Trading terms glossary
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B

Backwardation
This is a state when the price of a futures contract is trading lower than the expected spot price.

Learn more about backwardation

Base rate
The interest rate a central bank will charge for lending to other banks.

Base currency
In trading the term base currency is the first currency listed in a currency pair. It can also mean the accounting currency used by banks and other businesses.

Basis point
A basis point is a unit of measurement, equal to one one-hundredth of a percent (0.01%). It is used to quantify the change between two percentages, also sometimes referred to as ‘bp’, which is pronounced ‘bip’ or ‘beep’.

Bear trader
A bear trader wants to short sell financial instruments, believing that a market, asset or financial instrument is heading in a downward trajectory. Opposite to “bulls” or “bull traders.”

Bear market
When the market is on a sustained downward trajectory, with the majority of investors selling. 

Bearish
Being bearish means a trader believes that a market, asset or financial instrument is going to experience a downward trajectory. Opposite of “bullish.”

Bear call spread
A strategy in options trading, combining a short call option and a long call option with a higher strike. Basically, a short call with lower strike price + long call with a higher strike price.

Beta
A measure of the risk or volatility of a security or portfolio, when compared to the wider market.

Bid
The price a trader is willing to pay for a certain asset.

Bid-Ask Spread
The difference between the best buy price (bid) and best sell price (offer) for an asset.

Learn more about the Bid-Ask Spread

Blue chip stocks
Blue-chip stocks are the shares of companies that are reputable, financially stable and long-established. A company that is considered blue chip is generally large, at the top of its sector, features on a recognised index, and has a well-known brand. Blue chip stocks may change over time and are therefore difficult to define. 

Bollinger bands
Bollinger bands are a popular form of technical price indicator, based on an asset’s simple moving average (SMA). Often referred to as a ‘lagging indicator,’ as they are reactive not predictive. 

Learn more about using Bollinger Bands in FX Trading.

Bond trading
Bond trading is one way of making profit from fluctuations in the value of corporate or government bonds. This definition can also mean the trading of bonds by a broker on the floor of an exchange. 

Learn more about Bond Trading

Bonds
Bonds investment securities, that involve lending money to an institution for a fixed period of time. They can come in two varieties: corporate bonds and government bonds.

Book value
The monetary value of an asset reflected in an entity’s accounting books/balance sheet, not based on future appreciation or depreciation. 

Bottom line
A company’s bottom line refers to the profit, net income, net earnings or earnings per share (EPS) of a business.

Brent crude
Brent crude is one of the major oil benchmarks used by those trading oil contracts, futures and derivatives. As oil from different fields varies in value, oil benchmarks are a way for traders to understand which types of oil they are trading. Brent crude is mostly drilled from the North Sea oilfields: Brent, Forties, Oseberg and Ekofisk (BFOE).

Broker
A broker is an independent person or a company that organises and executes financial transactions on behalf of another party. They can do this across a number of different asset classes, including stocks, forex, real estate and insurance. A broker will normally charge a commission for the order to be executed.

Bull trader
Bull traders believe that a market, instrument, or sector is going on an upward trajectory. Opposite to “bears” or “bear traders.” 

Bull call spread
A trading strategy that takes advantage of upward market movements, while limiting profit and loss. It is used by trader when they believe a stock will have a limited increase in price. 

Learn more about Bull Call Spreads

Bull market
A market when the majority of investors are buying. Opposite of “bear market.” 

Bullish
Expecting that a market, asset or financial instrument is going to experience an upward trend and acting accordingly. Opposite of “bearish.”

Buy
Taking ownership of a financial asset, whether it is a commodity, stock or another asset.

Buyer/Taker
Refers to the holder of an option, who has the right to purchase the underlying security.

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