Financial Markets Glossary
Dow Futures & Index Futures
SYMBOL YM An electronically traded futures contract representing a portion of standard DJIA futures, E-mini Dow futures offer an accessible alternative to manage exposure to the U.S. stock market. Based on the Dow Jones Industrial Average, E-mini Dow futures offer exposure to the 30 U.S. blue-chip companies represented in the stock index.
FTSE Futures & Index Futures
SYMBOL Z The FTSE 100 – or ‘Financial Times and Stock Exchange’ 100 index – is a stock market index that covers the top 100 companies listed on the London Stock Exchange, one of the world’s leading stock exchanges. FTSE futures are traded electronically on the LIFFE CONNECT electronic trading platform used by the NYSE Euronext derivatives market. The FTSE futures symbol is Z, and the contract is valued at £10 per index point, moving in 0.5 increments.
DAX Futures & Index Futures
SYMBOL FDAX DAX futures are the derivatives market tracking the main German stock index, DAX (Deutscher Aktien Index). It is the main blue-chip stock index which tracks the performance of 30 companies listed on the Frankfurt stock exchange and is called as the DAX30. The DAX futures are offered by the Eurex exchange, a futures exchange specializing in offering European futures.
Other Terms
Inflection Points
There are several types of horizontal inflection points that can be employed in technical analysis. Among these, the most common ones are the psychological round numbers, previous day high, low, open and close. Average true ranges are also used in determining intraday inflection points, particularly among day traders or scalpers. Technical indicators such as moving averages can also be treated as support and resistance. Bollinger bands can also serve as dynamic inflection points, with the upper band serving as resistance and the lower band acting as support. Just as with other types of inflection points, a break above the resistance could be a signal for more gains while a break below the support could indicate further losses.
Resistance Level
A price level above which it is deemed difficult for the market to rise
Support level
A price level below which it is deemed difficult for a security or market to fall. This tends to be where there is more demand than supply at a given point
Support level
A price level below which it is deemed difficult for a security or market to fall. This tends to be where there is more demand than supply at a given point
Support level
A price level below which it is deemed difficult for a security or market to fall. This tends to be where there is more demand than supply at a given point
Support level
A price level below which it is deemed difficult for a security or market to fall. This tends to be where there is more demand than supply at a given point
Moving Averages
A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random price fluctuations. It is a trend-following, or lagging, indicator because it is based on past prices.
The two basic and commonly used moving averages are the simple moving average (SMA), which is the simple average of a security over a defined number of time periods, and the exponential moving average (EMA), which gives greater weight to more recent prices.
CONTRACTS
Emini Futures & Index Futures
SYMBOL ES E-minis are a futures contract that can be traded electronically on the Chicago Mercantile Exchange and is based on the S&P 500 index. As opposed to normal S&P futures contracts, which have a point value of $250, the e-mini contract has a point value of $50. Short for Electronic Mini S&P 500. Instead of owning individual stocks, S&P 500 traders can buy and sell futures contracts on the strength of the index. Emini futures are probably the most important trading vehicle in the world and perfect for beginner traders.
Dow Futures & Index Futures
SYMBOL YM An electronically traded futures contract representing a portion of standard DJIA futures, E-mini Dow futures offer an accessible alternative to manage exposure to the U.S. stock market. Based on the Dow Jones Industrial Average, E-mini Dow futures offer exposure to the 30 U.S. blue-chip companies represented in the stock index.
FTSE Futures & Index Futures
SYMBOL Z The FTSE 100 – or ‘Financial Times and Stock Exchange’ 100 index – is a stock market index that covers the top 100 companies listed on the London Stock Exchange, one of the world’s leading stock exchanges. FTSE futures are traded electronically on the LIFFE CONNECT electronic trading platform used by the NYSE Euronext derivatives market. The FTSE futures symbol is Z, and the contract is valued at £10 per index point, moving in 0.5 increments.
DAX Futures & Index Futures
SYMBOL FDAX DAX futures are the derivatives market tracking the main German stock index, DAX (Deutscher Aktien Index). It is the main blue-chip stock index which tracks the performance of 30 companies listed on the Frankfurt stock exchange and is called as the DAX30. The DAX futures are offered by the Eurex exchange, a futures exchange specializing in offering European futures.
Glossary - Other Terms
Inflection Points
There are several types of horizontal inflection points that can be employed in technical analysis. Among these, the most common ones are the psychological round numbers, previous day high, low, open and close. Average true ranges are also used in determining intraday inflection points, particularly among day traders or scalpers. Technical indicators such as moving averages can also be treated as support and resistance. Bollinger bands can also serve as dynamic inflection points, with the upper band serving as resistance and the lower band acting as support. Just as with other types of inflection points, a break above the resistance could be a signal for more gains while a break below the support could indicate further losses.
Resistance Level
A price level above which it is deemed difficult for the market to rise.
Support Level
A price level below which it is deemed difficult for a security or market to fall. This tends to be where there is more demand than supply at a given point.
Pivot Points
A technical indicator derived by calculating the numerical average of a particular stock’s high, low and closing prices.
Bollinger Bands
A technical analysis technique in which lines are plotted to standard deviations above and below a moving average, and at the moving average itself. Because standard deviation measures volatility, these bands will be wider during increased volatility and narrower during decreased volatility. Some consider a market which approaches the upper band to be overbought, and a market which approaches the lower band to be oversold.
A Price Channel
A channel that typically shows the trailing 20-day high and 20-day low. It works very simply; you buy when the weekly closing price moves up to a new 20-period high, and sell when the weekly closing price moves down to a new 20-period low. I.e. when the price moves out of its channel, trade in the direction of the new trend.
Moving Averages
A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random price fluctuations. It is a trend-following, or lagging, indicator because it is based on past prices.
The two basic and commonly used moving averages are the simple moving average (SMA), which is the simple average of a security over a defined number of time periods, and the exponential moving average (EMA), which gives greater weight to more recent prices.
Ascending/Descending Channel
A rising or falling channel, with the price typically constrained within the boundaries of that channel. Imagine railway lines – that's the channel, short when the prices hits the top of a channel, go long when the price hits the bottom of a channel.
Long / Buy
A bet or trade taken in anticipation of a rising market, an ‘up bet’. To go Long means to Buy.
Short / Sell
A bet or trade taken because you believe the market will fall. To go Short means to Sell.
Spread
The difference between the Sell and Buy price.
Stake
The bet size per unit of movement. This is not the total amount you could lose.
Stop Loss
A pre-determined level at which you can close a trade to limit your loss if the price moves against you.
Stop Order
Stops are orders to sell below, or buy above the current price. They can be used to initiate a new position if the price breaks through a perceived support / resistance level.
Trailing stop
A more complex stop-loss order in which the stop loss price is set at a fixed percentage or number of points below the market price. If the market price rises, the stop loss price rises proportionately, but if the stock price falls, the stop loss price doesn’t change. This technique allows you to set a limit on the maximum possible loss without setting a limit on the maximum possible gain.
HOD
High of the day – the highest price achieved during that day's session.
LOD
Low of the day – the lowest price achieved during that day's session.
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