Stock Market Glossary - Letter B

Backtest

Testing a trading strategy on historical price data.

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Backwardation

Futures-market situation in which later contracts can trade below near-term contracts.

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BaFin

Federal Financial Supervisory Authority.

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Balance sheet

Statement of a company’s assets and capital at a reporting date.

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Basis risk

Risk that a hedge and the position being hedged develop differently.

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Bear market

Market phase with significantly falling prices, usually more than 20 percent from the high.

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Beta

Measure of the sensitivity of a stock to fluctuations compared to the overall market.

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Bid

Highest price at which a buyer is willing to purchase an asset.

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Bid-ask spread

Bid-ask spread explained: what bid and ask quotes reveal about liquidity, trading costs and order types.

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Blue Chip

Share of an established large company with high market capitalization and a stable business model.

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Bollinger Bands

Volatility based indicator bands around a moving average.

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Bond

Fixed-interest security that states or companies use to raise debt capital.

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Bond fund

Fund that invests in bonds across issuers, maturities or credit qualities.

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Bracket order

Order setup consisting of entry, stop loss and profit target in one package.

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Break-even ratio

Minimum hit rate at which a strategy neither wins nor loses before costs.

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Breakout

Price breakout above an important resistance or below an important support.

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Bull market

Market phase with persistently rising prices and positive sentiment.

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Burn rate

The rate at which a company burns through capital before it becomes profitable.

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business cycle

Recurring sequence of upswing, boom, downturn and recession.

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Buy and hold

Long-term investment strategy without active trading.

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