Stock Trading Glossary of Terms

Acceleration is measure of the rate at which a stock's price increases or decreases over a period of time.

Accelerated vesting refers to the quicker granting of full ownership rights to stock options or other benefits, often triggered by specific events such as an acquisition, termination, or achieving performance milestones.

Accumulation is the process where investors are actively buying shares of a particular stock over a period, often indicating strong interest or confidence in the stocks future performance.

Acquisition is the process by which one company purchases another company or its assets to gain control over its operations and enhance strategic advantages.

Active Management is an investment strategy where a portfolio manager makes specific investments with the goal of outperforming an investment benchmark index through research, analysis, and their own judgment.

Activity Level is a measure of the volume of shares being bought and sold in a particular stock or market.

Advances & Declines is a measure of the number of stocks that have increased or decreased in price over a period of time.

After-hours trading refers to the buying and selling of securities outside of regular trading hours.

Alpha is a financial metric that measures the excess return of an investment or portfolio relative to a benchmark index, indicating the value added or subtracted by the portfolio manager's decisions.

Analyst ratings provide investors with recommendations on whether to buy, hold, or sell a particular stock or security, based on the opinions of institutional investors.

Annual Report is a comprehensive report that publicly traded companies are required to publish each year, which includes information about the company's financial performance, operations, and future plans.

Arbitrage is a practice of buying and selling securities in different markets to take advantage of price discrepancies and make a profit.

Ascending Tops is a technical analysis chart pattern that indicates an upward trend in a stock's price.

Asset is a resource that has economic value and can be owned or controlled by an individual, company, or organization to generate future benefits or profits.

Averaging Down is a strategy in which an investor buys more shares of a stock as the price declines, in order to reduce the average cost per share.

Bankruptcy is a legal process in which an individual or organization is unable to pay their debts and seeks relief from their creditors.

Bear / Bull Trap occur when the price of a security appears to break out of an existing support or resistance level but then quickly reverses course, trapping traders who took action on the signal.

Balance Sheet is a financial statement that displays a company's assets, liabilities, and equity at a specific point in time.

Bear Market is market in which stock prices are falling and investor sentiment is negative.

Bar Chart is a technical analysis chart used to represent a movement of price over a period of time.

Base is a market support level after which a rally or breakout tipycally occurs.

Beta is a measure of a stock's volatility compared to the overall market.

Blockchain is a decentralized, distributed ledger technology that securely records transactions across multiple computers in a tamper-resistant and transparent manner.

Blue-Chip Stocks are large, industry-leading companies with a long history of stable earnings, consistent dividend payments, and a solid reputation for quality products and services.

Bollinger Bands, which consist of upper and lower bands set on either side of a simple moving average (SMA) two standard deviations away from the market's SMA, are a widely used technical price indicator that can identify levels of support and resistance.

Bond is a fixed-income security that represents a loan made by an investor to a borrower, typically a company or government, used to finance its operations.

Bookrunner is the main underwriter or lead manager in a securities issuance responsible for coordinating the issuance process, including pricing, selling, and allocating the securities to investors.

Bourse is a synonym to stock exchange. A second meaning is European stock exchange.

Breakout is a significant technical event in which the price of an asset moves through a support or resistance level, indicating a change in market sentiment and potentially leading to a new trend.

Bull Market is a market in which stock prices are rising and investor sentiment is positive.

Broker is licensed professional or a firm that buys and sells securities on behalf of clients in exchange for a commission or fee.

Bid is highest price that a buyer is willing to pay for a particular stock or security.

Buyback refers to a company's action of repurchasing its outstanding shares from the market in order to reduce the total number of shares available to the public.

Call option is a type of financial contract that grants the holder the right, but not the obligation, to buy a particular asset at a set price on or before a predetermined expiration date.

Candlestock Charts are a popular financial charting tool that represent price movements using candlestick-shaped symbols, and are used by traders and investors to identify trends, patterns, and price levels.

Capitalization, also known as market capitalization or market cap, is a measure of a company's total market value. It is calculated by multiplying the total number of shares outstanding by the current market price per share.

Capital gains refer to the profit earned from the sale of an asset, and can be short-term or long-term, subject to taxes, and offset by capital losses.

Carry Trade is a financial strategy where an investor borrows money in a low-interest-rate currency to invest in assets denominated in a higher-interest-rate currency, aiming to profit from the interest rate differential.

Cash Flow Statement is a financial statement that provides information about a company's cash inflows and outflows over a specific time period through three main activities: operating, investing, and financing activities.

Charting is a method of technical analysis that involves studying historical price patterns and movements of an asset to identify potential future price movements, and it is widely used by traders and investors to manage risk and identify potential buying or selling opportunities.

Close is the final price at which a stock or security trades at the end of a trading day (not including extended trading).

Congestion refers to a period of directionless trading within a range that is bound by support and resistance levels, where the price of an asset is unable to break out of the range.

Commodities are raw materials or primary agricultural products that are traded on commodity markets, typically used for manufacturing or consumption.

Correction is a significant decline, usually defined as 10% or more, in the overall value of a stock market index or individual stocks over a short period of time.

Cost of carry refers to as the total cost associated with holding a financial instrument or physical commodity over a time period, including storage, insurance, and financing costs, minus any yield earned during that period.

Covered call is an options trading strategy where an investor holds a long position on a tradeable asset and sells a call option against the same asset.

Credit spread refers to the difference in interest rates or yields between two financial instruments, typically bonds, and is used to measure the credit risk of the issuer.

Cryptocurrency is a digital or virtual form of currency that uses cryptography for secure transactions and operates on decentralized networks based on blockchain technology.

Currency is a system of money in common use, typically issued by a government or otther authority, used as a medium of exchange for goods and services.

Currency futures is a contract that details the price at which a currency could be bought or sold, and sets a specific date for the exchange.

Day Trading is practice of buying and selling securities within the same trading day, with the goal of profiting from short-term price movements. Never holds stocks overnight.

Deflation is a sustained decrease in the general price level of goods and services in an economy over time.

Derivatives are financial instruments that derive their value from an underlying asset or security

Dilution in finance refers to the reduction in existing shareholders ownership percentage and earnings per share resulting from the issuance of additional shares.

Divergence occurs when the price of an asset moves in an opposite direction to a technical indicator, such as volume, and can be a useful tool for identifying potential turning points in the market.

Dividend is a distribution of a portion of a company's earnings to its shareholders.

Dollar-cost averaging is an investment approach where you consistently invest a set amount of money at regular intervals, regardless of the asset's current price.

Earnings are profits generated by a company over a specific period of time.

ETFs are investment funds that track a basket of underlying assets, offering investors a low-cost and convenient way to diversify their portfolios, with lower expense ratios compared to actively managed mutual funds.

Equity denotes the residual value of a company's assets after subtracting all liabilities, including fees and operational costs.

Exchange is a marketplace where securities, commodities, and other financial instruments are traded.

Execution is a process of completing a trade, in which a broker buys or sells securities on behalf of a client at the best available price.

Expense ratio is the annual fee expressed as a percentage of an investment fund's assets, charged by the fund to cover operating expenses such as management fees and administrative costs.

FDIC insurance is a government-backed program that protects depositors' funds up to a certain amount in case of a bank failure.

Fiat Currency is a national currency whose value is not tied to a commodity like gold or silver but instead relies on the public's trust in the issuing government or central bank.

Fibonacci ratios are a mathematical sequence derived from dividing one number in the sequence by the number that follows it, commonly used by technical analysts to identify potential price targets for retracements and extensions in a trend.

Fixed income refers to as investments that provide regular, predetermined interest payments and the return of principal at maturity, typically including bonds and similar securities.

Forex, short for foreign exchange, refers to the global trading of currencies in a manner similar to stock trading.

Fundamental analysis is a method of evaluating the intrinsic value of assets and analysing the factors that could influence their prices in the future.

Futures contract is a contractual arrangement between two parties to exchange an asset at an agreed-upon price on a predetermined date in the future.

Gold bullion investing is the practice of acquiring physical gold bars or coins as a means of preserving wealth, hedging against economic uncertainty, and diversifying investment portfolios.

Haircut is a percentage reduction in the value of an asset that is used as collateral for a loan.

Hedge fund is an investment fund managed by professional portfolio managers, typically using a wide range of strategies to generate returns for its investors while aiming to minimize risk through hedging techniques.

Hedging is a risk management strategy employed by investors to protect against potential losses in their investment portfolios by offsetting adverse price movements with corresponding positions.

High is the highest price at which a stock or security trades during a particular trading session.

Holidays schedule for stock markets in the US.

Income Statement is a financial statement that displays a company's revenues and expenses over a specific time period, ultimately determining its profits or losses.

Index is a statistical measure of the performance of a group of stocks or the overall stock market.

Inflation is a measure of the rate, typically expressed as percentage points over a fixed period of time, at which the general level of prices for goods and services is increasing over time.

Individual Retirement Account (IRA) is a tax-advantaged investment account that individuals can use to save for retirement, with contributions made on a pre-tax or after-tax basis, and the funds grow tax-free until withdrawal.

Interest rate is the percentage charged on the total amount borrowed or earned on an investment over a specific period, typically expressed annually.

IPO (Initial Public Offering) is the process through which a privately held company offers its shares to the public for the first time.

Leverage is the use of borrowed funds to invest in securities or other assets, with the goal of increasing potential returns.

Liabilities refer to the debts and obligations that a company owes to its creditors, including loans, accounts payable, and other financial obligations that must be settled in the future.

Liquidity is a financial metric that measures how easily and quickly an asset can be bought or sold without affecting its price.

Low is the lowwest price at which a stock or security trades during a particular trading session.

Margin is a type of investment strategy where investors borrow money from a broker to purchase securities, such as stocks or bonds.

Margin call occurs when an investor's account falls below the required minimum level of equity, and the broker demands that the investor deposit additional funds or securities to bring the account back up to the required level.

Meme stocks are shares of companies that gain sudden and significant popularity among retail investors, often driven by social media hype rather than fundamental business performance.

Merger is the combination of two or more companies into a single entity, typically to enhance competitive advantage, expand market share, or achieve greater efficiencies.

Mutual fund is a pooled investment vehicle managed by a professional fund manager that collects money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.

Open is the first price at which a stock or security trades at the beginning of a particular trading session.

Option is a type of financial contract that provides the holder with the choice, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specific time frame if the price of the asset moves beyond a certain level.

Order is an instruction given by an investor to a broker to buy or sell a particular stock or security.

OTC Stocks are stocks that are traded "over the counter" and not on a formal stock exchange.

P/E ratio is a financial ratio that measures the relative value of a company's stock price to its earnings per share, indicating whether a stock is overvalued or undervalued.

Parent Company is a corporation that owns enough voting stock in another company to control its policies and management decisions.

Passive Management is an investment strategy that seeks to replicate the performance of a specific market index by investing in index funds or exchange-traded funds (ETFs) without active stock selection or frequent trading.

Penny stocks are low-priced, speculative securities typically trading below a certain threshold, often associated with smaller companies and higher volatility.

Pink Sheet Stocks are stocks that are traded on the OTC market, often considered to be more speculative and less regulated than other types of stocks.

Point & Figure Charts is a charting technique that represents price changes using columns of X's and O's instead of the traditional price and time axes, eliminating noise and focusing on significant price movements.

Portfolio is a collection of stocks, bonds, and other securities held by an investor.

Position, in financial terms, refers to a trader's market commitment or exposure, representing a trade that can incur profit or loss (open position) or one that has been recently closed (closed position), with profit or loss being realized only upon closure.

Pre-market refers to the period of time before regular market trading hours when investors can place trades and receive information about potential price movements of a stock.

Profit margin is the percentage of revenue that exceeds the costs of production, indicating its efficiency in generating profits from its operations.

Pullback, also known as a retracement or consolidation, refers to a temporary dip or pause in an asset's trend and should not be mistaken for a reversal, which denotes a more lasting move against the current trend.

Pump and dump refers to the fraudulent practice of artificially inflating the price of a stock or cryptocurrency through misleading statements or promotions, only to sell off the inflated assets at a profit, leaving unsuspecting investors with losses.

Put option is a type of financial contract that gives the holder the right, but not the obligation, to sell a specific asset at a predetermined price on or before a specific expiration date.

Quantitative Easing, often abbreviated as QE, is an economic monetary strategy designed to reduce interest rates and boost the money supply

Quote is the current price at which a stock or security is trading in the market.

Rally is a period of sustained upward movement in the stock market or in the price of a particular stock or security.

Recession is typically defined as a significant and widespread decline in economic activity, characterized by a contraction in Gross Domestic Product (GDP), employment, and other economic indicators.

Regular market hours refer to the period of time during which stock markets are open for trading, typically between 9:30 a.m. and 4:00 p.m. Eastern Time in the United States.

Relative Strength refers to the comparison of a particular stock's performance against a peer group or market index, with the aim of identifying whether the stock is overperforming or underperforming the group or index.

Resistance is a technical analysis term that refers to a price level where selling pressure is expected to be strong, causing the price to stop rising or even reverse its direction.

Reversal refers to a significant change in the direction of a stock or the broader markets trend, signaling a shift from an uptrend to a downtrend or vice versa.

Risks refer to the likelihood or probability of an investment or business decision resulting in financial loss or negative consequences.

Roth IRA is a tax-advantaged retirement savings account that allows individuals to make after-tax contributions and withdraw the money tax-free in retirement, subject to certain conditions.

Stock Sector is a group of stocks that operate in the same industry or business sector.

Share Market is the market where stocks and other securities are bought and sold.

Short Selling is a practice of selling a stock or security that the seller does not own, with the expectation of buying it back at a lower price in the future.

Silver bullion investing involves purchasing physical silver bars or coins as a means of preserving wealth, hedging against economic uncertainty, and diversifying investment portfolios.

Spread is a difference between the bid and ask prices for a particular stock or security.

Stagflation is an economic condition characterized by a combination of stagnant economic growth, high unemployment, and high inflation.

Stock split is a corporate action where a company increases the number of its outstanding shares by dividing existing shares, thereby reducing the price per share proportionally.

Support (Level) refers to a psychological, fundamental, or technical level where there are more buyers than sellers, limiting selling in a stock or market, and providing traders with a reference point for identifying potential buying opportunities and managing risk.

Traditional IRA is a tax-advantaged retirement savings account that allows individuals to make tax-deductible contributions, with the money growing tax-free until withdrawal in retirement when it is taxed as ordinary income

Trend is the overall direction of a market or stock, either bullish or bearish, and is a critical concept in technical analysis, while counter-trend refers to a temporary reversal against the prevailing trend.

Trendline is a technical analysis tool used to identify the direction and strength of a trend in a security's price over a chosen timeframe by connecting two or more points on a chart, and can help traders and investors identify key levels to buy or sell a security, as well as determine the overall strength of a trend.

Volatility is a measure of the degree of fluctuation in the price of a stock or security over a period of time.

Volume is the total number of shares or contracts traded in a particular stock or security over a period of time.

Witching hour in stock trading refers to the final hour of trading on the third Friday of March, June, September, and December when futures and options contracts expire, often leading to increased volatility and trading activity as investors adjust their positions.

Yield is the income generated by a stock or security, typically expressed as a percentage of its current price.