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'.
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.
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.
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.
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.
