Glossary of trading terms

A rally is a series of price increases in shares, indices, or bonds over a short period on the stock market. A considerable boost in demand from a rise in investment generally stokes a rally, and they often follow a period of flat or downward growth.

A rally that occurs during a prolonged period of price declines is called a bear market rally, and this can sometimes be mistaken for an end to the bear market period. However, it is considered a bear market rally only when prices stay underneath the level of the bearish decline.

A rally that occurs in a period of rising prices is called a bull market rally, which is less common than a bear market rally.

A range occurs when a security trades in a consistently high and low-price range for a given period.  In this situation, a bounded range is identified by charting the high and low-price points across horizontal trendlines.

Security prices that are in the top area of a bounded range are called resistance levels, at this level, with a growing number of sellers in the market the asset will have resistance to trading.

Conversely, at the lower end of the price range a security is expected to experience price support as more buyers will be willing to trade at that price.

In Foreign Exchange (Forex), the rate is the value of one currency against another, representing how much of one it would take to buy the other. So, for example, if the exchange rate between the euro and the British pound is 0.85, it would cost €0.85 to buy £1.

Exchange rates are expressed in currency pairs, which use an acronym for each currency, followed by the exchange rate. So, in the example given above, the rate would read EUR/GDP 0.85.

The Royal Bank of New Zealand (RBNZ) is the country's central bank, responsible for driving the monetary policy to manage economic conditions. The core purpose of the RBNZ is to ensure that the economy has a stable financial system under which it can achieve growth.

The RBNZ makes decisions about the monetary policy and issues the local currency, the NZD.

Traders of significant size including pension funds, asset managers, insurance companies, etc. They are viewed as indicators of major long-term market interest, as opposed to shorter-term, intra-day speculators.

A realized profit or loss occurs when an investment is sold for a higher or lower price than purchased for, and it is only recognized once the transaction has been made. A realized profit is also known as a realized gain and only becomes liable for capital gains tax at this point.

For example, if an investor buys 1000 shares at $5 each and sells when the shares reach a market value of $8, they will have a realized profit of $3,000 ($8,000 -$5,000). Conversely, if the shares dropped to $2 each and sold, they would have a realized loss of $3,000 ($2,000 - $5,000).

A rectangle pattern occurs when the price of a security stays within a bounded range, creating horizontal trend lines that show well-defined support and resistance levels. Rectangle patterns show market indecision and indicate that the supply and demand of a security is in a stalemate.

Traders often watch for a breakout to occur either upwards or downwards. When price consolidates to a rectangle pattern during a downtrend, it is considered a bearish rectangle. A bullish rectangle is when the price consolidates during an upward trend.

A resistance level, or resistance, is the price point at which more traders sell an asset than buy, causing the value to reverse and a peak to form on a price chart. For a resistance level to form, the phenomenon must occur more than once, allowing a line to be charted showing a clear price point at which the market reverses.

Traders and technical analysts use resistance levels to understand trends in the marketplace from previous data and forecast what may be to come.

A retail investor is an individual and non-professional investor who buys and sells securities or funds through brokers or other investment accounts. Retail investors purchase securities for their personal accounts and invest smaller amounts than institutional investors.

Retail investment has been growing significantly because of access to financial information and trading tools, and in 2021 the retail investment market in the US made up 32% of total equity volume.

Retail sales measure consumer demand by calculating the total goods sold over a given period. Consumer demand is considered an indicator of an economy's financial well-being and whether it is heading towards contraction or expansion.

In the US consumer spending, or retail sales, account for 70% of GDP.

A revaluation is an upward adjustment on a country's currency relative to a baseline such as gold, wages, or a different currency. In a fixed exchange rate economy, a decision to reevaluate a currency can only be made by the central bank. In a free-floating exchange rate, a revaluation is spurred by market forces.

Revaluation is the opposite of devaluation, in which a country's currency experiences a downward value adjustment.

A rights issue is a way for a company to raise cash by inviting its shareholders to buy new shares at a discounted price for a defined period. Invited shareholders are not obliged to purchase the shares but have the right to do so. Rights issues are often issued by a company to pay down debt or quickly raise capital for increased investment.

Risk is the exposure to potential losses you take on when trading a security. Different assets have different levels of risk, which means you can tailor your strategy based on your experience and the level of risk you want to take on.

Typically, your exposure to risk increases in line with your exposure to potential profits. For example, using leverage, a common borrowing tactic in trading magnifies your potential gains, but it also magnifies your risk of losses.

The employment of financial analysis and trading techniques – such as attaching stops and limits – to reduce and/or control exposure to various types of risk.

A rollover in forex is the action of keeping your position open from one trading day to the next, hence the name “rolling over.”. In a rollover, you technically close your position at the end of the trading day and re-enter the trade at the new open rate. This usually happens automatically.

In the forex market, which is open 24 hours 5 days a week, rollover occurs at the close of the New York trading session—5 pm ET. Rollover rates are multiplied by three on Wednesdays to make up for the two days the market is closed.

A round trip in trading refers to the dubious buying and selling of the same amount of a security to inflate the perceived trading volume and liquidity of that security. In forex, round trips involve opening and closing a position within a single day, often multiple times, and can interfere with technical analysis.

Round trip trading in other markets such as stocks or on business balance sheets has been the root of many financial scandals. This behavior is considered unethical and can be illegal when used to manipulate a market into appearing more in-demand than it actually is.

Your running profit or loss refers to the money you currently stand to gain or lose should you close your open trades. On most trading platforms a running profit will show as green and a running loss as red. If the sum of your positions is green, you have a running profit, and if the sum of your positions is in the red, you have a running loss.

Displaying your trades as running profits or losses helps to visualize where you stand hypothetically without actually closing any trades.

RUT is the acronym for the Russell 2000, an index comprised of the smallest 2000 stocks in the Russell 3000. Investors typically watch this small-cap index to measure the performance of smaller, domestically focused businesses in the United States.

Significantly, the RUT is the most prominent index to track small-cap stocks, and the index is weighted by shares outstanding. This means the index is influenced by a member stock’s last sale price and the number of shares available to be traded rather than the company’s entire market cap. It is a free-floating index maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group.