Glossary Terms


401(k)

A tax-advantaged retirement savings plan sponsored by employers, allowing employees to contribute a portion of their salary to the plan.

A/D Line

A technical indicator that shows the cumulative sum of daily advances minus declines in a stock market.

ADR

A certificate representing shares in a foreign stock traded on U.S. exchanges. ADRs make it easier for U.S. investors to invest in foreign companies.

After Hours

Trading activity that occurs after the regular stock market hours (9:30 AM to 4:00 PM Eastern Time).

Alpha

A measure of a stock's performance relative to a market index, indicating the stock's excess return.

Annual Report

A comprehensive report published by a company, providing information on its financial performance and activities over the past year.

Arbitrage

The practice of exploiting price differences in different markets or instruments to make a profit.

Ask

The price at which a seller is willing to sell a security. Also known as the "offer" or "ask price."

Asset Allocation

The distribution of investments across different asset classes, such as stocks, bonds, and cash, to achieve a desired risk-return profile.

Backtesting

Evaluating a trading strategy's performance using historical data to assess how it would have performed in the past.

Bear Market

A market characterized by falling prices and pessimism among investors.

Bear Market

A market characterized by falling prices and pessimism among investors.

Beta

A measure of a stock's volatility in relation to the overall market. A beta greater than 1 indicates higher volatility, while less than 1 suggests lower volatility.

Beta

A measure of a stock's volatility in relation to the overall market. A beta greater than 1 indicates higher volatility, while less than 1 suggests lower volatility.

Bid

The price at which a buyer is willing to purchase a security.

Blue-Chip

Stocks from well-established, financially stable companies with a history of stable earnings and reliable dividends.

Blue-Chip Stocks

Shares in large, well-established, and financially sound companies with a history of stable performance.

Bollinger Bands

A technical analysis tool consisting of a set of trendlines plotted two standard deviations away from a simple moving average.

Bond

A fixed-income investment representing a loan made by an investor to a borrower (typically a government or corporation) in exchange for periodic interest payments and the return of the principal at maturity.

Book Value

The net asset value of a company, calculated by subtracting liabilities from assets and dividing by the number of outstanding shares.

Breakout

A price movement through a resistance level, often signaling a potential upward trend.

Broker

A person or firm that executes buy or sell orders on behalf of clients in exchange for a commission or fee.

Bull Market

A market characterized by rising prices and optimism among investors.

Bull Market

A market characterized by rising prices and optimism among investors.

Buy and Hold

An investment strategy involving buying securities and holding them for the long term, irrespective of short-term market fluctuations.

CAGR

A measure of the mean annual growth rate of an investment over a specified time period, with compounding taken into account.

Call Option

A financial contract giving the holder the right, but not the obligation, to buy a specified amount of an underlying security at a predetermined price within a specified time frame.

Candlestick Chart

A type of financial chart used to represent the price movements of an asset. Each "candlestick" represents a specific time period and shows the open, high, low, and close prices.

Capital Gains

Profits generated from the sale of an investment or asset that has appreciated in value.

Capital Loss

The loss incurred when selling an investment or asset for less than its original purchase price.

Cash Flow

The net amount of cash and cash-equivalents flowing into and out of a business over a specific time period.

Commodities

Physical goods or raw materials traded on commodity exchanges, such as gold, oil, or agricultural products.

Competitive Landscape

The overall structure of an industry and the position of companies within it.

Compound Interest

Interest calculated on the initial principal and the accumulated interest from previous periods.

Contingent Order

An order that is only executed if certain conditions are met, such as a stop-loss or take-profit order.

Convertible Bond

A bond that can be converted into a predetermined number of shares of the issuer's common stock during its term.

Corporate Governance

The system of rules, practices, and processes by which a company is directed and controlled.

Correction

A decline of at least 10% in the price of a financial security from its most recent high.

Cost Basis

The original value of an asset for tax purposes, typically used to calculate capital gains or losses when the asset is sold.

Counterparty Risk

The risk that the other party in a financial transaction may default on its obligations.

Cross-Border Listing

The practice of a company listing its shares on multiple stock exchanges in different countries.

Cross-Cultural Management

The ability to manage effectively in a diverse, cross-cultural environment.

Cryptocurrency

Digital or virtual currencies that use cryptography for security and operate on decentralized networks based on blockchain technology.

Current Ratio

A financial metric that measures a company's ability to cover its short-term liabilities with its short-term assets.

Dark Pool

A private, off-exchange trading platform where large institutional investors can execute large block trades without revealing the details to the public until after the trade is completed.

Day Trading

The practice of buying and selling financial instruments within the same trading day to take advantage of small price movements.

Debt-to-Equity Ratio

A financial ratio indicating the proportion of a company's financing that comes from debt compared to equity.

Derivative

A financial contract whose value is derived from the value of an underlying asset, index, or rate. Examples include options and futures contracts.

Diversification

Spreading investments across different assets or asset classes to reduce risk.

Dividend

A portion of a company's earnings distributed to its shareholders as a reward for holding the stock.

Dividend Aristocrat

A company consistently increasing its dividend payments for at least 25 consecutive years.

Dividend Aristocrat

A company consistently increasing its dividend payments for at least 25 consecutive years.

Dividend Payout Ratio

The percentage of a company's earnings paid out as dividends to shareholders.

Dividend Yield

The annual dividend income of a stock as a percentage of its current market price.

Div Yield

The annual dividend income of a stock as a percentage of its current market price.

DJIA

An index that tracks the performance of 30 large, publicly-owned companies listed on U.S. stock exchanges, often considered a barometer of the U.S. stock market.

Dollar-Cost Averaging

An investment strategy involving regularly investing a fixed amount of money regardless of the asset's price, resulting in the purchase of more shares when prices are low and fewer shares when prices are high.

Dow Jones Industrial Average (DJIA)

An index tracking the performance of 30 large, publicly-owned companies listed on U.S. stock exchanges.

Dow Jones Industrial Average (DJIA)

An index that tracks the performance of 30 large, publicly-owned companies listed on U.S. stock exchanges.

Due Diligence

The process of thoroughly researching and analyzing a potential investment before making a decision.

Earnings Per Share (EPS)

The portion of a company's profit allocated to each outstanding share of common stock

EPS

The portion of a company's profit allocated to each outstanding share of common stock. It serves as an indicator of a company's profitability.

ESG Investing

Environmental, Social, and Governance investing, focusing on companies' impact on the environment, social responsibility, and governance practices.

ESG Investing

Environmental, Social, and Governance investing, focusing on companies' impact on the environment, social responsibility, and governance practices.

Foreign Exchange Risk

The risk that changes in exchange rates can impact the value of an investment denominated in a foreign currency.

FTSE 100

An index representing the 100 largest companies listed on the London Stock Exchange.

FTSE 100

An index that represents the 100 largest companies listed on the London Stock Exchange.

FX Risk

The risk that changes in exchange rates can impact the value of an investment denominated in a foreign currency.

Geographic Revenue Mix

The distribution of a company's revenue across different geographic regions.

Global Corporate Giants

The largest and most influential companies globally with substantial market capitalization and extensive market reach.

Global Economic Indicators

Key metrics impacting the global economy, such as GDP growth, interest rates, and inflation.

Hedging

A strategy used to reduce the risk of adverse price movements in an asset. Commonly used in the context of managing currency and market risks.

Innovation Leader

A company known for innovation and leadership in introducing new products, services, or technologies.

Institutional Ownership

The percentage of a company's outstanding shares held by institutional investors.

IPO

The first sale of stock by a private company to the public, marking its transition to a publicly traded company.

Large-Cap

Stocks with a market capitalization typically between $10 billion and $200 billion, representing some of the largest and most influential companies globally.

LBO

The acquisition of a company using a significant amount of borrowed money, often involving a private equity firm.

Leverage

The use of borrowed capital to increase the size of a trading position, amplifying both potential gains and losses.

Liquidity

The ease with which an asset can be bought or sold in the market without affecting its price. Liquidity is crucial for efficient trading.

Long Position

Buying a security with the expectation that its price will rise, allowing for a profit when the position is closed.

M&A

The consolidation of companies through various financial transactions, such as mergers, acquisitions, or takeovers.

Market Cap

The total value of a company's outstanding shares of stock, calculated by multiplying the current stock price by the number of shares.

Market Capitalization

The total value of a company's outstanding shares, calculated by multiplying the current share price by the total number of shares.

Market Diversification

The practice of spreading investments across different markets and regions to reduce risk.

Market Entry Strategies

Approaches used by companies to enter new markets or expand their presence globally.

Market Leadership

The position of a company as a leader in its industry or market segment.

Market Sentiment

The overall attitude of investors toward a particular security or financial market.

Megacap

A classification for the largest and most valuable companies, typically with market capitalizations exceeding $200 billion.

Nikkei 225

An index tracking the performance of 225 large, publicly-owned companies listed on the Tokyo Stock Exchange.

Nikkei 225

An index that tracks the performance of 225 large, publicly-owned companies listed on the Tokyo Stock Exchange.

Payout Ratio

The percentage of earnings a company pays out to its shareholders in the form of dividends.

P/E Ratio

A valuation ratio calculated by dividing the market price per share by the earnings per share. It helps investors assess the relative value of a stock.

Regulatory Compliance

Adherence to laws, regulations, and industry standards governing a company's operations.

ROE

A financial metric that measures the profitability of a company by calculating the return generated on shareholders' equity.

ROI

A measure of the profitability of an investment, calculated as the gain or loss relative to the initial investment.

Short Position

Selling a security with the expectation that its price will fall, allowing for a profit when the position is closed.

S&P 500

An index measuring the performance of 500 large companies listed on U.S. stock exchanges.

S&P 500

A market-capitalization-weighted index that measures the performance of 500 large companies listed on stock exchanges in the United States.

Volatility

The degree of variation in a trading price series over a specific period. Higher volatility often implies greater risk.

YTD

The period beginning at the start of the current calendar year and continuing up to the present day.



General Trading Terms


ADA

A blockchain platform for the development of decentralized applications and smart contracts.

ADR

The average price range a stock experiences within a specific period, often used to gauge volatility.

AH

Trades that occur after the regular market hours, typically between 4:00 PM and 8:00 PM Eastern Time.

AMM

A decentralized finance (DeFi) algorithmic trading protocol that provides liquidity to decentralized exchanges.

AON

An order that must be executed in its entirety, or not at all.

ATH

The highest historical price reached by a financial asset.

ATL

The lowest historical price reached by a financial asset.

ATM

An option where the strike price is equal to the current market price of the underlying asset.

AUD

The official currency of Australia.

Aussie

Refers to the currency pair involving the Australian Dollar and the U.S. Dollar.

BBL

A quick way to inform others that you will be back later.

B/O

A significant price movement above a certain level of resistance or below a level of support.

BPR

The amount of capital required to open and maintain a particular options position.

BRB

A quick way to inform others that you will be right back.

BTC

The first and most well-known cryptocurrency, often referred to as digital gold.

BTD

A strategy of purchasing an asset when its price experiences a temporary decline.

Cable

Refers to the currency pair involving the British Pound and the U.S. Dollar.

CAD

The official currency of Canada.

Carry

A trading strategy that involves borrowing in a currency with a low-interest rate and investing in a currency with a higher interest rate.

CBOE

The largest options exchange in the U.S., facilitating the trading of options contracts.

CC

A strategy where an investor holds a long position in an asset and sells a call option on the same asset to generate income.

CHF

The official currency of Switzerland.

CP

A brokerage firm providing trading services for equities and options.

DAO

An organization represented by rules encoded as a computer program that is transparent, controlled by the organization members, and not influenced by a central government.

DAS

A trading platform/software used for day trading.

DD

Research and analysis conducted before making an investment decision.

DeFi

A financial system built on blockchain technology that aims to recreate and improve upon traditional financial systems.

DEX

A cryptocurrency exchange that operates without a central authority or intermediary.

DITM

An option with a strike price significantly favorable compared to the current market price of the underlying asset.

D/R

Stocks with the highest average daily price range, indicating higher volatility.

DYOR

Encourages individuals to conduct their own thorough research before making investment decisions.

EOD

The closing time of a trading session.

E/R

The public release of a company's financial performance, including revenue and profit, usually on a quarterly or annual basis.

ETH

A blockchain platform enabling the creation of decentralized applications and smart contracts.

EUR

The official currency of the Eurozone.

FA

Analyzing a security's intrinsic value by examining related economic, financial, and other qualitative and quantitative factors.

FOMO

The fear that others are making profitable investments and one might miss out on potential gains.

FTR

A trading strategy that involves selling after a rapid price increase.

FUD

Negative information or rumors spread to create fear and uncertainty in the market.

FWIW

Used to qualify or emphasize a statement, often when providing information.

FX

The global marketplace for trading national currencies against one another.

FYI

Used to inform someone about a piece of information.

GBP

The official currency of the United Kingdom.

GL

Wishing someone success or good fortune.

G/R

Indicates a stock that was initially above the prior day’s close but has dropped below it.

Green

Indicates an increase in price or account value.

GTFO

A slang expression urging someone to leave or expressing that someone has left.

HF

Wishing someone an enjoyable experience.

HOD

The highest price reached by a security during a particular trading day.

HODL

A term used in the cryptocurrency community to encourage holding onto assets despite market volatility.

IB

A popular brokerage firm providing online trading services.

ICO

A fundraising method for new cryptocurrency projects, similar to an initial public offering (IPO) in the stock market.

ICYMI

Used to draw attention to something important that the reader may have missed.

IDK

Indicates uncertainty or lack of knowledge.

IIRC

Indicates that the following statement is based on the speaker's memory and may not be entirely accurate.

IMHO / IMO

Indicates a personal opinion on a matter.

IOW

Used to rephrase or clarify a statement.

ITM

An option with intrinsic value, meaning the option's strike price is favorable compared to the current market price of the underlying asset.

IV

A measure of the market's expectations for the future volatility of an underlying asset, derived from option prices.

JPY

The official currency of Japan.

Kiwi

Refers to the currency pair involving the New Zealand Dollar and the U.S. Dollar.

KYC

A process used by financial institutions to verify the identity of their customers.

L2

Provides detailed market data, including the best bid and ask prices, for a particular security.

LBB

The lower boundary in a Bollinger Bands chart, indicating potential oversold conditions.

L/F

Refers to stocks issued with a low number of shares, leading to higher volatility.

LITM

Holding a long position in an option that is in the money.

LOD

The lowest price reached by a security during a particular trading day.

LOL

An expression used to convey laughter or amusement.

Loonie

Refers to the currency pair involving the U.S. Dollar and the Canadian Dollar.

LOTM

Holding a long position in an option that is out of the money.

Low Float

Stocks with a limited number of shares available for trading, often resulting in price volatility.

MCP

The midpoint between the national best bid and national best offer for an option.

MM

A financial institution or individual that facilitates the buying and selling of financial instruments.

MOC

An order to buy or sell a security at the closing price, typically entered near the close of the trading day.

NFT

A unique digital asset, often representing ownership of digital or physical items.

NZD

The official currency of New Zealand.

OEX

Options based on the S&P 100 Index.

OI

The total number of outstanding options contracts for a particular security.

OMG

An expression of surprise or shock.

O/N

Refers to positions or trades held overnight.

OTM

An option with no intrinsic value, meaning the option's strike price is not favorable compared to the current market price of the underlying asset.

P2P

A decentralized network where participants interact directly with each other without intermediaries.

Perking Up

Indicates a stock showing signs of upward movement after a period of consolidation.

PH

The final hour of the trading day, often characterized by increased trading activity.

PIP

A standardized unit of movement in the foreign exchange market.

PM

A margin system that bases margin requirements on the overall risk of a portfolio of positions.

POP

The likelihood that a trade will be profitable based on statistical analysis or option pricing models.

PoS

A consensus algorithm used in blockchain networks, where validators are chosen to create new blocks based on the number of coins they hold and are willing to "stake."

PoW

A consensus algorithm used in blockchain networks, where validators (miners) solve complex mathematical problems to validate transactions and create new blocks.

Pre

Trades that occur before the regular market hours, typically between 4:00 AM and 9:30 AM Eastern Time.

PROPS

An informal expression conveying proper acknowledgment or respect.

Red

Indicates that the current price is below the closing price of the previous trading day.

Res

A price level at which a security often faces selling pressure, preventing it from moving higher.

R/G

Indicates a stock that was initially below the prior day’s close but has risen above it.

ROC

A measure of the return generated on invested capital.

ROI

A measure of the profitability of an investment, calculated as the gain or loss relative to the initial investment.

R/R

The ratio of potential profit to potential loss in a trade.

R/S

A corporate action that reduces the number of a company's outstanding shares, increasing the share price proportionally.

SPX

Options based on the S&P 500 Index

S/R

Levels on a chart where the price of an asset might experience a pause in its movement or change direction.

SS or S/S

The sale of a borrowed security with the expectation of buying it back later at a lower price.

SSR

A rule that prevents short selling on a downtick, designed to prevent excessive downward pressure on a stock's price.

STC

Closing out an existing options position by selling the contract.

STD

A strategy where an investor holds a position in both a call and a put option with the same strike price and expiration date.

STO

Opening a position by selling an options contract.

STP

A conditional order to buy or sell an option at a specific price or better.

STT

A strategy where an investor holds a position in both a call and a put option with different strike prices but the same expiration date.

Sup

A price level at which a security often faces buying interest, preventing it from moving lower.

SV

A measure of how the implied volatility of options varies with different strike prices.

T+1

The settlement date for securities transactions that occur on a trade date.

T+2

The settlement date for most securities transactions, occurring two business days after the trade date.

T+3

The settlement date for certain securities transactions, occurring three business days after the trade date.

TA

The analysis of historical price and volume data to forecast future price movements.

TIA

Expressing gratitude for anticipated assistance or information.

TOS

A trading platform owned by TD Ameritrade.

TTM

The remaining time until an options contract expires.

TTYL

A casual way of saying goodbye with the intention of talking again in the future.

TY

Expressing gratitude or appreciation.

UBB

The upper boundary in a Bollinger Bands chart, indicating potential overbought conditions.

USD

The official currency of the United States.

VIX

The CBOE Volatility Index, which measures market expectations for future volatility.

WITM

A warrant where the current market price is higher than the exercise (strike) price.

WOTM

A warrant where the current market price is lower than the exercise (strike) price.

WTB

A trading strategy involving writing options and using the premium received to buy other options.

XSP

Options based on the Mini S&P 500 Index.

XYZ

Used to represent an unknown or generic stock in examples or discussions.

Yen

Refers to the currency pair involving the U.S. Dollar and the Japanese Yen.

Yen

Refers to the currency pair involving the U.S. Dollar and the Japanese Yen.

YW

A polite response to someone expressing gratitude.