Trading Glossary Explained

Trading is a complex process, which includes many actions that a person unfamiliar with the financial world will find puzzling. Once you launch your trading career, you will be swamped with trading terms whose meaning you will not know. You will not immediately grasp how the market value of a business differs from its book value. Nor will you understand what CPI stands for and how it is different from IPO, unless we supply you with a glossary of all confusing terms that you meet in a trading business.

To help you avoid confusion, we have compiled a comprehensive glossary of financial terms used in the markets. All trading glossary is presented in our glossary in alphabetical order and is explained with linguistic precision. Any financial term that sounds baffling at you now will become crystal clear once you read its definition in our glossary below.

All | # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

There are currently 7 names in this directory beginning with the letter O.

Offer

This term refers to a trader’s expressed intention to buy an asset or financial instrument from another trader or institution.

On Balance Volume (OBV)

It is a form of technical analysis enabling traders to make predictions about future price movements based on the asset’s previous trading volume.

Open Position

This term refers to a trade still able to generate a profit or incur a loss. when a position is closed, all profits and losses have been realized, and the trade is no longer active. Open positions are either long or short; that is, they allow traders to profit when markets are on the rise and when they are sliding.

Option

It is a financial instrument that offers traders the right to buy or sell an asset when its price moves beyond a certain price within a specified time period.

Order

It is a request sent by a broker or a trading platform to make a trade on a financial instrument.

Out of Money (OTM)

This term refers to a contract that has not yet reached the value of its strike price. In other words, it has no intrinsic value and will expire worthless.

Over-the-Counter Trading (OTC)

This term refers to a trade not made on a formal exchange.