Money words, explained simply
57 terms about gold, everyday money, stocks and crypto, in plain language with real examples.
Gold and silver
- HallmarkA hallmark is an official stamp that shows a piece's purity has been tested.
- Karat (24K, 22K, 18K)Karat tells you how much of a piece is pure gold, out of 24 parts.
- Making chargesMaking charges are what a jeweller adds for the work of turning gold into jewellery.
- Pavan (sovereign)A pavan, also called a sovereign, is a unit of weight for gold equal to 8 grams.
- Spot priceThe spot price is the current world market price for buying a metal for immediate delivery.
- Sterling silverSterling silver is 92.5% pure silver, usually mixed with copper to make it stronger.
- TolaA tola is a traditional unit of weight for gold, equal to about 11.66 grams.
- Troy ounceA troy ounce is the standard weight used to price gold and silver worldwide, equal to about 31.1 grams.
Everyday money
- APRAPR, or annual percentage rate, is the yearly cost of borrowing, including certain fees as well as interest.
- Compound interestCompound interest means you earn interest on your interest as well as on the money you put in.
- DevaluationDevaluation is when a currency loses value against other currencies.
- EMIAn EMI, or equated monthly instalment, is the fixed amount you pay on a loan every month.
- Exchange rateAn exchange rate is how much of one currency you get for another.
- Flat rate loanA flat rate charges interest on the full loan amount for the whole term, even as you repay it.
- InflationInflation is the rate at which prices rise, which means the same money buys less over time.
- Interest rateAn interest rate is the price of borrowing money, or what you earn for saving it, shown as a percentage per year.
- Mid-market rateThe mid-market rate is the point halfway between what big banks pay to buy and sell a currency.
- RemittanceA remittance is money that someone working abroad sends home to family or friends.
- SpreadA spread is the gap between the price to buy something and the price to sell it.
Stocks and investing
- Bear marketA bear market is a long period of falling prices, commonly defined as a drop of 20% or more from a recent high.
- BetaBeta measures how strongly something tends to move compared with a benchmark, such as a market index.
- Bull marketA bull market is a long period when prices are generally rising.
- CorrelationCorrelation shows how closely two prices move together, on a scale from -1 to 1.
- DiversificationDiversification means spreading your money across different investments, so one failure does less damage.
- DividendA dividend is a share of a company's profit paid to its shareholders, usually in cash.
- Dollar-cost averagingDollar-cost averaging means investing the same amount on a regular schedule, whatever the price is.
- EarningsEarnings are a company's profit, usually reported to investors every three months.
- ETFAn ETF, or exchange-traded fund, is a fund you can buy and sell on a stock exchange like a single share.
- IPOAn IPO, or initial public offering, is when a private company first sells shares to the public.
- Market capMarket cap is the total value of a company or coin: its price multiplied by the number of shares or coins.
- Market correctionA correction is a fall of about 10% from a recent high, short of a full bear market.
- P/E ratioThe P/E ratio compares a share's price with the company's profit per share.
- S&P 500The S&P 500 is an index that tracks about 500 of the largest companies listed in the US.
- StockA stock, or share, is a small piece of ownership in a company.
- Stock market indexAn index is a single number that tracks the prices of a group of stocks.
- VolatilityVolatility is how much and how quickly a price moves up and down.
Crypto
- AltcoinAn altcoin is any cryptocurrency other than Bitcoin.
- BitcoinBitcoin is a digital currency that runs on a public network, without a bank or government in control.
- Bitcoin halvingThe halving is when the reward for mining new Bitcoin is cut in half, about every four years.
- BlockchainA blockchain is a shared public record of transactions, kept by many computers instead of one company.
- Crypto walletA crypto wallet is an app or device that holds the keys that let you control your coins.
- DepegA depeg is when a stablecoin's price moves away from the value it is meant to hold.
- Gas feeA gas fee is what you pay the network to process a crypto transaction.
- Honeypot tokenA honeypot is a scam token you can buy but cannot sell.
- KYCKYC, or know your customer, is the identity check that exchanges and banks must do before giving you full access.
- P2P tradingP2P, or peer-to-peer, trading means buying or selling crypto directly with another person, usually on an exchange that holds the coins until payment is made.
- Rug pullA rug pull is when a project's creators suddenly take the money and abandon it, leaving buyers with a near-worthless token.
- Seed phraseA seed phrase is a list of words, usually 12 or 24, that can restore a crypto wallet and everything in it.
- StablecoinA stablecoin is a cryptocurrency designed to keep a steady price, usually $1.
- TRC20, ERC20 and BEP20These are token standards on three blockchains: TRC20 on TRON, ERC20 on Ethereum and BEP20 on BNB Chain.
- USDT (Tether)USDT, also called Tether, is the largest stablecoin, designed to be worth one US dollar.
Trading
- Funding rateA funding rate is a regular payment between traders holding perpetual futures, which keeps the futures price near the market price.
- LeverageLeverage means trading with borrowed money, so that a small deposit controls a bigger position.
- LiquidationLiquidation is when an exchange closes your leveraged position because your losses have nearly used up your deposit.
- Open interestOpen interest is the total value of futures positions that are still open.
- RSIRSI, or relative strength index, is a score from 0 to 100 that compares recent gains with recent losses.
- WhaleA whale is a person or organisation holding or moving a very large amount of crypto.