Free Simple Glossary of Energy Trading terms

An Order is an instruction sent to an Exchange or a Broker to execute a trade unconditionally, or when or if specific criteria are met

For much more information please refer to the Detailed Glossary

Volume is the measure of how much of something is involved in a trade

Volume = Quantity (but the term Volume is nearly always used in preference)

Hence in energy trading volume may have dimensions of energy, mass, weight or volume

For much more information please refer to the Detailed Glossary

To hedge is to offset, mitigate or reduce a risk or risks of an organization or individual by entering into contracts or trades

A hedge is a trade or contract intended at least partly to reduce risk

In Energy Trading the risk is usually market risk associated with other trades or contracts, or the operation of assets

For much more information please refer to the Detailed Glossary

When two parties execute a trade between themselves they specify the terms of the trade: Price, Volume, Location, timing etc.

But in order to successfully manage the trade's delivery and settlement a lot more information needs to be available than is captured in the trade details, such as when payment is due, who needs to notify a TSO etc.

This additional detail is held in a Master Agreement

Each trade that is executed is regulated by a Master Agreement

For much more information please refer to the Detailed Glossary

A type of commodity, which although it may be applied to any physical commodity, usually describes the ability to store natural gas in its gaseous state

Storage facilities usually consist of natural structures (depleted gas fields for example) that are attached to the gas pipeline network

For much more information please refer to the Detailed Glossary

A trade is a legally binding contract between two parties

A physically settled trade requires one party to deliver one or more commodities to the other party at a time and location specified in the trade terms, in return for one or more cash payments

A financially settled trade requires both parties to agree the value of one or more underliers, and make one or more cash payments dependent on those values

For much more information please refer to the Detailed Glossary

A financial side or leg of a trade that is not fixed in advance, but is dependent on the value of some observable (usually an index) at a pre-agreed time related to the delivery date

For much more information please refer to the Detailed Glossary

In energy trading terms an asset is something an organization owns that can physically provide, transform or move an energy commodity, such as a gas field, a power station, or a refinery

For much more information please refer to the Detailed Glossary

At its simplest the delta of a trade or position is the ratio of its change in value to the change in value of its underlier 

For much more information please refer to the Detailed Glossary

A Blotter is a traditional term for a form on which trade details are recorded by a trader as trades are executed

For much more information please refer to the Detailed Glossary