Active Investing
A strategy that seeks to outperform the market through security selection and market timing.
After-Hours Trading
The buying and selling of securities outside of standard exchange hours, typically between 4:00 PM and 8:00 PM ET for US markets.
Algorithmic Trading
The use of computer programs to execute trading orders automatically based on pre-set rules governing timing, price, quantity, or mathematical models.
Angel Investor
A high-net-worth individual who invests personal capital in early-stage startups.
Arbitrage
The simultaneous purchase and sale of equivalent assets in different markets to profit from a price discrepancy.
Ask Price
The lowest price at which a seller is willing to sell a security at a given moment.
Backwardation
A futures market condition where the spot price exceeds the futures price, reflecting immediate supply tightness.
Bear Market
A sustained decline of 20% or more in stock prices accompanied by widespread pessimism.
Bear Trap
A false technical signal suggesting further price decline that lures short sellers into positions before prices reverse sharply higher.
Benchmark
A standard index used to measure a portfolio's performance.
Bid-Ask Spread
The difference between the highest price a buyer will pay and the lowest price a seller will accept for a security.
Block Trade
A large securities transaction — typically 10,000 or more shares or $200,000 or more in value — executed privately to avoid moving the market price.
Blue-Chip Stock
Shares of a large, well-established, financially sound company with a long record of reliable performance and often dividend payments.
Bollinger Bands
A volatility indicator consisting of a moving average and two standard deviation bands above and below it, widening during volatile periods and narrowing during calm ones.
Broker
A licensed intermediary who executes securities transactions on behalf of clients in exchange for a fee or commission.
Bull Market
A sustained period of rising stock prices and widespread investor optimism.
Bull Trap
A false breakout above resistance that lures buyers into long positions just before prices reverse lower.
Buy Side
Firms that manage and invest money on behalf of clients, including asset managers, hedge funds, pension funds, and insurance companies.
Candlestick Chart
A price chart that displays a security's open, high, low, and close for each period using rectangular candle shapes, with upper and lower wicks showing price extremes.
Capital Market
A financial market where long-term debt and equity securities are issued and traded.
Circuit Breaker
A regulatory mechanism that temporarily halts trading market-wide when prices fall by specified thresholds, designed to prevent panic-driven crashes.
Clearinghouse
A financial intermediary that interposes itself between buyers and sellers in securities and derivatives markets, becoming the buyer to every seller and the seller to every buyer to eliminate counterparty risk.
Closing Price
The final price at which a security trades during a regular market session, used as the official daily reference price.
Commercial Paper
A short-term unsecured debt instrument issued by corporations to meet near-term working capital needs.
Commodities Market
A marketplace where raw materials and primary goods such as oil, gold, and agricultural products are bought and sold.
Common Stock
The primary class of company ownership shares, granting holders voting rights and a residual claim on assets and earnings after all other obligations are paid.
Consolidated Tape
The real-time electronic feed disseminating last-sale prices and volume for all U.S. equity trades.
Contango
A futures market condition where futures prices exceed the spot price, reflecting carrying costs over time.
Continuous Trading
A market structure where orders are matched and executed throughout the trading session as they arrive, rather than at fixed auction times.
Covered Call
An options strategy where an investor who owns a stock sells call options on it to generate premium income.
Crossing Network
An electronic system that matches large buy and sell orders internally without routing them to public exchanges.
Cyclical Stock
A stock whose performance is closely tied to the economic cycle, rising during expansions and falling during recessions.
Dark Pool
A private trading venue that allows large institutional investors to trade securities without revealing their orders to the public market until after execution.
Day Trading
A trading style in which a trader buys and sells securities within the same trading day, closing all positions before the market closes to avoid overnight risk.
Dead Cat Bounce
A brief, temporary price recovery in a declining asset or market before the downtrend resumes.
Death Cross
A bearish signal when the 50-day moving average crosses below the 200-day moving average.
Defensive Stock
A stock that tends to maintain relatively stable earnings and dividends regardless of the state of the overall economy.
Delisting
The removal of a company's shares from a stock exchange, either voluntarily or for failing listing requirements.
DMA
Technology that lets traders place orders directly on an exchange order book, bypassing a broker's desk.
Dividend Stock
A share of a company that pays regular cash distributions to shareholders, typically from earnings, providing income alongside potential price appreciation.
Dollar-Cost Averaging
Investing a fixed dollar amount at regular intervals regardless of price.
ECN
An automated trading system that matches buy and sell orders directly without a traditional market maker.
Equal-Weight Index
A stock market index that assigns the same percentage weight to every constituent regardless of market capitalization.
Equity Risk Premium
The excess return that investing in stocks is expected to provide over the risk-free rate, compensating investors for the higher risk of equities.
ETF
A pooled investment vehicle that holds a basket of securities and trades on a stock exchange throughout the day like a single share.
Ex-Dividend Date
The cutoff date after which new buyers are not entitled to the next declared dividend.
ETN
An unsecured bank-issued debt security that tracks an index and trades on an exchange, carrying issuer credit risk.
Execution Quality
A measure of how well a broker fills a trade relative to available market prices at time of execution.
Expense Ratio
The annual fee charged by a fund as a percentage of assets.
Factor Investing
A strategy that targets specific return drivers such as value, size, momentum, or quality.
Fat Finger Error
An accidental trading mistake caused by entering incorrect data—such as wrong order size, price, or ticker—into an order entry system.
Fibonacci Retracement
Technical analysis levels derived from the Fibonacci sequence used to identify potential support and resistance.
Fill or Kill
An order type that must be executed immediately and completely at a specified price or better, or it is entirely cancelled with no partial fills allowed.
Financial Market
Any marketplace where buyers and sellers participate in the trade of financial assets.
Flash Crash
A sudden, extreme market price decline occurring within minutes before prices rapidly recover.
Flight to Quality
The movement of investment capital from riskier assets into safer assets — such as U.S. Treasuries, gold, or cash — during periods of financial stress or market uncertainty.
Float
The number of shares of a company's stock that are freely available for public trading, excluding shares held by insiders, executives, and restricted shareholders.
Floor Trader
An exchange member who trades financial instruments directly on the exchange floor for their own account.
Fundamental Analysis
A method of valuing a security by examining the underlying company's financial health, competitive position, and economic environment to estimate intrinsic value.
Futures Market
An exchange where standardized contracts for future delivery of commodities or financial instruments are traded.
Golden Cross
A bullish signal when the 50-day moving average crosses above the 200-day moving average.
GTC Order
A standing trade order that remains active until executed or manually cancelled, typically expiring after 90 days.
Growth Stock
A share of a company expected to grow revenue and earnings significantly faster than the market average, typically trading at elevated valuations.
Hedge Fund
A private pooled investment fund using sophisticated strategies — including short selling, leverage, and derivatives — available only to accredited investors.
HFT
A form of algorithmic trading that uses powerful computers to execute thousands of orders per second, profiting from tiny price discrepancies at extremely high speed.
High-Water Mark
The highest peak value a fund has reached, above which a manager must perform before earning performance fees again.
Index Rebalancing
The periodic adjustment of an index's constituent stocks and their weightings to reflect changes in the market or index rules.
Initial Margin
The minimum amount of capital required to open a leveraged securities or futures position.
IPO
The first time a private company offers its shares to the public on a stock exchange.
Insider Trading
The buying or selling of a company's securities by someone with access to material non-public information about the company, which is illegal in most circumstances.
Institutional Ownership
The percentage of a company's outstanding shares held by institutional investors such as mutual funds, pension funds, and hedge funds.
Intermarket Trading System
A communications network that linked major U.S. stock exchanges to route orders to the best available price.
Internalization
When a broker fills a customer order from its own inventory rather than routing it to an exchange.
Large-Cap
A publicly traded company with a market capitalization generally above $10 billion, representing the largest and most established firms.
Last Sale Price
The price at which a security most recently traded, displayed in real time as the current market reference price.
Level 1 Quotes
Real-time market data showing the best bid, best ask, last sale price, and trading volume for a security.
Level 2 Quotes
Real-time market data showing all pending buy and sell orders across multiple price levels in an exchange's order book.
Leveraged ETF
An exchange-traded fund that uses financial derivatives and debt to amplify the daily returns of an underlying index, typically 2× or 3×.
Limit Order
An order to buy or sell a security at a specified price or better, giving the trader control over execution price but no guarantee of execution.
Listed Company
A public company whose shares are traded on an organized stock exchange, meeting that exchange's listing requirements.
Lit Market
A trading venue where orders are publicly displayed in a visible order book before execution.
Lock Limit
A condition where a futures contract hits its maximum allowable daily price move, effectively halting further trading.
Lock-Up Period
A contractual restriction preventing insiders from selling shares after an IPO, typically lasting 90 to 180 days.
MACD
A momentum indicator showing the relationship between two exponential moving averages of price.
Maker-Taker
An exchange fee model that pays rebates to liquidity providers (makers) who post limit orders and charges fees to liquidity takers who execute against posted orders.
Margin Call
A demand from a broker for an investor to deposit additional funds because a margin account's value has fallen below the required level.
Margin Trading
Buying securities using funds borrowed from a broker, allowing investors to control larger positions than their cash balance alone would permit.
Market Breadth
A measure of how many stocks are participating in a market move, used to gauge the health and sustainability of a trend.
Cap-Weighted Index
An index where each component's weight is proportional to its market capitalization.
Market Close
The end of a regular trading session on a stock exchange, after which no new orders are accepted until the next session.
Correction
A short-term decline of 10–20% in a stock index or asset price from a recent peak.
Market Crash
A sudden, severe decline in stock prices across a broad section of the market, typically 20% or more in a short period.
Market Cycle
The recurring pattern of expansion, peak, contraction, and trough that financial markets move through over time.
Market Depth
The ability of a market to absorb large orders without significantly moving the price.
Market Efficiency
The degree to which asset prices fully and immediately reflect all available information.
Market Impact
The effect that executing a large trade has on the market price of the security being bought or sold, causing the price to move against the trader.
Market Index
A composite measure that tracks the performance of a selected group of stocks representing a market or sector.
Market Liquidity
The ease with which an asset can be bought or sold quickly at a fair price without significantly affecting its market price.
Market Maker
A firm or individual that continuously quotes buy and sell prices for a security, providing liquidity to the market.
Market Microstructure
The study of how trading mechanisms and market design affect price formation and transaction costs.
Market Open
The start of the regular trading session when exchanges begin accepting and executing orders from market participants.
Market Order
An order to buy or sell a security immediately at the best available current price, prioritizing execution speed over price certainty.
Market Sentiment
The overall attitude and emotional disposition of market participants toward a particular security or financial market at a given point in time.
Market Surveillance
The monitoring of trading activity by exchanges and regulators to detect manipulation, fraud, and other illegal practices.
Mean Reversion
The theory that asset prices and financial metrics tend to return toward their long-run historical averages over time.
Mid-Cap
A company with a market capitalization typically between $2 billion and $10 billion, offering a blend of growth potential and relative stability.
Midpoint Price
The average of the best bid and best ask prices, representing a neutral reference price between buyer and seller.
Momentum Investing
A strategy that buys recent outperformers and sells recent underperformers.
Moving Average
A continuously updated average of a security's price over a set lookback period, used to smooth short-term noise and identify trends.
Naked Short Selling
Short selling securities without first borrowing or locating shares to deliver, creating a risk of settlement failure.
NASDAQ
The world's second-largest stock exchange by market capitalization, known for listing technology and growth companies.
NBBO
The best available bid and ask price for a security across all registered U.S. exchanges.
Noise Trader
An investor who makes trading decisions based on sentiment, rumors, or trends rather than fundamental analysis of asset value.
NYSE
The world's largest stock exchange by market capitalization, located on Wall Street in New York City.
Odd Lot
A securities order for fewer than 100 shares, contrasted with a round lot of exactly 100 shares or a multiple thereof.
Open-End Fund
An investment fund that continuously creates and redeems shares at net asset value on demand, with no fixed number of shares outstanding.
Open Interest
The total number of outstanding futures or options contracts that have not been settled, closed, or delivered — a measure of market activity and liquidity.
Opening Bell
The bell rung at 9:30 a.m. ET each weekday signaling the official start of regular trading on US stock exchanges.
Opening Cross
A price-discovery mechanism exchanges use to set the official opening price by matching accumulated orders.
Options Chain
A table listing all available option contracts for a security, organized by expiration and strike price.
Order Book
A real-time list of outstanding buy and sell orders for a security at various price levels.
OTC Market
A decentralized market where securities are traded directly between parties through a dealer network rather than on a formal exchange.
Payment for Order Flow
Compensation that a broker receives from a market maker or wholesale trading firm for routing customer orders to that firm for execution.
Penny Stock
A low-priced stock, typically trading below $5 per share, often for small companies with thin liquidity and limited reporting requirements.
Pink Sheets
An OTC quotation system for stocks not listed on major exchanges, featuring lower regulatory requirements.
Portfolio Turnover
A measure of how frequently a fund's holdings are bought and sold over a given period.
Portfolio
A collection of financial assets held by an investor.
Pre-Market Trading
Stock trading that occurs before the regular market session opens at 9:30 a.m. ET.
Pre-Open Period
The time before official market trading hours when exchanges accept orders for the opening auction.
Preferred Stock
A class of equity with priority over common stock for dividend payments and asset distribution in liquidation, typically without voting rights.
Price Action
A trading methodology that makes decisions based solely on the movement of price on a chart, without relying on lagging technical indicators.
Price Discovery
The process by which market participants interact to determine the fair price of an asset through supply and demand.
Price Improvement
Execution of a trade at a better price than the quoted best bid or offer, resulting in a lower cost for a buyer or higher proceeds for a seller.
Primary Market
The market where new securities are issued and sold for the first time, enabling issuers to raise capital directly from investors.
Prime Broker
A financial institution offering hedge funds integrated services including securities lending, leverage, and custody.
Program Trading
The automated simultaneous purchase or sale of a basket of stocks using computer-driven order systems.
Proprietary Trading
When a financial firm trades securities using its own capital to generate direct profit, not for clients.
Quote Stuffing
A manipulative tactic of flooding exchanges with rapid order entries and cancellations to slow competitors.
Record Date
The date on which a company identifies shareholders eligible to receive a dividend.
Redemption
The repayment of a bond at maturity or the repurchase of fund shares by an investor.
RSI
A momentum oscillator scaled from 0 to 100 that measures the speed and magnitude of recent price changes to identify overbought or oversold conditions.
Repo
A short-term collateralized borrowing arrangement using securities sold with an agreement to repurchase.
Risk Arbitrage
An event-driven strategy that profits from the spread between a target company's stock price and an announced deal price.
Round Lot
The standard trading unit for a security, typically 100 shares for equities listed on major US exchanges.
Secondary Market
The financial marketplace where previously issued securities are bought and sold between investors, as opposed to being purchased directly from the issuing company.
Sector Rotation
An investment strategy of shifting capital between market sectors based on where they are in the economic cycle to capture relative outperformance.
Securities Exchange
A regulated marketplace where buyers and sellers trade stocks, bonds, and other financial instruments.
Securities Lending
The temporary transfer of stocks or bonds to a borrower in exchange for collateral and a lending fee.
Securities
Tradeable financial instruments that represent ownership, a creditor relationship, or rights to ownership, including stocks, bonds, and derivatives.
Sell Side
Firms that facilitate securities transactions and provide research, underwriting, and trading services to investors — including investment banks, broker-dealers, and market makers.
Settlement Date
The date on which a securities transaction is formally completed and ownership is transferred.
Short Interest
The total number of shares sold short and not yet repurchased to close the position.
Short Selling
Borrowing shares to sell at the current price, then repurchasing them later at a lower price to profit from the decline.
Short Squeeze
A rapid price surge in a heavily shorted stock that forces short sellers to buy back shares to cover their positions, amplifying the price move.
Single Stock Futures
Standardized contracts to buy or sell shares of one company at a set price on a future date.
Slippage
The difference between the expected price of a trade and the actual price at which the trade is executed, usually caused by market movement or low liquidity.
Small-Cap
A publicly traded company with a market capitalization typically below $2 billion, characterized by higher growth potential and greater volatility.
Smart Beta
An investment strategy that uses rules-based index construction to target specific return factors — such as value, quality, or low volatility — rather than weighting solely by market cap.
SOR
Automated technology that finds the best execution venue for a trade across multiple markets.
Spoofing
A form of market manipulation where traders place large orders they intend to cancel to create false impressions of demand or supply.
Spread Compression
The narrowing of bid-ask spreads or yield spreads, driven by increased market liquidity or falling risk premiums.
Stock Dilution
The reduction in existing shareholders' ownership percentage and earnings per share that occurs when a company issues additional shares.
Stock Exchange
An organized marketplace where securities such as stocks and bonds are bought and sold between investors.
Stock Market
A network of exchanges where buyers and sellers trade shares of publicly listed companies.
Stock Screening
The process of filtering a universe of stocks using quantitative financial criteria to identify investment candidates.
Stock
A share of ownership in a publicly traded corporation.
Stop-Limit Order
A conditional order that triggers at a stop price and then executes only within a specified limit price range.
Stop-Loss Order
An order that automatically sells a security when its price falls to a specified level, designed to limit an investor's loss on a position.
Stop-Loss
A trade order that automatically sells a security once it reaches a specified price, limiting the holder's downside loss.
Support & Resistance
Price levels at which a stock has historically tended to stop falling (support) or stop rising (resistance) due to concentrated buying or selling pressure.
Swing Trading
A trading strategy holding positions for days to weeks to capture short-to-medium-term price swings.
T+1
The settlement standard requiring US securities trades to be finalized within one business day of the transaction date.
Tape Reading
The practice of analyzing real-time price, volume, and order flow data to infer short-term market direction.
Technical Analysis
A method of evaluating securities by analyzing historical price and volume data to forecast future price movements and identify trading opportunities.
Tick Size
The minimum price increment by which the price of a security can move up or down in a given market.
Time Horizon
The expected length of time an investment will be held.
Trading Halt
A temporary suspension of trading in one or more securities, ordered by an exchange or regulator to allow the market to absorb material information.
Trading Range
The price band between established support and resistance levels within which a security consolidates without a clear directional trend.
Trading Session
The designated hours during which a financial market is open for buying and selling securities.
Trading Volume
The total number of shares or contracts traded for a security during a given period, typically one trading day.
TWAP
The average price of a security calculated over a set time period, used to minimize market impact of large orders.
Underwriting
The process by which an institution evaluates and assumes financial risk on behalf of a client, used in securities issuance, insurance, and lending.
Uptick Rule
A regulation requiring short sales to be executed at a price higher than the last trade price, designed to prevent short sellers from accelerating a stock's decline.
Value Stock
A stock trading below its estimated intrinsic value based on fundamental metrics such as earnings, book value, or cash flow.
VIX
The CBOE Volatility Index, a real-time measure of expected S&P 500 volatility over the next 30 days derived from option prices, often called the fear gauge.
Volatility
A statistical measure of how sharply and rapidly the price of an asset changes over time.
VWAP
The average price of a security weighted by trading volume, used as a benchmark for execution quality.
Warrant
A company-issued derivative giving the holder the right to buy shares at a fixed price before a set expiration date.
Wash Trading
The illegal practice of simultaneously buying and selling the same security to create artificial trading volume or misleading price activity.
Window Dressing
Fund managers buying recent winners near quarter-end to make portfolios look more attractive in reports.