable assets.
A derivative is set between two or more parties that can trade on an exchange or over-the-counter (OTC). These contracts can be used to trade any number of assets and carry their own risks. Prices for derivatives derive from fluctuations in the underlying asset.
Derivatives are essentially contracts that derive their value from an underlying asset. Derivative contracts are short-term financial instruments that come with a fixed expiry date. The underlying asset can be stocks, commodities, currencies, indices, exchange rates, or even interest rates. Derivative trading involves both buying and selling of these financial contracts in the market. With derivatives, you can make profits by predicting the future price movement of the underlying asset.
The Dollar Index is an index of the value of the US dollar when compared to several foreign currencies. The Index typically uses the money of America's leading trade partners to create this value.
A drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund. A drawdown is usually quoted as the percentage between the peak and the subsequent trough.
Earnings are the profits made from successful trades over some time.
An electronic communication network (ECN) broker is a financial intermediary that uses ECNs to give clients direct access to other stakeholders in equity and currency markets.
The economic calendar is a list of scheduled dates for events and releases that might affect the movement of prices across markets.
Equity refers to a trader's amount in their trading account (balance) plus or minus any profit or loss from open positions. If, however, the trader doesn't have any open positions, equity is equal to the balance. Equity is the cornerstone of a trader's position, as it determines their potential for gains and the risk level they are exposed to.
Bond denominated in a currency other than the local currency of the country where the bond is issued. Eurobonds are underwritten by an international syndicate of financial institutions and sold to international investors, eg a US dollar-denominated bond issued in the United Kingdom and sold to investors worldwide. Eurobonds denominated in US dollars are known as eurodollar bonds, and those denominated in yen as euroyen bonds.
An exchange is a marketplace where securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading and the efficient dissemination of price information for any securities trading on that exchange.
The price of one country's currency in relation to another.
Expert Advisor Fee
An advisor fee refers to the fees payable to an advisor regarding their advice on money, finances, or investments.
Regulated institutions offer financial services, including investment advice, tax preparation, insurance, and more.
In the context of trading, a firm is a company operating within the financial industry related to trading.
Fixed Interest Rate
Interest rate that is fixed for the life of the debt instrument or for a certain number of years. At the date of inception, the timing and value of coupon payments and principal repayments are known.
Foreign Exchange Swap
Transaction involving the actual exchange of two currencies (principal amount only) on a specific date at a rate agreed at the time of the conclusion of the contract (the short leg), and a reverse exchange of the same two currencies at a date further in the future at a rate (generally different from the rate applied to the short leg) agreed at the time of the contract (the long leg).
Foreign Exchange (forex or FX) is the trading of one currency for another. For example, one can swap the U.S. dollar for the euro.
The money or capital provided, especially by an organization or a firm, for a particular purpose.
Contracts for assets (especially commodities or shares) bought at agreed prices but delivered and paid for later.
Futures Commission Merchant
A futures commission merchant (FCM) is an organization that solicits and accepts trading for future contracts with customers.
Gambling refers to risky actions taken to make money.
A gap is an area on a trading chart where the price of a financial instrument moves sharply upwards or downwards, with little or no trading in between the move.
Gentoo is a Swiss investment company and a Partner of The Trading Pit.
GmbH is an abbreviation of the German phrase "Gesellschaft mit beschränkter Haftung," which translates to "Limited Liability Company."
Gross Market Value
Sum of the absolute values of all outstanding derivatives contracts with either positive or negative replacement values evaluated at market prices prevailing on the reporting date. Thus, the gross positive market value of a dealer's outstanding contracts is the sum of the replacement values of all contracts that are in a current gain position to the reporter at current market prices (and therefore, if they were settled immediately, would represent claims on counterparties). The gross negative market value is the sum of the values of all contracts that have a negative value on the reporting date (ie those that are in a current loss position and therefore, if they were settled immediately, would represent liabilities of the dealer to its counterparties). The term "gross" indicates that contracts with positive and negative replacement values with the same counterparty are not netted. Nor are the sums of positive and negative contract values within a market risk category such as foreign exchange contracts, interest rate contracts, equities and commodities set off against one another. Gross market values supply information about the potential scale of market risk in derivatives transactions and of the associated financial risk transfer taking place. Furthermore, gross market value provides a measure of economic significance that is readily comparable across markets and products.
A representation of data in the form of a map or diagram in which data values are represented as colours.
Unregulated investment fund and various types of money managers, including commodity trading advisers (CTAs), which share (a combination of) the following characteristics: they often follow a relatively broad range of investment strategies that are not subject to borrowing and leverage restrictions, with many of them using high levels of leverage; they often have a different regulatory mandate than "institutional investors" and typically cater to sophisticated investors such as high net worth individuals or institutions; and they often hold long and short positions in various markets, asset classes and instruments, with frequent use of derivatives for speculative purposes.
Hedge Fund Manager
A hedge fund manager is a financial company or individual that employs professional portfolio managers and analysts in order to establish hedge funds. H
A high-water mark is the highest peak in value that an investment fund or account has reached. This term is often used in the context of fund manager compensation, which is performance-based.
High-frequency trading (HFT)
An algorithmic trading strategy that profits from incremental price movements, with frequent, small trades executed in milliseconds for very short investment horizons. HFT is a subset of algorithmic trading
Multi-name CDS contract with constituent reference credits and a fixed coupon that are determined by an administrator such as Markit (which administers the CDX and iTraxx indices). Index products include tranches of CDS indices.
Institutional traders buy and sell securities for accounts they manage for a group or institution. Pension funds, mutual fund families, insurance companies, and exchange traded funds (ETFs) are common institutional traders.
A financial instrument, or instrument, is a virtual (digital) document representing a legal agreement to make a financial transaction or a deal involving money.
International Securities Identification Number (ISIN)
An International Securities Identification Number (ISIN) is a 12-digit alphanumeric code that uniquely identifies a specific security. The organization that allocates ISINs in any particular country is the country's respective National Numbering Agency (NNA).
Intraday means "within the day." In the context of trading, this refers to securities or assets that trade on the market during regular business hours.
put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit.
An investment is an asset or item acquired to generate income. Investing involves outlaying resources today in the hope they will pay off in the future. Goods bought as investments are not meant for consumption but for use in the future to create wealth. Investors purchase a monetary asset now, expecting it to yield income or be resold at a higher price later.
An investment bank is an institution that purchases large amounts of newly issued shares or other financial instruments and then resells them to investors.
An investor is any person or other entity (such as a firm or mutual fund) who commits capital with the expectation of receiving financial returns.
An index that uses the capital asset pricing model to determine whether a money manager outperformed a market index. The alpha of an investment or investment manager.
Know Your Customer (KYC)
Know Your Client (KYC) is a standard in the investment world that ensures firms know their clients' financial profiles and investment knowledge.
LDT is the abbreviation of "Last Day to Trade," which refers to the last date when a security or stock can be traded to be registered.
Leverage is when traders use borrowed funds to increase their available capital beyond what they could raise themselves.
A limit order is an order to buy or sell a stock with restrictions on the maximum price the trader is willing to pay or receive. This price is known as the "limit price."
The risk inherent in options contracts, which is much lower than that of a futures contract, which has unlimited risk. The maximum loss in buying a call option, for example, is the premium paid for the option.
Liquid assets are holdings that an investor may sell for cash without incurring penalties.
A liquid market is a market with many buyers and sellers, and the transaction costs are comparatively low.
London Stock Exchange (LSE)
The U.K.'s six regional exchanges joined together in 1973 to form the stock exchange of Great Britain and Ireland, later named the LSE. The FTSE 100 index (known as the footsie) is its dominant index.
A 'long' position is one that a trader holds in the belief that the value of the holding will rise in the future.
'Long term' refers to a trading style where a trader holds a position for an extended period.
A 'lot' refers to the number of units bought within a trade on a financial market.
'Margin' refers to an investor's equity in their brokerage account. To "buy on margin" means to trade using borrowed money (typically from a broker). Trading "on margin" requires a margin account rather than a standard one.
Known as financial market.
Financial Markets include any place or system that provides buyers and sellers the means to trade financial instruments, including bonds, equities, the various international currencies, and derivatives. Financial markets facilitate the interaction between those who need capital with those who have capital to invest.
Market data refers to the live streaming of trade-related data. It encompasses a range of information such as price, bid/ask quotes and market volume
This refers to a firm or individual who actively quotes two-sided markets, providing bids and offers (known as 'asks') along with each market size.
A market order is placed to buy or sell a holding at the market's best available price.
Market research is the process of determining the viability of a new service or product through research conducted directly with potential customers. Market research allows a company to discover the target market and get opinions and other feedback from consumers about their interest in the product or service.
Max Daily Drawdown
What Is a Maximum Drawdown (MDD)? A maximum drawdown (MDD) is the maximum observed loss from a peak to a trough of a portfolio, before a new peak is attained. Maximum drawdown is an indicator of downside risk over a specified time period.
MetaTrader is an industry-leading forex trading platform created by MetaQuotes Software.
Micro futures allow investors to trade against the stock market at large. They're priced so that ordinary investors can afford to trade futures on the major market indices, which have otherwise gotten so expensive that only major investors can afford to trade those futures.
A multi-asset class, also known as a multiple-asset class or multi-asset fund, is a combination of asset classes (such as cash, equity or bonds) used as an investment. A multi-asset class investment contains more than one asset class, thus creating a group or portfolio of assets.
The Nasdaq 100 Index is a basket of the 100 largest, most actively traded U.S companies listed on the Nasdaq stock exchange. The index includes companies from various industries except for the financial industry, like commercial and investment banks. These non-financial sectors include retail, biotechnology, industrial, technology, health care, and others.
Net exposure is the difference (net) between a hedge fund's short and long positions and is expressed as a percentage. A lower level of net exposure decreases the impact of market fluctuations.
Net market value
Similar to gross credit exposure, with the difference that netting is restricted to one type of derivative product instead of across all products. In the OTC derivatives statistics, net market values are reported for CDS only.
A news trader is a trader or investor who makes trading or investment decisions based on news regarding the financial markets.
A news trader is a trader or investor who makes decisions based on news announcements.
Open interest refers to the total number of outstanding derivative contracts that have not been settled for an asset, such as options or futures.
An open market transaction is an order placed by an insider to buy or sell restricted securities openly on an exchange.
An open position can refer to two things:
A trade that has been established but which has not yet been closed out with an opposing trade
An investor holding shares of a stock is said to have "an open position" in the stock until the shares are sold
An option is a contract that gives the buyer the right – but not the obligation – to buy (in the case of a call) or sell (in the case of a put) an asset at a specific price or before a certain date.
An order book lists the number of units being a bit on or offered at each price point or market depth. It also identifies the buyers and sellers, though participants can remain anonymous.
Simply put, overnight positions are trading positions that are not closed by the end of the trading day. These trades are held overnight for trading the following day. Overnight positions expose the traders to risk from adverse movements that occur after normal trading closes.
Overtrading refers to buying or selling excessive levels of an asset by a trader or institution.
A parabolic SAR is tool traders use to highlight the direction an asset is moving and provide entry and exit points.
In the context of The Trading Pit, a Partner is a trader, an institution, or some other player in the finance industry who/that has signed an agreement to work with us and to benefit from the network The Trading Pit is creating.
A payment of money, especially as compensation or a dividend.
A price interest point (Pip) is the minor unit price move an exchange rate can make based on market convention.
Price action is the movement of an asset's price plotted over time.
The price level is an average of the given price applied across the entire market.
A financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.
Profit split is a method to divide the profit of an external sales transaction between the entities involved in the transaction.
Prop traders use the capital provided by a company to conduct trades involving assets classes like futures, stocks, currencies, and commodities. The more complex trades include derivatives of these assets. A prop trader can work for an online broker or a financial firm
occurs when a bank or firm trades stocks, derivatives, bonds, commodities, or other financial instruments in its own account, using its own money instead of using clients' money.
Proprietary trading refers to a financial firm or commercial bank that invests for direct market gain rather than earning commission dollars by trading on behalf of clients. Also known as "prop trading," this type of trading activity occurs when a financial firm chooses to profit from market activities rather than thin-margin commissions obtained through client trading activity. Proprietary trading may involve the trading of stocks, bonds, commodities, currencies or other instruments.
A 'purchase' refers to buying an item or service that is typically exchanged for money or another asset.
Quantower is the platform for many experienced traders interested in trading a variety of assets as it offers access to Forex, CFDs, Cryptos, Options, Futures and Stocks.
A rally refers to a period of ongoing, sustained increases in the price of an asset. Rallies typically involve rapid or significant increases in cost.
Regulations refer to the rules imposed on a trading or financial body by a higher authority, such as a government or institution related to feconomicgovernance.
A retail trader is an individual trader who trades with money from personal wealth, rather than on behalf of an institution. A retail trader is someone who trades their own money, but not for a living.
Revenue is the income derived from business activities; in the case of trading, this refers to trades.
A reversal is a change in the price direction of an asset. This change can either be an increase or a decrease.
Risk refers to the possibility of a trader losing money on a trade. All trades carry a degree of risk.
Risk management refers to the rules and processes that exist or are put in place when trading to keep losses under control and maintain a healthy risk-reward ratio.
Is used to describe something that does not involve any risk: This strategy is not entirely risk-free
Rithmic is one of the most popular trading platforms for futures traders due its low latency which facilitates high performance
Rules refer to the conditions under which a trader or organization may operate. A company, a government, or a financial institution may set regulations. In the case of The Trading Pit, all of our Trading Challenges contain rules that traders must abide by.
The Standard and Poor's 500 (S&P500) is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States.
The scaling plan can help you create a shared vision for scaling up your idea or investment.
Scalping is a trading strategy in which traders profit from small price changes for a stock.
A market in which securities are bought and sold; a stock exchange.
One of the equal parts into which a company's capital is divided, entitling the holder to a proportion of the profits.
A share certificate is a written document signed on behalf of a corporation that serves as legal proof of ownership of the number of shares indicated. A share certificate is also referred to as a stock certificate.
Short selling refers to borrowing a security from a brokerage, the price the trader believes will fall. The trader will sell the stock on the open market and then buy the same stock at a lower price. The trader will then keep the profit on the trade before repaying the loan.
A spread is a difference between the quoted buy (offer) and sell (bid) prices for an asset.
A stochastic oscillator indicates the momentum of an asset by comparing a particular closing price to a range of the asset'costses over a certain period.
Stochastic RSI is an indicator used in technical analysis that ranges between zero and one and is created by applying the Stochastic oscillator formula to a set of relative strength index (RSI) values rather than standard price data.
A share which entitles the holder to a fixed dividend, whose payment takes priority over that of ordinary share dividends.
A stop-loss order is placed to buy or sell a specific stock once it reaches a pre-determined price. Stop-loss orders are intended to limit losses on made a position.
A swap is a derivative contract where two parties exchange the cash flows or liabilities from two different financial instruments.
Swing trading is a strategy that aims to make short- to medium-term gains in a financial instrument over a short time, typically from a few days to several weeks.
Systrade is a partner of The Trading Pit and a provider of IT solutions for companies in the financial sector.
A take-profit order (T/P) is a limit order that specifies the exact price at which a position will be closed out for a profit. The charge is only filled if the asset reaches the fixed price.
Tax is the money must be paid to a government on an investor's holdings.
Technical analysis is a broad term that uses various tools to evaluate investments and identify trading opportunities.
A time frame refers to the length of time a trend that a trader can identify and use takes place in a market. Immediate time frames are periods that a trader can act on immediately and are particularly important to day traders and high-frequency trading.
Trade latency refers to the time interval between an order being placed and its execution. Lower latency is desirable as it means that a trader has a higher possibility of securing the price displayed before the market moves. Traders can reduce the latency of their trading by subscribing to a VPS service.
A test in which a trader is called to test or justify his trading experience and knowledge.
A trading platform is a software system offered to investors and traders by certain financial institutions, such as brokerages and banks.
What does Trailing mean in finance? Trailing refers to the property of a measurement, indicator, or data series that reflects a past event or observation. It is usually attached to a specified time interval by which the data trail or over which that data are aggregated, summed, or averaged.
True Strength Index
The True Strength Index (TSI) is an analytical tool that creates trade signals based on a market's overbought/oversold levels, crossovers, and divergence.
A trust company is a legal entity that acts as a fiduciary, agent, or trustee on behalf of a person or business to run the administration, management, and eventual transfer of assets to a beneficial party.
U.S. Dollar Index
Measures the U.S. dollar’s value against a basket of six overseas denominations.
The percentage of the people classified as unemployed as compared to the total labor force.
A trade value refers to the dollar value of a trade and is calculated by multiplying the price per unit of the asset by the number of branches executed (bought or sold).
Virtual trading refers to when traders trade in a virtual environment to either learn new strategies or take part in an introductory challenge, as with our Trading Challenges.
Volatility refers to the size of an asset's price swing around the mean price.
The number of shares traded in a particular stock, index, or other investment over a specific period of time.
Generic term for the securities industry firms that buy, sell, and underwrite securities.
A watchlist is a list of assets that a trader watches with the potential of taking action if prices fall far enough to become undervalued.
Weighted average cost of capital (WACC)
Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment. Often the weighted average of the cost of equity and the cost of debt The weights are determined by the relative proportions of equity and debt in a firm's capital structure.
West Texas Intermediate (WTI)
A popular benchmark oil price. WTI is the underlying asset in the New York Mercantile Exchange's oil futures contract. This type of oil has a low sulphur content (sweet). The U.S. Department of Energy maintains historical data for this oil price. It is sometimes known as WTI - Cushing or WTI, Cushing, Oklahoma.
Refers to the cryptocurrency issued by Ripple on its blockchain. The currency is not collateralized and Ripple focuses on global payments.
A special dividend declared at the end of a fiscal year that usually represents distribution of higher-than-expected company profits.
The percentage return paid on a stock in the form of dividends, or the effective rate of interest paid on a bond or note.
Zero-balance account (ZBA)
A checking account in which zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover checks presented.