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 9 names in this directory beginning with the letter R.

Rally

It is a period in which a price of an asset experiences sustained upward movement. A rally usually happens after a period in which prices have been flat, traded in a narrow band, or experienced a drop.

Range

It is the difference between a market’s highest and lowest price in a given period. Range is an indicator of volatility. If the range at the market is wide, this means that it is volatile.

Reserves

These are the liquid assets set aside for future use by an individual, business, or central bank. Reserves are usually currencies or gold. For traders, reserves are kept in cash that is quickly accessed.

Resistance Level

It is the point on a price chart at which an upward price trajectory is checked by an overwhelming inclination to sell the asset. If a market price is close to a resistance level, a trader can close his or her position taking the profit instead of waiting for the price to fall back.

Return on Capital Employed (ROCE)

It is a long-term profitability ratio measuring how effectively a company uses its capital. The metric tells you the profit generated by each dollar or any other currency used.

Reversal

It is a turnaround in the price movement of an asset; that is, when an upward trend becomes a downward trend or vice versa.

Risk Management

It is the process of identifying potential risks in a trader’s investment portfolio and taking steps to minimize them.

Risks

These are the ways in which an investment can bring losses to a trader.

Rollover

It is the process of keeping a position open beyond its expiry.