Glossary of trading terms

The offer price is the price at which you as a trader can buy an underlying asset trading in the market. The offer price is also referred to as the ‘ask’ or the ‘asking’ price.

If a market is said to be trading offered, it means a pair is attracting heavy selling interest, or offers.

An offsetting transaction is a trade that cancels or offsets some or all of the market risk of an open position.

Attempting to sell at the current market order price.

A one-cancels-the-other order (OCO) is an order whereby, if one order is executed, then the other order is automatically cancelled. It is used when you want to place two orders at the same time: usually with one going long and the other going short. When market movements cause either order to be filled, the unfilled order is automatically cancelled.

You might place this kind of order when you expect a big move in the market but can’t decide whether it will go up or down. The OCO ensures at least one of your trades will open and move in the direction of the next move.

A one-touch option is a is a type of binary option with a strike price above or below the current market price and an expiration date, where the price of the underlying asset only needs to hit the strike price once before the option expires.

An open order is an unfilled working order that will get executed when the specific requirements have been met unless it’s cancelled by the customer or it expires.

Open orders can be subject to delayed executions because they’re not market orders. A lack of market liquidity could cause an order to remain open.

An open position is a live trade that can generate a profit or incur a loss. It can be long or short. When the profit or loss becomes realized the trade becomes a closed position.

The precise date and time when an option will expire. The two most common option expiries are 10:00am ET (also referred to as 10:00 NY time or NY cut) and 3:00pm Tokyo time (also referred to as 15:00 Tokyo time or Tokyo cut). These time periods frequently see an increase in activity as option hedges unwind in the spot market.

Options contracts give you the right but not the obligation to buy or sell an asset on a fixed expiry date at set price, known as the strike price.

Options contracts are used to trade forex, stocks, commodities, and real estate agreements.

The two types of options contracts are:

• Call options: an agreement to buy an asset
• Put options: an agreement to sell an asset

Both can be purchased to speculate on the market direction or generate income.

An instruction to execute a trade.

An order book is a list of orders for a specific market, recorded by an exchange to measure market depth and interest from buyers and sellers.

Order books are often used by traders to identify market sentiment. For short-term traders in particular, order books are valuable as they show whether bulls or bears are dominant in the market.

Typically, order books are made up of three main components:

• Buy orders – shows buyer information including volume and price
• Sell orders – shows seller information including volume and price
• Order history – shows the orders that have been made in the past

Order books don’t cover every order in the market, as ‘dark pools’ also anonymously take orders. Dark pools are private exchanges that don’t show the identity, nor the intent (e.g. buy or sell) of an order. These are orders from whales – large traders in the market such as banks or corporations – who don’t want their trading activity to be publicly available.

Given the large volume of whales’ trades, if this information was widely available it would give traders a clear indication of how a market’s price might move.