Investment & trading encyclopedia

Understand investment products, market mechanics, indicators and research terminology. Each entry includes an explanation, example, cautions and related learning.

80 explained termsView all courses

Showing 1–5 of 5

Foreign exchangeBeginner

Pip

A pip is the conventional unit for measuring a forex price move. It is usually the fourth decimal place (0.0001) of a quote, but the second decimal place (0.01) for pairs quoted in Japanese yen.

Portfolio & riskIntermediate

Position Sizing

Position sizing is the rule that decides how many units of an instrument to hold in a single position. A common approach is fixed-fractional sizing, which sets the size so that the loss to a planned exit price equals a chosen percentage of account equity.

Stocks & valuationIntermediate

Price-to-Book Ratio (P/B)

The price-to-book ratio compares a stock's market price with the accounting value of shareholders' equity per share. It indicates how much the market pays for each unit of net assets recorded on the balance sheet.

Stocks & valuationBeginner

Price-to-Earnings Ratio (P/E)

The price-to-earnings ratio compares a stock's share price with the company's earnings per share. It shows how many units of currency the market currently pays for one unit of annual earnings.

Options & futuresIntermediate

Put Option

A put option gives its buyer the right, but not the obligation, to sell a set quantity of the underlying asset at the strike price on or before expiration, in return for a premium.