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Trading Glossary

Glossary trade refers to a type of trading strategy where traders use a predefined set of terms, definitions, or concepts to make informed decisions. It often involves industry-specific jargon, financial metrics, and analytical tools to navigate markets effectively.

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Volatility

When the market swings rapidly in either direction, causing sudden price movements and general uncertainty.

Volatility Targeting

Some funds do not keep the same amount invested at all times. Instead, they adjust their exposure according to how much the market is moving. This approach is called volatility targeting.

Volatility means the size and speed of price changes. A fund may aim to keep its volatility near 10%. If markets become much more unstable, the fund may reduce its positions and hold more cash. When markets calm down, it may increase exposure again.

The goal is to keep risk more stable. Since the calculation depends on recent market movements, sudden changes can lead to frequent adjustments.

Volume

The total number of units traded for a product during a specific time period.

Volume-Weighted Average Price (VWAP) Algo

A large order can push the market price against the trader if it is placed all at once. A VWAP algo avoids this by dividing the order into smaller parts and carrying them out during the trading day.

The program aims to achieve an average price close to VWAP, which gives more weight to prices where more trading took place.

An order to buy 100,000 shares may be spread across several hours. The program places more of the order during busy periods and less when activity is low.

The final result may still differ from VWAP because actual prices and trading volume can change during the session.

Voluntary disclosure

The act of a company voluntarily providing financial or other information to the public or to shareholders.

Vostro account

A foreign currency account held by a bank on behalf of another bank.

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