Financial Market Terms
Learn essential financial market terms with simple definitions and practical examples covering trading, stocks, forex, cryptocurrencies, commodities, and economic indicators.
Financial Glossary
300 resultsBlockchain Oracle
Quick Definition
A blockchain oracle supplies smart contracts with data or computation from outside their native blockchain.
Full Definition
A price oracle, for example, can deliver market prices that a lending protocol uses to value collateral. Oracles solve a connectivity problem because blockchains cannot directly trust ordinary web data. Their data sources, update rules, decentralization, and resistance to manipulation are important security considerations.
Example
The lending protocol used a price oracle to decide whether a borrower's collateral needed liquidation.
Also Known As
Bollinger Bands
Quick Definition
Bollinger Bands are volatility bands placed above and below a moving average using standard deviation.
Full Definition
A common setting uses a 20-period moving average with bands two standard deviations away, causing the bands to widen when recent volatility rises and narrow when it falls. Touching a band is not by itself a buy or sell signal, because price can remain near a band during a strong trend.
Example
A sudden increase in price volatility can make the upper and lower Bollinger Bands spread farther apart.
Also Known As
Bond
Quick Definition
A bond is a debt security through which an investor lends money to an issuer.
Full Definition
The issuer generally promises to pay interest and return principal according to stated terms. Bond prices can rise or fall before maturity, and investors face risks such as default, changing interest rates, inflation, and limited liquidity.
Example
Buying a corporate bond means lending money to the company in exchange for promised payments.
Also Known As
Book Value
Quick Definition
Book value is the accounting value of a company's assets minus its liabilities.
Full Definition
On the balance sheet, this residual amount is shareholders' equity, subject to adjustments when calculating book value available to common shareholders. Book value is based on accounting records and can differ greatly from market value, especially for businesses with valuable intangible assets.
Example
A company with $300 million in assets and $180 million in liabilities has total book value of $120 million.
Also Known As
Breakout
Quick Definition
A breakout occurs when price moves beyond a watched support, resistance, range, or chart boundary.
Full Definition
Traders may look for higher volume, a closing price beyond the boundary, or follow-through as confirmation. Price can quickly return inside the range in a false breakout, so the event is not a guaranteed signal of continued movement.
Example
A stock closing above a resistance area near $60 may be described as breaking out.
Also Known As
Brent Crude Oil
BrentQuick Definition
Brent is a North Sea crude-oil benchmark widely used to price internationally traded oil.
Full Definition
Brent-related physical assessments and futures serve as reference prices for many crude grades around the world. Its price reflects global supply and demand, shipping economics, regional conditions, and expectations for future oil balances. Brent and WTI can trade at different prices because their delivery systems and market exposures differ.
Example
An oil cargo may be priced as the Brent benchmark plus or minus a quality and location adjustment.
Also Known As
Broker
Quick Definition
A broker is a person or firm that arranges or executes securities transactions for customers.
Full Definition
A broker acts as an agent, seeking to carry out a customer's order rather than trading as the principal for that transaction. Brokers may earn commissions, markups, asset-based fees, or other compensation that should be disclosed.
Example
An investor sends a buy order to a broker, which routes the order for execution.
Also Known As
Broker-Dealer
BDQuick Definition
A broker-dealer is a securities firm that can act as both an agent for customers and a principal for its own account.
Full Definition
Its role depends on the particular transaction: as broker it executes for someone else, and as dealer it trades for itself. Broker-dealers are generally subject to registration, conduct, capital, recordkeeping, and supervisory requirements in their jurisdiction.
Example
The same firm may route a customer's stock order as broker and quote a bond from its own inventory as dealer.
Also Known As
Bull Market
Quick Definition
A bull market is an extended period of broadly rising prices and generally optimistic investor sentiment.
Full Definition
The term is most often applied to a broad market or asset class rather than a one-day rise. A 20% advance from a recent low is a common convention, not a universal rule or a guarantee that gains will continue.
Example
A broad stock index rising for many months while setting higher highs may be described as a bull market.
Also Known As
Call Option
CallQuick Definition
A call option gives the holder the right to buy the underlying interest at the strike price under the contract's terms.
Full Definition
A call buyer generally benefits when the underlying price rises enough to exceed the strike plus the premium and costs. The call writer receives the premium but may be required to sell or otherwise settle if assigned. Maximum risk differs greatly between buying a call and writing an uncovered call.
Example
A 100-strike call becomes in the money when the underlying price is above 100, although the buyer may still need a higher price to cover the premium.
Also Known As
Candlestick
Quick Definition
A candlestick is a chart symbol that displays an asset's open, high, low, and close for one time period.
Full Definition
The body shows the distance between open and close, while the upper and lower shadows show the period's high and low. Colors commonly distinguish an up period from a down period, but color conventions can vary by chart platform.
Example
One daily candlestick summarizes all four key prices for a single trading day.
Also Known As
Cash Flow Statement
Quick Definition
A cash flow statement reports cash moving into and out of a company during a period.
Full Definition
It separates cash flows into operating, investing, and financing activities and reconciles the change in cash. It helps investors see whether reported earnings are producing cash and how the company funds investments, debt payments, or shareholder distributions.
Example
Buying new equipment appears as an investing cash outflow on the cash flow statement.
Also Known As
Cash Settlement
Quick Definition
Cash settlement closes a derivative through a cash payment based on its final value instead of delivering the underlying asset.
Full Definition
The exchange or contract specifies the final settlement price and calculation. Cash settlement is necessary for underlyings such as many indexes that cannot be physically delivered. A trader can still owe a large amount if a leveraged position moves sharply before final settlement.
Example
An index future settles to cash because the index itself cannot be delivered.
Also Known As
Central Bank
Quick Definition
A central bank is a public institution responsible for monetary policy and key parts of a country's monetary and financial system.
Full Definition
Central banks may set policy interest rates, supply reserves, issue currency, operate payment systems, and support financial stability, depending on their legal mandate. Their decisions and communications influence borrowing costs, inflation expectations, bond yields, and exchange rates. Examples include the Federal Reserve, European Central Bank, and Bank of Japan.
Example
A central bank may raise its policy rate when inflation is persistently above its objective.
Also Known As
Centralized Exchange
CEXQuick Definition
A centralized exchange is a company-operated platform that matches crypto trades and commonly holds customer assets.
Full Definition
Users usually deposit funds into accounts controlled by the exchange and trade through its internal order book or matching system. This can provide fast execution and convenient fiat access, but it creates custody, counterparty, insolvency, hacking, and withdrawal risks. A balance shown by the platform is a claim on its system until the assets are successfully withdrawn onchain.
Example
The trader bought ETH on a CEX and then withdrew it to a self-custody wallet.
Also Known As
Chain Reorganization
ReorgQuick Definition
A chain reorganization occurs when a node replaces recent accepted blocks with a different valid chain selected by the protocol.
Full Definition
This can happen naturally when competing blocks appear at nearly the same time or maliciously during an attack. Transactions from replaced blocks may be included again later, return to the mempool, or conflict with transactions in the new chain. Waiting for more confirmations reduces reorganization risk on many networks.
Example
A one-block reorg removed the latest block, but its valid transactions were included again soon afterward.
Also Known As
Circulating Supply
Quick Definition
Circulating supply is an estimate of the token units currently available to the public and circulating in the market.
Full Definition
It generally excludes unissued units and may exclude locked, reserved, or controlled allocations. Data providers use circulating supply to calculate circulating market capitalization, but their exact methods can differ. The number can increase when tokens are mined, minted, vested, or unlocked.
Example
A token had one billion units created, but only 300 million were counted in circulating supply.
Also Known As
Coin
Quick Definition
A coin is a crypto asset that is native to its own blockchain.
Full Definition
Coins are normally used to pay network fees, reward network participants, or transfer value on their native chains. BTC is native to Bitcoin and ETH is native to Ethereum. In casual speech, people often call every crypto asset a coin, but technically many assets are tokens issued on another blockchain.
Example
ETH is a coin on Ethereum, while an ERC-20 asset created on Ethereum is a token.
Also Known As
Cold Wallet
Quick Definition
A cold wallet keeps private keys or the signing process offline when not in use.
Full Definition
Cold storage reduces exposure to online attacks and is often used for long-term holdings. It may involve a hardware device, an offline computer, or another carefully designed setup. It still requires safe backups and protection against loss, damage, theft, and incorrect use.
Example
The company stored long-term reserves in a cold wallet and used a separate hot wallet for operations.
Also Known As
Commodity
Quick Definition
A commodity is a basic good or raw material that can be traded and is usually standardized by grade or specification.
Full Definition
Major groups include energy, metals, and agricultural products. Commodities can trade in physical markets as well as through futures, options, swaps, and funds. Their prices often respond to supply, demand, inventories, weather, transport constraints, geopolitics, and currency movements.
Example
Crude oil, gold, natural gas, wheat, and copper are widely traded commodities.
Also Known As
Common Stock
Quick Definition
Common stock is a class of company ownership that usually carries voting rights and a residual claim on profits.
Full Definition
Common shareholders can often vote on matters such as electing directors, and they may receive dividends when the board declares them. If the company is liquidated, creditors and preferred shareholders are generally paid before common shareholders, so common stock carries meaningful risk.
Example
One common share may give its owner one vote at the company's annual meeting.
Also Known As
Compound Annual Growth Rate
CAGRQuick Definition
Compound annual growth rate is the constant yearly rate that would turn a beginning value into an ending value over a stated period.
Full Definition
It is calculated as the ending value divided by the beginning value, raised to the power of one divided by the number of years, minus one. CAGR smooths the path into one annual rate and therefore hides year-to-year volatility and the effect of interim cash flows.
Example
An investment growing from $10,000 to $12,100 in two years has a CAGR of 10%.
Also Known As
Confirmation
Quick Definition
A confirmation means a blockchain transaction has been included in an accepted block.
Full Definition
On chains with sequential blocks, each additional block built after that block adds another confirmation. More confirmations generally reduce the chance that a recent chain reorganization will remove the transaction. The number considered sufficient depends on the network, transaction value, and recipient's risk policy.
Example
The exchange credited the Bitcoin deposit after it received three confirmations.
Also Known As
Consensus Forecast
Quick Definition
A consensus forecast is a summary estimate, often the median, of predictions submitted by surveyed economists or analysts.
Full Definition
Economic calendars use consensus values as a practical measure of what markets may already expect. The result depends on the contributors, survey deadline, and whether the provider uses a mean, median, or another method. Consensus is not an official forecast and can hide a wide range of individual views.
Example
If forecasts for CPI cluster around 0.3 percent, the calendar may display 0.3 percent as consensus.
Also Known As
Consensus Mechanism
Quick Definition
A consensus mechanism is the process and rule set a distributed network uses to agree on valid ledger updates.
Full Definition
Because network participants do not all receive information at the same moment, they need a way to settle on an accepted transaction history and state. Proof of work and proof of stake are two common approaches. Every mechanism makes trade-offs among security, decentralization, speed, cost, and fault tolerance.
Example
Ethereum uses proof of stake as part of its consensus mechanism.
Also Known As
Consumer Price Index
CPIQuick Definition
The Consumer Price Index measures the average change over time in prices paid by consumers for a basket of goods and services.
Full Definition
CPI is one of the most closely watched measures of consumer inflation. The basket and calculation method are maintained by the statistical agency for each country, so details can differ across jurisdictions. Traders often compare monthly and yearly changes with forecasts because inflation can affect interest-rate expectations.
Example
If CPI rises faster than expected, markets may price a greater chance of tighter monetary policy.
Also Known As
Contango
Quick Definition
Contango is a futures-curve condition in which later delivery prices are higher than nearer delivery prices.
Full Definition
Storage, financing, insurance, and expectations can contribute to an upward-sloping commodity futures curve. A long investor who repeatedly sells a cheaper expiring contract and buys a more expensive later contract may experience negative roll yield, all else equal. Contango describes the curve at a point in time and does not guarantee the future direction of spot prices.
Example
Oil for delivery in six months trades at 78 while the nearby contract trades at 74, creating a contango curve between those months.
Also Known As
Contract Rollover
RollQuick Definition
Contract rollover is closing a position in an expiring futures contract and opening a similar position in a later contract.
Full Definition
Rolling maintains market exposure without entering the expiring contract's settlement or delivery process. The price difference between the two maturities and transaction costs affect the result. A roll is two transactions and can create execution, spread, liquidity, and curve risks.
Example
A trader sells the June future and buys the September future before June reaches its last trading day.
Also Known As
Contract Size
Quick Definition
Contract size is the standardized quantity or multiplier represented by one derivative contract.
Full Definition
It converts a quoted price movement into the contract's monetary gain or loss. Standard, mini, and micro contracts may track the same market but use different sizes. Traders should calculate total notional exposure rather than judging risk only from the margin deposit.
Example
If a futures contract represents 100 units, a price change of 2 units changes its value by 200 before fees.
Also Known As
Core Consumer Price Index
Core CPIQuick Definition
Core CPI is a consumer price measure that excludes selected volatile categories to highlight underlying inflation.
Full Definition
In the United States, the common core CPI measure excludes food and energy prices. Removing volatile items can make the longer-term inflation trend easier to see, but it does not mean those expenses are unimportant to households. The excluded categories and methodology may differ in other countries.
Example
Headline CPI may fall with gasoline prices while core CPI remains firm because service prices continue rising.