154 terms

Dictionary: B

B-book: Broker practice of keeping the other side of a client's trade internally rather than hedging it, so the client's loss is the broker's profit and vice versa.
Back-adjustment: Shifting all historical prices in a continuous futures series by the roll gap so the chart has no artificial jumps.
Back-end load: A charge taken on redemption, often declining each year the investment is held until it reaches zero after a set period.
Backlog: The value of orders received but not yet delivered or recognised as revenue; a forward indicator of the next several quarters of sales.
Backspread: The inverted ratio spread: sell one nearer option and buy two further out, creating a position that is long convexity and often opened for a small credit.
Backtesting: Testing a set of trading rules on historical data to see how it would have performed.
Backwardation: A futures curve where later contract months are priced lower than nearer ones, usually signaling tight current supply.
Bad debt: Debt left in a lending protocol with insufficient collateral behind it, because liquidation failed or arrived too late. A direct loss to depositors.
Bad tick: A single erroneous price in a data feed. Small in isolation, and capable of triggering a stop or a signal that never should have existed.
BaFin: Germany's integrated financial supervisor for banks, insurers, brokers and markets, operating within the EU framework and the euro area banking union.
Bag-holding psychology: The mental machinery that keeps someone in a collapsed position: entry anchoring, loss aversion, ownership, and the story that justified it.
Bagholder: Someone stuck holding a position that has fallen far below their entry, usually because they refused to take the loss when it was small.
Balance area: A region where a market has traded for an extended period with a well-developed profile, indicating agreement on value between buyers and sellers.
Balance of payments: The full accounting of a country's transactions with the rest of the world, split into the current account and the capital and financial accounts, which must offset each other.
Balance sheet: A snapshot of what a company owns, what it owes and what is left for owners on one particular date. Assets always equal liabilities plus equity.
Balance sheet runoff: Shrinking the central bank's asset holdings by letting maturing securities pay off instead of reinvesting the proceeds, usually subject to a monthly cap.
Balance vs equity: Balance is the settled cash after closed trades; equity is balance plus or minus everything still open. Margin rules are enforced on equity, not balance.
Banging the close: Trading aggressively into the settlement window to push the official settlement price in a direction that benefits a position priced off it. A prosecutable form of manipulation.
Bank reserves: Deposits commercial banks hold at the central bank; the ultimate settlement asset and the quantity the Fed expands or shrinks with QE and QT.
Bank Secrecy Act: The US statute requiring financial institutions to keep records and file reports that assist in detecting money laundering, including SARs, CTRs and identity verification duties.
Bankruptcy ticker suffix: The extra letter appended to a ticker to flag a status such as bankruptcy, delinquent filings, or a when-issued line, historically the trailing Q for a company in bankruptcy.
Bar chart (OHLC): A chart where each period is a vertical line from low to high, with a left tick for the open and a right tick for the close.
Bar replay: A charting mode that hides future bars and steps forward one at a time, letting you practise reading a chart without hindsight.
Bar types: Alternatives to fixed-time bars that sample by activity instead: a new bar every N trades, N shares, or N dollars traded.
Barrier option: An option that only comes into existence or ceases to exist if the underlying touches a specified level, making it cheaper than a standard option with the same strike.
Base currency: The first currency in a pair; the one you are buying or selling, priced in units of the quote currency.
Base effects: Distortions in a year-over-year growth rate caused by an unusual value in the year-ago comparison month rather than by anything happening now.
Base fee: The protocol-set portion of a transaction fee that adjusts with congestion and is burned rather than paid to block producers.
Base rate neglect: Ignoring how common an outcome is in general and reasoning only from the specific story in front of you.
Basic versus diluted EPS: Basic EPS divides profit by shares that exist today; diluted EPS also counts the shares that options, restricted stock and convertibles would create.
Basis: The gap between a derivative's price and spot. Positive basis means futures trade above spot, which can be harvested by holding spot and shorting the future.
Basis: The difference between the local cash price of a commodity and the futures price used to hedge it.
Basis point (bp): One hundredth of a percentage point, the standard unit for quoting interest rates, yields and credit spreads.
Basis risk: The risk that the price you are hedging and the futures contract you hedged with move apart.
Basis trade: Any position capturing the difference between a derivative and its underlying, or between two closely related instruments, financed so that only the convergence matters.
Basket order: A single instruction to trade many symbols at once, executed as a coordinated list rather than as unrelated tickets.
Bayesian optimisation: A search method that builds a probabilistic model of the objective surface and picks the next parameter set most likely to be informative.
Bear / bearish: A trader who expects prices to fall; a bear market is a decline of 20% or more from a high.
Bear call spread: Sell a call and buy a higher-strike call in the same expiration; a bearish credit trade capped by the long call.
Bear flag: A sharp decline followed by a shallow upward drift, read as a pause before the downtrend continues.
Bear flattener: The curve flattens because short yields rise faster than long yields; a selloff led by the front end, the signature of a hiking cycle.
Bear put spread: Buy a put and sell a lower-strike put in the same expiration; a bearish debit trade with defined risk and a profit capped at the lower strike.
Bear steepener: The curve steepens because long yields rise faster than short yields; a selloff led by the long end, usually about supply, inflation or term premium.
Bear trap: A breakdown below support that reverses sharply, trapping short sellers and stopping out longs just before the rally.
Bearish candle: Any candle that closes below its open, usually drawn red or filled.
Bearish engulfing: A red candle whose body completely covers the previous green candle's body, showing sellers taking control after an advance.
Bed and breakfasting rule: United Kingdom: shares repurchased within 30 days of a disposal are matched against that disposal, preventing a sale and immediate repurchase purely to crystallise a loss or use an allowance.
Behaviour journal: A journal that records what you did and how you were, alongside the numbers, so behaviour patterns become visible over time.
Beige Book: A qualitative survey of business conditions from each of the twelve Federal Reserve districts, published two weeks before each FOMC meeting.
Belief perseverance: Holding on to a view after the evidence that produced it has been withdrawn, because the belief has become part of how you see the market.
Belt hold: A candle that opens at its extreme and runs the other way all period, closing near the opposite end with no shadow on the open side.
Benchmark: The index or blend a portfolio is measured against. A benchmark is only useful if it is investable, published in advance, and built from the same opportunity set the manager actually trades.
Benchmark close: The exchange-designated closing price used for index calculation, fund valuation, derivatives settlement and performance measurement, normally set by the closing auction.
Beneficial ownership rule: The requirement to identify and verify the natural persons who own 25% or more of a legal entity customer, plus one individual with significant control over it.
Bermudan option: An option exercisable on a fixed schedule of dates between American and European extremes; common in rates and structured products.
Best execution: A regulatory obligation on brokers to take all sufficient steps to obtain the best overall result for clients, considering price, cost, speed and likelihood of execution.
Beta: How much a stock tends to move for a given move in the broad index; a beta of 1.4 implies roughly 1.4% for each 1% of index move.
Beta estimation: Measuring an instrument's sensitivity to a benchmark, usually as the slope of a regression of its returns on the benchmark's.
Beta-weighted delta: Every position's directional exposure converted into equivalent shares of one benchmark, giving a single portfolio risk number.
Bias-variance tradeoff: Simple models miss real structure; flexible models fit noise. The best model for noisy financial data sits far toward the simple end of that scale.
Bid: The highest price a buyer is currently willing to pay for an asset.
Bid-ask bounce: The apparent price oscillation created when consecutive trades alternate between hitting the bid and lifting the offer, even though the underlying value has not moved.
Bid-ask spread: The gap between the best buy price and the best sell price; a hidden cost paid on every round trip.
Bid-to-cover ratio: Total bids received at a Treasury auction divided by the amount sold; a crude but closely watched gauge of how much demand showed up.
Big figure: The whole-number part of an exchange rate that dealers leave unsaid, quoting only the last two digits to save time.
Big Mac index: A light-hearted purchasing power comparison that uses the price of one standardised burger in each country to judge whether a currency looks cheap or expensive.
Binomial model: A pricing method that builds a tree of up and down price steps and values the option backwards from expiration, handling early exercise naturally.
Bitcoin dominance: Bitcoin's market cap as a percentage of total crypto market cap, used to gauge whether money is rotating into or out of altcoins.
Bitcoin futures (BTC): CME contracts on 5 bitcoin, cash settled to a daily reference rate, which brought regulated, centrally cleared bitcoin exposure to institutions in December 2017.
Black swan: An outlier event outside prior experience, with extreme impact, that gets rationalised as predictable only after it happens.
Black Wednesday (1992): The day in September 1992 when the UK abandoned its attempt to hold sterling inside the European Exchange Rate Mechanism, after rate rises and reserve spending failed to stop the selling.
Black-Scholes assumptions: The conditions the formula requires — constant volatility, continuous trading, no jumps, no transaction costs — each of which markets violate routinely.
Black-Scholes model: The closed-form equation that prices a European option from spot, strike, time, rate and volatility, and the shared language of the options market.
Blacklist function: Code in a token contract letting the issuer freeze specific addresses so their balances cannot be moved. Standard in major fiat-backed stablecoins.
Block: A batch of transactions accepted by a network at one time, linked to the previous batch by a hash.
Block bootstrap: Bootstrap resampling that draws contiguous blocks of observations rather than single points, preserving short-run structure like volatility clustering.
Block explorer: A website that indexes a chain so you can look up any transaction, address, block or contract.
Block height: The number of blocks between the chain's first block and the current one; a chain's clock and version number.
Block order: A single trade large enough to need special handling, conventionally 10,000 shares or $200,000 in US equities.
Block reward: The newly issued coins plus fees paid to whoever produces a block; the main source of a chain's supply inflation.
Block time: The average gap between blocks on a chain, which sets how quickly a transaction can first be included.
Block trade: A large, privately negotiated futures trade executed away from the order book at a permitted price and reported to the exchange within minutes.
Block trade (options): A large options trade negotiated away from the screen and printed to the tape as a single transaction, often a hedge or an institutional structure.
Blockchain: A shared database copied across many computers, where new records are added in batches that each reference the batch before them.
Blockspace: The limited room inside blocks that transactions compete for; the real commodity a blockchain sells.
Blow-off top: A steep, near-vertical final surge at the end of a long rally, on huge volume, followed by a sharp reversal.
Blown up: Losing all or nearly all of an account, usually in a short period, through oversized positions or a refusal to take a loss.
Blue chip: A large, established, consistently profitable company with a long operating history and usually a durable dividend.
Blue sky laws: US state securities laws that require registration or notice filings for offerings and licensing of brokers and advisers within the state, layered under federal regulation.
Boiler room: A high-pressure sales operation pushing worthless or grossly overpriced securities through cold calls, social media or messaging groups, usually as the distribution arm of a pump and dump.
Bollinger band width: The distance between the upper and lower Bollinger Bands expressed relative to the middle band, used as a direct measure of current volatility.
Bollinger Bands: A moving average with bands plotted two standard deviations above and below it, showing how stretched price is relative to recent volatility.
Bollinger squeeze: A period when Bollinger Bands narrow to an unusually tight range, indicating low volatility that tends to be followed by an expansion.
Bona fide hedge exemption: Permission for a commercial firm to exceed speculative position limits because its futures offset a genuine physical exposure.
Bond: A tradable loan: the issuer borrows money, pays interest on a schedule, and returns the face amount on a set date.
Bond equivalent yield (BEY): A convention that restates a yield on a semi-annual compounding basis so instruments with different payment frequencies can be compared fairly.
Bond indenture: The legal contract governing a bond: the coupon, maturity, seniority, covenants, call schedule, events of default and the trustee's powers.
Bonferroni correction: Divide your significance threshold by the number of tests you ran. Crude, conservative, and better than pretending you only ran one.
Book building: The process of collecting investor orders at various prices during the roadshow to discover demand and set the final offering price.
Book value: Total assets minus total liabilities as reported on the balance sheet: the accounting measure of what shareholders own.
Book value per share: Shareholders equity divided by shares outstanding: the accounting net worth backing each share.
Book-to-bill ratio: Orders received in a period divided by revenue billed in the same period; above 1 means the backlog is growing, below 1 means it is shrinking.
Bootstrap: Estimating the uncertainty of a statistic by resampling the observed data with replacement, many times, and looking at the spread of results.
Bootstrapping (the curve): Building a zero-coupon curve step by step from observable coupon bond prices, solving for each new spot rate using the ones already known.
Boredom trading: Entering because nothing is happening and sitting still is uncomfortable, rather than because a setup appeared.
Borrow APR: The annualised interest rate on an on-chain loan, floating continuously with utilisation rather than fixed at origination.
Borrow cost: The fee paid to borrow shares in order to short them. Cheap and stable for large caps, punitive and unpredictable for the names shorts most want.
Borrow fee: The annualised rate a short seller pays to borrow shares, quoted as a percentage of position value and accrued daily; it can range from a fraction of a percent to several hundred.
Borrow rate: The annualised fee a short seller pays to borrow shares, quoted as a percentage of position value and accrued daily while the position is open.
Box breathing: A paced breathing pattern - equal counts in, hold, out, hold - used to bring physical arousal down within a minute or two.
Box spread: A bull call spread plus a bear put spread at the same two strikes; a package worth exactly the strike width at expiration, used as a synthetic loan.
Bracket order: An entry order that automatically attaches a stop-loss and a take-profit once it fills.
Breadth thrust: A rapid shift from very few stocks advancing to a very large majority, historically associated with the start of durable rallies.
Break of structure: Price closing beyond the most recent significant swing point in the direction of the existing trend, confirming that the trend is continuing.
Break-even effect: Taking larger and wilder risks while you are down, in order to get back to flat, because the loss is not yet accepted as real.
Breakaway gap: A gap that leaves a consolidation area or breaks a major level, usually on heavy volume, marking the start of a new move.
Breaker block: A former support or resistance zone that failed and is then retested from the other side, expected to act with the opposite polarity.
Breakeven: The underlying price at which an option position makes exactly zero at expiration, after accounting for premium paid or received.
Breakeven inflation: The nominal Treasury yield minus the TIPS yield of the same maturity: the average inflation rate at which both bonds return the same amount.
Breakeven stop: Moving the stop to the entry price once a trade has moved in your favour, converting risk into a scratch outcome.
Breakeven win rate: The hit rate at which a given payoff ratio produces exactly zero expectancy, and therefore the bar any strategy must clear.
Breakout: A move through a support or resistance level or out of a range, ideally with volume behind it.
Brent crude futures: The waterborne North Sea benchmark that prices roughly three quarters of internationally traded crude, listed on ICE in 1,000-barrel cash-settled contracts.
Brent-WTI spread: The price difference between the two global crude benchmarks, driven by US pipeline capacity, export economics and freight.
Bretton Woods system: The post-1944 arrangement under which major currencies were fixed against the US dollar and the dollar was convertible into gold at a set price, ending in the early 1970s.
Bridge: A system that moves value between chains, usually by locking assets on one side and issuing a claim on the other.
Bridge hack risk: The concentrated risk that a cross-chain bridge holding pooled assets is exploited, leaving wrapped claims unbacked.
Broadening formation: A pattern of successively higher highs and lower lows, producing an expanding range that reflects rising volatility and disagreement.
Broken date: A forward value date that does not fall on a standard tenor, priced by interpolating between the surrounding standard dates.
Broken wing butterfly: A butterfly with unequal wings, usually entered for a credit, which removes risk entirely on one side and concentrates it on the other.
Broker-dealer: A firm registered to execute trades for customers as a broker and to trade for its own account as a dealer, subject to capital, custody and conduct rules.
BrokerCheck: FINRA's free public database showing a US broker or firm's registrations, exam history, employment record, and disclosed complaints, arbitrations and regulatory actions.
Bug bounty: A standing offer to pay researchers for responsibly disclosed vulnerabilities, often scaled to the funds a bug could have taken.
Bull / bullish: A trader who expects prices to rise; a bull market is a sustained uptrend, conventionally 20% or more off a low.
Bull call spread: Buy a call and sell a higher-strike call in the same expiration; a bullish debit trade with capped profit and loss limited to the debit.
Bull flag: A sharp advance followed by a shallow, orderly drift lower or sideways, read as a pause before the trend resumes.
Bull flattener: The curve flattens because long yields fall faster than short yields; a rally led by the long end, often a growth scare or flight to quality.
Bull market genius: Someone whose apparent skill is entirely the market going up, usually discovered when it stops.
Bull put spread: Sell a put and buy a lower-strike put in the same expiration; a bullish credit trade that profits if the underlying stays above the short strike.
Bull steepener: The curve steepens because short yields fall faster than long yields; a rally led by the front end, typically pricing rate cuts.
Bull trap: A breakout above resistance that fails quickly, trapping buyers who chased it above a level that now becomes resistance again.
Bullish candle: Any candle that closes above its open, usually drawn green or hollow.
Bullish engulfing: A green candle whose body completely covers the previous red candle's body, showing buyers overwhelming the prior period's sellers.
Burner wallet: A throwaway wallet funded with a small amount, used to interact with unfamiliar contracts so a bad approval cannot reach your main holdings.
Burnout: Exhaustion, cynicism, and reduced effectiveness from prolonged strain - common in traders because the screen never closes and the feedback is harsh.
Bushel: The volume unit US grain futures are written on, standardised by weight per crop: 56 pounds for corn, 60 for wheat and soybeans, 32 for oats.
Business cycle: The recurring but irregular sequence of expansion, peak, contraction and trough in aggregate economic activity, which drives rotation between asset classes and sectors.
Butterfly (curve trade): A three-leg curve trade on the belly of the curve against the two wings, expressing a view on curvature rather than direction or slope.
Buy the dip: Purchasing an asset after a decline in the belief that the larger uptrend will resume.
Buy-in: A forced market purchase executed by a broker or clearing house to close a position that cannot be delivered, charged to the account that failed.
Buy-write: Buying stock and selling a call against it in one order, entered as a package so the net debit is known before either leg fills.
Buyback yield: Net shares repurchased over the past year divided by market cap; the buyback equivalent of a dividend yield.
Buying power: The notional value of securities you can purchase right now given cash, margin entitlement and current positions — not the same number as your account equity.
Buying power reduction (BPR): The amount of account capital a position ties up while it is open; the real denominator for any options return calculation.

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