Backwardation
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A theory which says that as a futures contract nears expiry, it will trade at a higher price compared to when it was further from the expiry date. It is a condition that occurs in commodities and futures markets where the price of a given good is higher today than the price in the future. Also see 'Contango'.
Bar chart
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A style of chart used in technical analysis, where the top of the vertical line represents the highest price traded in a particular instrument, and the bottom part displays the lowest price. The closing price is shown on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar normally represents one day of trading.
Base currency
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The first currency quoted in a currency pair (for example in the GBP/USD currency pair, GBP is the base currency while USD is the quote currency).
Base rate
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The lending rate determined by the central bank of a given country.
Basis point
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Typically one hundredth of 1%, for example an interest rate cut of 50 basis points is equal to 0.5%.
Bear market
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A market distinguished by falling prices and negative sentiment.
Beta
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Measure of how changes in a share price correlate to overall movements in the share market as a whole.
Bid
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The highest price a buyer is willing to pay for a product is referred to as the ‘bid’. Also see Ask and Offer.
Bid price
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The price at which the buyer is willing to purchase at.
Blue chip
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Blue-chip companies are usually well-established, financially sound and better able to weather downturns. As a result, blue-chip stocks are regarded as less volatile. Companies listed in a country’s top tier stock index, such as the UK’s FTSE 100, are considered blue-chips.
Bollinger Bands®
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A chart indicator used in technical analysis to measure market volatility, consisting of a single moving average and two standard deviation bands.
Bond
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A tradeable debt security, usually issued by a government or semi-government body to raise money. Holders of the bond have lent money for which they receive a fixed rate of interest over a set period of time. The bond is repaid with interest on the predetermined maturity date. Bonds can be traded on the sharemarket.
Breakout trading
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Trading strategies that recommend entering CFD trades once the price breaks through a defined resistance or support level. New ‘buy’ positions are entered into when the price breaks through a resistance level, while new ‘sell’ positions are entered into when the price breaks through a support level. These strategies are based on the view that once the price breaks through a support or resistance level, a new trend is likely to begin.
Broker
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An individual or firm acting as an intermediary to bring together buyers and sellers, typically usually for a small commission or fee.
Brokerage
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Fee paid to a stockbroking firm for buying or selling of shares.
Bull market
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A market distinguished by rising prices. Bullish investors have a positive opinion about a market, believing that prices will continue to rise.
Bullion
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Precious metals such as gold, silver, platinum or palladium in the form of bars or ingots.
Bundesbank
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Central bank of Germany.
Buy limit order
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A conditional trading order that indicates a security may be purchased only at the designated price or lower. Also see Take-profit order.
Buy position
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A position in the market that would profit from a rising market price, or make a loss should prices fall.
Buy stop- entry order
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When you buy a security that is entered at a price above the current offer price. It is triggered when the market price touches or goes through the specified stop price.
