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Trading Glossary

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.

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IPO (Initial Public Offering)

What is an IPO?

An IPO (initial public offering) is when a company makes its shares available to the public. This means the stock can be bought and sold by both retail and institutional investors. An IPO is usually underwritten by investment banks, who set up the sale of the shares on exchanges. 

What is the difference between an IPO and a Stock?
An IPO is the process of a privately held company being transformed into a public one. The difference between stock and an IPO is that an IPO refers to public shares of a stock and not shares offered after that.

Initial public offerings can be used to raise new equity capital for a company. It monetizes the investments of private shareholders such as company founders or private equity investors. This enables easy trading of existing holdings or future capital raising. The disadvantages of IPO are the same trade-offs between equity and debt financing.
 

NZD/USD

The New Zealand dollar to US Dollar exchange rate is represented by the acronym NZD/USD. The New Zealand dollar, also known as the ‘Kiwi' because of the bird depicted upon the NZ$1 coin is the smallest major in terms of trading volume, accounting for 2.1% of daily forex trades. Around $104 billion worth of NZD is traded each day.

The New Zealand economy is heavily reliant upon exports, with dairy being the nation's biggest industry. Mining is also important and, like its antipodean neighbour Australia, New Zealand relies heavily upon trade with China. Data from China that shows strength or weakness in industry or consumer demand can have a strong impact upon NZD/USD.

As a commodity-correlated currency the New Zealand dollar is also highly-sensitive to risk-appetite. In times of geopolitical or economic uncertainty the NZD/USD exchange rate weakens, while market confidence tends to push NZD/USD higher.

Grey Market

What is the Grey Market?

In the financial and trading domains, the Grey Market enables traders to take positions on a company’s potential via yet-to-be-released Initial Public Offering (IPO). Asset and share prices in this market are more of a prediction of what the company’s total market capitalization will be at the end of its first trading day than any official or sanctioned price.

How do grey markets make money? 
Grey markets make money by providing liquidity for new IPOs by allowing buyers and sellers to trade in newly issued stocks without the issuer's consent. This provides the issuer with a way to gain quick access to capital without relying on banks or other traditional sources of funding.

How do I get into grey market?
A grey market also refers to public companies and securities that are not listed, traded, or quoted in a U.S. stock exchange. Grey market securities have no market makers quoting the stock. Also, since they are not traded or quoted on an exchange or interdealer quotation system, investors' bids and offers are not collected in a central spot, so market transparency is diminished, and effective execution of orders is difficult.
 

Opening Price

What is an Opening Price?

The Opening Price is the price at which a security first trades upon the opening of an exchange on a trading day. It is important to note that it may not identical to the previous day’s closing price. Also, for new stock offerings (IPO etc), Opening Price refers to the initial share price at the beginning of trade of the first day. Yet there are some cases when an opening price will also be the share price which was established by the first trade of the day, instead of being based on a price that was already in place when at the beginning of trade of that day at that specific exchange.

How is opening price calculated?
The opening price is can be calculated by taking the first trade price executed in that trading session. In case of stock trading it is the price of the first trade executed on the exchange when the market opens. Opening price is usually used to calculate the performance of the stock or any other asset for the day.

What is the difference between opening price and closing price?
The opening price is the price of an asset at the start of a trading session, while the closing price is the price of an asset at the end of a trading session. 

Who sets the opening price of a stock?
The opening price of a stock is typically set by the stock exchange or market maker responsible for trading that stock. 

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Grey Market

What is the Grey Market?

In the financial and trading domains, the Grey Market enables traders to take positions on a company’s potential via yet-to-be-released Initial Public Offering (IPO). Asset and share prices in this market are more of a prediction of what the company’s total market capitalization will be at the end of its first trading day than any official or sanctioned price.

How do grey markets make money? 
Grey markets make money by providing liquidity for new IPOs by allowing buyers and sellers to trade in newly issued stocks without the issuer's consent. This provides the issuer with a way to gain quick access to capital without relying on banks or other traditional sources of funding.

How do I get into grey market?
A grey market also refers to public companies and securities that are not listed, traded, or quoted in a U.S. stock exchange. Grey market securities have no market makers quoting the stock. Also, since they are not traded or quoted on an exchange or interdealer quotation system, investors' bids and offers are not collected in a central spot, so market transparency is diminished, and effective execution of orders is difficult.
 

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IPO (Initial Public Offering)

What is an IPO?

An IPO (initial public offering) is when a company makes its shares available to the public. This means the stock can be bought and sold by both retail and institutional investors. An IPO is usually underwritten by investment banks, who set up the sale of the shares on exchanges. 

What is the difference between an IPO and a Stock?
An IPO is the process of a privately held company being transformed into a public one. The difference between stock and an IPO is that an IPO refers to public shares of a stock and not shares offered after that.

Initial public offerings can be used to raise new equity capital for a company. It monetizes the investments of private shareholders such as company founders or private equity investors. This enables easy trading of existing holdings or future capital raising. The disadvantages of IPO are the same trade-offs between equity and debt financing.
 

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NZD/USD

The New Zealand dollar to US Dollar exchange rate is represented by the acronym NZD/USD. The New Zealand dollar, also known as the ‘Kiwi' because of the bird depicted upon the NZ$1 coin is the smallest major in terms of trading volume, accounting for 2.1% of daily forex trades. Around $104 billion worth of NZD is traded each day.

The New Zealand economy is heavily reliant upon exports, with dairy being the nation's biggest industry. Mining is also important and, like its antipodean neighbour Australia, New Zealand relies heavily upon trade with China. Data from China that shows strength or weakness in industry or consumer demand can have a strong impact upon NZD/USD.

As a commodity-correlated currency the New Zealand dollar is also highly-sensitive to risk-appetite. In times of geopolitical or economic uncertainty the NZD/USD exchange rate weakens, while market confidence tends to push NZD/USD higher.

Opening Price

What is an Opening Price?

The Opening Price is the price at which a security first trades upon the opening of an exchange on a trading day. It is important to note that it may not identical to the previous day’s closing price. Also, for new stock offerings (IPO etc), Opening Price refers to the initial share price at the beginning of trade of the first day. Yet there are some cases when an opening price will also be the share price which was established by the first trade of the day, instead of being based on a price that was already in place when at the beginning of trade of that day at that specific exchange.

How is opening price calculated?
The opening price is can be calculated by taking the first trade price executed in that trading session. In case of stock trading it is the price of the first trade executed on the exchange when the market opens. Opening price is usually used to calculate the performance of the stock or any other asset for the day.

What is the difference between opening price and closing price?
The opening price is the price of an asset at the start of a trading session, while the closing price is the price of an asset at the end of a trading session. 

Who sets the opening price of a stock?
The opening price of a stock is typically set by the stock exchange or market maker responsible for trading that stock. 

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