Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Abnormal Return
When we call something abnormal, we usually mean that it deviates from the norm, or the expected. It can be either negative or positive. The same applies to your financial returns. Let’s say you speculated that a stock would go up by 10%, based on analysis and comparison with other assets. Then, it went up by 24%! The extra 14% is considered the abnormal return. Abnormal returns can move both upward and downward, depending on market conditions.
Absolute Advantage
An absolute advantage is the ability to produce more than competitors using the same quantity of input in the same amount of time. Let’s simplify this with an example: if you can wrap 20 gifts in 30 minutes while your friends can wrap 15 and 10 gifts in the same time, you hold an absolute advantage over them, provided you all use the same tools.
Account
When you open an account with a broker, you gain access to a platform where you can deposit money, withdraw returns, and trade various assets. The brokerage firm executes buy and sell orders on your behalf. Additionally, your trading account serves as a record of all the past transactions you have made. At any time, you can log into your account and view all your buy and sell orders.
Account Balance
When you open an account, you will have an account balance. This concept is simple and easy to understand. Whatever remains in your account is your account balance at any given time. For example, if you have $5 left in your account, then your balance is $5. If you have $10,000 remaining in your account, then your balance is $10,000.
Account Equity
To put it simply, account equity is the real-time value of your current account balance plus any unrealized profits or losses from open positions. While your account balance reflects the amount you have after closing all trades, account equity is the real-time value of your account, constantly fluctuating with market movements and the performance of your trades.
Account Statement
An account statement is a record of the transactions that took place through your account. It includes all the positions you took, whether short or long. In your account statements, you can find details about deposits, withdrawals, fees, and your current balance. In other words, it is the document you can refer to for any information regarding your account.
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