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IBKR Traders' Glossary

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Featured Financial Terms

Margin

In the securities context, margin refers to borrowing money from your broker and using your investment as collateral. In the commodities context, margin refers to the amount of cash a client must put up as collateral to support a futures contract.

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Order Types and Algos

Order types and algos are methods used in trading that may help limit risk, speed execution, provide price improvement, allow privacy, time the market and simplify the trading process through advanced trading functions.

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Options

An option contract gives the buyer or holder the right, but not the obligation, to buy or sell an underlying financial asset or commodity. Unlike futures, where the buyer has to fufill the contract, an option gives the choice of whether to exercise or not. In the Market Value - Real FX Position section of the TWS Account Window, this is the real-time mark-to-market value of securities options.

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Tariff

A tariff is a tax imposed by a government on imported goods and services. It serves multiple purposes, such as protecting domestic industries from foreign competition, generating revenue, and sometimes as a tool for political leverage. When a tariff is applied, the cost of the imported goods increases, making them less competitive compared to locally produced items.

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Fixed Income

An asset class for which real return rates or periodic income is received at regular intervals at reasonably predictable levels. The most common type of fixed-income security is the bond; bonds are issued by federal, state and local governments or major corporations.

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Volatility

A statistical measure of the distribution of returns for a specific security or market index. Volatility can be measured by using the standard deviation or by the variance between returns from the same security or market index. Typically, the higher the volatility, the riskier the security. A high volatility indicates that a security's value can potentially be spread out over a larger range of values, meaning that the price of the security may fluctuate dramatically over a short period of time in either direction. A low volatility indicates that a security's value does not change dramatically, but changes in value steadily over a period of time.

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IBKR ForecastTrader

Interactive Brokers’ unique platform enabling clients to trade event contracts based upon single proposition Yes or No outcomes. The investor faces a question, often based upon the outcome of an event at the end of a specified time period. CME Group launched event contracts on 10 major futures contracts, that offer investors the chance to buy Yes or No outcomes for a single-day event.

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Futures

Futures are the buying and selling of a standard quantity of a financial asset at a future date and at a fixed price. Futures, unlike forwards, are standardized contracts and must be traded on a recognized exchange.

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Macroeconomics

Macroeconomic theory is concerned with the size and output of a national economy, and how the overall economic system behaves as major policy tools, such as interest rates, change. Economists measure the gross domestic product (GDP) of the economy, comprising inputs from individual macro pieces. Employment, consumer and government spending are a couple of the important pieces of the pie that drive growth in GDP.

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Forex

This term refers to the foreign currency cash market. Forex stands for Foreign Exchange. The international forex market is a decentralized, unregulated system of banks and interbank deals who offer prices, or liquidity, to facilitate international currency movements.

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Account Management

IBKR's electronic system that lets clients configure and manage their IBKR account from a single window. Log in to your account from the Login menu on the IBKR website for access to reporting, funding, account configuration, trading, security and client service functions.

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Advisor

Registered Investment Advisor. An Interactive Brokers institutional account structure that allows Registered Investment Advisors (RIAs) and Commodity Trading Advisors (CTAs) to execute and allocate trades among multiple clients from a single order management interface.

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