Trading Glossary

Take a look at our list of the financial terms associated with trading and the markets.
Ichimoku Clouds

A simple and flexible Japanese indicator tool that uses the moving average system to provide trend, support and resistance levels, as well as entry and exit signals. As with the name, the indicator is characterized by a clear graphical chart of price dynamics. The indicator consists of five lines, namely the transition line, the baseline, the anterior band A and B, and the delay line. The intersection of the transition line and the baseline often represents a pause or reversal of the trend, and the "leading cloud" composed of two leading bands provides support and resistance. Late lines are often used to determine whether a trend has reversed. 

Immediate or Cancel Order

One of the ways to execute an order. After the order is placed, the trading system matches the order. In this execution mode, the order is immediately executed for the part that has been matched, and the part that has not been matched will be canceled. For example, if you place an order to go long 100 lots of gold, if only 80 lots are matched, then the order will be executed for 80 lots and the remaining 20 lots will be canceled. 

Implied Volatility

By inputting other factors in the formula such as the strike price, the number of days before expiration, the current market risk-free rate and the current underlying price into the option evaluation formula, the volatility represented behind the current option price can be inferred. It is often used as a perception indicator to judge future price movements in the market 

Import

Refers to the physical goods or services produced around the world, by ship, land, air, or online services, etc., transported or exported to a country, it is called the import of that country. General import trade will trigger the depreciation of the local currency and the appreciation of foreign currencies. 

Import Price Index

Refers to the increase or decrease in the overall payment price of goods imported by the country. The index is key to the trade account, and an increase in the import price index can reduce the trade surplus, or increase the trade deficit, which may also lead to the depreciation of local currencies and the appreciation of foreign currencies. 

In Neck

The In Neck candlestick patterns is a bearish continuation pattern in a downtrend when the frist candle is a down candle followed by a gap lower on the next candle that close up to be at or near the close of the previous days candle. The close today is the same level as the previous days close.

Income Effect

During the Great Depression, demand for high-end luxury goods fell and demand for low-end consumer goods rose, causing the prices of these consumer goods to rise, and prices may even be higher than luxury goods. Because potatoes are low-grade food consumer goods, the price of potatoes often rises during depressions. The potato effect is also describing Maslow's pyramid of needs, and when faced with a crisis, people's needs will slide down to the lower levels of the pyramid. 

Income Statement

One of the three major accounting statements, it is used to record the financial performance and profitability of a company in a certain period of time. The other two major statements are the balance sheet and the cash flow statement. 

Indian Rupee (INR)

The legal tender of India, the code is INR. 

Indicative Quote 

The offer only provides information, can not directly complete the transaction through the price, more for the purpose of price guidance, to avoid the quotation being abused. 

Indirect Quote 

Refers to a certain unit of local currency as a benchmark to measure how much foreign currency is receivable. 

Inflation

Inflation, refers to the process by which the purchasing power of a country's currency continues to decline over a period of time, and is often used to describe the level of price increases in a basket of goods or services within a country. The faster commodity prices rise, the higher the corresponding inflation rate.

Initial Coin Offering

It is a common IPO behavior like stocks, just buying virtual currency instead of stocks. ICO is a way of raising funds, a company can raise funds to create a new virtual currency or service, it will raise funds through ICO so that interested investors can buy. The vast majority of ICOs only give investors access to the functionality of that particular project and not the ownership of the company itself. 

Initial Margin

Refers to the margin that a futures or foreign exchange margin trader has to pay when he or she starts to open a trading position. When the initial margin of a variety is smaller relative to the contract value, the greater the leverage used by the commodity, and conversely, the greater the initial margin relative to the contract value, the smaller the leverage used by the commodity. In terms of foreign exchange commodities, the initial margin currently on the market is about 0.2% to 1% of the contract value. 

Initial Public Offering

A company raises funds from public investors by listing on the stock exchange. The company transformed from private to listed through an IPO. The stock exchange has certain scale or process requirements for listed companies, and companies need to provide prospectuses to explain the company's operations and financing purposes to investors. Usually, investment banks or underwriters intervene to assist companies in listing. After the IPO, the company's common stock will be able to trade in the open market, and shareholders who hold the shares can also sell their shares in this open market. 

Institutional Investor

Generally, the financial service sector are divided into two types, institutional investors and retail investors. Institutional investors generally refer to investment by institutions registered and approved under local laws. The amount of funds of general institutional investors is large, and there are higher requirements for the liquidity and fee cost of financial products. Mutual funds, hedge funds, pension funds, insurance companies, etc. are all institutional investors. 

Interbank Offered Rate

In the operation of banks, lending is an important part. Since large amounts of money are involved on a daily basis and the amount of funds is uncertain; In order to avoid a lack of liquidity in the bank, while ensuring that one bank does not hold too much idle cash or cash equivalents, one bank can borrow short-term (often overnight) from another bank, so that interbank lending becomes interbank lending, and the interest rate of lending (divided into loan interest rate and borrowing interest rate) is the lending rate. A bank is often both a borrower and a lender, and LIBOR, SIBOR and HIBOR are commonly used in the lending market. The interbank offered rate is an important criterion in the financial market and is generally used as the standard for risk-free interest rates.  

Interest Rate

The price at which the borrower needs to pay for the money borrowed is also the remuneration that the lender receives by delaying his consumption and lending it to the borrower. It is usually calculated as a percentage of one-year interest on the principal. Interest rates are one of the important tools for the central banks around the world to regulate monetary policy, and are also used to control investment, inflation, and unemployment, which in turn affect economic growth.  

Interest Rate Parity Theory

A major theoretical pillar in foreign exchange trading refers to the relationship between the exchange rate between two currencies and the interest rate of their respective countries. The theory is based on the principle of arbitrage, describing investors choosing local currencies to invest in overseas currencies, regardless of the interest rate gap between the two countries, the final rate of return should be the same. Extrapolating this theory shows that the interest rate differential between the two countries will have an impact on the currency exchange rate, and the currency of the party with the higher interest rate will depreciate, while the currency of the party with the lower interest rate will appreciate. 

Interest Rate Spread

A key indicator in the theory of interest rate parity refers to the difference between interest rates in two countries. It is generally used in two countries with similar interest rate systems, using the difference in short-term low-risk government bond interest rates. For example, if the cash rate in Australia is 3% and the cash rate in Japan is 1%, the interest rate difference between the two countries is 2%.

Interest Rate Swap

It is a forward transaction in which the two parties exchange floating and fixed interest rates for a specific principal amount at a certain time point in the future series of interest payments, which does not involve the exchange of principal and can be used to avoid interest rate risk. For example, when a company wants to issue a fixed bond but believes that the interest rate will start to go down in the future, then it can enter a fixed-to-float interest rate exchange transaction. Businesses, therefore, convert their fixed-rate liabilities into floating-rate liabilities, and if the interest rate goes down, the company can save interest costs. 

Inverse Head and Shoulders

A technical analysis term that refers to the pattern formed after the stock price has undergone the following movements: 1. Falling, rebounding after hitting a certain low, 2. Falling again, hitting a lower level than the previous low and then recovering. 3. Fell again, but failed to break below the previous low and bounced up, forming a third low. Since the second low is the lowest of the three lows, it looks graphically like a head and shoulders top pattern flipped 180 degrees. Generally, if this pattern is completed, the downtrend may reverse upwards as the price subsequently rises above the neckline formed by the two highs. 

Inverted Yield Curve

Referring to a country's short-end Treasury bond yields higher than long-term yields, indicating that the economy is in a stage of rapid central bank tightening. After the curve is inverted, it will often lead to economic recession because the tightening rate is too fast, which cannot be ignored.

ISM,Markit PMI

ISM and Markit are two agencies that publish PMI data, the former is published by the American Institute for Supply Management, which only compiles PMI data in the United States, while the latter is compiled by financial information data provider IHS Markit, which has different partners around the world and provides PMI data from different countries around the world. Both agencies release data in the first week of each month. In contrast, the number of companies surveyed by I SM is 400, while the number of Markit is 800, so ISM fluctuates more sharply than Markit data, and in most cases the PMI data trend is the same.  

Ivey Canada Purchasing Managers Index

Canada's Monthly Purchasing Managers' Index, which measures the level of activity of Purchasing Managers in Canada, is provided by the Ivey School of Business. As with the Markit PMI, values range from 0-100, and 50 is the boom-bust line. Higher than 50 indicates that the economic activity on the procurement side is performing well, reflecting the economic boom, and below 50 is the opposite.