157 terms

Dictionary: F

Factor crowding: The state where so much capital targets the same systematic signal that its expected return falls and its downside becomes correlated across everyone holding it.
Factor investing: Building portfolios around characteristics that have historically explained differences in return across assets, such as valuation, size, recent performance or profitability.
Fail to deliver: A settled trade where the seller did not deliver the shares on time, leaving an open obligation at the clearing house until it is resolved or bought in.
Failed breakdown: A break below an obvious support level that quickly reverses and reclaims the level, trapping sellers who entered on the break.
Failed pattern: A chart pattern that triggers and then immediately reverses, often producing a stronger move in the opposite direction than the pattern predicted.
Failed transaction: A transaction that was included in a block but did not complete; the state change is undone while the gas spent is not refunded.
Fails to deliver: A settlement failure where the seller does not deliver securities on the due date, leaving the buyer paid but unsecured until the position is closed or bought in.
Fair value (index futures): The theoretically correct index futures price: the cash index plus the cost of financing the basket to expiry, minus the dividends the basket pays in that time.
Fair value gap (FVG): A three-candle pattern where the first and third candle wicks do not overlap, leaving a price range that traded only once and quickly.
Fake volume: Reported trading activity that does not represent real risk transfer, produced by wash trading, incentive farming, or simple fabrication.
Fakeout (false breakout): A breakout that reverses almost immediately, trapping traders who entered on the move.
Fallen angel: A bond downgraded from investment grade to high yield, which forces index-tracking and mandate-constrained holders to sell into a market of smaller, pickier buyers.
Falling knife: A price in fast, steep decline; buying one is the classic way to be early and wrong at the same time.
Falling three methods: A bearish continuation pattern: a long red candle, a few small rising candles held inside its range, then another long red candle.
Falling wedge: A pattern where both highs and lows fall but the lows fall more slowly, so the range narrows as price declines, usually read as bullish.
False breakout: Price moving beyond a level, triggering breakout orders, and then failing to hold, returning inside the prior range.
False discovery rate: The expected share of your accepted discoveries that are wrong. A gentler target than eliminating all false positives, and usually the right one for strategy search.
Fama-French three-factor model: A model explaining stock returns with market excess return plus a size term and a value term, widely used as the baseline for judging whether a manager produced real alpha.
Family office: A private organisation managing the wealth and affairs of one family or a small group of families, combining investment management with tax, estate and administrative functions.
Fast market: A period when prices move faster than quotes can be maintained, so displayed prices become unreliable and executions land well away from what the screen showed.
Fat tails: Extreme outcomes occur far more often than a normal distribution predicts. The single most consequential fact about financial data.
FCA Consumer Duty: A UK outcomes-based standard requiring firms to act to deliver good outcomes for retail customers across products, price and value, consumer understanding and support.
FCM (futures commission merchant): A registered firm that accepts futures orders and customer money, and carries the account at the clearing house.
Feature engineering: Turning raw market data into the inputs a model sees. In finance this is where nearly all the value and nearly all the leakage lives.
Feature importance: A ranking of which inputs the model relies on. Useful for sanity-checking and dangerous when read as a statement about cause.
Fed funds futures: Contracts settling to the monthly average effective federal funds rate, from which the market's implied probabilities of Fed rate decisions are calculated.
Federal Deposit Insurance Corporation (FDIC): The US agency insuring bank deposits to $250,000 per depositor per bank per ownership category; it covers cash in banks, never securities in brokerage accounts.
Federal funds rate: The overnight interest rate banks charge each other for reserves, set as a target range by the FOMC; the base rate for the US economy.
Federal funds target range: The 25 basis point band the FOMC sets for the overnight fed funds rate; since 2008 policy is announced as a range rather than a single point.
Federal Reserve: The central bank of the United States, which sets short-term interest rates, supplies bank reserves, and acts as lender of last resort to the banking system.
Fee drag: The cumulative effect of annual charges on terminal wealth, which compounds against the investor in the same way returns compound for them.
Fee tier: A volume-banded schedule under which a venue's fees fall and rebates rise as a participant's monthly activity crosses defined thresholds.
Feeder cattle futures (GF): CME contracts on 50,000 pounds of weaned calves, cash settled to an index of auction prices rather than physically delivered.
Fiat-backed stablecoin: A token that promises redemption for one unit of a currency, backed by cash and short-term securities held by an issuer off-chain.
Fiber: Desk slang for EUR/USD, coined as a modern counterpart to cable when fibre-optic lines replaced telegraph wires.
Fibonacci extension: Projected levels beyond the end of a move, at ratios such as 1.272 or 1.618 of the prior swing, used as targets rather than entries.
Fibonacci retracement: Horizontal levels at 23.6%, 38.2%, 50%, 61.8%, and 78.6% of a prior move, used to estimate where a pullback might end.
Fiduciary duty: A legal obligation to act in a client's best interest, placing their interests ahead of the adviser's own, including in the handling of conflicts and compensation.
FIFO cost basis: The default method matching sales against the oldest lots first, which in a long-held rising position tends to realise the largest gain but with long-term treatment. United States.
FIFO rule: The requirement that when several positions in the same pair and size are open, the oldest one must be closed first, used on US retail forex accounts.
Fill: The execution of an order; a partial fill means only some of the requested quantity has traded.
Fill assumption: What your backtest believes about whether an order executed, at what price, and in what size. Usually the most optimistic part of the whole model.
Fill rate: The proportion of submitted quantity that actually executes, a core measure of whether a passive or conditional strategy can be run at scale.
Fill-or-kill and immediate-or-cancel: Order conditions requiring immediate execution: FOK fills the whole quantity at once or cancels; IOC fills what it can and cancels the rest.
Filter: A secondary condition that blocks trades from a primary signal, intended to remove the signals that historically lost.
Final settlement: The last mark of an expiring futures contract, either a cash payment against a reference price or the start of physical delivery.
Finality: The point at which a transaction cannot be reversed without breaking the protocol's own rules or destroying staked capital.
Finance lease: A lease that transfers substantially all the risks and rewards of ownership, accounted for as an asset purchase funded by debt rather than as rent.
Financial Conduct Authority (FCA): The UK conduct regulator for retail financial services, including forex and CFD brokers, responsible for authorisation, client money rules and the retail leverage restrictions.
Financial leverage: The use of borrowed money to fund assets, which magnifies both returns and losses for shareholders without changing the operating business at all.
Financial Services Agency (Japan): Japan's financial regulator, which caps retail forex leverage at 25:1, registers crypto exchanges under the Payment Services Act, and oversees securities firms.
Financial stress: Money pressure from outside the account, which degrades exactly the judgement trading requires and raises risk-taking at the worst time.
Financing cash flow: Cash raised from or returned to funders: borrowing and repaying debt, issuing shares, buying back shares and paying dividends.
Financing cost: The interest paid on leverage and the interest earned on cash. At non-zero rates it is a first-order term that many backtests silently set to zero.
FinCEN: The US Treasury bureau that administers the Bank Secrecy Act, collects suspicious activity and currency transaction reports, and runs beneficial ownership reporting.
Finfluencer: A social media personality who publishes market opinions and trading content, usually monetised through courses, subscriptions, affiliate links, or promotion.
FINRA: The self-regulatory organization for US broker-dealers, overseen by the SEC; it writes rules such as the PDT rule and licenses brokers.
FINRA arbitration: The mandatory dispute forum where most US customer claims against brokers are heard by arbitrators rather than in court, with very limited grounds for appeal.
First notice day: The first day a holder of a long physically deliverable futures position can be told to take delivery; brokers require exits before it.
First position day: The day on which clearing firms must report which customer accounts hold long positions eligible to receive delivery, usually two business days before first notice day.
Fisher equation: The relationship stating that the nominal interest rate approximately equals the real rate plus expected inflation, which is the backbone of how bond yields are decomposed.
Five-year five-year forward breakeven: The inflation rate the market implies for the five-year period beginning five years from now, used as the cleanest gauge of whether long-run inflation expectations are anchored.
FIX protocol: The industry-standard messaging language for order routing and trade reporting, in which orders, cancels, fills and rejects are tag-value messages over a sequenced session.
Fixed costs: Costs that do not change with volume in the short run, such as rent, salaried staff and depreciation on plant already built.
Fixed fractional sizing: Risking the same percentage of current equity on every trade, so size grows with wins and shrinks with losses.
Fixed lot sizing: Trading the same share or contract count every time regardless of account size or volatility.
Fixed mindset: Treating trading ability as an innate trait, so every loss feels like evidence about you and every review feels like an accusation.
Fixed ratio sizing: Adding one unit of size for every fixed increment of profit, instead of scaling by a percentage of equity.
Flag (bull flag, bear flag): A short, tight consolidation that slopes against a sharp prior move, expected to resolve in the direction of that move.
Flash loan: An uncollateralised loan that must be borrowed and repaid inside a single transaction, made possible because the whole transaction reverts if it is not.
Flash loan attack: Using borrowed-and-repaid-in-one-block capital to distort a price, a vote or an accounting formula, then extracting the profit before repaying.
Flat time: The share of the record spent below a previous equity peak, which for most real strategies is the majority of it.
Flat yield curve: A curve where short and long yields are nearly equal, usually seen late in a hiking cycle as the market prices the end of tightening.
Flatten: A single command that closes all open positions and cancels all working orders, leaving the account with no market exposure.
Flattener: A trade that profits when the gap between long and short yields narrows, typically short the short maturity and long the long one.
FLEX option: An exchange-listed contract with customised strike, expiration, exercise style and settlement, cleared centrally rather than bilaterally.
Flight to quality: The movement of capital out of risky assets into the safest available ones during stress, which in currencies means bidding up the dollar, yen and franc and selling high-yielders.
Float: The number of shares actually available for public trading, excluding insider and restricted holdings.
Float rotation: Daily volume divided by the free float: how many times the tradeable share count changed hands in a session, used to gauge the intensity of a momentum move.
Floating profit and loss: The gain or loss on positions that are still open, marked at the price at which you could close them right now, which for a long is the bid.
Floating rate note (FRN): A bond whose coupon resets periodically off a short-term benchmark such as SOFR plus a fixed spread, so its price barely moves with rates.
Floor broker: A pit trader who executed orders for customers rather than trading their own account.
Floor price: The lowest asking price in an NFT collection; a headline quote that is easy to manipulate and rarely achievable at size.
Flow state: Absorbed, effortless focus that appears when the difficulty of a task sits just above your current skill and feedback is immediate.
Follow-on offering: A public sale of newly created shares by a company that is already listed, underwritten and marketed much like an IPO but on a much shorter timetable.
FOMC: The Federal Open Market Committee, the Federal Reserve body that sets the US federal funds rate at eight scheduled meetings a year.
FOMC minutes: The detailed account of an FOMC meeting published three weeks afterwards, which reveals the spread of opinion behind a statement that says little.
FOMO (fear of missing out): The urge to enter a trade because price is moving without you, usually late, without a plan, and with a poor risk-reward.
Footnotes: The detailed disclosures behind the headline statements, where accounting policies, estimates, segments, debt terms and commitments are actually explained.
Footprint chart: A candle that shows volume traded at the bid and ask at each individual price inside the bar, rather than a single total.
Forced liquidation: Your broker closing positions for you because equity fell below maintenance requirements, at prices and times you do not choose.
Forced trading: Manufacturing a trade because the day, the target, or the routine demands one, rather than because a setup appeared.
Foreign exchange reserves: The foreign currency assets a central bank holds, used to defend a peg, intervene, service external debt and reassure lenders; published monthly and watched closely.
Foreign ordinary shares: The issuer's actual home-market shares traded in the US over the counter, rather than a depositary receipt; usually flagged with an F on the ticker.
Form 10-K: The annual filing a US-listed company must make, containing audited financial statements, business description, risk factors and management's discussion.
Form 10-Q: The quarterly filing covering the first three quarters of a fiscal year, with unaudited condensed statements and a shorter narrative than the 10-K.
Form 1099-B: The US broker statement reporting proceeds from sales, and cost basis for covered securities, together with wash sale adjustments and Section 1256 aggregate results.
Form 1099-DA: The US information return for digital asset transactions, requiring custodial brokers to report gross proceeds and, phased in later, cost basis for crypto sales.
Form 1099-NEC: The US information return reporting non-employee compensation of $600 or more, commonly used for prop firm payouts, affiliate income and contractor work.
Form 13F: The quarterly holdings report required of institutional managers over a size threshold, filed 45 days after quarter end and showing long US equity positions only.
Form 144: The notice filed before an affiliate or holder of restricted stock sells into the market, disclosing the intended size and the broker, ahead of the sale itself.
Form 4: The filing an officer, director, or 10% holder must make within two business days of buying or selling the company's stock, disclosing price, size, and the type of transaction.
Form 6781: The US form reporting Section 1256 contracts and straddles, applying the year-end mark to market and the 60/40 split before results flow to Schedule D.
Form 8-K: The filing used to disclose material events between scheduled reports: earnings releases, executive departures, acquisitions, covenant breaches and restatements.
Form 8949: The US form listing individual sales of capital assets with dates, proceeds, basis and adjustment codes, feeding totals into Schedule D. United States.
Form ADV: The registration and disclosure filing of a US investment adviser: Part 1 structured data, Part 2 the plain-English brochure on strategy, fees and conflicts, Part 3 the client relationship summary.
Form BD: The application a firm files to register as a broker-dealer with the SEC, and the record of its ownership, control persons and disciplinary history.
Form CRS: A short plain-language relationship summary that US brokers and advisers must give retail investors, covering services, fees, conflicts, standard of conduct and disciplinary history.
Form S-1: The registration statement a company files before selling shares to the public for the first time, containing the first detailed financials most investors ever see.
Form U4: The uniform application that registers an individual with FINRA, the states and exchanges, and the record where disclosure events must be reported.
Forward contract: A private, customized agreement to buy or sell something at a set price on a future date, without exchange standardization or clearing.
Forward curve: The set of prices for all listed contract months of a product, plotted from nearest to furthest expiry.
Forward guidance: Central bank communication about the likely future path of policy, used to move long rates today without changing the overnight rate.
Forward points: The number of pips added to or subtracted from the spot rate to reach a forward rate, determined by the interest rate gap between the two currencies.
Forward premium and discount: Whether a currency's forward rate is above or below spot; the lower-yielding currency trades at a premium and the higher-yielding one at a discount.
Forward price-to-earnings: Share price divided by expected earnings per share for the next twelve months or the next fiscal year; the multiple the market actually trades on.
Forward rate: The interest rate for a future period implied by today's spot rates; what the market is effectively pricing in for borrowing later.
Forward rate agreement: A contract fixing an interest rate for a future period on a notional amount, settled in cash for the difference between the agreed rate and the actual rate.
Forward volatility: The volatility implied for a future window between two expirations, backed out of the two quoted implied volatilities.
Founder shares: Cheap shares issued to founders or a SPAC sponsor before outside money arrives, usually at a nominal price and on special terms.
Four price doji: A candle where the open, high, low and close are all the same price, usually a sign of no real trading rather than a signal.
Fractional Kelly: Betting a fixed fraction of the full Kelly stake - typically a quarter to a half - to cut volatility at a small cost in growth.
Fractional shares: Ownership of less than one whole share, created by brokers splitting shares internally or by corporate actions such as dividend reinvestment and splits.
Framing effect: The same fact changes your decision depending on how it is worded - a 40 percent win rate and six losses in ten feel completely different.
Free cash flow: Operating cash flow minus capital expenditure: the cash left over after keeping the business running and investing in it, available to fund debt, dividends and buybacks.
Free cash flow margin: Free cash flow divided by revenue; how many cents of genuinely spendable cash each sales dollar produces after capital spending.
Free cash flow yield: Free cash flow divided by market cap, or unlevered free cash flow divided by enterprise value; the cash return the business generates on its price.
Free floating currency: A currency whose rate is set entirely by market supply and demand, with the central bank targeting inflation or employment rather than any exchange rate level.
Free margin: Equity minus used margin: the amount available to open new positions or to absorb losses on existing ones before a close-out becomes possible.
Free-float adjustment: Weighting index members by the shares actually available to public investors rather than by total shares outstanding, excluding strategic, state and insider holdings.
Free-float weighting: Weighting index members by the value of shares actually available to public investors, excluding stakes held by founders, governments, and strategic holders.
Free-riding: Buying and then selling a security in a cash account without ever paying for it, covering the purchase with the sale proceeds. It is prohibited and triggers a 90-day restriction.
Freeze response: Going blank at the moment of decision - unable to enter, exit, or act - which is a stress reaction rather than a lack of discipline.
Front month: The nearest-expiring, most actively traded futures contract for a product.
Front-end load: A commission deducted from an investment at the point of purchase, so only the remainder is actually invested.
Front-running: Trading ahead of a customer or client order, or of information about it, to profit from the price impact that order is expected to cause.
Frozen concentrated orange juice futures (OJ): ICE contracts on 15,000 pounds of frozen concentrated orange juice solids, a small, thin market driven almost entirely by Florida and Brazilian weather and disease.
Frustration tolerance: The capacity to keep executing correctly while the market is annoying you - the specific skill that separates traders who tilt from those who do not.
FSCS protection: The UK compensation scheme covering customers of failed authorised firms, protecting investments up to £85,000 per person per firm.
FUD (fear, uncertainty, doubt): Negative information or rumor spread about an asset, sometimes to push the price down and sometimes a dismissive label for legitimate criticism.
Full carry: The theoretical maximum contango: the deferred price at which financing plus storage plus insurance exactly equals the spread over the nearby.
Full port: Committing the entire portfolio to one position, leaving no capital for anything else and no room for being wrong.
Fully diluted shares: Shares outstanding plus every share that could be created by options, warrants, restricted stock, and convertibles if all were exercised.
Fully diluted valuation (FDV): The market cap a token would have if every token that will ever exist were trading at today's price.
Fully paid securities lending: A voluntary programme in which a client lends out shares they own outright and receives a share of the borrow fee, with collateral posted in return.
Fund of funds: A fund that invests in other funds rather than in securities directly, offering manager selection, diversification and access in exchange for a second layer of fees.
Funded account: The account a trader receives after passing an evaluation; usually simulated, with real payouts based on its performance.
Funding currency: The low-yielding currency a trader borrows or sells short to finance a position in a higher-yielding one.
Funding interval: How often a perpetual contract settles funding payments, commonly every eight hours, with some venues settling hourly or continuously.
Funding rate: A periodic payment between long and short perpetual futures holders that pulls the perp price toward spot; positive means longs pay shorts.
Funds from operations: The standard REIT earnings measure: net income with property depreciation added back and gains on property sales removed.
Futures butterfly (fly): A three-legged curve trade, long one month, short two of the middle month and long a third, that isolates the curvature of the forward curve.
Futures commission merchant (FCM): A registered firm that accepts futures orders and holds customer margin funds, which must be segregated from the firm's own money.
Futures contract: A standardized, exchange-traded agreement to buy or sell a fixed quantity of something at a set price on a future date.
Futures margin call: A demand to restore account equity to the initial margin level after daily settlement leaves it below maintenance, payable in cash, usually within one business day.
FX forward: An agreement to exchange two currencies at a fixed rate on a future date, used mainly by companies to lock in the cost of a known payment.
FX swap: A pair of simultaneous trades in opposite directions with different value dates, used to move an existing position's settlement date or to borrow one currency against another.

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