Trading Basics

Controlled Risk Bet

A trade where the maximum downside is predefined, usually with a guaranteed stop loss order.

The ask price is the level at which a seller is willing to accept a bid on a security.

The ask price is always higher than the bid price.

Also known as the offer price.

When the majority of shares changes hands in a company.

This is typically when one company buys another.

Backwardation occurs when a bid price exceeds the ask price.

This usually occurs when stock is suspended or under a share repurchase scheme.

It can also mean that a futures contract will trade at a higher price when it is coming close to expiring.

The opposite of backwardation is known as contango.

Learn the skills needed to trade the markets on our Trading for Beginners course.