# Trading Glossary A to Z

> A plain English trading glossary from A to Z. Short definitions of key terms in stocks, forex, futures, options, crypto and risk, each linked to a full lesson.

Source: https://learn.tradelabsai.com/reference/trading-glossary-a-to-z/  
Track: Reference · Level: Beginner · Updated: 2026-10-03  
Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice.  
Cite as: TradeLabs Learn, "Trading Glossary A to Z", https://learn.tradelabsai.com/reference/trading-glossary-a-to-z/

This glossary gives short, plain English definitions of the terms you will meet most often in trading and investing. Each entry links to a full lesson where the idea is explained with examples, so use it as a quick reference and a map of the school. Terms are grouped by their first letter. If a word you need is missing, try the search box at the top of the page, which searches every lesson title and summary.

## A

- **Alpha:** return above what a portfolio's market exposure explains. See [Alpha and Beta](https://learn.tradelabsai.com/portfolio/alpha-and-beta/).
- **Arbitrage:** profiting from price differences for the same or related assets. See [Arbitrage](https://learn.tradelabsai.com/markets/arbitrage/).
- **Ask:** the lowest price a seller will accept. See [Bid-Ask Spread](https://learn.tradelabsai.com/markets/bid-ask-spread/).
- **Asset allocation:** how a portfolio is split across asset classes. See [Asset Allocation](https://learn.tradelabsai.com/portfolio/asset-allocation/).
- **ATR (average true range):** an indicator of typical price range per bar. See [ATR (Average True Range)](https://learn.tradelabsai.com/indicators/atr/).

## B

- **Backtest:** testing a strategy on historical data. See [Backtesting Methodology](https://learn.tradelabsai.com/research/backtesting-methodology/).
- **Backwardation:** futures priced below spot. See [Backwardation](https://learn.tradelabsai.com/futures/backwardation/).
- **Basis:** the difference between futures and spot prices. See [Basis and Basis Trading](https://learn.tradelabsai.com/futures/basis-and-basis-trading/).
- **Beta:** how much an asset moves relative to the market. See [Alpha and Beta](https://learn.tradelabsai.com/portfolio/alpha-and-beta/).
- **Bid:** the highest price a buyer will pay. See [Bid-Ask Spread](https://learn.tradelabsai.com/markets/bid-ask-spread/).
- **Bollinger Bands:** volatility bands around a moving average. See [Bollinger Bands](https://learn.tradelabsai.com/indicators/bollinger-bands/).
- **Bond:** a loan to a government or company that pays interest. See [What Is a Bond?](https://learn.tradelabsai.com/markets/what-is-a-bond/).
- **Break of structure:** price breaking a prior swing high or low. See [Break of Structure](https://learn.tradelabsai.com/price-action/break-of-structure/).
- **Breakout:** price moving beyond a key level. See [Breakout Trading](https://learn.tradelabsai.com/strategies/breakout-trading/).

## C

- **Call option:** the right to buy at a set price. See [Calls and Puts](https://learn.tradelabsai.com/options/calls-and-puts/).
- **Candlestick:** a chart bar showing open, high, low and close. See [How to Read Candlesticks](https://learn.tradelabsai.com/candlesticks/how-to-read-candlesticks/).
- **CFD:** a contract paying the difference in an asset's price. See [What Is a CFD?](https://learn.tradelabsai.com/markets/what-is-a-cfd/).
- **Clearing house:** the central counterparty that guarantees trades. See [Clearing Houses and Central Counterparties](https://learn.tradelabsai.com/market-structure/clearing-houses/).
- **Contango:** futures priced above spot. See [Contango](https://learn.tradelabsai.com/futures/contango/).
- **Correlation:** how consistently two assets move together. See [Covariance and Correlation](https://learn.tradelabsai.com/math/covariance-and-correlation/).
- **Credit spread:** extra yield over government bonds for credit risk. See [Credit Spreads](https://learn.tradelabsai.com/bonds-credit/credit-spreads/).

## D

- **Day trading:** opening and closing positions within the same day. See [Day Trading](https://learn.tradelabsai.com/strategies/day-trading/).
- **Delta:** an option's price change per $1 move in the underlying. See [Delta](https://learn.tradelabsai.com/options/delta/).
- **Derivative:** a contract whose value comes from another asset. See [What Is a Derivative?](https://learn.tradelabsai.com/markets/what-is-a-derivative/).
- **Diversification:** spreading risk across assets that move differently. See [Diversification](https://learn.tradelabsai.com/portfolio/diversification/).
- **Drawdown:** a fall from an equity peak. See [Maximum Drawdown](https://learn.tradelabsai.com/portfolio/maximum-drawdown/).
- **Duration:** a bond's sensitivity to interest rate changes. See [Duration](https://learn.tradelabsai.com/bonds-credit/duration/).

## E

- **ETF:** a fund that trades on an exchange like a stock. See [What Is an ETF?](https://learn.tradelabsai.com/markets/what-is-an-etf/).
- **Expectancy:** average profit or loss per trade. See [Expectancy](https://learn.tradelabsai.com/risk/expectancy/).
- **Expiration:** the date an option or future ends. See [Expiration](https://learn.tradelabsai.com/markets/expiration/).
- **Exponential moving average:** an average weighted toward recent prices. See [Exponential Moving Average (EMA)](https://learn.tradelabsai.com/indicators/exponential-moving-average/).

## F

- **Fair value gap:** a price imbalance left by a fast move. See [Fair Value Gaps](https://learn.tradelabsai.com/smart-money/fair-value-gaps/).
- **Fibonacci retracement:** levels based on Fibonacci ratios. See [Fibonacci Retracements](https://learn.tradelabsai.com/indicators/fibonacci-retracements/).
- **Funding rate:** periodic payments between perpetual futures longs and shorts. See [Funding Rates](https://learn.tradelabsai.com/crypto/funding-rates/).
- **Futures contract:** an agreement to trade an asset at a set price on a future date. See [What Is a Future?](https://learn.tradelabsai.com/markets/what-is-a-future/).

## G

- **Gamma:** how fast an option's delta changes. See [Gamma](https://learn.tradelabsai.com/options/gamma/).
- **Gap:** a jump in price between sessions. See [Price Gaps and How to Trade Them](https://learn.tradelabsai.com/chart-patterns/price-gaps-and-how-to-trade-them/).
- **Greeks:** measures of an option's sensitivities. See [The Option Greeks Explained](https://learn.tradelabsai.com/options/the-option-greeks-explained/).

## H

- **Hedging:** reducing risk with an offsetting position. See [Hedging](https://learn.tradelabsai.com/markets/hedging/).
- **High frequency trading:** very fast automated trading. See [High-Frequency Trading](https://learn.tradelabsai.com/algo-trading/high-frequency-trading/).
- **Historical volatility:** volatility measured from past returns. See [Historical and Realized Volatility](https://learn.tradelabsai.com/volatility/historical-volatility/).

## I

- **Implied volatility:** volatility priced into options. See [Implied Volatility (IV)](https://learn.tradelabsai.com/volatility/implied-volatility/).
- **Index:** a basket that tracks part of a market. See [What Is an Index?](https://learn.tradelabsai.com/markets/what-is-an-index/).
- **Insider trading:** illegal trading on confidential information. See [Insider Trading](https://learn.tradelabsai.com/industry/insider-trading/).
- **Iron condor:** an options strategy that profits in a range. See [Iron Condor](https://learn.tradelabsai.com/options/iron-condor/).

## K

- **Kelly criterion:** a formula for growth optimal bet size. See [Kelly Criterion](https://learn.tradelabsai.com/risk/kelly-criterion/).

## L

- **Leverage:** controlling more than your capital through borrowing. See [Leverage](https://learn.tradelabsai.com/markets/leverage/).
- **Limit order:** an order at a set price or better. See [Limit Orders](https://learn.tradelabsai.com/orders/limit-orders/).
- **Liquidation:** forced closing of a leveraged position. See [Liquidations in Crypto](https://learn.tradelabsai.com/crypto/liquidations-in-crypto/).
- **Liquidity:** how easily an asset trades without moving its price. See [Liquidity](https://learn.tradelabsai.com/markets/liquidity/).
- **Long position:** owning an asset to profit if it rises. See [Long Positions](https://learn.tradelabsai.com/markets/long-positions/).
- **Lot:** a standard trade size in forex. See [Lots: Standard, Mini and Micro](https://learn.tradelabsai.com/forex/lots-standard-mini-and-micro/).

## M

- **MACD:** a momentum indicator from two moving averages. See [MACD](https://learn.tradelabsai.com/indicators/macd/).
- **Margin:** collateral deposited to open leveraged positions. See [Margin](https://learn.tradelabsai.com/markets/margin/).
- **Market maker:** a firm quoting both bid and ask. See [Market Makers and Liquidity Providers](https://learn.tradelabsai.com/market-structure/market-makers/).
- **Market order:** an order to trade immediately at the best price. See [Market Orders](https://learn.tradelabsai.com/orders/market-orders/).
- **Mean reversion:** the tendency of prices to return toward an average. See [Mean Reversion](https://learn.tradelabsai.com/strategies/mean-reversion/).
- **Momentum:** the tendency of trends to persist. See [Momentum Trading](https://learn.tradelabsai.com/strategies/momentum-trading/).
- **Moving average:** the average price over a set period. See [Moving Averages Explained](https://learn.tradelabsai.com/indicators/moving-averages-explained/).

## O

- **Open interest:** the number of open futures or options contracts. See [Open Interest](https://learn.tradelabsai.com/markets/open-interest/).
- **Option:** the right, not the obligation, to buy or sell at a set price. See [What Is an Option?](https://learn.tradelabsai.com/markets/what-is-an-option/).
- **Order block:** a zone of large institutional orders in smart money concepts. See [Order Blocks](https://learn.tradelabsai.com/smart-money/order-blocks/).
- **Order book:** the list of resting buy and sell orders. See [The Order Book and Market Depth](https://learn.tradelabsai.com/market-structure/the-order-book-and-market-depth/).
- **Overfitting:** a model fitted to noise in past data. See [Overfitting and Curve Fitting](https://learn.tradelabsai.com/research/overfitting-and-curve-fitting/).

## P

- **Paper trading:** practising with simulated money. See [Paper Trading](https://learn.tradelabsai.com/start-here/paper-trading/).
- **Perpetual futures:** futures with no expiry, kept near spot by funding. See [Perpetual Futures](https://learn.tradelabsai.com/crypto/perpetual-futures/).
- **Pip:** the standard unit of forex price movement. See [Pips and Pipettes](https://learn.tradelabsai.com/forex/pips-and-pipettes/).
- **Position sizing:** deciding how much to trade. See [Position Sizing](https://learn.tradelabsai.com/risk/position-sizing/).
- **Prediction market:** a market where contracts pay out on real world events, such as Polymarket. See [What Are Prediction Markets?](https://learn.tradelabsai.com/prediction-markets/what-are-prediction-markets/).
- **Price to beat:** the starting price an up or down round is judged against. See [Price to Beat and How Rounds Settle](https://learn.tradelabsai.com/prediction-markets/price-to-beat/).
- **Profit factor:** gross profits divided by gross losses. See [Profit Factor](https://learn.tradelabsai.com/portfolio/profit-factor/).
- **Put option:** the right to sell at a set price. See [Calls and Puts](https://learn.tradelabsai.com/options/calls-and-puts/).

## R

- **Rebalancing:** trading back to target weights. See [Rebalancing](https://learn.tradelabsai.com/portfolio/rebalancing/).
- **Resistance:** a price level where selling tends to appear. See [Support and Resistance](https://learn.tradelabsai.com/price-action/support-and-resistance/).
- **Risk reward ratio:** potential gain compared with potential loss. See [Risk/Reward Ratio](https://learn.tradelabsai.com/risk/risk-reward-ratio/).
- **RSI:** an oscillator measuring the speed of price moves. See [RSI (Relative Strength Index)](https://learn.tradelabsai.com/indicators/rsi/).

## S

- **Scalping:** very short term trading for small gains. See [Scalping](https://learn.tradelabsai.com/strategies/scalping/).
- **Sharpe ratio:** excess return per unit of volatility. See [Sharpe Ratio](https://learn.tradelabsai.com/portfolio/sharpe-ratio/).
- **Short selling:** selling borrowed assets to profit from a fall. See [Short Selling](https://learn.tradelabsai.com/markets/short-selling/).
- **Slippage:** the difference between expected and actual fill price. See [Slippage](https://learn.tradelabsai.com/markets/slippage/).
- **Spread:** the gap between bid and ask, or a multi leg position. See [Bid-Ask Spread](https://learn.tradelabsai.com/markets/bid-ask-spread/).
- **Stablecoin:** a crypto token designed to hold a steady value. See [Stablecoins](https://learn.tradelabsai.com/crypto/stablecoins/).
- **Stop loss:** an order that exits a losing position. See [Stop Loss Strategies](https://learn.tradelabsai.com/risk/stop-loss-strategies/).
- **Support:** a price level where buying tends to appear. See [Support and Resistance](https://learn.tradelabsai.com/price-action/support-and-resistance/).
- **Swing trading:** holding positions for days to weeks. See [Swing Trading](https://learn.tradelabsai.com/strategies/swing-trading/).

## T

- **Theta:** an option's value lost per day. See [Theta](https://learn.tradelabsai.com/options/theta/).
- **Tick:** the minimum price increment. See [Ticks and Tick Size](https://learn.tradelabsai.com/markets/ticks-and-tick-size/).
- **Time in force:** how long an order stays active. See [Time in Force: Day, GTC and GTD Orders](https://learn.tradelabsai.com/orders/time-in-force/).
- **Trailing stop:** a stop that follows price as it moves in your favour. See [Trailing Stop Orders](https://learn.tradelabsai.com/orders/trailing-stop-orders/).
- **Trend following:** trading in the direction of established trends. See [Trend Following](https://learn.tradelabsai.com/strategies/trend-following/).

## V

- **Value at risk:** a statistical estimate of potential loss. See [Value at Risk (VaR)](https://learn.tradelabsai.com/portfolio/value-at-risk/).
- **Vega:** an option's sensitivity to implied volatility. See [Vega](https://learn.tradelabsai.com/options/vega/).
- **VIX:** an index of expected S&P 500 volatility. See [The VIX](https://learn.tradelabsai.com/volatility/the-vix/).
- **Volatility:** how much prices vary. See [Volatility](https://learn.tradelabsai.com/markets/volatility/).
- **Volume profile:** traded volume at each price level. See [Volume Profile](https://learn.tradelabsai.com/volume/volume-profile/).
- **VWAP:** volume weighted average price. See [VWAP](https://learn.tradelabsai.com/volume/vwap/).

## W

- **Wash sale:** a US tax rule disallowing some losses. See [Wash Sale Rule](https://learn.tradelabsai.com/industry/wash-sale-rule/).
- **Win rate:** the share of trades that make money. See [Win Rate and Payoff Ratio](https://learn.tradelabsai.com/portfolio/win-rate-and-payoff-ratio/).
- **Wyckoff method:** a framework for reading accumulation and distribution. See [Wyckoff Method](https://learn.tradelabsai.com/smart-money/wyckoff-method/).

## Y

- **Yield curve:** interest rates across maturities. See [Yield Curves](https://learn.tradelabsai.com/bonds-credit/yield-curves/).
- **Yield to maturity:** a bond's total return if held to maturity. See [Yield to Maturity](https://learn.tradelabsai.com/bonds-credit/yield-to-maturity/).

## Frequently asked questions

### What are the most important trading terms for beginners?

Bid, ask, spread, market order, limit order, stop loss, leverage, margin, position sizing and risk reward ratio are good places to start.

### Is there a glossary for options terms?

Options terms such as call, put, strike, delta, gamma, theta, vega and implied volatility are included above, each linked to a full lesson.

### How do I find a term that is not listed?

Use the search box at the top of every page, which searches all lesson titles and summaries.

Next, find every key formula in one place in the [Formula Library](https://learn.tradelabsai.com/reference/formula-library/).

## Continue learning

- Next lesson: [Formula Library](https://learn.tradelabsai.com/reference/formula-library/)
- Related: [FX Forward Points Calculator](https://learn.tradelabsai.com/tools/fx-forward-points-calculator/): Free FX forward points calculator. Enter the spot rate, the two currencies' interest rates and days to get the forward rate, forward points and premium.
- Related: [Formula Library](https://learn.tradelabsai.com/reference/formula-library/): Every key trading formula in one place: returns, risk, position sizing, ratios, options, bonds, futures and forex, each with a link to a full lesson and calculator.
- Related: [Visual Library](https://learn.tradelabsai.com/reference/visual-library/): A visual library of the most useful trading diagrams: candlestick anatomy, support and resistance, trends, option payoffs, drawdowns and the order book.
- Related: [Beginner Learning Path](https://learn.tradelabsai.com/start-here/beginner-learning-path/): A step by step route through the beginner trading lessons, from how markets work and order types to charts, risk management and your first real trades.
- Related: [How This School Works](https://learn.tradelabsai.com/start-here/how-this-school-works/): How this free trading school is organised: tracks, sections, levels, prerequisites and learning paths, plus how to get the most from every lesson.
- Related: [Market Basics](https://learn.tradelabsai.com/markets/market-basics/): How financial markets work: exchanges, brokers, the order book, bids and asks, market makers and how millions of orders become one live price.