Take a look at our list of the financial terms associated with trading and the markets. From beginners starting their trading journey to experts with decades of experience, all traders need to clearly understand a huge number of terms.
Natural gas is a found deep underground, alongside coal and other fossil fuel deposits. It is extensively used in the US, accounting for 25% of US energy consumption. The gas primarily consists of methane.
It is priced in USD per British thermal units (mmBtu). The highest price recorded for Natural gas was $15.30 in December 2005, a record low of $1.02 was seen in January 1992.
Natural gas is used as a source of energy generation, especially for heating and cooling systems. It is often preferred to goal or oil as it produces less greenhouse gases than other fossil fuels.
Just ten countries account for close to 80% of the proven natural gas supplies in the world, with Russia sitting on 25% of total reserves. The Middle East is home to several the remaining top producers, excluding the US.
Gas futures allow you to speculate on, or hedge against, changes in the price of gas.
The United States Natural Gas Fund® LP (UNG) is an exchange-traded security that is designed to track in percentage terms the movements of natural gas prices. UNG issues shares that may be purchased and sold on the NYSE Arca.
The investment objective of UNG is for the daily changes in percentage terms of its shares' net NAV to reflect the daily changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the daily changes in the Benchmark Futures Contract, less UNG's expenses.
The Benchmark is the futures contract on natural gas as traded on the NYMEX. If the near month contract is within two weeks of expiration, the Benchmark will be the next month contract to expire. The natural gas contract is natural gas delivered at the Henry Hub, Louisiana.
UNG invests primarily in listed natural gas futures contracts and other natural gas related futures contracts, and may invest in forwards and swap contracts. These investments will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less.
A commodity is a raw material asset such as oil, gas, gold, or wheat. Commodities can be categorised into either hard commodities or soft commodities.
What are Soft Commodities?
Soft commodities typically refer to raw materials that are grown rather than mined such as coffee beans or sugar.
What Are Hard Commodities?
Whereas hard commodities must be extracted such as natural gas or crude oil.
A commodity is often exchangeable for other commodities of the same type and can be purchased through either the spot market using cash, or through derivatives like futures.
Energy Select Sector SPDR Fund (XLE) tracks US energy companies within the S&P 500. This asset uses the Energy Select Sector Index as its tracking benchmark. The ETF is offers concentrated exposure to oil and gas industry giants, as the S&P500 favours large-caps. Nevertheless, it is fairly representative of the whole energy market.
Just a few holdings make up a big part of the portfolio, and there are only 31 holdings in total. Top holdings for the benchmark index include Exxon Mobil Corp, Chevron Corp and ConocoPhillips.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
DBC, also known as the PowerShares DB Commodity Tracking ETF, tracks 14 commodities based on the futures curve. It aims to limit the effect of contango and maximise the effect of backwardation so that investors improve their returns. The commodities included in the ETF are gasoline, heating oil, Brent crude oil, WTI crude oil, gold, wheat, corn, soybeans, sugar, natural gas, zinc, copper, aluminium and silver.
Unlike other commodity ETFs, DBC rolls future contracts based on the shape of the future curve, rather than following a schedule. This allows the ETF to generate the best roll yield by minimising losses and maximising backwardation.
Crude Oil, also known as West Texas Intermediate (WTI), is a light, sweet crude that acts as benchmark for oil prices in the US.
Crude Oil is priced in USD per barrel. It reached a historic high of $145.31 in July 2008 and saw a record low of $1.17 in February 1946.
WTI contains less sulphur than Brent Crude (which acts as a benchmark for oil prices in Europe and the Middle East), which means it demands a premium price. Both WTI and Brent are light, sweet oils that are ideal for refining into gasoline.
It is produced, refined and consumed in North America, and is mostly sourced in Texas - which is where the name originates - as well as in Louisiana and North Dakota.
WTI price is sensitive to factors that impact the general price of oil, as well as geopolitical and economic events and natural disasters in the Midwest and Gulf Coast regions.
The AEX Index, known also as the Amsterdam 25, is a free float-adjusted and market capitalisation-weighted index of the 25 biggest and most actively traded companies trading in Amsterdam. It was created on January 3rd, 1983, but its base value of 538.36 is taken from 4th January 1999 to account for conversion to the euro.
The index recorded an all-time high in September 2000 of 701.56. It is the most widely-used bellwether of the Dutch stock market's performance.
The biggest sector in the index is Oil & Gas, which accounts for 17% of the total weighting. Personal & Household Goods, and Technology, are the second and third biggest sectors in the index respectively, each making up around 14% of the AEX.
Amsterdam 25 futures allow you to speculate on, or hedge against, changes in the price of stocks in the Netherlands market. The instrument is priced in euros and rolled over on the second Friday of every month.
The UK 100 is a blue-chip index of the largest 100 companies on the London Stock Exchange in terms of market capitalisation. Companies are only included if they meet relevant size and liquidity requirements.
The index was launched on 3rd January 1984, with a base date of 30th December 1983 and a base level of 1,000 points.
In terms of weighting, the three largest sectors of the UK 100 as of H2 2018 are Oil & Gas (16.56%), Banks (12.70%), and Personal & Household Goods (12.37%).
Traditionally the index has lagged its peers, such as the larger FTSE 250 and the US S&P 500. The index fluctuates in response to market risk sentiment and the strength of the pound Sterling. The UK 100 contains many international companies who report their earnings in other currencies, so a stronger pound weakens company profits.
Because of this, the UK 100 is also considered to be an unreliable indicator of the health of the UK economy because of its large international component.
The CAC 40, also known as the France 40, is a blue-chip index and stock market barometer comprising of the 40 companies listed in Paris with the highest liquidity and free-float market capitalisation. It is the most-traded index administered by Euronext.
The index has a base level of 1,000, taken from the 31st December 1987. It was launched on 15th June 1988. The index hit a record high of 6,922.33 in September 2000, with an all-time low of 893.82 recorded in January 1988.
Personal & Household Goods is the biggest sector in the index, comprising around 13% of the total weighting, followed closely by Industrial Goods & Services. Oil & Gas is the third-biggest sector, with a weighting of just under 12%. Healthcare and Banks are the fourth and fifth largest sectors respectively. Companies are limited to a 15% weighting.
CAC 40 index futures allow you to speculate on, or hedge against, changes in the price of major French stocks. Futures rollover on the second Friday of each month.
Heating Oil is a low-viscosity petroleum product derived from crude oil. Around 25% of the yield of crude oil is devoted to heating oil, the second most after gasoline products. As a result, prices often closely follow those of WTI crude.
It is priced in USD per gallon, and has a historic high of $3.32 in April 2011. The record low was $0.87 in January 2016.
Heating oil is used as a fuel for furnaces and boilers to heat homes and businesses. It is especially popular in the British Isles and the North-eastern US. As a result, demand fluctuates seasonally, peaking in the colder months between October and March.
Price is, as a result, also affected by cold weather. Other factors affecting price include the price of alternative heating options, energy efficiency and insulation, refining costs and government regulations.
Heating Oil futures allow you to speculate on, or hedge against, changes in the price of Heating Oil. Futures rollover on the third Friday of every month.
USD/NOK is the symbol for the US Dollar to Norwegian krone exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion.
The krone is the 13th most-trade currency, accounting for 1.7% of all daily forex activity. Around $US48 billion worth of USD/NOK - 0.9% of the total daily volume - is traded each day.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
The Norwegian economy is strongly-reliant upon crude oil and natural gas; the nation is one of the 5 top exporters of gas and oil, with the sector accounting for 22% of Norwegian GDP and 67% of the country's exports. USD/NOK therefore benefits doubly in times of low risk-appetite.
The EU is an important trade partner for Norway, accounting for 72% of its trade. Eurozone economic data can therefore have an impact upon NOK.
The euro to Norwegian krone exchange rate has the acronym EUR/NOK. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. The krone is the 13th most-trade currency, accounting for 1.7% of all daily forex activity. Around $US28 billion worth of EUR/NOK - 0.6% of the total daily FX volume - is traded each day.
The euro is the currency of the Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Norwegian economy is strongly-reliant upon crude oil and natural gas; the nation is one of the 5 top exporters of gas and oil, with the sector accounting for 22% of Norwegian GDP and 67% of the country's exports. The EU is an important trade partner for Norway, accounting for 72% of its trade. Eurozone economic data can therefore have an impact upon NOK as well as EUR.
The STOXX Europe 50 Index, also known simply as the Europe 50, is Europe's blue-chip index, comprising of 50 stocks from 17 countries; Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The index peaked at 4,557.57 in July 2007 and hit a record low of 1,809.98 in March 2009.
Companies in the Healthcare industry make up a fifth of the index, while Banks is the second-largest sector represented, with a weighting of 15.6%. Personal & Household Goods is the third largest sector with a weighting of 12.3%, but Oil & Gas is only 10 basis points smaller.
The stocks are mostly from Great Britain (33.6%), Switzerland (18%), France (17.9%), and Germany (14.9%). The index includes a capping factor to ensure that it cannot be dominated by one single country or component.
Europe 50 index futures allow you to speculate on, or hedge against, changes in the price of major European stocks. Futures rollover on the second Friday of March, June, September, and December.
The FTSE MIB Index, also known as the Italy 40, is Italy's leading benchmark index. It comprises the large cap components of the FTSE Italia All-Share Index; the 40 most-capitalised and liquid Italian shares account for around 80% of the market cap of the total domestic market.
The index was launched in the second quarter of 2009, but its base date is 31st December 1997. It has a base value of 24,401.54, peaked at 50,108.56 in March 2000 and struck a record low of 12,362.50 in July 2012.
Just over a quarter of the index is comprised of banks, with Utilities the second-largest category with a weighting of 16.51%. Oil & Gas is the third-largest sector, with a 12.67% share of the index.
A 15% weighting cap is in operation to ensure that no single component can dominate the index.
Italy 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Italian stock market. Futures rollover on the 2nd Friday of March, June, September, and December.
The WIG 20 Index, or Poland 20, is a blue-chip stock market index of the 20 most actively traded and liquid companies on the Warsaw Stock Exchange. Constituents are chosen from the top 20 companies trading on the Warsaw Stock Exchange as of the third Friday of February, May, August, and November.
The ranking is based upon turnover values for the previous 12 months and a closing price from the previous five trading sessions is used to calculate free float capitalisation.
The index has been calculated since 16th April, 1994 as a base value of 1,000 points. To keep the index diverse, no more than five companies from a single sector may be included in the index at any one time. Sectors covered by the index includes Commercial Banks, Oil & Gas Exploration & Production, Insurance, Metals Mining, and more.
Poland 20 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Warsaw Stock Exchange. Futures rollover on the 2nd Friday of March, June, September, and December.
A commodity is a raw material asset such as oil, gas, gold, or wheat. Commodities can be categorised into either hard commodities or soft commodities.
What are Soft Commodities?
Soft commodities typically refer to raw materials that are grown rather than mined such as coffee beans or sugar.
What Are Hard Commodities?
Whereas hard commodities must be extracted such as natural gas or crude oil.
A commodity is often exchangeable for other commodities of the same type and can be purchased through either the spot market using cash, or through derivatives like futures.
DBC, also known as the PowerShares DB Commodity Tracking ETF, tracks 14 commodities based on the futures curve. It aims to limit the effect of contango and maximise the effect of backwardation so that investors improve their returns. The commodities included in the ETF are gasoline, heating oil, Brent crude oil, WTI crude oil, gold, wheat, corn, soybeans, sugar, natural gas, zinc, copper, aluminium and silver.
Unlike other commodity ETFs, DBC rolls future contracts based on the shape of the future curve, rather than following a schedule. This allows the ETF to generate the best roll yield by minimising losses and maximising backwardation.
The AEX Index, known also as the Amsterdam 25, is a free float-adjusted and market capitalisation-weighted index of the 25 biggest and most actively traded companies trading in Amsterdam. It was created on January 3rd, 1983, but its base value of 538.36 is taken from 4th January 1999 to account for conversion to the euro.
The index recorded an all-time high in September 2000 of 701.56. It is the most widely-used bellwether of the Dutch stock market's performance.
The biggest sector in the index is Oil & Gas, which accounts for 17% of the total weighting. Personal & Household Goods, and Technology, are the second and third biggest sectors in the index respectively, each making up around 14% of the AEX.
Amsterdam 25 futures allow you to speculate on, or hedge against, changes in the price of stocks in the Netherlands market. The instrument is priced in euros and rolled over on the second Friday of every month.
Energy Select Sector SPDR Fund (XLE) tracks US energy companies within the S&P 500. This asset uses the Energy Select Sector Index as its tracking benchmark. The ETF is offers concentrated exposure to oil and gas industry giants, as the S&P500 favours large-caps. Nevertheless, it is fairly representative of the whole energy market.
Just a few holdings make up a big part of the portfolio, and there are only 31 holdings in total. Top holdings for the benchmark index include Exxon Mobil Corp, Chevron Corp and ConocoPhillips.
The CAC 40, also known as the France 40, is a blue-chip index and stock market barometer comprising of the 40 companies listed in Paris with the highest liquidity and free-float market capitalisation. It is the most-traded index administered by Euronext.
The index has a base level of 1,000, taken from the 31st December 1987. It was launched on 15th June 1988. The index hit a record high of 6,922.33 in September 2000, with an all-time low of 893.82 recorded in January 1988.
Personal & Household Goods is the biggest sector in the index, comprising around 13% of the total weighting, followed closely by Industrial Goods & Services. Oil & Gas is the third-biggest sector, with a weighting of just under 12%. Healthcare and Banks are the fourth and fifth largest sectors respectively. Companies are limited to a 15% weighting.
CAC 40 index futures allow you to speculate on, or hedge against, changes in the price of major French stocks. Futures rollover on the second Friday of each month.
Heating Oil is a low-viscosity petroleum product derived from crude oil. Around 25% of the yield of crude oil is devoted to heating oil, the second most after gasoline products. As a result, prices often closely follow those of WTI crude.
It is priced in USD per gallon, and has a historic high of $3.32 in April 2011. The record low was $0.87 in January 2016.
Heating oil is used as a fuel for furnaces and boilers to heat homes and businesses. It is especially popular in the British Isles and the North-eastern US. As a result, demand fluctuates seasonally, peaking in the colder months between October and March.
Price is, as a result, also affected by cold weather. Other factors affecting price include the price of alternative heating options, energy efficiency and insulation, refining costs and government regulations.
Heating Oil futures allow you to speculate on, or hedge against, changes in the price of Heating Oil. Futures rollover on the third Friday of every month.
The euro to Norwegian krone exchange rate has the acronym EUR/NOK. The euro is the 2nd most-traded currency on the planet, making up one side of 31% of daily trades. The krone is the 13th most-trade currency, accounting for 1.7% of all daily forex activity. Around $US28 billion worth of EUR/NOK - 0.6% of the total daily FX volume - is traded each day.
The euro is the currency of the Eurozone, which is overseen by the European Central Bank. The euro, also known as the common currency, the single currency, or the single unit, has an inverse correlation with the US Dollar.
The Norwegian economy is strongly-reliant upon crude oil and natural gas; the nation is one of the 5 top exporters of gas and oil, with the sector accounting for 22% of Norwegian GDP and 67% of the country's exports. The EU is an important trade partner for Norway, accounting for 72% of its trade. Eurozone economic data can therefore have an impact upon NOK as well as EUR.
The STOXX Europe 50 Index, also known simply as the Europe 50, is Europe's blue-chip index, comprising of 50 stocks from 17 countries; Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The index peaked at 4,557.57 in July 2007 and hit a record low of 1,809.98 in March 2009.
Companies in the Healthcare industry make up a fifth of the index, while Banks is the second-largest sector represented, with a weighting of 15.6%. Personal & Household Goods is the third largest sector with a weighting of 12.3%, but Oil & Gas is only 10 basis points smaller.
The stocks are mostly from Great Britain (33.6%), Switzerland (18%), France (17.9%), and Germany (14.9%). The index includes a capping factor to ensure that it cannot be dominated by one single country or component.
Europe 50 index futures allow you to speculate on, or hedge against, changes in the price of major European stocks. Futures rollover on the second Friday of March, June, September, and December.
The FTSE MIB Index, also known as the Italy 40, is Italy's leading benchmark index. It comprises the large cap components of the FTSE Italia All-Share Index; the 40 most-capitalised and liquid Italian shares account for around 80% of the market cap of the total domestic market.
The index was launched in the second quarter of 2009, but its base date is 31st December 1997. It has a base value of 24,401.54, peaked at 50,108.56 in March 2000 and struck a record low of 12,362.50 in July 2012.
Just over a quarter of the index is comprised of banks, with Utilities the second-largest category with a weighting of 16.51%. Oil & Gas is the third-largest sector, with a 12.67% share of the index.
A 15% weighting cap is in operation to ensure that no single component can dominate the index.
Italy 40 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Italian stock market. Futures rollover on the 2nd Friday of March, June, September, and December.
Natural gas is a found deep underground, alongside coal and other fossil fuel deposits. It is extensively used in the US, accounting for 25% of US energy consumption. The gas primarily consists of methane.
It is priced in USD per British thermal units (mmBtu). The highest price recorded for Natural gas was $15.30 in December 2005, a record low of $1.02 was seen in January 1992.
Natural gas is used as a source of energy generation, especially for heating and cooling systems. It is often preferred to goal or oil as it produces less greenhouse gases than other fossil fuels.
Just ten countries account for close to 80% of the proven natural gas supplies in the world, with Russia sitting on 25% of total reserves. The Middle East is home to several the remaining top producers, excluding the US.
Gas futures allow you to speculate on, or hedge against, changes in the price of gas.
Crude Oil, also known as West Texas Intermediate (WTI), is a light, sweet crude that acts as benchmark for oil prices in the US.
Crude Oil is priced in USD per barrel. It reached a historic high of $145.31 in July 2008 and saw a record low of $1.17 in February 1946.
WTI contains less sulphur than Brent Crude (which acts as a benchmark for oil prices in Europe and the Middle East), which means it demands a premium price. Both WTI and Brent are light, sweet oils that are ideal for refining into gasoline.
It is produced, refined and consumed in North America, and is mostly sourced in Texas - which is where the name originates - as well as in Louisiana and North Dakota.
WTI price is sensitive to factors that impact the general price of oil, as well as geopolitical and economic events and natural disasters in the Midwest and Gulf Coast regions.
The WIG 20 Index, or Poland 20, is a blue-chip stock market index of the 20 most actively traded and liquid companies on the Warsaw Stock Exchange. Constituents are chosen from the top 20 companies trading on the Warsaw Stock Exchange as of the third Friday of February, May, August, and November.
The ranking is based upon turnover values for the previous 12 months and a closing price from the previous five trading sessions is used to calculate free float capitalisation.
The index has been calculated since 16th April, 1994 as a base value of 1,000 points. To keep the index diverse, no more than five companies from a single sector may be included in the index at any one time. Sectors covered by the index includes Commercial Banks, Oil & Gas Exploration & Production, Insurance, Metals Mining, and more.
Poland 20 futures allow you to speculate on, or hedge against, changes in the price of major stocks on the Warsaw Stock Exchange. Futures rollover on the 2nd Friday of March, June, September, and December.
The United States Natural Gas Fund® LP (UNG) is an exchange-traded security that is designed to track in percentage terms the movements of natural gas prices. UNG issues shares that may be purchased and sold on the NYSE Arca.
The investment objective of UNG is for the daily changes in percentage terms of its shares' net NAV to reflect the daily changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the daily changes in the Benchmark Futures Contract, less UNG's expenses.
The Benchmark is the futures contract on natural gas as traded on the NYMEX. If the near month contract is within two weeks of expiration, the Benchmark will be the next month contract to expire. The natural gas contract is natural gas delivered at the Henry Hub, Louisiana.
UNG invests primarily in listed natural gas futures contracts and other natural gas related futures contracts, and may invest in forwards and swap contracts. These investments will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less.
IDU, also known as the iShares US Utilities ETF, tracks a broad range of market-cap-weighted US utilities stock. This asset provides exposure to US electricity, gas and water companies and has 51 holdings.
This ETF is an opportunity for traders looking for exposure to the sector, or to US holdings. Stocks included in the portfolio include Nextera Energy Inc, Duke Energy Corp, Dominion Energy Inc and Southern. It is comprised of 56.67% electric utilities, 31.10% multi-utilities, 5.3 gas utilities. Water utilities and independent power producers or energy traders make up the remainder.
The UK 100 is a blue-chip index of the largest 100 companies on the London Stock Exchange in terms of market capitalisation. Companies are only included if they meet relevant size and liquidity requirements.
The index was launched on 3rd January 1984, with a base date of 30th December 1983 and a base level of 1,000 points.
In terms of weighting, the three largest sectors of the UK 100 as of H2 2018 are Oil & Gas (16.56%), Banks (12.70%), and Personal & Household Goods (12.37%).
Traditionally the index has lagged its peers, such as the larger FTSE 250 and the US S&P 500. The index fluctuates in response to market risk sentiment and the strength of the pound Sterling. The UK 100 contains many international companies who report their earnings in other currencies, so a stronger pound weakens company profits.
Because of this, the UK 100 is also considered to be an unreliable indicator of the health of the UK economy because of its large international component.
USD/NOK is the symbol for the US Dollar to Norwegian krone exchange rate. The US Dollar is by far the world's most-traded currency, accounting for 87% of all over-the-counter FX each day - $4.4 trillion.
The krone is the 13th most-trade currency, accounting for 1.7% of all daily forex activity. Around $US48 billion worth of USD/NOK - 0.9% of the total daily volume - is traded each day.
The US Dollar is not only the most ubiquitous currency on the globe, but also a safe-haven asset. In times of market uncertainty traders withdraw from riskier assets into stable USD.
The Norwegian economy is strongly-reliant upon crude oil and natural gas; the nation is one of the 5 top exporters of gas and oil, with the sector accounting for 22% of Norwegian GDP and 67% of the country's exports. USD/NOK therefore benefits doubly in times of low risk-appetite.
The EU is an important trade partner for Norway, accounting for 72% of its trade. Eurozone economic data can therefore have an impact upon NOK.
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