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Trading terms glossary
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Acquisition (mergers and acquisitions)
When one company purchases or ‘takes over’ either the majority or the entirety of the ownership stake of another company.

American Depositary Receipt (ADR)
The ADR represents securities of a foreign company and enables American investors to own shares in foreign corporations. ADRs trade on the US stock exchange and the sponsoring bank collects dividends, pays local taxes and converts them to dollars for distribution to American shareholders. 

American Option
An options contract which can be exercised at any time prior to expiration.

Aggregate demand
The overall demand for goods and services in the economy, showing how current price relates to GDP (gross domestic product).

Aggregate supply

The total supply of goods and services that can be sold in a national economy – at a particular time and during a particular period. 

Alpha
The measurement of the performance of an investment portfolio, against a certain benchmark. Measuring the “success” of a portfolio over a period of time. The alpha can be positive or negative, depending on its proximity to the market.

Learn more about Alpha

Amortisation
Paying off a loan or obligation over a period of time in installments or transfers. Amortisation will often incur interest payments, at the discretion of the lender.

Annual general meeting (AGM)
A yearly meeting of the shareholders of a company and its board of directors. Generally, the directors to present the company’s annual report to shareholders at this meeting.

Arbitrage
Arbitrage is simultaneously buying and selling an asset, in order to take advantage of a temporary difference in price. The asset will usually be bought and sold in different markets. It can also be the calculation of the relative value of stocks, bonds or funds at the same time, in two or more places.

Learn how to use Arbitrage trading to increase profits.

Ask (Offer) price
The asking price from the seller, at which you can buy an asset or security.

Asset classes
Physical assets or financial assets grouped into a category. The instruments are grouped based on whether they have similar characteristics, behave in the same way on the market, or follow the same laws and regulations.

Assets
In trading, an asset refers to what is being traded or exchanged on the market, for example stocks, bonds, commodities or currencies. It is an economic resource which can be owned or exchanged to return a profit or held for a future benefit. 

At the money
At the money (ATM) is a term used to describe the relationship between an option’s strike price and the underlying securities price. The term describes a strike price that is the same as the market price. 

Learn more about At the Money

Auction
An auction market facilitates competition between buyers and sellers, where buyers indicate the maximum price they will pay for an asset, while sellers express the lowest price they will sell at. 

Automated trading (to be expanded)
Automated trading – sometimes known as algorithmic trading – is the use of algorithms for making trade orders. It allows traders to set specific rules and parameters for making trades, which will be executed automatically once triggered. 

Averaging down
When a stock owner purchases additional assets when the asset’s price drops, it is referred to as averaging down. The purpose of the second purchase is to decrease the average price at which the investor purchased the stock.

Learn more about Averaging Down