Trading Glossary Explained

Trading is a complex process, which includes many actions that a person unfamiliar with the financial world will find puzzling. Once you launch your trading career, you will be swamped with trading terms whose meaning you will not know. You will not immediately grasp how the market value of a business differs from its book value. Nor will you understand what CPI stands for and how it is different from IPO, unless we supply you with a glossary of all confusing terms that you meet in a trading business.

To help you avoid confusion, we have compiled a comprehensive glossary of financial terms used at the markets. All trading glossary is presented in our glossary in the alphabetical order and is explained with linguistic precision. Any financial term that sounds baffling to you now will become crystal clear once you read its definition in our glossary below

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There are currently 5 names in this directory beginning with the letter K.

Key Performance Indicators (KPIs)

This term refers to a set of qualifiable measurements used to estimate a company’s overall long-term performance. In particular, KPIs help determine a company’s strategic, financial, and operational achievements, compared to similar companies in the same industry.

Key Rate Duration

This is the measurement used to estimate the value of a debt security or a debit instrument portfolio – bonds – changes at a specific maturity point along the entirety of the yield curve.

Knock-In Option

It is a latent option contract that begins to function as a normal option only when a specific price level is reached before expiration.

Knock-Out Option

It is an option with an inherent mechanism to expire worthless if a predetermined price level in the underlying asset is reached. This option sets a cap on the level an option can reach in the holder’s favor.

Know Your Customer (KYC)

This is a standard in the investment industry which ensures companies and advisors know detailed information about their clients’ risk tolerance, investment knowledge, and financial position. KYC protects investment advisors and clients alike.