Ask
The lowest price currently offered by a seller.
PLAIN-ENGLISH GLOSSARY
Learn the language. Challenge the jargon.
Concise definitions for the terms used across trading, investing and market commentary.
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Basis
The difference between a cash/spot price and a related futures price.
Bid
The highest price currently offered by a buyer.
CFD
A contract for difference: an OTC agreement settling the change in an asset’s price without ownership of that asset.
COT report
The CFTC’s weekly Commitments of Traders breakdown of reportable futures and options positions by trader category.
Delta
An option sensitivity estimate: the expected price change for a one-unit move in the underlying, all else equal.
Drawdown
The decline from a portfolio or strategy peak to a subsequent trough.
ETF
An exchange-traded fund that pools assets and trades on an exchange like a share.
Expectancy
Average outcome per decision: win probability × average win, minus loss probability × average loss.
Futures
A standardised exchange-traded agreement to buy or sell an asset at a future date under specified terms.
Leverage
Exposure larger than the capital committed, magnifying both gains and losses.
Liquidity
The ability to transact promptly with limited price impact.
Margin
Collateral required to support a leveraged position; in futures, it is a performance bond rather than part-payment.
Open interest
The number of derivative contracts that remain open rather than offset or settled.
R-multiple
A result expressed relative to the initial planned risk. A £100 loss budget is 1R.
Slippage
The difference between an expected execution price and the price actually received.
Spread
The difference between bid and ask, or a multi-leg position involving related instruments.
Volatility
The magnitude and frequency of price variation, measured historically or implied from option prices.
Definitions are deliberately simplified. Contract specifications, legal meaning and market practice can vary by product, venue and jurisdiction.