The Glossary of Financial Markets

A trader is a person who buys and sells financial instruments over the short term, chasing price differences. Unlike an investor, a trader holds positions for short periods -- anywhere from a few seconds to a few weeks.

There are several styles: scalping, day trading, swing trading.

An investor is a person who allocates money to financial assets with the goal of earning a return over the medium to long term. Investors focus on the fundamental value of assets rather than daily price swings.

A broker is an intermediary that gives you access to the financial markets. It executes your buy and sell orders on your behalf, in exchange for a commission or the spread. It is essential that a broker be regulated by a financial authority.

A stock exchange is an organized, regulated market where financial instruments such as stocks and bonds are traded. It ensures price transparency and connects buyers with sellers.

Liquidity shows how easily an asset can be bought or sold without significantly affecting its price. A highly liquid asset trades quickly, close to the current market price.

Volatility measures how much and how quickly an asset's price changes over a period of time. High volatility means wide swings -- bigger opportunities, but also greater risk.

A portfolio is the entire set of financial assets held by a person or institution: stocks, bonds, currencies, funds and others. How the portfolio is built determines its risk level and potential return.

The financial market is where those who have capital to invest meet those who need financing. It includes the capital market (stocks, bonds), the currency market and the derivatives market.

A financial instrument is a contract that has value and can be traded: stocks, bonds, currencies, derivatives or fund units. Each type has its own rules, risks and costs.

A financial asset is anything of value that can generate a gain: a stock, a bond, a currency, a commodity or a fund unit. Assets are grouped into classes based on their characteristics.

An asset class groups together instruments with similar characteristics and behavior: stocks, bonds, currencies, commodities, cryptocurrencies. Spreading capital across multiple classes is the basis of portfolio diversification.

Securities are negotiable financial instruments, such as stocks and bonds, issued by companies or the state and traded on the capital market. They are strictly regulated to protect investors.

Return expresses the gain obtained from an investment, relative to the amount invested, usually as a percentage. It can come from price appreciation, dividends or interest.

Speculation means buying or selling an asset with the goal of profiting from short-term price changes, taking on greater risk. It differs from long-term investing, which focuses on fundamental value.

Capital is the amount of money you have available to invest or trade. Managing capital correctly -- how much you allocate to each position and how much risk you accept -- is essential to staying active in the market.

A commission is the amount charged by a broker for executing a trade. On some accounts the broker earns from the spread; on others, from a fixed or percentage-based commission. Costs directly affect your net result.

A demo account lets you trade with virtual money, under real market conditions, without financial risk. It is used to learn the platform and test strategies before using real capital.

A trading platform is the software through which you place orders, monitor charts and manage your account. Common examples include MetaTrader and cTrader, though each broker may offer its own platform.

You open a long (buy) position when you expect an asset's price to rise. You profit if the price goes up and lose if it goes down. It is the classic direction, where you buy first and sell later.

You open a short (sell) position when you expect the price to fall. You first sell a borrowed asset, planning to buy it back later. It is a high-risk operation.

Profit and loss represents the financial result of your positions. It can be unrealized (on still-open positions) or realized (after closing a position). Tracking it closely supports trading discipline.

A trading account is the account opened with a broker through which you deposit funds, place orders and manage your positions. There are different account types, with varying costs and conditions.

A bull market is a prolonged period of rising prices, while a bear market is a prolonged period of falling prices. The terms describe overall sentiment and the dominant direction of the market.

Compound interest means the gain is calculated not only on the initial amount but also on previously accumulated gains. Over time, it produces an accelerating growth effect on capital.

An issuer is the entity that creates and puts a financial instrument into circulation: a company that issues stocks or bonds, or a state that issues debt securities. Investors buy what the issuer issues.

A financial intermediary connects investors and markets: brokers, banks, investment firms. trading.md is an intermediary, a partner of regulated international brokers, not a brokerage house.

On the primary market, instruments are issued for the first time and the money goes to the issuer (for example, an IPO). On the secondary market, investors trade already existing instruments among themselves, without the issuer receiving anything.

The money market is the segment where short-term debt instruments (under one year) are traded, such as treasury bills. It has low risk and high liquidity, and is used for the temporary placement of funds.

Simple interest is calculated only on the initial amount, not on accumulated gains. Unlike compound interest, it does not produce an accelerating growth effect over time.

Market value is the price at which an asset can currently be bought or sold, set by market supply and demand. It can differ from book value or from a value estimated through analysis.

GDP measures the total value of goods and services produced in an economy over a given period. It is the main indicator of a country's economic health and influences financial markets.

Inflation is the general rise in prices over time, which reduces the purchasing power of money. Central banks closely monitor inflation and adjust the interest rate to keep it under control.

The interest rate set by the central bank is the cost of borrowing money in the economy. Changes to it influence the exchange rate, stock prices, and investors' appetite for risk.

NFP (Non-Farm Payrolls) is a monthly U.S. report showing how many jobs were created, excluding agriculture. It is one of the most closely watched economic indicators and often triggers sharp market moves.

Yield expresses the income generated by an investment relative to its price, in percentage terms. For bonds, it shows the annual interest relative to price; for stocks, the dividend yield. It typically rises when price falls and falls when price rises.

A central bank manages the monetary policy of a country or region, sets the interest rate, and monitors price stability. Its decisions strongly influence financial markets.

Monetary policy consists of the central bank's decisions on the interest rate and money supply, aimed at controlling inflation and supporting the economy. It can be restrictive (higher rates) or accommodative (lower rates).

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services. It is the main indicator of inflation and a key benchmark for central banks.

The Purchasing Managers Index (PMI) measures activity in the manufacturing or services sector. A reading above 50 indicates expansion, while below 50 indicates economic contraction.

The unemployment rate shows the percentage of people able to work who are without a job but actively seeking one. It is an important indicator of economic health and influences central bank decisions.

A recession is a period of significant and prolonged decline in economic activity. The commonly used rule of thumb is two consecutive quarters of falling GDP, though the official definition (for example, the NBER's in the U.S.) takes several indicators into account, not just GDP.

The exchange rate is the price of one currency expressed in another currency. It varies based on demand, supply, interest rates, and the state of the economy. When exchanging currency online, pay attention to the spread applied.

A trade deficit occurs when a country imports more than it exports. Investors monitor it because it can influence the exchange rate and economic policy.

An economic indicator is an official statistic (GDP, inflation, unemployment) that shows the state of the economy. Their releases are scheduled and can trigger significant market moves.

The economic calendar lists the dates and times at which economic data and central bank decisions are released. Traders use it to anticipate periods of high volatility.

A basis point is one hundredth of a percent (0.01%). It is used to express small changes precisely, especially in interest rates.

Quantitative easing (QE) is a measure whereby the central bank purchases financial assets to inject money into the economy and lower long-term interest rates. It is used during periods of crisis.

Deflation is the general and prolonged fall in prices. Although it may seem favorable to consumers, it can signal a weakened economy in which people postpone spending and economic activity slows down.

Stagflation is the unusual combination of high inflation and stagnant economic growth, often accompanied by high unemployment. It is difficult to combat, since measures against inflation can deepen the stagnation.

The money supply is the total amount of money in circulation in an economy. The central bank influences it through monetary policy, which affects inflation, interest rates, and the exchange rate.

The balance of payments records all economic transactions between a country and the rest of the world over a period: trade, investments, transfers. Imbalances in it can influence the exchange rate.

Public debt is the total amount borrowed by the state, usually through the issuance of bonds. Its level and repayment capacity influence the country's credit rating and the cost of financing.

The sovereign rating is the grade assigned by rating agencies to a state's ability to repay its debts. A better rating means lower borrowing costs for that country.

The economic cycle describes the alternation of phases of expansion and contraction in the economy: growth, peak, recession, and recovery. Investors track the cycle to adjust their decisions.

A floating exchange rate is set freely through supply and demand, while a fixed exchange rate is maintained by the central bank at a target value. Many countries use intermediate regimes, with occasional interventions.

Devaluation is the decline in the value of one currency relative to other currencies. It can make exports cheaper but makes imports more expensive and can fuel inflation. The opposite term is appreciation.

The Producer Price Index (PPI) measures the change in prices at the producer level. It is considered an early signal for inflation that will later reach consumers.

The consumer confidence index measures how optimistic households are about the economy and their own finances. Optimism supports consumption, while pessimism dampens it, influencing economic growth.

A soft landing is when the central bank cools inflation without triggering a recession; a hard landing means that the effort to stop inflation drives the economy into recession.

A share represents a portion of a company's capital. By buying a share, you become a co-owner of the company and can benefit from its rising value and from dividends. Shares are traded on the stock exchange.

A dividend is the part of a company's profit distributed to shareholders. It is expressed as an amount per share and is usually paid annually or quarterly. Not all companies pay dividends — some reinvest their profit instead.

Market capitalization is the total market value of a listed company. It is calculated by multiplying the share price by the total number of shares outstanding. It is used to classify companies by size.

An IPO (Initial Public Offering) is the moment when a company lists its shares on the stock exchange for the first time and offers them to the public. Through an IPO, the company raises capital, and investors can buy shares.

A stock market index measures the performance of a group of shares representative of a market or a sector. It serves as a barometer of the overall state of the market.

A blue chip stock belongs to a large, stable company with a solid reputation, usually a leader in its field. These companies are perceived as relatively safer and often pay steady dividends.

Short selling is a strategy in which you speculate on a falling asset price: you sell a borrowed asset, planning to buy it back later, ideally at a lower price. It is a high-risk operation, since losses can theoretically be unlimited.

A shareholder is a person or institution that holds shares in a company. Depending on the number of shares held, a shareholder may have voting rights and the right to receive dividends.

Earnings per share (EPS) shows how much profit is attributable to each share of a company. It is used to assess profitability and is part of the P/E ratio calculation.

A stock split means dividing each share into several shares, proportionally reducing the price. The total value held does not change; the purpose is to increase accessibility and liquidity.

Free float represents the percentage of a company's shares that circulate freely on the market, available for trading, excluding stakes held long-term by founders or the state. A large free float means better liquidity.

A market maker is an entity that continuously quotes buy and sell prices, providing liquidity. It earns from the spread and enables fast order execution.

Dividend yield shows how much the annual dividend represents relative to the share price, expressed as a percentage. It helps compare companies that pay dividends.

Penny stocks are very low-priced shares, usually of small and little-known companies. They are highly volatile, have low liquidity and carry high risk.

A market sector groups companies from the same field of activity (technology, energy, healthcare, financial). Investors track sectors to diversify their portfolio and observe economic trends.

A preferred stock gives priority in dividend payments and, usually, a fixed dividend, but without voting rights. It sits between common shares and bonds in terms of risk profile.

A common share grants voting rights at the shareholders' meeting and the right to variable dividends, depending on profit. It is the most common type of share. It differs from preferred stock.

Share capital is the total value of shareholders' contributions to a company, divided into shares. It represents the starting base of the company's equity financing.

A share buyback is the operation by which a company repurchases its own shares from the market, reducing the number of shares outstanding. This usually increases earnings per share and can support the price.

Companies are divided by market capitalization into large cap (large), mid cap (medium) and small cap (small) companies. Large ones tend to be more stable, while small ones are more volatile but have greater growth potential.

A company's book value is the difference between its assets and its liabilities, according to the balance sheet. Divided by the number of shares, it gives the book value per share, used in valuation.

The price-to-book ratio (P/B) compares a share's market price with its book value. It shows how much the market pays for each leu of the company's net assets.

The general meeting of shareholders is the forum in which shareholders vote on the company's important decisions: dividend distribution, election of management, changes to the bylaws. Each common share usually carries one vote.

The preemptive right allows existing shareholders to buy new shares before other investors, in a capital issuance, in order to preserve their ownership stake. It protects against dilution.

A bond is a debt security: by buying one, you lend money to an issuer (a government or a company), which pays you periodic interest and returns the principal at maturity. Bonds are seen as less risky than stocks.

The coupon is the interest paid periodically by a bond, expressed as a percentage of face value. A bond with a 6% coupon and a face value of 1,000 pays 60 per year.

Maturity is the date on which a bond issuer must return the face value to the investor. Bonds can be short-, medium-, or long-term, depending on their maturity.

Face value is the amount the issuer returns to the bondholder at maturity, and the amount on which the coupon is calculated. A bond's market price can differ from its face value.

Yield to maturity (YTM) is the total annual return of a bond if held until maturity, taking into account price, coupon, and face value. It rises when the price falls.

Government bonds are debt securities issued by a government to fund itself. They are generally seen as low-risk in their own currency, since the state can meet its domestic debt obligations.

Corporate bonds are issued by companies to raise financing. They usually offer a higher coupon than government bonds, in exchange for higher credit risk.

A credit rating is the grade assigned by specialized agencies to an issuer's ability to repay its debts. High ratings indicate low risk; low ratings indicate high risk (speculative bonds).

The yield curve shows government bond yields across different maturities. Its shape signals market expectations; an inverted curve is watched as a possible sign of recession.

Duration measures the sensitivity of a bond's price to changes in interest rates. The higher the duration, the more strongly the price reacts to rate changes.

Zero-coupon bonds do not pay periodic interest. They are sold below face value, and the investor's gain is the difference between the purchase price and the face value received at maturity.

Credit risk is the risk that a bond issuer fails to pay interest or fails to repay the borrowed amount. Credit ratings help assess this risk.

Interest rate risk is the risk that a bond's price falls when market interest rates rise. Bonds with longer duration are more exposed to this risk.

A eurobond is a bond issued in a currency other than that of the country where it is placed, often to reach international investors. Governments and large companies use them frequently.

An ETF (Exchange-Traded Fund) is a fund that pools together several assets (stocks, bonds) and trades on an exchange, like a stock. It offers exposure to an entire index or sector, at low cost.

A mutual fund (open-end investment fund) pools money from many investors and places it in a diversified portfolio managed by professionals. Investors hold fund units proportional to the amount invested.

Net Asset Value is the per-unit value of a fund, calculated as total assets minus liabilities, divided by the number of units. It is the reference price for buying and redeeming units.

A fund unit represents a share of a fund's assets. By buying units, you become a participant in the fund proportional to the amount invested. The value of a unit is given by the net asset value (NAV).

An index fund automatically tracks the composition of a stock market index, offering exposure to the entire market represented by that index. It has low costs, being passively managed.

Passive management tracks an index, with low costs; active management involves asset selection by managers, aiming to beat the market, but with higher costs.

The management fee (often expressed as TER, total expense ratio) is the annual cost of holding a fund, as a percentage of the amount invested. Lower costs matter a lot over the long term.

A pension fund collects and invests participants' contributions to secure them an income at retirement. It has a long investment horizon and a strategy focused on stability.

A benchmark is a reference index against which the performance of a fund or portfolio is compared. It allows a real assessment of the results obtained.

A REIT is a fund that invests in income-generating real estate properties and distributes a large part of its earnings as dividends. It allows exposure to the real estate market without buying properties directly.

A closed-end fund has a fixed number of units, traded among investors, often on an exchange. Unlike an open-end fund, it does not continuously issue and redeem units on demand.

A money market fund invests in very short-term debt instruments, with low risk. It is used to keep money relatively safe and liquid, with a modest return.

A bond fund invests in diversified debt securities. It offers fixed-income exposure without buying individual bonds, but the value of the units fluctuates with interest rates.

A balanced fund combines several asset classes, usually stocks and bonds, in a single portfolio. The proportion between them determines the fund's risk profile.

A distributing ETF pays dividends out to investors, while an accumulating one reinvests them automatically into the fund. The choice depends on the goal: current income or long-term growth.

Tracking error shows how much an index fund's performance deviates from the index it tracks. A small error means the fund closely replicates the index.

The prospectus is the official document describing a fund or an issuance: strategy, risks, costs, and rules. Investors should read it before investing.

A sovereign wealth fund is an investment fund owned by the state, which manages national reserves or revenues (for example from natural resources) for long-term objectives.

Forex (Foreign Exchange) is the global currency market, where one currency is exchanged for another. It is the largest financial market in the world, operates over-the-counter (OTC), and is open 24 hours a day, 5 days a week.

A currency pair expresses the value of one currency relative to another. The first currency is the base currency, the second is the quote currency. Pairs are grouped into majors, minors, and exotics.

A pip (Percentage in Point) is the smallest standard price move of a currency pair. For most pairs, a pip represents the fourth decimal place of the quote. The pip measures the gain or loss on a position.

A lot is the standard unit of volume in currency trading. A standard lot equals 100.000 units of the base currency. Smaller lots also exist: mini (10.000), micro (1.000), and nano (100).

The swap is the interest paid or received for keeping a position open overnight. It arises from the interest rate differential between the two currencies of a pair. It can be positive or negative.

XAU/USD is the symbol used for trading gold against the US dollar; XAU is the standard code for gold. Gold is considered a safe-haven asset, often sought during periods of economic uncertainty.

In a currency pair, the first currency is the base currency, and the second is the quote currency. The rate shows how many units of the quote currency are needed for one unit of the base currency.

Major pairs include the most heavily traded currencies in the world, all against the US dollar (for example EUR/USD, GBP/USD, USD/JPY). They have high liquidity and, generally, low spreads.

Minor pairs do not include the US dollar (for example EUR/GBP), while exotic pairs combine a major currency with one from a smaller economy. The latter have reduced liquidity and wider spreads.

The cross rate is the exchange rate between two currencies, calculated without directly using the US dollar as an intermediary. It appears in pairs that do not contain the dollar.

The foreign exchange market operates 24 hours a day on business days, divided into main sessions: Sydney, Tokyo, London, and New York. The overlap between the London and New York sessions brings the highest activity.

Carry trade is the strategy of borrowing a low-interest currency and investing in one with a higher interest rate, seeking to capture the interest rate differential. It involves significant currency risk.

A pipette is one tenth of a pip, i.e. the extra decimal place displayed by many platforms for greater quote precision.

A direct quotation expresses how much local currency is needed for one unit of foreign currency; an indirect quotation shows the reverse. The distinction matters for correctly interpreting the exchange rate.

Appreciation is the increase in the value of one currency relative to another, while depreciation is its decrease. They are driven by interest rates, capital flows, and the state of the economy.

A currency peg is maintaining the exchange rate of a currency at a fixed value relative to another currency or a basket of currencies. It requires central bank interventions to support the parity.

A currency intervention is the central bank's action of buying or selling foreign currency to influence the value of its own currency. It is used to reduce volatility or defend a parity.

Foreign exchange reserves are the foreign currency assets held by the central bank. They serve to support the national currency, pay for imports, and honor external debt.

A currency fixing is a reference rate set at a fixed time, used for valuations and settlements. Fixing mechanisms were reformed after manipulation scandals documented by regulators.

A commodity is a raw material traded in standardized form on markets: metals, energy, agricultural products. Commodities of the same type and quality are interchangeable, regardless of producer.

Gold is a precious metal used for centuries as a store of value and a safe-haven asset. In periods of uncertainty or inflation, many investors increase their exposure to gold. It is also traded under the symbol XAU/USD.

Oil is one of the most heavily traded commodities. Brent and WTI are the two main price benchmarks, depending on region and quality. The price of oil influences inflation and the global economy.

Natural gas is a highly volatile energy commodity, sensitive to season, weather, and geopolitical factors. It is traded through futures contracts and derivative instruments.

Precious metals (gold, silver, platinum, palladium) have both industrial uses and a role as a store of value. Gold and silver are the most popular among investors.

Industrial metals (copper, aluminum, zinc) are used in manufacturing and construction. Their prices often reflect the state of the global economy; copper is nicknamed the barometer of the economy.

Agricultural commodities (wheat, corn, soybeans, coffee, sugar) are grown products traded on specialized markets. Prices depend on harvests, weather, and global demand.

Contango is the situation where the futures price of a commodity is higher than the spot price, usually due to storage and financing costs. The opposite situation is called backwardation.

Backwardation is the situation where the futures price of a commodity is lower than the spot price, often signaling strong immediate demand. It is the opposite of contango.

A commodity index tracks the price of a basket of raw materials (energy, metals, agricultural products). It allows exposure to the commodities market as a whole, without trading each commodity separately.

A safe-haven asset is sought after in periods of crisis or uncertainty because it tends to preserve its value. Gold and certain currencies considered safe are classic examples.

A CFD (Contract for Difference) is a derivative financial instrument through which you speculate on the price difference of an asset without actually owning it. It allows positions on both rising and falling prices, and uses leverage.

A derivative is a contract whose value derives from the price of another asset, called the underlying asset — a stock, a currency, a commodity, or an index. Examples of derivatives: CFDs, futures contracts, options.

Leverage allows you to control a larger position than the capital you have deposited, using money borrowed from the broker. Leverage amplifies both potential gains and losses, in the same proportion.

Margin is the amount of money you must deposit to open and maintain a leveraged position. It acts as collateral. The higher the leverage, the lower the margin required.

A margin call is the broker's warning that the funds in the account have dropped below the level required to maintain open positions. If you do not add funds, the broker may automatically close the positions (stop out / close-out).

A futures contract is a standardized agreement to buy or sell an asset at a price fixed now, but with delivery on a future date. It is traded on regulated markets and is used both for speculation and for hedging.

The underlying asset is the instrument from which the value of a derivative product derives. For a CFD on Apple shares (AAPL), the underlying asset is the Apple share; the CFD price tracks its price.

Free margin is the portion of the account funds that is not locked up as collateral for open positions and can be used to open new positions or absorb losses.

Stop out (also called margin close-out in regulatory language) is the level at which the broker automatically closes positions when funds fall below a minimum threshold, in order to limit losses.

A forward contract is a non-standardized agreement to buy or sell an asset at a price fixed now, with delivery on a future date. Unlike futures, it is traded over-the-counter (OTC).

Notional value represents the total value of the position being controlled, not the amount deposited as margin. With leverage, the notional value is much higher than the capital committed, which also amplifies the risk.

CFDs can have stocks, stock indices, commodities, currencies, or cryptocurrencies as their underlying asset. On Raw or ECN-type accounts, the commission applies to all asset classes, not just stocks.

The overnight commission is the financing cost charged for holding a leveraged position overnight. It reflects the interest associated with the amount borrowed from the broker and can erode the profit of long-term positions.

An interest rate swap is a contract through which two parties exchange interest cash flows, typically a fixed rate against a variable one. It is used to manage interest rate risk.

A credit default swap is a contract that functions like insurance against the default of a debt. The buyer pays a premium, and the seller compensates it if the issuer becomes unable to pay.

Initial margin is the amount required to open a leveraged position. It represents the collateral required by the broker at the time of opening, calculated as a percentage of the notional value of the position.

Maintenance margin is the minimum level of funds required to keep a position open. If funds fall below this threshold, a margin call occurs and, subsequently, forced closure.

Derivative contracts with a maturity date (such as futures) expire on a set date. Rollover means closing the expiring contract and opening one with a later maturity, in order to maintain exposure.

An option gives you the right, but not the obligation, to buy (call) or sell (put) an asset at a set price (strike), until a certain date. You pay a premium for this right.

Binary options are contracts with an "all or nothing" outcome, tied to whether a price condition is met at a fixed moment. They are very high-risk products.

A warrant is a financial instrument that gives the right to buy or sell an underlying asset at a set price, until a certain date. It resembles an option, but is usually issued by a financial institution.

A call option gives you the right, but not the obligation, to buy an asset at a set price (strike), until a certain date. You buy a call when you expect the price to rise.

A put option gives you the right, but not the obligation, to sell an asset at a set price (strike), until a certain date. You buy a put when you expect the price to fall or to protect your portfolio.

The strike price is the fixed price at which an option's underlying asset can be bought or sold. The relationship between the strike and the market price determines the option's value.

The premium is the amount paid by an option's buyer for the right it grants. It represents the cost and, at the same time, the buyer's maximum loss if the option is not exercised.

These terms describe the relationship between the market price and the strike: an option is in the money when it would generate a profit if exercised, at the money when the price equals the strike, and out of the money when it would not generate a profit.

A structured product is a financial instrument that combines several components (for example, a bond and an option) to offer a specific risk-return profile. It can be complex and difficult to value.

An American option can be exercised at any time until expiration, while a European option can only be exercised on the expiration date. The distinction concerns the timing of exercise, not the place of trading.

An option's intrinsic value is the gain it would produce if exercised right now. An out-of-the-money option has zero intrinsic value; its value comes solely from time value.

Time value is the portion of an option's premium that reflects the time remaining until expiration and the uncertainty involved. It decreases as expiration approaches, a phenomenon called time decay.

Implied volatility is the volatility the market expects for the underlying asset, derived from option prices. High implied volatility makes options more expensive, regardless of price direction.

The Greeks (delta, gamma, theta, vega) measure the sensitivity of an option's price to different factors: movement of the underlying asset, the passage of time, and changes in volatility. They are used for risk management.

A covered call is a strategy in which you hold an asset and sell a call option on it, collecting the premium. It generates extra income, but caps the gain if the price rises significantly.

A market order is a buy or sell order executed immediately, at the best price available at that moment. The advantage is speed; the drawback is that the final price may differ slightly from the one seen (slippage).

A limit order is executed only at the price you set or at a more favorable one. It gives you control over the price but does not guarantee execution — if the price never reaches the specified level, the order remains unfilled.

Stop loss is an order that automatically closes a position once the price reaches a preset loss level. It is an essential risk-management tool, used to limit losses on a trade.

Take profit is an order that automatically closes a position once the price reaches a preset gain level. It lets you lock in profit without having to watch the market constantly.

Slippage is the difference between the expected price of an order and the price at which it is actually executed. It occurs especially during periods of high volatility or low liquidity.

A stop order is triggered only once the price reaches a preset level, at which point it converts into a market order. It is used to enter the market on confirmation of a move or to limit losses.

A trailing stop is a stop order that follows the price at a fixed distance as it moves favorably, locking in accumulated profit. If the price reverses, the order stays at the last level reached.

A stop-limit order combines a stop order with a limit order: once the price reaches the stop level, a limit order is placed at the specified price. It gives you control over the price but does not guarantee execution.

A Good Till Cancelled (GTC) order stays active until it is executed or manually cancelled, regardless of how many days pass. It contrasts with an order valid only for the current day.

A day order is valid only for the current trading session. If it is not executed by market close, it is automatically cancelled.

A requote occurs when the requested price is no longer available at the moment of execution, and the broker offers a new price. It is more common during periods of high volatility.

Position liquidation means closing it, either voluntarily or forced by the broker when funds no longer cover the required margin. The result, profit or loss, becomes realized at that moment.

An OCO order links two orders: if one is executed, the other is automatically cancelled. It is used, for example, to place a take profit and a stop loss simultaneously.

An iceberg order displays only a portion of the total volume in the market, hiding the rest. It is used by large participants so as not to influence the price by revealing the entire order.

A partial fill occurs when only part of an order is completed, because there isn't enough liquidity at the requested price. The remainder stays active or is cancelled, depending on the order type.

These orders are executed at the price set during the market's opening or closing session. They are used to trade at the day's reference prices.

A candlestick chart shows, for each time interval, four prices: open, close, high, and low. The body and the "wicks" of the candle show the direction and strength of the price move.

A trend is the general direction in which the price moves over a given period. It can be upward (uptrend), downward (downtrend), or sideways. Identifying the trend is essential in technical analysis.

Support is a price level where declines tend to stop, while resistance is a level where advances tend to stop. These levels help traders anticipate possible price turning points.

A moving average smooths out price movement by calculating the average over a number of periods. It helps identify the trend and turning points. The most commonly used are the simple moving average (SMA) and the exponential moving average (EMA).

RSI is a momentum indicator that measures the speed and magnitude of price movements on a scale from 0 to 100. Values above 70 suggest overbought conditions, while values below 30 suggest oversold conditions.

A consolidation zone is a period in which the price moves sideways, between a support level and a resistance level, without a clear trend. It often appears before a large move, when the market "gathers its strength."

The timeframe is the time interval represented by each candle or bar on the chart, ranging from one minute to a month. The choice of timeframe depends on the trading style.

Volume shows how many units of an asset were traded within an interval. A high volume usually confirms the strength of a price move, while a low volume calls it into question.

MACD is a momentum indicator that compares two moving averages to signal changes in trend and momentum. It is used together with the signal line and the histogram.

Bollinger Bands consist of a moving average and two bands placed a given distance from it. They widen when volatility increases and narrow when it decreases, helping to identify price extremes.

Fibonacci levels are percentages derived from a mathematical sequence (notably 38.2%, 50%, and 61.8%), used to estimate possible support and resistance zones during price corrections.

A trend line connects several price points to highlight the market's direction. A line drawn below prices supports an uptrend, while one drawn above prices supports a downtrend.

A breakout occurs when the price moves beyond an important support or resistance level, signaling a possible continuation of the move in that direction. Confirmation by increased volume boosts its reliability.

A pullback is a temporary price move against the dominant trend, before the trend resumes. Traders watch it to enter the market at a more favorable price.

Divergence occurs when price and an indicator (such as RSI) move in opposite directions. It can signal that the current trend is weakening and that a price reversal may be coming.

Pivot points are price levels calculated from the previous period's high, low, and close, used to anticipate support and resistance zones in the current session.

A technical indicator is a mathematical calculation applied to price or volume, displayed on the chart to help interpret the market. Indicators do not predict the future; they only offer an additional perspective.

A gap is a jump in price between one period's close and the next period's open, visible as an empty space on the chart. It often occurs after important news or at market open.

A doji is a candle in which the opening and closing prices are nearly equal, forming a very small body. It signals indecision in the market and a possible change in direction.

A retracement is a partial price correction against the trend, followed by the trend's resumption. It differs from a full trend reversal by its smaller scale.

A price channel forms between two parallel trend lines, within which the price oscillates. The edges of the channel act as support and resistance levels.

A chart pattern is a recurring price shape (such as head and shoulders or double top), used to anticipate possible future moves. Reliability increases when confirmed by volume.

The simple moving average (SMA) gives equal weight to all periods, while the exponential moving average (EMA) gives more weight to recent prices, reacting faster to changes.

The stochastic oscillator compares the closing price to the price range over a period, on a scale from 0 to 100. It is used to identify overbought and oversold zones.

ATR (Average True Range) measures the volatility of an asset, indicating the average amplitude of price moves. It is used to calibrate stop loss levels based on volatility.

VWAP (Volume Weighted Average Price) is the average price of an asset over a day, weighted by volume. It serves as a benchmark to assess whether trades were executed at a good price.

The volume profile shows how much volume was traded at each price level, rather than over time. It highlights zones of high interest, which can act as support or resistance.

Dow Theory is a set of classic principles about market movement, formulated in the early 20th century. It underlies modern technical analysis, though many ideas have since been refined or challenged and are studied mainly as a historical foundation.

Elliott Wave theory holds that markets move in repetitive wave patterns. It is a subjective and contested approach: the same charts can be interpreted differently, and the evidence for its reliability is weak.

The Wyckoff Method analyzes the relationship between price and volume to identify the accumulation and distribution phases of large participants. It is a classic approach, used with caution and without guarantees of results.

The Gann Method combines price with time and geometric angles. It includes controversial components, including astrological references, treated with caution by the financial community. Its reliability is not supported by solid evidence.

The P/E ratio (Price to Earnings) compares a stock's price with the company's earnings per share. It shows how many years of current earnings the price paid would cover. It is used to assess whether a stock is expensive or cheap.

EBITDA represents a company's profit before interest, taxes, depreciation, and amortization. It is used to assess operating performance, without the effect of financing and accounting decisions.

The balance sheet shows, at a given point in time, a company's assets, liabilities, and equity. It is one of the core documents for the fundamental analysis of a company.

The income statement shows a company's revenues, expenses, and profit over a period. Together with the balance sheet and the cash flow statement, it forms the core financial statements used for analysis.

Cash flow shows the money actually moving in and out of a company. A firm can report a profit yet still run into trouble if cash flow is negative; that is why analysts watch it closely.

ROE (Return on Equity) measures how much profit a company generates relative to its equity. It shows how efficiently the firm uses shareholders' money.

ROA (Return on Assets) measures how much profit a company generates relative to its total assets. It indicates how efficiently the firm uses its resources.

Net margin shows what percentage of revenue remains as profit after all expenses. A high margin points to an efficient company or one with pricing power.

The debt-to-equity ratio compares a company's debt with its equity. A high level points to heavy reliance on borrowed financing and greater financial risk.

The price-to-sales ratio compares a company's market capitalization with its revenue. It is especially useful for firms that are not yet profitable, where the P/E ratio cannot be calculated.

DCF valuation (Discounted Cash Flow) estimates a company's value by discounting future cash flows to the present. The result depends heavily on the assumptions used, so it must be treated with caution.

Enterprise value reflects a company's total value, including market capitalization and debt, minus cash. It provides a more complete picture than market cap alone.

The EV/EBITDA ratio compares enterprise value with operating profit (EBITDA). It is used to compare companies within the same sector, regardless of their financing structure.

The payout ratio shows what percentage of profit is paid out as dividends. A very high ratio can be unsustainable, while a low one indicates that profit is being reinvested into the company's growth.

Working capital is the difference between a company's current assets and current liabilities. It shows whether the firm has enough short-term resources to cover its immediate obligations.

The current ratio compares current assets with current liabilities. A value above 1 suggests that the firm can cover its short-term obligations.

Valuation multiples (P/E, P/B, EV/EBITDA) relate a company's price to financial indicators. They allow quick comparison of firms, but must be used in context, alongside other methods.

Diversification means spreading capital across multiple assets, sectors, or markets to reduce risk. The basic idea: if one asset falls, others can offset it, so the overall portfolio is more stable.

Correlation measures how much two assets move in the same direction. Highly correlated assets offer weak diversification, since they tend to fall together during difficult periods.

Systematic risk affects the entire market (for example, an economic crisis) and cannot be eliminated through diversification. Unsystematic risk is specific to an asset or company and can be reduced through diversification.

Asset allocation is the division of capital across asset classes (stocks, bonds, cash, commodities) according to your objectives and risk tolerance. It is considered the decision with the greatest influence on long-term outcomes.

Rebalancing is bringing the portfolio back to its target allocation after market movements have shifted the weights. It involves selling what has grown too much and buying what has fallen.

Beta measures how much an asset moves relative to the market. A beta of 1 means it moves in line with the market; above 1, more volatile; below 1, less volatile than the market.

Alpha measures the return achieved above what would be expected relative to the risk taken and the market. A positive alpha indicates performance superior to a simple benchmark index.

The Sharpe ratio measures an investment's return relative to the risk taken. The higher it is, the better the risk-adjusted return. It allows for a fair comparison of strategies.

The efficient frontier is the set of portfolios that offer the best possible return for a given level of risk. A concept from modern portfolio theory, it helps combine assets optimally.

Modern portfolio theory shows how combining assets with different correlations can reduce total risk without sacrificing return. It is the foundation of rational diversification.

The investment horizon is the period during which you intend to keep your investments before needing the money. A longer horizon typically allows for taking on greater risk.

The risk profile reflects how much risk you are willing and able to accept, based on your objectives, income, experience, and temperament. It guides the choice of instruments and allocation.

Dollar-cost averaging means investing equal amounts at regular intervals, regardless of price. This way, you buy more units when the price is low and fewer when it is high, averaging out the cost over time.

The 60/40 portfolio allocates 60% to stocks and 40% to bonds, as a classic balance between growth and stability. It is a common starting point for long-term investors.

The All-Weather model, associated with Ray Dalio (Bridgewater), aims for a portfolio that holds up in any economic environment by balancing assets by risk rather than by amount. It is a theoretical approach, not a guarantee.

The risk/reward ratio compares the potential loss to the potential gain of a trade. A ratio of 1:3 means you risk one unit to gain three. It is a key tool for solid discipline.

Position sizing is the amount of capital allocated to a single trade. Setting position size correctly helps you limit the maximum loss per trade to a small percentage of the account.

Drawdown is the decline in equity from a peak to a subsequent low, usually expressed as a percentage. It measures how much an account or strategy has lost before returning to its previous level.

Hedging means opening a position designed to offset the risk of another position already held. The goal is not profit but protecting capital against unfavorable price moves. It is used frequently by companies and investors.

Negative balance protection prevents the account from going below zero: even if the market moves sharply, you cannot lose more than you deposited. In the EU this is a measure imposed by ESMA for non-professional investors.

Exposure is the total amount you risk in the market through one or more positions. The greater the exposure relative to capital, the greater the risk to the portfolio.

The 1% rule is a risk management principle under which you do not risk more than 1% of capital on a single trade. It limits losses from a string of unsuccessful trades.

Win rate is the percentage of trades closed in profit out of the total number of trades. A high win rate does not guarantee profitability; the risk/reward ratio matters too.

Risk capital is the portion of your money that you can afford to lose without affecting your financial situation. Trading should be done only with this type of capital.

Currency risk is the risk that a change in the exchange rate will affect your investments denominated in another currency. It arises whenever you invest in assets in a currency different from your own.

Liquidity risk is the risk of being unable to sell an asset quickly, at a fair price, due to a lack of buyers. Thinly traded assets are more exposed to this risk.

Market risk is the risk of loss from broad market movements: prices, interest rates, exchange rates. It affects most assets and cannot be eliminated entirely through diversification.

Value at Risk (VaR) estimates the maximum probable loss of a portfolio, over a given time horizon and with a given probability. It is used by institutions, but has limitations during periods of extreme crisis.

Counterparty risk is the risk that the other party to a transaction will fail to fulfill its obligations. Clearing houses and the segregation of funds reduce this risk.

Over-the-counter (OTC) trading takes place directly between parties, outside an organized exchange. Many instruments, such as currency pairs and CFDs, are traded OTC, through brokers.

A regulated market is a trading platform overseen by a financial authority, with strict rules on transparency and investor protection. Stock exchanges are regulated markets.

Bid is the price at which the market buys from you (the sell price for you), and Ask is the price at which the market sells to you (the buy price for you). The difference between them is the spread.

The spread is the difference between the buy price (ask) and the sell price (bid) of a financial instrument. It is one of the main costs of a trade and one of the ways brokers earn money.

A quote is the current price displayed for a financial instrument, made up of the buy price (bid) and the sell price (ask). The quote updates in real time, based on supply and demand.

The order book shows the existing buy and sell orders for an asset, at different price levels. It shows supply and demand and helps assess liquidity.

A liquidity provider is a large institution (usually a bank) that supplies buy and sell prices, enabling fast order execution. Brokers connect to multiple providers.

Settlement is the process by which, after a trade, the actual transfer of the asset and the money takes place between the parties. It occurs a certain interval after the order is executed.

A clearing house stands between the buyer and the seller, guaranteeing that obligations are met and reducing counterparty risk. It is used mainly on regulated derivatives markets.

Market depth shows how many buy and sell orders exist at different price levels. A market with high depth absorbs large orders without sudden price swings.

On the spot market, assets are bought and sold for immediate delivery, at the current price. This differs from the derivatives market, where transactions refer to future prices and dates.

ECN and STP are models in which the broker sends orders directly to liquidity providers, without a dealer's intervention. Unlike the market maker model, the broker is not your counterparty.

A tick is the smallest possible price movement of an instrument. The number of ticks within an interval reflects market activity.

A fixed spread stays constant regardless of market conditions, while a variable spread changes based on liquidity and volatility, and can widen during turbulent periods.

A central depository keeps the electronic record of securities and ensures the settlement of transactions. The investor remains the rightful owner, even though the holding is recorded through custodians.

A custodian is an institution that safely holds investors' financial assets and manages settlement and the collection of dividends. The investor remains the beneficial owner of the assets.

A central counterparty stands between the buyer and the seller on regulated markets, becoming the buyer to every seller and the seller to every buyer. It reduces the risk that a party will fail to honor its obligations.

T+2 settlement means that the actual transfer of shares and money takes place two business days after the trade. The interval varies depending on the market and the instrument.

The shareholder register is the official record of a company's shareholders. In modern markets, shares are held through custodians, but the investor remains the beneficial owner.

Bitcoin is the first and best-known cryptocurrency, launched in 2009. It runs on a decentralized network (blockchain), without a central authority. Its maximum supply is capped at 21 million units.

A blockchain is a distributed digital ledger in which transactions are recorded in blocks linked together cryptographically. The technology underpins cryptocurrencies and ensures transparency and tamper resistance.

A stablecoin is a cryptocurrency whose value is pegged to a stable asset, usually a fiat currency such as the US dollar. Its purpose is to reduce the volatility typical of cryptocurrencies.

Altcoin is the generic name for any cryptocurrency other than Bitcoin. It covers thousands of projects with very different uses and risk levels.

Ethereum is a blockchain platform that enables the execution of smart contracts and decentralized applications. Its native currency is called Ether (ETH).

A digital wallet (wallet) stores the keys that let you access and transfer cryptocurrencies. It can be hot (connected to the internet) or cold (offline), with the latter being more secure.

A private key is the secret code that gives you control over the cryptocurrencies in a wallet. Whoever holds the private key controls the funds; losing it means losing access.

A cryptocurrency exchange is a platform where crypto-assets are bought, sold, and swapped. Choosing a regulated, secure exchange reduces risk.

A token is a digital unit of value issued on an existing blockchain. It can represent a currency, an access right, an asset, or a stake in a project.

A smart contract is a program that executes automatically on a blockchain when predefined conditions are met, without intermediaries. It underlies decentralized applications.

Mining is the process by which transactions are validated and added to the blockchain, with participants rewarded in cryptocurrency. It consumes significant computing power and energy.

Halving is the scheduled reduction by half of the mining reward, occurring at fixed intervals for Bitcoin. It slows down the rate at which new units are issued.

DeFi (Decentralized Finance) brings together financial services built on blockchain, such as lending and exchanges, without traditional institutions. It offers open access but carries technical and regulatory risks.

An NFT (Non-Fungible Token) is a unique digital token that certifies ownership of a digital object. Unlike cryptocurrencies, NFTs are not interchangeable and their markets are highly speculative.

Staking means locking up cryptocurrencies to help support the operation of a blockchain network, in exchange for rewards. It carries technical and market risks, and funds may be unavailable for a period.

Web3 is a vision of the internet based on decentralized networks and blockchain, in which users own their data and assets. It is a developing field, with maturity and regulation still uncertain.

The network fee (gas fee) is the cost paid to process a transaction on a blockchain. It varies with network congestion and can rise sharply during periods of heavy activity.

A crypto-asset is a digital representation of value or rights, based on blockchain technology. The category includes coins, tokens, and stablecoins.

A distributed ledger (Distributed Ledger Technology) is a database shared among multiple participants, without a central authority. Blockchain is its best-known form.

CNPF is the authority that regulates and supervises the non-bank financial market in the Republic of Moldova, including the capital market. Its role is to protect investors and ensure the market functions properly.

ESMA is the European authority for financial markets. In 2018 it introduced protective measures for retail investors — leverage limits on CFDs and a ban on binary options. These measures are now permanently enforced by the national authorities of each member state, at the same thresholds.

MiFID II is the European framework that regulates markets in financial instruments. It sets out transparency rules, client classification, and investor-protection obligations for investment firms in the EU.

A regulated broker is authorized and supervised by a recognized financial authority. Regulation imposes rules for the protection of client funds and transparency. Checking a broker's regulatory status is the first step in choosing one.

The compensation fund protects investors if a member firm becomes insolvent and cannot meet its obligations. In the Republic of Moldova, the maximum compensation per investor is the equivalent in lei of 1,000 euros.

KYC (Know Your Customer) is the procedure by which regulated brokers verify clients' identity before opening an account. It is part of the anti-money-laundering (AML) rules and protects both the client and the firm.

ASF is the authority that regulates and supervises the capital market, insurance, and private pensions in Romania. It sets rules for investor protection.

The National Bank of Moldova is the central bank of the Republic of Moldova. It manages monetary policy, supervises the banking system, and publishes the official exchange rates daily.

Law 177/2025 regulates how firms may promote, sell, and distribute financial instruments in the Republic of Moldova. It initiated the regulation of the derivatives market and strengthened investor protection.

Segregation of funds means keeping clients' money in accounts separate from the broker's own funds. This way, if the firm becomes insolvent, client funds are protected.

A risk warning is a mandatory disclosure through which firms draw attention to the risk of loss. For CFDs, it includes the percentage of retail investor accounts that lose money.

Regulations divide clients into professional and retail categories. Retail investors benefit from a higher level of protection, including leverage limits and mandatory warnings.

A conflict of interest arises when a financial firm's interests may clash with those of the client. Regulated firms are required to identify, manage, and disclose such situations.

AML (Anti-Money Laundering) brings together the rules by which financial firms prevent money laundering and the financing of illegal activities. KYC procedures are part of this framework.

GDPR is the European regulation on the protection of personal data. It imposes strict rules on firms for collecting, storing, and using client data, with clear rights for data subjects.

Insider trading means using confidential, non-public information to gain an advantage in the market. It is illegal and sanctioned by financial authorities.

Market manipulation covers actions intended to artificially distort the price or volume of an asset in order to mislead other participants. It is prohibited and prosecuted by regulators.

Market abuse is the general term for illegal practices that undermine market integrity, such as insider trading and price manipulation.

Best execution is the obligation of investment firms to obtain the best possible outcome for clients when executing orders, taking into account price, cost, speed, and likelihood of execution.

The suitability test assesses whether a financial product matches the client's knowledge, experience, and objectives. Regulated firms are required to apply it to protect investors.

A license is the authorization granted by a financial authority to a firm to provide investment services. Verifying the license and the authority that issued it is the first step in evaluating a broker.

CySEC (Cyprus) and FCA (United Kingdom) are internationally recognized financial market regulators. Many global brokers are authorized by such authorities, which subjects them to strict rules.

In the Republic of Moldova, investment gains are treated as capital gains. The taxable base is 50% of the realized gain, and the standard income tax rate is 12%, resulting in an effective tax of about 6% of profit. It is declared using form CET18.

A capital gain is the positive difference between the selling price and the purchase price of an asset. In the Republic of Moldova, the taxable base is 50% of the gain, and the income tax rate is 12%, resulting in an effective tax of about 6%.

In the Republic of Moldova, dividends from domestic sources are generally taxed with a final withholding of 6%, while dividends from foreign sources are taxed at 12%. Final withholding means the tax is applied at the source.

The tax treatment of interest income in the Republic of Moldova differs by source: interest on state securities is exempt from tax (0%, as of August 15, 2024, under Law 214/2024), interest from banks and domestic corporate bonds is taxed at 6%, and interest from foreign sources is taxed at 12%.

Rental income earned by individuals in the Republic of Moldova is taxed at a rate of 7%, under the Tax Code (art. 90¹ para. (3⁴)). This is relevant for those who earn passive income from real estate.

CET18 is the individual income tax return in the Republic of Moldova. It is used to declare, among other things, gains from investments. The filing deadline is generally April 30.

CRS (Common Reporting Standard) is the standard for the automatic exchange of financial account information between countries, in which the Republic of Moldova has participated since 2024. This means data on foreign accounts can be reported to the authorities.

Double taxation treaties prevent the same income from being taxed in two countries. The Republic of Moldova has such treaties with many states, but not with all, which matters for foreign investments.

The fiscal year is the period for which income and taxes are calculated. In the Republic of Moldova, for individuals, the fiscal year coincides with the calendar year.

FOMO is the fear of missing out on an opportunity, which pushes traders to enter positions impulsively, without analysis, simply because the price is "running." It is one of the most common emotional traps in trading.

A trading plan is a set of written rules that establish when you enter and exit a position, how much you risk, and how you manage capital. The discipline to follow it separates rational decisions from emotional ones.

Overtrading means opening an excessive number of trades, often out of emotion or the desire to recover losses. It increases costs (spread, commissions) and risk exposure, eroding capital.

A trading journal is a written record of every trade: the reason for entry, the levels used, the outcome, and the emotions felt. Reviewing the journal periodically helps identify recurring mistakes and improve discipline.

Discipline means sticking to the trading plan and risk rules even under emotional pressure. It is one of the traits that separates consistent results from random ones.

Revenge trading means impulsively opening positions to quickly recover a recent loss. It usually leads to poor decisions and further losses.

Loss aversion is the tendency to feel losses more intensely than equivalent gains. It can lead traders to hold losing positions for too long.

Greed and fear are the two emotions that most often drive decisions in the market. Greed pushes toward excessive risk, while fear leads to premature exits or to missing rational opportunities.

Overconfidence is the tendency to overestimate one's own knowledge or ability to predict the market. It often leads to excessive risk-taking and to ignoring warning signals.

A cognitive bias is a systematic error in thinking that distorts decisions. In trading, biases can drive irrational choices; recognizing them is the first step toward correcting them.

The herd effect is the tendency to follow the crowd's decisions instead of doing one's own analysis. In the markets, it fuels speculative bubbles and selling panics.

Anchoring is the tendency to rely too heavily on an initial piece of information (for example, the purchase price) when making subsequent decisions, even when it is no longer relevant.

Confirmation bias is the tendency to seek out and retain only information that supports your opinion while ignoring information that contradicts it. It can lead to one-sided investment decisions.

Mental accounting is the tendency to treat money differently depending on its source or intended use, even though its value is the same. It can distort decisions, for example by making it easier to risk a recent gain.

The disposition effect is the tendency to sell profitable assets too quickly and to hold losing ones for too long. It reflects emotional rather than rational position management.

The illusion of control is the belief that you can influence outcomes that, in reality, largely depend on chance or the market. It can lead to taking on unjustified risk.