123 terms

Dictionary: I

ICE (Intercontinental Exchange): The exchange group that lists Brent crude, gasoil, and the New York softs complex, and owns the NYSE.
Iceberg order: A large limit order that displays only a small portion of its size at a time, refreshing as each visible piece fills.
Ichimoku Kinko Hyo: A Japanese charting system of five lines that together show trend, support and resistance, and momentum at a glance.
Idempotent order: An order submission designed so that sending it twice has the same effect as sending it once, normally by attaching a unique client-supplied identifier.
Identity and trading: What happens when being a trader becomes part of who you are, so losses feel like personal verdicts and changing approach feels like giving up on yourself.
Idiosyncratic risk: The part of a position's risk unique to that instrument - fraud, trial results, a guidance miss - which diversification can genuinely reduce.
Illiquidity premium: The extra expected return demanded for holding an asset that cannot be sold quickly at a fair price, compensating for the loss of optionality and flexibility.
Illusion of control: Feeling that your effort or ritual influences an outcome that is actually determined by the market.
Illusion of validity: The confidence that comes from a coherent story or a rich-looking model, independent of whether it predicts anything.
Imbalance: A stretch of price that traded so quickly in one direction that little two-sided activity occurred there, often shown as a gap between adjacent bar ranges.
Imbalance message: A pre-auction data broadcast showing how much unmatched buy or sell interest exists and at what price the cross would currently print.
Immediate-or-cancel (IOC): Take whatever is available right now at your price, then cancel the remainder instead of resting on the book.
Impairment: A non-cash charge that cuts an asset's carrying value on the balance sheet when its recoverable value falls below what the books say.
Impermanent loss: The shortfall a liquidity provider takes versus simply holding the two tokens, caused by the pool selling the winner and buying the loser as prices diverge.
Implementation intention: A rule in the form if X happens, I do Y - decided in advance so the behaviour does not need willpower in the moment.
Implementation shortfall: The total cost of a trade measured against the price when the decision was made, including spread, impact, fees and the cost of what you failed to execute.
Implied dividend: The dividend stream backed out of option prices via put-call parity; the market's forecast, which can differ from the company's announced policy.
Implied forward: The forward price of the underlying derived from the options market via put-call parity; the level around which the volatility surface is really centred.
Implied orders: Synthetic bids and offers the exchange generates by combining outright and spread markets, so a spread quote can trade against outright quotes and vice versa.
Implied repo rate: The annualised return earned by buying a deliverable bond, holding it to delivery and selling futures against it — the yardstick for which bond is cheapest to deliver.
Implied versus realised volatility: The core comparison in volatility trading: what options are pricing against what the underlying actually delivers.
Implied volatility (IV): The annualized volatility that current option prices imply for the underlying; a measure of how expensive options are.
Impostor syndrome: Persistent doubt about your competence despite evidence of it, which in traders shows up as inability to take normal size after a good stretch.
Impulse wave: In Elliott Wave, a five-wave move in the direction of the larger trend, with three advancing waves separated by two corrections.
In the money (ITM): An option with intrinsic value: a call with the stock above its strike, or a put with the stock below it.
In-kind redemption: Settling an ETF redemption by handing over securities rather than cash, which lets the fund pass out low-basis holdings without realising a taxable gain.
In-sample: The slice of history you used to build and tune a strategy; results on it are always flattering and prove nothing on their own.
Income statement: The statement that runs from revenue down to net income over a period, showing what the company sold and what it cost to sell it.
Income stock: A stock bought mainly for its dividend stream rather than price appreciation, typically with a high yield and modest growth.
Income tax expense: The accounting charge for taxes on the period's profit, which is usually not the same as the cash actually paid to tax authorities.
Incremental margin: The change in operating profit divided by the change in revenue; how much of each new sales dollar drops to the profit line.
Incubation: Running a finished strategy on live data without money, or with token size, for a set period before funding it. The only truly clean out-of-sample test available.
Incubation period: Running a finished strategy on unseen live data for a fixed stretch before allocating real size to it.
Index: A basket of securities weighted by a rule, such as the S&P 500 (market-cap weighted) or the Dow (price weighted), used as a benchmark and a trading vehicle.
Index arbitrage: Trading index futures against a basket of the underlying stocks when the futures price strays from its fair value.
Index CFD: A CFD on a stock index quoted as a cash price with a value per point, offering index exposure in smaller size than the equivalent futures contract.
Index construction: The rulebook behind an index: what is eligible, how constituents are weighted, when the list is reviewed, and how corporate actions are handled.
Index dispersion: Selling index volatility and buying volatility on the index members, a bet that correlation between the components will fall.
Index effect: The tendency of stocks to rise on news of index addition and fall on deletion, driven by mandatory passive flows rather than by any change in the business.
Index fund: A fund that holds the constituents of a published index in their index weights, aiming to match the benchmark's return rather than beat it.
Index inclusion: The addition of a stock to a published index, which forces every fund tracking that index to buy it, creating a large one-off demand event.
Index option: An option on a stock index rather than a tradable security; usually European style and cash settled, so there is no assignment into shares.
Index price: A composite spot price built from several exchanges, used as the anchor for marking derivatives positions and for funding calculations.
Index provider: The firm that defines an index's rules, decides its constituents, and publishes its values, effectively controlling where trillions of passive dollars sit.
Index rebalance: The scheduled update of index weights to reflect changed share counts, float, and prices, requiring tracking funds to trade every affected constituent.
Index reconstitution: The full annual rebuild of an index's membership, in which every eligible stock is re-ranked and additions, deletions, and style assignments are set at once.
Index replication: How a fund actually holds an index: full replication buys every constituent in index weight, while sampling holds a representative subset chosen to match the index's risk profile.
Indicative price: The price at which an auction would currently clear if it ran this instant, published continuously during the pre-auction period as a live estimate.
Indicator lag: The unavoidable delay in any indicator calculated from past prices, which means it can confirm a change but never anticipate one.
Indicator shopping: Adding tools to a chart until one of them agrees with the position you already want to take.
Indirect bidder: An auction bidder who submits through a primary dealer rather than directly; largely foreign central banks and asset managers, and a rough proxy for overseas demand.
Indirect quote: A rate that prices one unit of the domestic currency in units of a foreign currency, such as one pound buying 1.27 dollars to someone in the UK.
Industrial production: A monthly index of physical output from manufacturing, mining and utilities, measuring volume rather than value so it is unaffected by price changes.
Inflation expectations: What households, firms and markets believe inflation will be in future; the variable central banks guard most jealously because expectations feed into actual wage and price setting.
Inflation targeting: A framework in which the central bank commits to a numerical inflation goal, usually 2%, and sets policy to return inflation to it over the medium term.
Information ratio: Excess return over a benchmark divided by the volatility of that excess return. The Sharpe ratio of your active decisions rather than of your total exposure.
Initial balance: The high and low established in the first hour of a session, used as the reference range for judging the rest of the day.
Initial jobless claims: The number of people filing new unemployment insurance claims each week; the most timely labour market indicator available and a genuine leading indicator of recession.
Initial margin: The collateral the exchange requires to open one futures contract and hold it overnight.
Initial public offering: The first sale of a company's shares to public investors, after which the stock lists on an exchange and trades freely.
Initial risk: The planned loss on a trade at the moment of entry, which defines the R unit used to measure everything afterwards.
Inside bar: A bar whose entire high-to-low range fits within the previous bar's range, marking a contraction in volatility.
Insider trading: Trading on material non-public information in breach of a duty; illegal in the US and enforced by the SEC and Justice Department.
Instant execution: An order model where you request a specific displayed price and the broker either fills it exactly or sends a requote.
Insurance fund: A venue's reserve that absorbs losses when a liquidated position is closed worse than its bankruptcy price, protecting winning traders from clawbacks.
Intangible assets: Non-physical assets with identifiable value: patents, customer relationships, trademarks, licences and acquired technology, usually amortised over a set life.
Interbank market: The network of large banks and dealers that trade currencies with each other directly and through electronic platforms, forming the top layer of FX pricing.
Intercommodity spread: A long-short position in two different but economically linked futures products, such as corn against wheat or gold against silver.
Interest coverage ratio: Operating profit divided by interest expense; how many times over the company can pay its lenders out of current earnings.
Interest expense: The cost of borrowed money for the period, charged below operating income and driven by the size and rate of the company's debt.
Interest income: What a company earns on its cash and short-term investments; a real profit contributor for cash-rich firms when rates are high.
Interest rate differential: The gap between the short-term interest rates of two currencies, which sets forward points, swap charges and the return on a carry trade.
Interest rate parity: The rule that forward exchange rates must offset the interest rate gap between two currencies, or riskless arbitrage would be available.
Interest rate risk: The risk that a bond or portfolio loses value because market yields rise; measured by duration and hedged with futures or swaps.
Interest rate swap: An agreement to exchange fixed interest payments for floating payments on a notional amount, the largest derivative market in the world by outstanding notional.
Interest rates in option pricing: How the risk-free rate enters option values: it raises calls and lowers puts, because holding a call defers the cash needed to own the underlying.
Intermarket sweep order (ISO): A US equity order marked so a venue may execute it immediately at its own price, because the sender simultaneously routes orders to every better-priced protected quote.
Internal rate of return: The discount rate that makes the present value of an investment's cash flows equal zero, used as the headline return measure for private funds and any irregular cash-flow stream.
Internal Revenue Service (IRS): The US federal tax authority, which receives broker information returns such as Form 1099-B and administers the rules on capital gains, wash sales and trader elections.
Internalisation: A broker or dealer filling your order from its own inventory or against another client's order, rather than sending it to a public venue.
Interval fund: A closed-end structure that offers to repurchase a limited percentage of shares, commonly 5%, at set intervals such as quarterly, rather than daily redemption.
Intraday drawdown: The worst peak-to-trough equity dip within a session, which is invisible in daily closing data and is what you actually lived through.
Intraday margin: The reduced margin a broker requires for positions opened and closed within the same session, often a small fraction of the exchange's overnight requirement.
Intramarket spread (futures calendar spread): Long one contract month and short another in the same product, so the position trades the shape of the curve rather than the level of price.
Intrinsic value: The portion of an option's price you would capture by exercising it immediately; zero for out-of-the-money options.
Introducing broker (IB): A person or firm that refers clients to a brokerage in exchange for a share of the spread, commission or volume those clients generate.
Invalidation level: The price at which your reason for being in a trade is no longer true, defined before entry and used to place the stop.
Inventory: Goods the company holds to sell: raw materials, part-finished production and finished units sitting in warehouses or on shelves.
Inventory costing: The convention that decides which units cost figure moves to COGS when a sale happens: first-in first-out, last-in first-out or weighted average.
Inverse ETF: A fund engineered to return the opposite of an index's daily move, offering a short exposure that cannot lose more than the amount invested.
Inverse head and shoulders: A bottoming shape of three troughs where the middle one is deepest, completed on a close above the neckline joining the two intervening peaks.
Inverse price-yield relationship: Bond prices and yields always move in opposite directions, because the coupon is fixed and only the price can adjust to a new required return.
Inverse volatility weighting: Allocating capital in proportion to one divided by each asset's volatility, so calmer instruments get more money and each contributes similar risk.
Inverted hammer: A small body near the low with a long upper shadow appearing after a decline, read as a tentative bottoming signal.
Inverted yield curve: When short-term Treasury yields exceed long-term yields; historically a recession warning with a long and variable lead.
Invested capital: The total capital put to work in the business: debt plus equity less surplus cash, or equivalently net working capital plus fixed and intangible assets.
Investing cash flow: Cash spent on or received from long-lived assets: capital expenditure, acquisitions, disposals and purchases or sales of securities.
Investment adviser representative (IAR): An individual who gives advice on behalf of a registered investment adviser and must register with the states where they have clients.
Investment Advisers Act of 1940: The US statute requiring those paid for advising on securities to register and imposing a fiduciary duty, with disclosure, custody, advertising and compliance program obligations.
Investment Company Act of 1940: The US statute regulating pooled investment vehicles such as mutual funds and ETFs, covering leverage, custody, governance and pricing, with exemptions that define private funds.
Investment grade (IG): Bonds rated BBB minus or Baa3 and above, judged to have a low probability of default; the rating band that most regulated institutions are permitted to hold.
Investment policy statement: A written document setting out objectives, time horizon, target allocation, permitted ranges, rebalancing rules and what is explicitly not allowed.
Investor compensation scheme: A statutory fund that pays clients up to a capped amount when a regulated firm fails and cannot return their money.
Invoice amount: The cash a long pays to take delivery: the settlement price times the contract size, adjusted for grade and location differentials and any accrued interest.
IORB (interest on reserve balances): The rate the Federal Reserve pays banks on the reserves they hold at the Fed, the main tool for steering short-term rates inside the target range.
IOSCO: The global association of securities regulators that sets non-binding principles and coordinates cross-border enforcement and information sharing.
IPO allocation: The discretionary decision about who receives shares at the offer price before trading begins, made by the bookrunner rather than by an open market.
IPO pop: The jump from the offer price to the first-day trading price, the visible cost of pricing a deal below where the market clears.
IPO price range: The preliminary price band published before an IPO, used to gather demand; it can be raised, cut, or priced outside entirely.
Iron butterfly: A short straddle at the money with long wings either side; a defined-risk, high-credit bet that the underlying finishes close to the body strike.
Iron condor: A neutral strategy combining a bear call spread and a bull put spread, profiting if the stock stays inside a range through expiration.
ISDA master agreement: The standard contract governing bilateral derivatives between two parties, under which every individual trade sits as a confirmation to one overarching legal framework.
ISIN: A twelve-character global identifier for a security: a two-letter country code, a nine-character national number, and a check digit.
Island reversal: A small cluster of bars isolated by a gap on both sides, left stranded above or below the surrounding price action.
ISM Manufacturing PMI: A monthly diffusion index of US factory purchasing managers, released on the first business day of the month; above 50 signals expansion, below 50 contraction.
ISM Services PMI: The services sector counterpart to the manufacturing ISM, released two business days later; it covers the roughly four-fifths of the US economy that is not factories.
ISO 4217 currency code: The three-letter standard code for a currency, usually two letters for the country and one for the currency name, such as USD, JPY or CHF.
Isolated margin: Margin mode where each position has its own ring-fenced collateral, so the most you can lose on it is the margin you assigned.
Issued shares: The number of shares the company has actually created and sold or granted, whether or not it later bought some back.
Issuer credit risk: The risk that the bank behind a structured note or ETN fails to pay, since these instruments are unsecured obligations rather than claims on a pool of assets.
IV crush: The sharp drop in implied volatility, and therefore option prices, once an anticipated event such as earnings has passed.
IV percentile: The share of days over the past year on which implied volatility was lower than today's reading; a distribution-aware alternative to IV rank.
IV rank and IV percentile: Where current implied volatility sits relative to its own range over the past year, so you can tell whether options are cheap or expensive for that asset.

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