Brokerage terms

Brokerage terms to know

As we said last time, there are quite a few specific terms brokers use to communicate. If you want to deal with brokers, your life will certainly get easier once you learn some of them. Here, we will present the most frequent of these.

Stock indexes

The ASX200 refers to the main Austrlian stock index.

The CAC, refers to the French CAC 40 stock index.

The DAX refers to the DAX 30, a German stock index.

The Nikkei25 is the main Japanese stock index.

Currencies

The aussie is a shorthand for the Australian dollar. Similarly, the kiwi refers to the New Zealand dollar. The loonie is the Canadian dollar. The necessity for this is obvious. Usually, people mean the US dollar when they just refer to dollars. These quick terms help clear up any sort of confusion.

The Eurodollar means US dollars that, usually American, companies store outside the US.

Financial institutions

A custody bank is a bank that holds any security in custody. These securities are the property of other financial institutions. So, this is an easy place to leave securities. The bank also organises trades and does some bookkeeping.

Interbank dealing is the interaction between banks, with no broker or other financial institution intervening.

The ECB is the European central bank.

The Fed is a quick reference to the US Federal Reserve Bank, their central bank.

The RBA is the Reserve Bank of Australia. Meanwhile, the RBNZ refers to the Reserve Banks of New Zealnd.

Miscellaneous terms

Here are a few more terms you are likely to here. Usually, they are references to trading methods.

A bid is a buy order, at or below market prices.

An offer is an order above or at market prices.

To give is to comply with a contract at a bid price.

To pay is to deal with a transaction at the offer price.

A candlestick refers to the most common chart for analysing stocks. They show the range of prices for an asset at any particular time.

Stop losses are systems to automatically pull out of the market at a set price.

A spread means the difference in price for a bid and an offer that your broker will offer you.

ETFs are exchange traded funds. They are like securities for indexes.

When someone calls something doveish, it refers to looser monetary policy.

 

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