Leverage
Leverage is the use of borrowed money or derivative contracts to hold market exposure larger than the capital you put up, which magnifies both gains and losses relative to that capital.
Investment & trading encyclopedia
Understand investment products, market mechanics, indicators and research terminology. Each entry includes an explanation, example, cautions and related learning.
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Limit Order
A limit order instructs a broker to buy at or below, or sell at or above, a specified price. It controls the worst price you will accept but does not guarantee that the order will be filled.
Liquidity
Liquidity is how easily an asset can be bought or sold quickly, in the desired size, without moving its price much. A liquid market has many active buyers and sellers, narrow spreads and deep order books.
Look-Ahead Bias
Look-ahead bias occurs when a backtest uses information that would not have been available at the simulated decision time, such as a price, report or revision published later. It inflates results because the test knows something the real decision-maker could not.