Glossary

Account funding is the process of transferring money into an investment or brokerage account so you can begin buying assets or trading.

A periodic summary from your broker or bank showing your holdings, transactions, cash balances, and account activity over a set time frame.

An asset is anything of value that an individual or business owns, which can potentially generate income or grow in worth over time.

Asset allocation is the process of dividing an investment portfolio across different asset types, such as stocks, bonds, and cash, to balance potential return against risk.

A benchmark is a standard, usually a market index, used to compare and evaluate the performance of an investment, fund, or portfolio.

The bid is the highest price buyers are currently willing to pay for an asset, and the ask is the lowest price sellers are willing to accept. The difference between them is the spread, a core trading cost.

A blockchain is a shared digital ledger that records transactions in linked, time-stamped blocks, maintained by a network of computers rather than a single central authority.

A blue-chip stock is a share of a large, well-established company with a long track record of stable operations, reliable earnings, and often consistent dividend payments.

A bond is a loan an investor makes to a government or company in exchange for regular interest payments and the return of the original amount at a set future date.

A broker regulator is an authority that oversees how brokerage firms operate, setting rules for licensing, conduct, and the handling of client money.

A brokerage account is an investment account you open with a broker to buy, hold, and sell assets such as stocks, ETFs, and bonds.

A call option is a contract giving the buyer the right, but not the obligation, to purchase an underlying asset at a set strike price before or at expiration, in exchange for a premium.

A capital gain is the profit you make when you sell an asset for more than you paid for it.

A brokerage account where you can only buy investments using money you have already deposited, with no borrowing. Trades settle from your own available cash.

Cash flow is the movement of money into and out of a business, investment, or personal account over a specific period, showing whether more cash is coming in than going out.

A contract for difference (CFD) is a derivative that pays the difference in an asset's price between opening and closing a position, without owning the underlying asset.

The practice of keeping customer funds in separate accounts from a company's own operating money, so client assets are identifiable and not used for the firm's business expenses.

Cold storage is a way of holding cryptocurrency by keeping the private keys completely offline, reducing exposure to hacking, phishing, and exchange failures.

Compound interest is the process of earning returns not only on your original money but also on the returns that money has already generated, causing balances to grow at an accelerating pace over time.

A corporate bond is a debt security issued by a company to raise money, in which the issuer promises to pay interest and repay the principal at maturity.

Correlation measures how two assets move in relation to each other, ranging from -1 (opposite directions) to +1 (same direction), and is a core input for diversification decisions.

The periodic interest payment a bond issuer makes to bondholders, usually expressed as an annual percentage of the bond's face value.

A credit rating is an independent assessment of how likely a borrower is to repay debt on time, expressed as a letter-grade scale that helps investors gauge default risk.

A crypto exchange is an online platform where users buy, sell, and trade digital assets such as bitcoin and ether, often acting as custodian of those assets until they are withdrawn.

A crypto wallet is a software application or hardware device that stores the private keys used to access, send, and receive cryptocurrency on a blockchain.

A digital asset secured by cryptography and recorded on a distributed ledger, typically a blockchain, that can be transferred peer-to-peer without a traditional intermediary.

A currency pair is the quotation of two currencies traded against each other, showing how much of the quote currency is needed to buy one unit of the base currency.

An investment or savings account that an adult manages on behalf of a minor beneficiary until the minor reaches a specified age.

Custody is the safekeeping of an investor's assets — in crypto, it comes down to who controls the private keys that move the coins: a third party or you.

A practice trading or investing account that uses simulated money, letting you test a platform and strategies without risking real capital.

Diversification is the practice of spreading investments across different assets, sectors, and regions so that no single holding can heavily damage your overall portfolio.

A dividend is a portion of a company's profits paid out to shareholders, usually in cash and typically on a regular schedule.

Dollar-cost averaging is an investing approach where you invest a fixed amount of money at regular intervals, regardless of price, so you buy more units when prices are low and fewer when prices are high.

A drawdown is the decline in a portfolio's value from its most recent peak to a subsequent low, usually expressed as a percentage. It helps investors understand how much an investment has fallen before recovering.

Duration measures how sensitive a bond's price is to changes in interest rates, expressed in years.

An ETF (exchange-traded fund) is a pooled investment fund that holds a basket of assets, such as stocks or bonds, and trades on a stock exchange throughout the day like an individual share.

An exchange rate is the price of one currency expressed in terms of another, showing how much of the second currency is needed to buy one unit of the first.

The expense ratio is the annual fee a fund charges investors, expressed as a percentage of assets, covering management and operating costs. It is deducted automatically from fund returns rather than billed separately.

The expiration date is the final day an options contract is valid; after this date, the option either gets exercised, settled, or expires worthless.

Face value is the amount a bond issuer promises to repay the bondholder at maturity, and the base amount used to calculate coupon payments.

Forex (foreign exchange) is the global market where one currency is traded for another, with prices quoted as currency pairs such as EUR/USD.

A government bond is a debt security issued by a national government to raise money, promising to pay periodic interest and return the face value at maturity.

Hedging is a risk-management technique where an investor takes an offsetting position designed to reduce potential losses in an existing investment, usually at some cost or trade-off.

An index fund is a pooled investment vehicle designed to track the performance of a specific market benchmark, such as a broad stock or bond index, rather than trying to beat it.

Inflation is the rate at which the general level of prices for goods and services rises over time, gradually reducing the purchasing power of money.

Investor protection refers to the rules, structures, and safeguards designed to keep account holders' money and interests secure when dealing with financial firms and markets.

An IPO (Initial Public Offering) is the first time a private company sells shares to the public, listing its stock on an exchange so anyone with a brokerage account can buy or sell it.

A financial account owned by two or more people, where each owner typically shares access rights and responsibility for the account.

A junk bond is a corporate bond rated below investment grade, offering higher yields to compensate investors for a higher risk of default.

KYC (Know Your Customer) is the identity-verification process financial firms use to confirm who a client is before allowing them to open an account, deposit funds, or trade.

Leverage is the use of borrowed funds to control a market position larger than the trader's own capital, amplifying both potential gains and potential losses.

Liquidity describes how quickly and cheaply an asset can be converted into cash without significantly affecting its price.

Lot size is the standardized quantity of a currency or instrument traded in one position, such as a standard lot of 100,000 units in forex, which determines how much each price movement is worth.

The minimum amount of equity an investor must keep in a margin account to continue holding a leveraged position; falling below it can trigger a margin call.

A brokerage account that lets you borrow money from your broker to buy investments, using your existing assets as collateral.

A margin call is a broker's demand that a trader deposit additional funds or securities into a margin account after the account's equity falls below the required maintenance level.

Market capitalization is the total market value of a company's outstanding shares, calculated by multiplying the current share price by the number of shares outstanding.

Maturity is the date on which a bond's issuer repays the bond's face value to the holder, ending the bond's life and its regular interest payments.

Net Asset Value (NAV) is the per-share value of a fund's holdings, calculated by subtracting liabilities from total assets and dividing by the number of shares outstanding.

Nominal return is the raw percentage gain on an investment before inflation, while real return adjusts that figure for inflation to show change in purchasing power.

A contract giving the holder the right, but not the obligation, to buy or sell an underlying asset at a set price before or at a specific expiration date.

A pip is the smallest standard price increment in a forex quote, typically 0.0001 for most currency pairs and 0.01 for pairs quoted in Japanese yen.

The price an option buyer pays to the seller for the rights the contract provides, quoted per share and typically multiplied by the contract size.

The original amount of money you invest, deposit, or borrow, separate from any interest, returns, or fees earned or added over time.

A private key is the secret cryptographic code that proves ownership of cryptocurrency and authorizes transactions; whoever controls the key controls the funds.

A put option gives the buyer the right, but not the obligation, to sell an underlying asset at a set strike price before or at expiration.

Rebalancing is the process of adjusting a portfolio back to its target asset allocation after market movements cause the actual weights to drift away from plan.

Regulation is the set of rules and oversight applied to financial markets, brokers, and products, designed to promote fair conduct, transparency, and investor protection.

A long-term savings account designed to help individuals set aside money for retirement, often with special tax treatment and rules around contributions and withdrawals.

Return is the gain or loss on an investment over a period, usually shown as a percentage of the amount invested.

A formal statement that explains the potential losses and uncertainties tied to an investment product or service, so you can understand what you are getting into before committing money.

Risk tolerance is the degree of loss and price fluctuation an investor is willing and able to accept in pursuit of potential returns.

Rollover is the process of extending an open forex or CFD position past the daily cutoff, usually with an interest-based credit or charge applied for holding it overnight.

Scam awareness is the practice of recognizing and avoiding fraudulent investment offers by checking claims, verifying who you are dealing with, and staying alert to pressure tactics.

The current market cost to buy or sell one share of a company's stock, determined by supply and demand on an exchange.

Short selling is a strategy where a trader borrows shares and sells them, aiming to buy them back later at a lower price and profit from a decline in the asset's value.

The spread is the difference between the price at which you can buy an asset (ask) and the price at which you can sell it (bid). It is a core trading cost, especially in forex and CFD markets.

A stablecoin is a cryptocurrency designed to hold a steady value by tracking a reference asset, most often a major currency, though the strength of that peg depends on how the coin is backed and held.

A stock is a share of ownership in a company, giving the holder a claim on part of the business and potential participation in its profits and growth.

A stock split divides a company's existing shares into more shares, lowering the price per share while keeping the total value of your holding the same.

The fixed price at which an option holder can buy or sell the underlying asset if the option is exercised.

Suitability is the principle that an investment product or strategy should reasonably match an individual investor's goals, financial situation, knowledge, and risk tolerance.

A ticker symbol is a short, unique code of letters (and sometimes numbers) used to identify a publicly traded security, such as a stock or ETF, on an exchange.

The length of time you expect to hold an investment before you need the money, which shapes how much risk and volatility you can reasonably accept.

Volatility measures how much and how quickly an asset's price moves up and down over time, often used as a shorthand for investment risk.

A withdrawal is the process of taking money out of an investment or brokerage account and transferring it to a linked bank account or payment method.

Yield is the income an investment generates, expressed as a percentage of its price, commonly used to compare bonds, dividend stocks, and funds.