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Trading Glossary

Find clear definitions for common trading, investing, market structure, and risk-management terms.

150 termsReviewed learning

Odeon Learning Hub

Original educational material with source references, practical examples, and explicit limitations.

A–Z trading glossary

Search alphabetized definitions and open a term for its full context, sources, and related concepts.

150 terms
ABCDEFGHIKLMNOPQRSTUVW

A

Account Balance

The account balance is the posted cash value after completed deposits, withdrawals, fees, interest, rewards, and realized trading results have been recorded.

Account Equity

Account equity is the current net value of an account after combining its cash, marked positions, and other assets and subtracting applicable liabilities.

Anchoring Bias

Anchoring bias is the tendency to let an initial price, forecast, or other reference exert excessive influence over later estimates and decisions.

Annual Percentage Yield (APY)

Annual percentage yield expresses an annualized return that incorporates compounding, allowing deposit or reward products with different compounding schedules to be compared.

Anti-Money Laundering (AML)

Anti-money laundering describes laws, controls, and monitoring intended to prevent financial services from being used to disguise or move proceeds of crime.

Ask Price

The ask price is the lowest displayed price at which a seller is currently offering to sell an instrument in a quoted market.

Asset Allocation

Asset allocation is the planned division of a portfolio among asset classes according to an investor’s objectives, time horizon, and risk constraints.

Asset Class

An asset class is a broad group of investments that share economic characteristics, market behavior, and often similar legal or risk features.

Available Cash

Available cash is the settled, unrestricted cash that current platform and risk controls permit an account to withdraw, invest, or otherwise use.

Available Margin

Available margin is the portion of account resources that remains after current margin requirements and other reservations are deducted from eligible equity.

Average Directional Index (ADX)

The average directional index is a smoothed technical indicator intended to measure trend strength without identifying whether the trend points upward or downward.

Average True Range (ATR)

Average true range is a technical indicator that smooths recent trading ranges, including gaps, to estimate how much an instrument typically moves.

B

Base Currency

The base currency is the first currency in a quoted pair and represents the unit whose value is being expressed in the quote currency.

Bid Price

The bid price is the highest displayed price at which a buyer is currently offering to purchase an instrument in a quoted market.

Bid-Ask Spread

The bid-ask spread is the difference between the highest displayed buying price and the lowest displayed selling price for an instrument.

Bitcoin

Bitcoin is a cryptoasset and peer-to-peer payment system whose public blockchain records transfers of the native unit, bitcoin, without a central ledger operator.

Blockchain

A blockchain is a distributed ledger structure that groups validated records into cryptographically linked blocks maintained under a shared consensus process.

Bollinger Bands

Bollinger Bands are a technical overlay that places volatility-based upper and lower bands around a moving average of an instrument’s price.

Break and Retest

A break and retest is a conditional setup that waits for price to cross a chart area and then revisit it before considering entry.

Breakout

A breakout is a price move beyond a previously observed support, resistance, range, or chart-pattern boundary, often considered alongside trading volume.

Broker

A broker is a regulated intermediary that receives or executes customer transactions in financial instruments and may provide custody or related account services.

C

Candlestick

A candlestick summarizes an instrument’s opening, high, low, and closing prices for one selected interval using a body and wicks.

Capacity for Loss

Capacity for loss is the financial ability to absorb an investment loss without undermining essential spending, obligations, or important future goals.

Capital Gain

A capital gain is the increase realized when a capital asset is disposed of for more than its applicable tax basis, subject to local rules.

Centralized Exchange (CEX)

A centralized exchange is a trading venue operated by an organization that controls account access, order matching, custody arrangements, or settlement processes.

Cold Wallet

A cold wallet keeps cryptoasset signing keys in an environment not routinely connected to online systems, reducing exposure to remote compromise.

Commodity

A commodity is a basic good or resource, such as energy, metal, or agricultural output, that can be traded directly or through contracts.

Compound Interest

Compound interest is interest calculated on principal plus previously credited interest, causing the balance to grow at an accelerating rate when returns stay positive.

Confirmation Bias

Confirmation bias is the tendency to favor information that supports an existing belief while discounting evidence that challenges the original view.

Consensus Mechanism

A consensus mechanism is the protocol process by which distributed participants agree on valid ledger updates and the ordering or finality of transactions.

Contract for Difference (CFD)

A contract for difference is a leveraged derivative that settles the price change in an underlying reference without transferring ownership of that underlying asset.

Correlation

Correlation measures how closely two return series have moved together, including direction and strength, over a selected sample and timeframe.

Cost Basis

Cost basis is the amount assigned to an asset for measuring gain or loss, usually adjusted under applicable accounting and tax rules.

Counterparty Risk

Counterparty risk is the possibility that an institution, issuer, venue, custodian, or contract party will fail to perform an obligation when due.

Crude Oil

Crude oil is an unrefined petroleum commodity whose traded benchmarks differ by grade, sulfur content, location, delivery period, and contract specification.

Cryptoasset

A cryptoasset is a digitally represented asset that uses cryptography and distributed-ledger systems for issuance, ownership records, transfer, or application access.

Currency Pair

A currency pair quotes the value of one currency, the base, in units of another currency, the quote currency, for a foreign-exchange transaction.

Custody

Custody is the safeguarding and administration of assets or the credentials controlling them on behalf of an owner or account holder.

D

Day Trading

Day trading is a strategy of opening and closing positions within the same trading day to seek gains from short-term price movement.

Decentralized Exchange (DEX)

A decentralized exchange is a blockchain-based trading arrangement that uses smart contracts to execute asset swaps without a conventional central order-taking operator.

Disposition Effect

The disposition effect is the observed tendency to realize gains relatively quickly while continuing to hold losing investments for longer.

Diversification

Diversification spreads exposure across investments or risk drivers so that one adverse event is less likely to dominate the entire portfolio.

Dividend

A dividend is a distribution of cash, shares, or other property that a company or fund makes to eligible holders under declared terms.

Drawdown

A drawdown is the percentage or monetary decline from a portfolio or strategy’s previous peak to a later lower value before recovery.

E

Early Withdrawal Penalty

An early withdrawal penalty is a disclosed reduction, fee, or reward forfeiture applied when funds leave a locked product before its scheduled maturity.

Economic Calendar

An economic calendar organizes scheduled data releases, central-bank decisions, auctions, and other events that may change market information and execution conditions.

Exchange-Traded Fund (ETF)

An exchange-traded fund pools assets under a stated strategy while its shares trade throughout the day on an exchange at market prices.

Execution

Execution is the completion of an order against available trading interest, producing a fill at a price, quantity, time, and venue.

Exponential Moving Average (EMA)

An exponential moving average is a price average that assigns greater weight to recent observations, making it respond faster than a comparable simple average.

Exposure

Exposure is the amount and direction of economic sensitivity an account has to an instrument, asset class, currency, issuer, or risk factor.

F

Fear and Greed

Fear and greed are shorthand for emotional pressures that can push trading decisions away from a predefined evidence and risk process.

Fiat Currency

Fiat currency is money issued under a public monetary system whose acceptance does not depend on redemption for a fixed amount of a commodity.

Fibonacci Retracement

A Fibonacci retracement divides a selected price swing into conventional proportional levels used as candidate areas for observing a pullback.

Fill

A fill is the executed portion of an order, identified by quantity, price, time, and other transaction details reported by the executing venue.

Fixed-Term Savings

Fixed-term savings commits eligible money for a defined period under stated interest, maturity, access, early-withdrawal conditions, and applicable repayment terms.

Foreign Exchange (Forex)

Foreign exchange is the market and process for exchanging one currency for another at a rate expressed through a currency pair.

Fundamental Analysis

Fundamental analysis evaluates economic, financial, industry, and issuer information to estimate an instrument’s condition, prospects, or value relative to price.

G

Gap

A gap is a discontinuity between successive traded price areas, leaving a range with little or no recorded trading on the selected chart.

Gold

Gold is a precious-metal commodity traded through physical markets and financial instruments whose pricing depends on form, location, currency, and settlement terms.

H

Hedging

Hedging uses an offsetting position or instrument to reduce sensitivity to a specified risk, usually in exchange for cost or reduced upside.

I

Identity Verification

Identity verification is the process of collecting and evaluating evidence to establish that an applicant is the person associated with a claimed identity.

Index

An index is a rules-based statistical measure that tracks the performance of a defined group of instruments, markets, or economic observations.

Initial Margin

Initial margin is the minimum eligible collateral or account value required to open a leveraged position under applicable rules and platform controls.

Interest Rate

An interest rate expresses the price of borrowing or return on lending over time as a proportion of principal under stated calculation terms.

Investment Time Horizon

Investment time horizon is the expected period before invested funds will be needed, reassessed alongside goals, liquidity, and capacity for loss.

K

Know Your Customer (KYC)

Know your customer is the set of customer-identification and due-diligence measures used to understand who a financial customer is and associated risks.

L

Ledger

A ledger is an ordered accounting record of value-changing events, balances, and references used to reconcile an account or distributed system.

Leverage

Leverage creates market exposure larger than the capital committed by using borrowed funds, derivatives, or margin-based product structures within an account.

Limit Order

A limit order permits execution only at its specified price or a better one, trading certainty of execution for control over price.

Liquidation

Liquidation is the forced reduction or closure of positions when account equity, margin, or another risk condition breaches required thresholds.

Liquidity

Liquidity is the ability to transact a meaningful quantity promptly near prevailing prices without causing a disproportionate price change in the wider market.

Long Position

A long position has positive economic exposure to an instrument, generally gaining when its price rises and losing when its price falls.

Loss Aversion

Loss aversion is the tendency to experience losses more strongly than comparable gains, which can distort otherwise consistent financial decisions.

Lot Size

Lot size is a standardized or platform-defined transaction quantity used to express how many units of an instrument a trade controls.

M

Maintenance Margin

Maintenance margin is the minimum eligible account equity that must continue supporting an open leveraged position after the position has been established.

Margin

Margin is eligible collateral or account value required to open and maintain leveraged exposure rather than the full economic value of the position.

Margin Call

A margin call is a demand or account alert indicating that additional eligible equity or reduced exposure is required to satisfy margin rules.

Margin Level

Margin level is an account-health ratio comparing eligible equity with used or required margin, commonly displayed as a percentage for risk monitoring.

Mark Price

A mark price is the valuation price a platform uses to calculate open-position value, unrealized P&L, margin, or liquidation conditions.

Market Analysis

Market analysis is a repeatable process for organizing economic, fundamental, technical, positioning, and instrument evidence into testable scenarios and risk decisions.

Market Capitalization

Market capitalization is the market price of one outstanding unit multiplied by the number of units counted as outstanding under the chosen methodology.

Market Maker

A market maker is a participant that regularly quotes prices at which it is willing to buy and sell specified instruments.

Market Order

A market order requests prompt execution at the best prices then available, without setting a maximum purchase price or minimum sale price.

Market Risk

Market risk is the possibility of loss caused by adverse changes in prices, rates, volatility, correlations, or other broad market conditions.

Market Session

A market session is a defined period when a venue or regional market conducts regular, extended, auction, or otherwise specified trading activity.

Maturity

Maturity is the scheduled date or end of a term when a financial obligation becomes due or a locked product reaches completion.

Moving Average Convergence Divergence (MACD)

MACD is a momentum indicator derived from the difference between faster and slower exponential moving averages, often compared with a signal line.

Multi-Factor Authentication (MFA)

Multi-factor authentication requires evidence from at least two distinct authentication-factor categories before granting access to an account or sensitive action.

N

Net Asset Value (NAV)

Net asset value is a fund’s assets minus liabilities, usually expressed per share using the valuation rules and calculation time in its documents.

Network Confirmation

A network confirmation is evidence that a blockchain transaction has been included in an accepted block, with later blocks increasing settlement confidence.

Notional Value

Notional value is the reference amount of an instrument or underlying exposure used to calculate a leveraged position’s gains, losses, and obligations.

O

Order Book

An order book is an organized set of current buy and sell instructions, commonly grouped by price and displayed quantity for a market.

Overtrading

Overtrading is trading more frequently, larger, or more reactively than a justified strategy and risk plan calls for over time.

P

Passkey

A passkey is a phishing-resistant sign-in credential based on public-key cryptography, with the private credential protected by a user device or provider.

Pending Order

A pending order is an accepted instruction that has not fully executed, expired, been rejected, or been cancelled and may still reserve resources.

Phishing

Phishing is a deceptive attempt to make a person reveal credentials, approve access, send assets, or install malicious software by impersonating trust.

Pip

A pip is a conventional unit for expressing a currency pair’s price change, commonly the fourth decimal place but dependent on the pair’s quotation.

Portfolio

A portfolio is the combined set of cash, holdings, positions, and other financial exposures considered together for allocation, performance, and risk.

Position

A position is an account’s current long or short economic interest in an instrument, measured by quantity, direction, price basis, and exposure.

Position Sizing

Position sizing is the process of selecting trade quantity so potential loss and total exposure remain consistent with predefined account-risk limits.

Position Trading

Position trading holds an instrument across longer market cycles using a thesis, review schedule, and risk limits designed for an extended horizon.

Price Slippage

Price slippage is the difference between an expected or referenced trade price and the average price at which the order actually executes.

Principal

Principal is the original amount of money committed, borrowed, or placed into a product before adding interest, rewards, fees, gains, or losses.

Private Key

A private key is secret cryptographic material used to create signatures that authorize actions associated with its corresponding public key or blockchain address.

Profit and Loss (P&L)

Profit and loss measures the financial result of positions or account activity over a stated scope, separating open valuation changes from completed results.

Proof of Stake (PoS)

Proof of stake is a consensus design in which validators commit eligible assets and risk penalties while proposing or attesting to valid blockchain updates.

Q

Quote

A quote is current pricing information for buying or selling an instrument, usually including a bid, ask, size, timestamp, and relevant conditions.

Quote Currency

The quote currency is the second currency in a pair and supplies the units used to express one unit of the base currency.

R

Realized P&L

Realized P&L is the profit or loss recorded when some or all economic exposure is closed, settled, expired, or otherwise completed.

Rebalancing

Rebalancing adjusts portfolio holdings toward a target asset allocation after market movement or changed circumstances cause exposures to drift over time.

Recovery Phrase

A recovery phrase is an ordered set of words used by compatible wallet software to derive or restore a collection of cryptographic keys.

Relative Strength Index (RSI)

The relative strength index is a bounded momentum oscillator that compares the magnitude of recent upward and downward price changes over a chosen lookback.

Reserved Funds

Reserved funds are amounts temporarily set aside for pending orders, withdrawals, open obligations, locked products, or other accepted account commitments.

Resistance

Resistance is a chart area where prior selling or reduced buying has repeatedly slowed or reversed upward price movement within the selected timeframe.

Risk Management

Risk management is the structured process of identifying, measuring, limiting, monitoring, and reviewing exposures that could impair a trade, portfolio, or account.

Risk Tolerance

Risk tolerance is a person’s willingness to accept uncertainty and losses, considered separately from financial capacity and product knowledge when setting limits.

Risk-Reward Ratio

A risk-reward ratio compares a trade’s planned downside to its planned upside using defined entry, invalidation, and target prices before entry.

S

Sanctions Screening

Sanctions screening checks customers, counterparties, destinations, and transactions against applicable restrictions before or during a financial relationship or transfer across jurisdictions.

Settlement

Settlement is the process that completes a transaction’s contractual exchange of money, assets, or ledger entitlements after execution or approval.

Short Position

A short position has negative economic exposure to an instrument, generally gaining when its price falls and losing when its price rises.

Simple Moving Average (SMA)

A simple moving average is the unweighted arithmetic mean of an instrument’s prices over a rolling number of observations in sequence.

Slashing

Slashing is a proof-of-stake protocol penalty that destroys or removes part of a validator’s committed assets for specified prohibited behavior.

Smart Contract

A smart contract is code deployed to a distributed ledger that executes defined state changes when transactions satisfy its programmed conditions.

Source of Funds

Source of funds describes the specific origin and transfer path of money or assets used for a particular account activity or transaction.

Spot Market

A spot market trades an asset for delivery or settlement under the market’s current convention, using prices quoted for near-term exchange.

Stablecoin

A stablecoin is a cryptoasset designed to maintain a value relative to a referenced currency, asset, or basket through a stated stabilization mechanism.

Staking

Staking commits eligible cryptoassets to proof-of-stake validation directly or through a service in return for protocol-derived rewards under stated conditions.

Stock

A stock is an ownership interest in a corporation, with rights and economic claims determined by its share class and governing law.

Stop-Limit Order

A stop-limit order releases a limit order after its stop condition is met, combining a trigger with a defined execution-price boundary.

Stop-Loss Order

A stop-loss order is an exit instruction intended to reduce further loss by activating when a position reaches a chosen adverse price condition.

Support

Support is a chart area where prior buying or reduced selling has repeatedly slowed or reversed downward price movement within the selected timeframe.

Swing Trading

Swing trading seeks to capture price moves lasting several sessions or longer while accepting overnight and event risk between entry and exit.

T

Take-Profit Order

A take-profit order is an exit instruction intended to close some or all of a profitable position when a selected favorable price is available.

Technical Analysis

Technical analysis studies historical price, volume, volatility, and chart behavior to describe market conditions and formulate rule-based trade decisions under uncertainty.

Token

A token is a digitally represented unit issued and transferred under a ledger or smart-contract system, with rights defined by its design and law.

Total Return

Total return combines price change with income and distributions over a period, adjusted for outflows, costs, and reinvestment assumptions as specified.

Trading and Investing

Trading and investing are distinct decision processes differentiated by purpose, evidence, expected horizon, turnover, review frequency, and planned exit conditions.

Trading Discipline

Trading discipline is the consistent execution of predefined research, sizing, order, exit, and review rules despite emotional pressure or recent outcomes.

Trading Journal

A trading journal is a structured record of decisions, market context, intended rules, execution details, outcomes, and later process review.

Trading Plan

A trading plan is a written decision framework defining eligible setups, risk limits, execution rules, review methods, and conditions for not trading.

Trailing Stop Order

A trailing stop order adjusts its trigger in a favorable direction by a selected distance while not moving it back when price reverses.

Transaction Fee

A transaction fee is a charge associated with submitting, executing, settling, transferring, or recording a financial or blockchain transaction for the user.

Trend

A trend is a sustained directional tendency in price over a chosen timeframe, commonly described as upward, downward, or sideways.

Trend Trading

Trend trading is a strategy that seeks participation in sustained directional movement while defining evidence for continuation, invalidation, and exit.

U

Unbonding Period

An unbonding period is the protocol or product waiting interval between requesting an exit from staking and regaining transferable control of the assets.

Unrealized P&L

Unrealized P&L is the estimated gain or loss on open exposure using a current valuation price before the position is closed or settled.

V

Validator

A validator is a proof-of-stake participant that proposes or attests to blockchain updates after committing stake and meeting protocol requirements.

Volatility

Volatility describes the magnitude and frequency of price changes over a period, measured historically or inferred from market prices under a stated method.

Volume

Volume is the quantity of units or contracts traded during a defined period under the reporting rules of a venue or data source.

W

Wallet

A cryptoasset wallet is a system for managing keys, addresses, and transaction signing rather than a container that physically stores blockchain assets.

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