Trading Basics
American Option
An option that can get exercised at any time during its life.
European options can only be exercised at the end.
Other Trading Basics
Basis Point
A basis point is 0.01% and is typically used when quoting interest rate changes.
A move of 0.25% is described as 25 basis points.
Credit Rating
An entities perceived ability to repay its debt. Provided by credit rating agencies. AAA is the best credit rating.
Cost of Carry
The cost to a trader of maintaining a position. This might be in form of overnight financing on simple CFD trades but can also include the costs to insure, transport or finance on more complex trades.
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Learn the skills needed to trade the markets on our Trading for Beginners course.
