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Financial Glossary

Backwardation

A theory which says that as a futures contract nears expiry, it will trade at a higher price compared to when it was further from the expiry date. Also see 'Contango'.

Bar chart

A style of chart used in technical analysis, where the top of the vertical line represents the highest price traded in a particular instrument, and the bottom part displays the lowest price. The closing price is shown on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar normally represents one day of trading.

Base currency

The first currency quoted in a currency pair (for example in the GBP/USD currency pair, GBP is the base currency while USD is the quote currency).

Base rate

The lending rate determined by the central bank of a given country.

Basis point

Typically one hundredth of 1%, for example an interest rate cut of 50 basis points is equal to 0.5%.

Bear market

A market distinguished by falling prices and negative sentiment.

Bid

The highest price a buyer is willing to pay for a product is referred to as the ‘bid’. Also see Ask and Offer.

Bid price

The price at which the buyer is willing to purchase at.

Bid-offer spread

The difference between the buying price (offer/ask) and selling price (bid) of a product.

Blue chip

Blue-chip companies are usually well-established, financially sound and better able to weather downturns. As a result, blue-chip stocks are regarded as less volatile. Companies listed in a country’s top tier stock index, such as the UK’s FTSE 100, are considered blue-chips.