Glossary - B

BACKWARDATION
When the price for immediate delivery of a commodity is higher than the price of delivery for a future date.
 
BANK OF ENGLAND
BOE is the central bank of the United Kingdom with independence in setting monetary policy and has a monopoly on the issue of bank notes in England and Wales and regulates the issue of bank notes by commercial banks in Scotland and Northern Ireland.
 
BAR CHART
A type of chart providing a visual representation of the price activity of a financial instrument over a given period of time. The chart consists of four significant points: the high and the low prices which form the vertical bar; the opening price, which is marked with a small horizontal line to the left of the bar; and the closing price, which is marked with a small horizontal line to the right of the bar.
 
BASE CURRENCY
The base currency is the first currency listed in any currency pair. Its value is determined against the counter currency's value. For example, if the rate of the EUR/USD pair is 1.3015, then the EUR is the base currency and it is worth 1.3015 USD.
 
BASE RATE
The minimum rate at which banks will lend money.
 
BEAR
Market participant who expects prices to fall.
 
BEAR MARKET
A market in which prices are falling.
 
BEAR RAID
The practice of ganging up to push a security's price lower through concerted short selling and spreading adverse rumors about it. The objective is to to make windfall profits in a brief time period through short sales.
 
BEIGE BOOK
This is a report published by the FED eight times a year prior to FOMC meetings. It consists of information on economic conditions throughout the country.
 
BETA
Beta is a measure of the volatility of a security in comparison to the market as a whole. A Beta of 1 indicates that the security's price will move with the market. A Beta of less than 1 means that the security will be less volatile than the market. A Beta of greater than 1 indicates that the security's price will be more volatile than the market.
 
BID
The price at which party to a trade is willing to buy.
 
BLOWOFF VOLUME
A very high volume session occurring suddenly in a trending market, possibly signaling the end of that trend.
 
BREAKAWAY GAP
A gap in prices that may signal the end of a price pattern and the beginning of an important market move.
 
BREAK EVEN
To "Break Even" on a trade means that there is no overall profit or loss incurred. For example, if you bought the FTSE 100 at 5500 and subsequently closed your position by buying back at the level of 5500, you would not make a profit or a loss; the result is that you would "Break Even".
 
BRICS
BRICS stands for Brazil, Russia, India, China and South Africa. These countries are all roughly at the same stage of their economic development and represent the shift in economic power from the G7 nations towards developing countries.
 
BULL
Market participant who expects prices to rise.
 
BULL MARKET
A market in which prices are rising.
 
BULLISH KEY REVERSAL
A chart formation that occurs in a down trending market when the day's high is higher, the low is lower and the close is above the previous day's close. This can signal the commencement of an up trend.
 
BUSINESS CYCLE
Refers to economy-wide fluctuations in production or economic activity over several months or years.
 
BUY ON OPENING
To buy at the open of the trading session.