CFDs Trading Glossary

 

What is Ask Price?

The Ask price is the quoted price at which the CFD provider is willing to sell and the CFD trader is able to buy a contract. The opposite price is the Bid price.

 

What is Back-testing?

Back-testing is the process of testing a trading strategy or a trading system against historical prices. That means you may know if a certain strategy/system has proved profitable in the past.

 

What is Benchmark Rate (or Base Rate)?

A Benchmark Rate is the reference rate of interest charged on borrowing.

 

What is Beta?

This is a statistical tool that measures the volatility of an individual security against the whole market or an index. If beta = 1 that means that the price behavior of the individual security imitates ideally the price behavior of the whole market. If beta is 1.20 that means that the individual security is 20% more volatile than the market itself. If beta is 0.80 that means that the individual security is 20% less volatile than the market itself.

Create Free and Export Indicators for MT4, MT5, or TradeStation to trade Forex, Shares, Indices, and Commodities

What is Bid Price?

Bid is the quoted price at which the CFD provider is willing to buy and the CFD trader is able to sell. The opposite price is Ask price.

 

What is Bid/Ask Spread?

Measures the difference between the bid and the ask price. The more liquid an asset the smaller is the spread between ask and bid.

 

What is Breakout Strategy?

This is a very popular trading strategy that is based on entering long / short trades when the price of an asset breaks through a strong support or resistance level.

 

What is Carry Trade?

A trading practice that involves selling an asset offering a low yield and at the same time buying an asset offering a higher yield. Usually carry traders sell the Japanese Yen to buy high-yielding currencies such is the New Zeeland Dollar and the Australian Dollar.

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