Stock Market Terms: 200 Essential Trading & Investing Terms

Complete Stock Market Glossary Text Version

This text version supports readers without JavaScript and gives search engines a clear HTML version of the full Stock Academy database.

1. Stock: A stock is ownership in a public company, represented by tradable units called shares.
2. Share: A share is one unit of ownership in a company or fund.
3. Equity: Equity means ownership value after debts or claims are considered.
4. Common Stock: Common stock gives investors basic ownership and usually voting rights in a company.
5. Preferred Stock: Preferred stock is equity that often pays fixed dividends before common stock dividends.
6. Stock Market: The stock market is the network where investors buy and sell shares of companies.
7. Exchange: An exchange is a regulated marketplace where securities are listed and traded.
8. NYSE: The NYSE is a major U.S. stock exchange known for many large listed companies.
9. Nasdaq: Nasdaq is a major U.S. exchange often associated with technology and growth companies.
10. Ticker Symbol: A ticker symbol is the short code used to identify a tradable security.
11. IPO: An IPO is the first public sale of a private company's shares to investors.
12. Direct Listing: A direct listing lets existing shareholders sell shares publicly without a traditional IPO offering.
13. Market Capitalization: Market capitalization is a company's stock price multiplied by its shares outstanding.
14. Large Cap: Large cap describes a company with a very large market value.
15. Mid Cap: Mid cap describes a company with a medium-sized market value.
16. Small Cap: Small cap describes a company with a smaller market value than large or mid caps.
17. Micro Cap: Micro cap describes a very small public company with higher risk and lower liquidity.
18. Blue Chip Stock: A blue chip stock is a large, established company with a strong reputation.
19. Growth Stock: A growth stock is expected to increase sales or earnings faster than the market.
20. Value Stock: A value stock appears inexpensive compared with its earnings, assets, or cash flow.
21. Income Stock: An income stock is bought mainly for regular dividend payments.
22. Dividend: A dividend is a payment a company makes to shareholders from profits or cash.
23. Dividend Yield: Dividend yield compares a stocks annual dividend with its current share price.
24. Ex-Dividend Date: The ex-dividend date is the first day a buyer is not entitled to the next dividend.
25. Record Date: The record date is when the company checks which shareholders qualify for a dividend.
26. Payout Ratio: The payout ratio shows what share of earnings is paid out as dividends.
27. Earnings: Earnings are a company's profit after expenses and taxes.
28. Revenue: Revenue is the money a company earns from selling goods or services before expenses.
29. Net Income: Net income is profit left after all costs, interest, and taxes are deducted.
30. Gross Profit: Gross profit is revenue minus the direct cost of producing goods or services.
31. Operating Income: Operating income is profit from core business operations before interest and taxes.
32. EPS: EPS, or earnings per share, shows profit allocated to each common share.
33. Diluted EPS: Diluted EPS estimates earnings per share after possible new shares from options or convertibles.
34. P/E Ratio: The P/E ratio compares a stocks price with its earnings per share.
35. Forward P/E: Forward P/E compares today's stock price with expected future earnings per share.
36. PEG Ratio: The PEG ratio compares a stocks P/E ratio with its expected earnings growth rate.
37. P/S Ratio: The P/S ratio compares a company's market value with its sales.
38. P/B Ratio: The P/B ratio compares market value with the company's book value.
39. EV/EBITDA: EV/EBITDA compares enterprise value with operating earnings before major accounting deductions.
40. Free Cash Flow: Free cash flow is cash left after operating needs and capital spending.
41. Cash Flow Statement: The cash flow statement shows how cash moves through operations, investing, and financing.
42. Balance Sheet: A balance sheet lists a company's assets, liabilities, and shareholders' equity at a point in time.
43. Income Statement: An income statement reports revenue, expenses, and profit over a period.
44. Assets: Assets are resources a company owns or controls that may create future value.
45. Liabilities: Liabilities are obligations a company owes to lenders, suppliers, workers, or others.
46. Shareholders’ Equity: Shareholders’ equity is the owners claim after liabilities are subtracted from assets.
47. Debt-to-Equity Ratio: Debt-to-equity compares company debt with shareholders equity.
48. Return on Equity: Return on equity measures profit generated for each dollar of shareholder equity.
49. Return on Assets: Return on assets measures how efficiently a company uses assets to create profit.
50. Gross Margin: Gross margin is gross profit as a percentage of revenue.
51. Operating Margin: Operating margin is operating income as a percentage of revenue.
52. Net Margin: Net margin is net income as a percentage of revenue.
53. Guidance: Guidance is management's forecast for future revenue, earnings, or other business metrics.
54. Earnings Call: An earnings call is a conference call where management discusses results and answers analysts.
55. Analyst Rating: An analyst rating is a research opinion such as buy, hold, or sell.
56. Price Target: A price target is an analysts estimate of where a stock could trade in the future.
57. Upgrade: An upgrade is a more positive analyst rating on a stock.
58. Downgrade: A downgrade is a less positive analyst rating on a stock.
59. Bull Market: A bull market is a period when prices rise broadly and investor confidence is strong.
60. Bear Market: A bear market is a sustained decline in prices, often with weak sentiment.
61. Correction: A correction is a notable price decline, often around 10% from a recent high.
62. Crash: A crash is a sudden, severe market decline driven by panic or major shocks.
63. Rally: A rally is a strong rise in prices after weakness or during an uptrend.
64. Recession: A recession is a broad economic slowdown with weaker output, income, and employment.
65. Expansion: Expansion is a period of economic growth with rising production, spending, and employment.
66. Inflation: Inflation is the general rise in prices that reduces purchasing power over time.
67. Interest Rate: An interest rate is the cost of borrowing money or the return paid on lending.
68. Federal Reserve: The Federal Reserve is the U.S. central bank that influences money supply and rates.
69. Monetary Policy: Monetary policy is central bank action that affects rates, credit, and money supply.
70. Fiscal Policy: Fiscal policy is government spending and tax policy used to influence the economy.
71. GDP: GDP measures the total value of goods and services produced by an economy.
72. Unemployment Rate: The unemployment rate shows the share of workers actively seeking jobs who are unemployed.
73. CPI: CPI tracks changes in prices paid by consumers for a basket of goods and services.
74. PPI: PPI tracks price changes received by producers before goods reach consumers.
75. Yield Curve: The yield curve shows interest rates on bonds with different maturities.
76. Inverted Yield Curve: An inverted yield curve occurs when short-term yields exceed long-term yields.
77. Treasury Yield: Treasury yield is the return investors demand for lending to the U.S. government.
78. Bond: A bond is a loan investors make to a government or company for interest payments.
79. Coupon: A coupon is the interest payment a bond promises to pay.
80. Maturity: Maturity is the date when a bond principal is due to be repaid.
81. Credit Rating: A credit rating grades a borrower's ability to repay debt.
82. Default Risk: Default risk is the chance that a borrower fails to make required payments.
83. Liquidity: Liquidity is how easily an asset can be bought or sold without moving its price much.
84. Volume: Volume is the number of shares or contracts traded during a period.
85. Average Volume: Average volume is the typical number of shares traded over a chosen period.
86. Bid: The bid is the highest price a buyer is currently willing to pay.
87. Ask: The ask is the lowest price a seller is currently willing to accept.
88. Bid-Ask Spread: The bid-ask spread is the gap between the best bid and best ask.
89. Market Order: A market order buys or sells immediately at the best available price.
90. Limit Order: A limit order sets the maximum buy price or minimum sell price you accept.
91. Stop Order: A stop order becomes active after a chosen stop price is reached.
92. Stop-Loss Order: A stop-loss order is designed to limit losses by selling after a price level is hit.
93. Stop-Limit Order: A stop-limit order triggers a limit order after the stop price is reached.
94. Fill: A fill means an order has been executed in the market.
95. Slippage: Slippage is the difference between expected price and actual execution price.
96. Liquidity Provider: A liquidity provider posts buy and sell interest to help markets trade smoothly.
97. Market Maker: A market maker provides bid and ask quotes and helps facilitate trading.
98. Broker: A broker is a firm or platform that executes trades for investors.
99. Brokerage Account: A brokerage account is an account used to buy and sell investments.
100. Margin Account: A margin account lets investors borrow from the broker to trade securities.
101. Cash Account: A cash account requires purchases to be paid with available cash.
102. Margin: Margin is borrowed money from a broker used to increase trading exposure.
103. Leverage: Leverage uses borrowed money or derivatives to control a larger position.
104. Buying Power: Buying power is the amount available to purchase securities in an account.
105. Short Selling: Short selling means selling borrowed shares to profit from a price decline.
106. Short Interest: Short interest shows how many shares have been sold short and remain open.
107. Short Squeeze: A short squeeze happens when rising prices force short sellers to buy back shares.
108. Covering: Covering means buying back shares to close a short position.
109. Borrow Fee: A borrow fee is the cost short sellers pay to borrow shares.
110. Float: Float is the number of shares available for public trading.
111. Free Float: Free float is the portion of shares freely tradable by public investors.
112. Outstanding Shares: Outstanding shares are all company shares currently issued and held by investors.
113. Insider Ownership: Insider ownership is the percentage of shares held by executives, directors, or founders.
114. Institutional Ownership: Institutional ownership is the share of stock held by funds, pensions, and large firms.
115. Stock Split: A stock split increases share count while reducing price per share proportionally.
116. Reverse Split: A reverse split reduces share count and raises price per share proportionally.
117. Buyback: A buyback happens when a company repurchases its own shares.
118. Secondary Offering: A secondary offering sells additional shares after a company is already public.
119. Dilution: Dilution occurs when new shares reduce existing shareholders ownership percentage.
120. Rights Offering: A rights offering lets existing shareholders buy new shares, often at a set price.
121. Warrant: A warrant gives the right to buy company stock at a set price before expiration.
122. ADR: An ADR lets U.S. investors trade shares of a foreign company in U.S. markets.
123. ETF: An ETF is a fund that trades like a stock and holds a basket of assets.
124. Mutual Fund: A mutual fund pools investor money into a professionally managed portfolio.
125. Index Fund: An index fund tries to track the performance of a market index.
126. S&P 500: The S&P 500 is an index of 500 large U.S. public companies.
127. Dow Jones Industrial Average: The Dow Jones Industrial Average tracks 30 large U.S. companies.
128. Nasdaq Composite: The Nasdaq Composite tracks thousands of stocks listed on the Nasdaq exchange.
129. Russell 2000: The Russell 2000 is an index that tracks many U.S. small-cap stocks.
130. Sector: A sector groups companies by broad business type, such as technology or healthcare.
131. Industry: An industry is a narrower business group inside a sector.
132. Diversification: Diversification spreads money across different investments to reduce single-position risk.
133. Portfolio: A portfolio is the full collection of investments an investor owns.
134. Asset Allocation: Asset allocation is how a portfolio is divided among asset types.
135. Rebalancing: Rebalancing adjusts a portfolio back toward its target allocation.
136. Risk Tolerance: Risk tolerance is how much loss or volatility an investor can emotionally and financially handle.
137. Time Horizon: Time horizon is how long money can stay invested before it is needed.
138. Volatility: Volatility measures how much an investment price moves over time.
139. Beta: Beta measures how much a stock tends to move compared with the overall market.
140. Alpha: Alpha is performance above or below a benchmark after considering risk.
141. Sharpe Ratio: The Sharpe ratio compares investment return with volatility risk.
142. Standard Deviation: Standard deviation measures how widely returns vary around their average.
143. Drawdown: Drawdown is the decline from a peak to a lower value.
144. Max Drawdown: Max drawdown is the largest peak-to-trough loss during a period.
145. Risk-Reward Ratio: Risk-reward ratio compares potential loss with potential gain on a trade.
146. Position Sizing: Position sizing decides how much capital to place in one trade or investment.
147. Stop Loss: A stop loss is a planned exit level used to limit downside.
148. Take Profit: Take profit is a planned exit level used to lock in gains.
149. Support: Support is a price area where buying has often slowed or stopped declines.
150. Resistance: Resistance is a price area where selling has often slowed or stopped advances.
151. Trendline: A trendline connects price points to show the direction of a trend.
152. Uptrend: An uptrend is a pattern of higher prices over time.
153. Downtrend: A downtrend is a pattern of lower prices over time.
154. Sideways Market: A sideways market moves within a range without a clear uptrend or downtrend.
155. Breakout: A breakout happens when price moves above resistance or out of a pattern.
156. Breakdown: A breakdown happens when price moves below support or out of a pattern.
157. Pullback: A pullback is a short-term decline within a broader uptrend.
158. Retest: A retest happens when price returns to a recently broken support or resistance level.
159. Consolidation: Consolidation is a period of tight price movement after a larger move.
160. Accumulation: Accumulation is steady buying that may occur before a larger advance.
161. Distribution: Distribution is steady selling that may occur before a larger decline.
162. Moving Average: A moving average smooths price data to show the general trend.
163. SMA: SMA, or simple moving average, averages prices over a chosen number of periods.
164. EMA: EMA, or exponential moving average, gives more weight to recent prices.
165. MACD: MACD is a momentum indicator based on the relationship between moving averages.
166. RSI: RSI is a momentum oscillator that measures the speed of recent price moves.
167. Bollinger Bands: Bollinger Bands show price bands around a moving average based on volatility.
168. VWAP: VWAP is the volume-weighted average price during a trading session.
169. Candlestick: A candlestick shows open, high, low, and close prices for a period.
170. Doji: A doji is a candlestick where open and close prices are very close.
171. Hammer: A hammer is a candlestick with a small body and long lower shadow.
172. Shooting Star: A shooting star is a candlestick with a small body and long upper shadow.
173. Engulfing Pattern: An engulfing pattern occurs when one candle fully covers the prior candle's body.
174. Gap: A gap occurs when price opens noticeably above or below the prior close.
175. Volume Profile: Volume profile shows how much trading occurred at different price levels.
176. Fibonacci Retracement: Fibonacci retracement marks possible pullback levels based on common ratios.
177. Overbought: Overbought means price may have risen too far too quickly by a chosen measure.
178. Oversold: Oversold means price may have fallen too far too quickly by a chosen measure.
179. Momentum: Momentum describes the strength and speed of a price move.
180. Relative Strength: Relative strength compares one assets performance with another asset or benchmark.
181. Options: Options are contracts that give rights tied to an underlying asset at a set price.
182. Call Option: A call option gives the right to buy an asset at a strike price before expiration.
183. Put Option: A put option gives the right to sell an asset at a strike price before expiration.
184. Strike Price: The strike price is the price at which an option can be exercised.
185. Expiration Date: The expiration date is when an option contract expires.
186. Premium: Premium is the price paid or received for an option contract.
187. Intrinsic Value: Intrinsic value is the amount an option is in the money.
188. Extrinsic Value: Extrinsic value is the portion of option premium beyond intrinsic value.
189. Implied Volatility: Implied volatility reflects the market's expected future movement in an option's price.
190. Delta: Delta estimates how much an option price changes when the stock moves $1.
191. Gamma: Gamma measures how quickly an options delta changes as the stock price moves.
192. Theta: Theta estimates how much option value decays as time passes.
193. Vega: Vega estimates how much an option price changes when implied volatility changes.
194. Open Interest: Open interest is the number of outstanding option contracts that remain open.
195. Covered Call: A covered call sells a call option against shares already owned.
196. Protective Put: A protective put buys put protection for shares already owned.
197. Spread: An options spread combines multiple option legs to shape risk and reward.
198. Straddle: A straddle buys or sells a call and put with the same strike and expiration.
199. Strangle: A strangle uses a call and put with different strikes but the same expiration.
200. Iron Condor: An iron condor is a four-leg options strategy often used for range-bound expectations.