TradeWize · Investing Glossary
The investing terms you'll actually run into.
Plain-English definitions — no jargon, no fluff. Every term is explained in one line, then a little deeper with a real example. When you're ready to use one, each links to the free lesson that teaches it hands-on.
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Abandonment triggerThe specific scenarios in which you would actually break your written plan — surfaced and named in advance so you can defend against them.Account statementThe monthly or quarterly document summarising your account activity, balances, and realized gains.Accounts receivable (A/R)Money customers owe the company for goods or services already delivered but not yet paid.AccrualsAccounting entries that record revenue or expense before cash actually moves.AcquisitionOne company buys another. The bought company's shares are converted to cash, acquirer stock, or a mix at the closing price.Active fundA fund whose manager picks stocks in the hope of beating a benchmark.Active investingPicking individual stocks (or actively-managed funds) instead of just buying the index.AllocationHow your portfolio is split across asset classes (stocks, bonds, cash, alternatives).Allocation driftThe slow movement of your portfolio away from its target mix as market values change.AlternativesInvestments outside the core stocks/bonds/cash mix — REITs, commodities, gold, crypto.AnchoringLetting one earlier number — like the price you paid — drive your judgment about a current decision.Annual reportThe yearly disclosure that includes audited financials, MD&A, and footnotes — the primary source for serious investors.APRAnnual Percentage Rate. The yearly interest cost of a loan, including most fees.Ascending triangleAn ascending triangle is a bullish continuation pattern: a flat horizontal resistance line on top, with a rising trendline of higher lows beneath it. As the higher lows squeeze price against the ceiling, pressure builds — and it usually resolves with a breakout up through the resistance.AskThe lowest price a seller is currently willing to accept.ASMLDutch semiconductor-equipment company that makes the EUV lithography machines every advanced chip is manufactured on — a global monopoly with no US peer.Asset allocationThe mix of stocks, bonds, and cash in a portfolio, expressed as percentages.Asset classA broad category of investment with similar behavior. Stocks, bonds, cash, real estate, commodities.Asset mixThe split of the portfolio across asset classes — stocks, bonds, real estate, commodities, cash.ATR (Average True Range)ATR (Average True Range) measures how much a security typically moves in a period — its volatility — as an average of recent trading ranges. It doesn't say which direction price is heading, only how far it tends to travel, which makes it a core tool for stop-losses and position size.AutomateSet up recurring transfers so investing happens without your willpower.
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BackwardationBackwardation is when futures prices are lower for later delivery dates — the futures curve slopes downward. It often signals tight near-term supply or strong demand for immediate delivery. For futures holders it creates a positive 'roll yield,' as they sell pricier near-term contracts and buy cheaper later ones.Balance sheetThe 'photo' statement — what the company owns, what it owes, and what's left for owners, on a single date.Balanced fundA single fund that holds both stocks and bonds at a fixed ratio, automatically rebalanced.Base rateThe long-run average probability of an event, before you weight any recent evidence.BasisBasis is the difference between an asset's futures price and its current spot (cash) price. It reflects carrying costs, supply and demand, and time to expiry — and it converges to zero as the contract nears expiration, since a future about to settle must match the spot price. Traders watch basis to gauge conditions and to hedge.Bear marketA prolonged market decline, conventionally defined as 20%+ from recent highs.Behavior gapThe difference between a fund's reported return and what its investors actually earned — usually worse.Behaviour gapThe gap between the returns a fund delivers and the returns its actual investors earn.BenchmarkThe reference index a fund compares itself to — e.g. the S&P 500, MSCI World, or Bloomberg Aggregate.BidThe highest price a buyer is currently willing to pay.Bollinger BandsBollinger Bands wrap a price chart in three lines: a middle moving average with an upper and lower band set two standard deviations away. The bands widen when volatility rises and squeeze together when it falls, framing whether price is relatively high or low.BondA loan from you to an issuer (government or company), repaid with interest on a known schedule.Bond ladderA portfolio of bonds with staggered maturities — one matures every year (or every few years) so cash continuously becomes available.Book valueTotal assets minus total liabilities — the accounting net worth of the business.BreakdownA breakdown is when price falls decisively through a support level it had been holding above — the bearish mirror of a breakout. It signals sellers have overwhelmed the buyers defending support, and often triggers a fast move lower as stops and new sellers pile in.BreakevenBreakeven is the price at which a trade shows neither a profit nor a loss — your entry price plus any costs. 'Moving your stop to breakeven' means raising a stop-loss to your entry once the trade moves in your favour, so a winner can no longer turn into a loser.BreakoutA breakout is when price pushes decisively through a level it had been stuck under or above — a resistance ceiling, a support floor, or the edge of a chart pattern. It signals that one side has finally overwhelmed the other, and often kicks off a fast move in the breakout's direction.Broad ETFAn ETF that tracks a wide market index — total US stock market, total international, total bond market.BrokerThe licensed firm you go through to buy and sell investments on an exchange.Brokerage accountThe account you open at a broker to hold your investments.Buy ruleA pre-written condition that has to be true before you allocate new capital — to a sleeve, a position, or the market in general.
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Calendar ruleRebalance on a fixed schedule (e.g. annually) regardless of how far the portfolio has drifted.Call optionA call option is a contract giving the buyer the right — but not the obligation — to buy an asset at a fixed 'strike' price before a set expiry date. Call buyers are betting the price will rise; their risk is capped at the premium paid, while the potential profit is open-ended.CandlestickA candlestick is a single bar on a price chart that shows four prices for one time period — the open, high, low and close. Its body spans the open-to-close range and thin wicks reach to the high and low, so one glance tells you whether buyers or sellers won the period.Capital expenditures (CapEx)Money spent on long-lived assets — buildings, equipment, software, improvements.Capital gainThe profit from selling an investment for more than you paid.Carve-outA parent company sells part of a subsidiary in an IPO, keeping a stake.Cash flow statementThe cash truth — actual cash in and out, split into operating, investing, and financing activities.Cash from financing (CFF)Cash raised from or returned to lenders and shareholders — debt issued or repaid, dividends, buybacks.Cash from investing (CFI)Cash spent on (or received from) long-term investments — capex, acquisitions, securities.Cash from operations (CFO)Cash actually generated by running the business — the most truthful number on the cash flow statement.Cash-secured putA cash-secured put is an options strategy where you sell a put option while setting aside enough cash to buy the stock if you're assigned. You collect the premium as income; in exchange, you agree to buy the stock at the strike if it falls there. It's a way to get paid to buy a stock you want at a lower price.CatalystThe event or condition that will close the valuation gap — and an estimated timeline.CFD (contract for difference)A CFD (contract for difference) is a derivative where you and a broker agree to exchange the difference in an asset's price between opening and closing the trade. You never own the underlying — you simply profit or lose on the price move, with leverage. CFDs cover stocks, indexes, commodities and crypto, and are popular outside the US, where they're banned.ChargebackA consumer protection on credit-card transactions that lets you reverse fraudulent charges.Chart patternA chart pattern is a recognisable shape that price forms on a chart — like a triangle, head and shoulders, or double top — that traders use to anticipate the next move. Patterns are grouped into continuation (the trend resumes) and reversal (the trend turns) types.Circle of competenceThe set of industries, business models, and types of companies you actually understand well enough to evaluate.Circuit breakerAn automatic trading halt that fires when the broad market falls past a threshold.CommissionThe per-trade fee some brokers charge to execute an order.CommodityA raw physical good like gold, oil, wheat, or copper — priced by the ounce, barrel, or bushel.CompoundingWhen your returns earn returns of their own, so money grows faster the longer it's invested.Concentration riskThe risk that one position, sector, or country represents enough of the portfolio that a single bad outcome dominates returns.Confirmation biasReading the things that agree with you and ignoring the things that don't.ContangoContango is when futures prices are higher for later delivery dates — the futures curve slopes upward. It usually reflects the costs of storing and financing an asset until delivery. Contango creates a 'roll cost' for anyone holding futures over time, as they repeatedly sell cheaper near-term contracts and buy pricier later ones.ConvictionHow strong your evidence is for a thesis — and therefore how much capital it earns.Core-and-satelliteA portfolio structure where most of your money sits in a 'core' diversified base, with smaller 'satellite' bets around the edges.Corporate actionAny event initiated by a company that changes its securities or distributes value to holders.CorrelationHow tightly two investments tend to move together, measured from +1 (identical moves) to −1 (opposite moves).Correlation trapThe phenomenon where assets that look uncorrelated in calm markets all crash together in a crisis.Cost basisWhat you originally paid for a holding, used to calculate gains and losses when you eventually sell.Cost of goods sold (COGS)The direct cost of producing whatever was sold — materials, direct labor, manufacturing overhead.CouponThe fixed interest payment a bond issuer promises, usually expressed as an annual percentage of face value.Covered callA covered call is an options strategy where you own 100 shares of a stock and sell a call option against them. You collect the premium as income; in exchange, you cap your upside at the strike. It's a popular way to generate income on shares you're happy to hold or sell.Creation/redemptionThe mechanism that keeps ETF prices close to NAV. Authorized participants swap baskets of underlying stocks for ETF shares (or vice versa).CryptocurrencyDigital assets recorded on a blockchain — Bitcoin, Ethereum, etc. Highly volatile and not backed by cash flows or governments.Cup and handleA cup and handle is a bullish continuation pattern: a rounded, U-shaped 'cup' where price dips and recovers to its old high, followed by a small pullback (the 'handle') near the rim. A breakout above the rim signals the uptrend resuming, with a target projected from the cup's depth.Currency hedgingAn overlay used by some international ETFs to remove the effect of currency moves, so you get the foreign stock return in your home currency.Current assetsCash, receivables, inventory, and other assets the company expects to convert to cash within a year.Current liabilitiesBills the company has to pay within a year — accounts payable, short-term debt, accrued expenses.Current ratioCurrent assets ÷ current liabilities. Above 1 means the company can cover next year's bills from current assets.Customer supportThe broker's ability to actually help when something goes wrong.
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DCF (discounted cash flow)Estimate intrinsic value by adding up the present value of every future cash flow the business produces.Deal spreadThe gap between the announced deal price and the live market price of the target's stock.Death crossA death cross is a bearish signal that occurs when a shorter-term moving average — usually the 50-day — crosses down through a longer-term one, usually the 200-day. It's widely watched as a warning that a lasting downtrend may be taking hold.Decision journalA pre-trade written record of your thesis, sizing, and what would change your mind.Declaration dateThe date the company's board formally announces the dividend.DefaultWhen a borrower fails to make a scheduled payment on a debt — a missed coupon, or failure to return principal at maturity.Default actionWhat your broker will do on your behalf if you take no action by a corporate-action deadline.Default riskThe risk that a bond issuer fails to make a payment on time.DeltaDelta measures how much an option's price moves for each $1 change in the underlying. A delta of 0.60 means the option gains about $0.60 if the stock rises $1. It ranges from 0 to 1 for calls (0 to −1 for puts) and doubles as a rough probability the option finishes in the money.Depreciation & amortization (D&A)Non-cash accounting charge that spreads the cost of long-lived assets over their useful life.DerivativeA derivative is a financial contract whose value comes from — is 'derived' from — the price of an underlying asset like a stock, index, commodity, or currency. Options, futures, and swaps are all derivatives. They let traders speculate on or hedge against price moves without owning the underlying directly.Descending triangleA descending triangle is a bearish continuation pattern: a flat horizontal support line on the bottom, with a falling trendline of lower highs above it. As the lower highs press price down against the floor, pressure builds — and it usually resolves with a breakdown through the support.Developed markets (DM)The world's mature, high-income economies outside the US — Western Europe, Japan, Canada, Australia, the UK.DilutionYour ownership percentage shrinks because the company issued more shares.Discount rateThe annual rate used to translate future dollars back into today's dollars in a DCF.Disposition effectSelling winners too early to lock in gains and holding losers too long to avoid realizing the loss.DistributionThe income a fund pays out to its shareholders — dividends from stocks held, plus realized capital gains.DivergenceDivergence is when price and a momentum indicator move in opposite directions — for example, price makes a higher high while the indicator makes a lower high. It signals that the momentum behind a move is weakening, often warning of a reversal before price turns.DiversificationHolding many different investments so no single one can sink you.DividendA cash payment a company makes to shareholders — usually quarterly — out of its profits.Dividend aristocratAn S&P 500 company that has raised its dividend for at least 25 consecutive years.Dividend coverage ratioHow many times earnings (or free cash flow) cover the dividend — the inverse of the payout ratio.Dividend cutWhen a company reduces or suspends its dividend, usually because earnings or cash flow can no longer cover it.Dividend trapA stock that lures investors with a high yield it can't sustain — and then cuts it.Dividend yieldAnnual dividend per share ÷ share price. The cash income the stock pays out as a percentage of price.Do-nothing ruleAn explicit commitment to NOT trade in response to specific common triggers (single headlines, short-term volatility, peer envy).DojiA doji is a candlestick with almost no body — its open and close are nearly equal — leaving a cross or plus shape with wicks on either side. It signals indecision: buyers and sellers fought to a standstill. After a strong trend, a doji can warn that momentum is stalling.Dollar-cost averagingInvesting a fixed amount on a fixed schedule, regardless of market level.Double bottomA double bottom is a bullish reversal pattern that forms after a downtrend: price falls to a low, bounces, then falls to roughly the same low a second time and holds. The two troughs look like a 'W'. A close above the bounce high between them (the neckline) confirms the reversal up.Double topA double top is a bearish reversal pattern that forms after an uptrend: price rallies to a high, pulls back, then rallies to roughly the same high a second time and fails. The two peaks look like an 'M'. A close below the pullback low between them (the neckline) confirms the reversal.DowntrendA downtrend is a market moving generally lower over time, defined by a staircase of lower highs and lower lows — each rally peaks below the last, and each decline bottoms below the previous one. It stays intact until price makes a higher high.DrawdownThe peak-to-trough fall in an investment's value before it recovers.DriftThe gradual shift in your portfolio's mix as some assets grow faster than others.DRIPDividend Reinvestment Plan — automatically uses cash dividends to buy more shares of the same company.DurationA measure of how much a bond's price moves when interest rates change. Longer duration = more price sensitivity.
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Earnings per share (EPS)Net income ÷ shares outstanding. The 'per-share slice' of the company's profit.EBITDAEarnings before interest, taxes, depreciation, and amortization — operating income plus non-cash D&A.Economic moatA durable advantage that lets a business defend high returns against competitors over time.EDGARThe SEC's free public database where US-listed companies file their 10-Ks, 10-Qs, 8-Ks, and other disclosures.EdgeWhatever it is about you that gives this pick a chance to outperform — information, time, temperament, or focus.Emergency fundCash reserved for unexpected expenses, usually 3–6 months of your usual spending.Emerging markets (EM)Stock markets in faster-growing, less mature economies — China, India, Brazil, Taiwan, South Korea, Mexico, etc.Employer matchFree money from an employer that matches part of what you contribute to a workplace retirement plan.Enterprise value (EV)Market cap + total debt − cash. The 'takeover price' of the whole business, regardless of how it's financed.EquityOwnership in something. For a company, it's what's left after all debts are paid — split across all shareholders.ETFExchange-Traded Fund — a basket of many stocks (or bonds) bundled into a single share that trades on an exchange like a regular stock.EV/EBITDAEnterprise value ÷ EBITDA. A 'capital-structure-neutral' multiple for comparing businesses across leverage levels.Ex-dividend dateThe ex-dividend date (or 'ex-date') — the first trading day on which buyers no longer get the upcoming dividend.ExchangeWhere buyers and sellers of the same stock meet to trade.Exercise & assignmentExercise is when an option holder uses their right to buy (call) or sell (put) the underlying at the strike; assignment is when the option seller is chosen to fulfil that obligation. Exercise is the buyer's action; assignment is what happens to the seller on the other side of it.Expense ratioThe annual percentage of assets a fund charges to cover management and operations.Expiration (options)Expiration is the date an option contract ends. After it, the option ceases to exist — it's either exercised (if it has value) or expires worthless. Because options are wasting assets, their time value erodes as expiration approaches, a decay that accelerates in the final weeks.
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Face valueThe amount the bond issuer promises to repay at maturity. Also called par value.Fee dragThe cumulative effect of every fee you pay on the return you actually keep.FlagA flag is a short-term continuation pattern: a sharp, near-vertical price move (the 'pole') followed by a small, tidy consolidation that drifts against the trend in a narrow parallel channel (the 'flag'). It usually breaks out in the pole's direction, resuming the move.FOMO buyingFear of missing out — piling into something after it has already run, because everyone else seems to be winning.Forward P/EP/E using next-12-month earnings forecasts in the denominator instead of trailing earnings.Free cash flow (FCF)Cash from operations minus capital expenditures — the cash actually available to shareholders or debt holders.Fund shortlistA small set of candidate funds you've pre-screened against your criteria and are ready to allocate between.Funding rateThe funding rate is a periodic payment exchanged between the long and short holders of a perpetual future, used to keep the perp's price tethered to the spot price. When the perp trades above spot, longs pay shorts (and vice versa), nudging the price back in line. It's the mechanism that replaces an expiry date.Futures contractA futures contract is a standardized agreement to buy or sell an asset at a set price on a set future date. Unlike an option, both sides are obligated to transact. Futures are used to hedge or speculate on commodities, indexes, currencies and rates — with leverage and a linear, symmetric payoff.FX feeThe markup applied when your broker converts your home currency to the currency of a foreign stock.FX markupThe gap between the true (mid-market) exchange rate and the rate your broker gives you.
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GammaGamma measures how fast an option's delta changes as the underlying moves — the 'acceleration' of an option's price. High gamma means the delta shifts quickly. Gamma is highest for at-the-money options near expiry, and it drives the fast, whippy moves in short-dated options.GapA gap is a jump on a price chart where a candle opens well above or below the previous candle's close, leaving an empty space with no trading in between. Gaps usually form on news released while the market was closed, and often act as support, resistance, or a target price will 'fill' later.GARP — growth at a reasonable priceA style that pays for growth, but not at any price — looks for moderate multiples on above-average growth.Glide pathA planned shift in allocation over time — typically moving from stocks toward bonds as retirement approaches.Golden crossA golden cross is a bullish signal that occurs when a shorter-term moving average — usually the 50-day — crosses up through a longer-term one, usually the 200-day. It's widely watched as a sign that a lasting uptrend may be taking hold.Gross marginGross profit as a percentage of revenue — how much of every dollar of revenue survives direct costs.Gross profitRevenue minus COGS — what's left after the direct cost of producing the product.Growth stockA stock priced for above-average revenue or earnings growth — typically high multiples and reinvesting cash.
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Head and shouldersHead and shoulders is a classic reversal pattern that marks the end of an uptrend. It forms three peaks — a higher middle peak (the head) flanked by two lower peaks (the shoulders) — sitting on a support line called the neckline. A close below the neckline signals a likely reversal down.Headline noiseThe constant churn of financial news that moves prices intraday but is irrelevant to a multi-decade investor.HedgeAn asset held specifically because it tends to rise (or at least not fall) when something else in the portfolio falls.Hedge fundA loosely regulated investment fund that uses leverage, shorting, and complex strategies to seek returns uncorrelated with the broader market.HerdingDoing what everyone else is doing because everyone else is doing it.High-yield (HY) / Junk bondCorporate bonds rated below investment grade — companies with material default risk that pay much higher coupons to compensate.High-yield savings accountA bank account that pays meaningfully more interest than a standard checking account.HorizonHow long until you need the money.
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Implied volatilityImplied volatility (IV) is the market's forecast of how much a stock will move, backed out from option prices. High IV means expensive options and an expected big move; low IV means cheap options and expected calm. IV rises with fear and uncertainty, and it drives the time-value portion of every premium.Inactivity feeA fee charged if you don't trade enough times per year.Income statementThe 'movie' statement — what came in (revenue), what was spent (costs), and what was left as profit, over a period.Index fundA fund that passively holds every stock in a named benchmark (S&P 500, MSCI World, etc.) in proportion.InflationThe gradual loss of purchasing power over time. $100 buys less each year.Interest rateThe cost of borrowing money, or the reward for lending it, expressed as a percentage.Interest-rate riskThe risk that rising interest rates push existing bond prices down, forcing a holder who sells before maturity to take a loss.Intrinsic valueWhat a business is worth based on the cash it can produce, independent of today's market price.InvalidationWhat would have to happen for you to admit the thesis is wrong and exit.InventoryGoods the company has made or bought but not yet sold.Investment Policy Statement (IPS)A written one-page document stating your time horizon, target allocation, position limits, rebalancing rule, and crash behaviour.Investment scamAny pitch or scheme designed to take your money without delivering real investment services.Investment-grade (IG)Corporate bonds rated BBB- or better — issuers strong enough that default is rare but not impossible.Investor protection schemeA legally-mandated fund that reimburses retail clients (up to a cap) if a regulated broker fails.IPOInitial Public Offering — the first time a company sells shares to the public.Iron condorAn iron condor is an options strategy that sells an out-of-the-money put spread and an out-of-the-money call spread at the same time. It collects premium and profits if the price stays within a range, with a defined maximum loss on either wing. It's a bet that the market won't move much.
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Lazy portfolioA pre-defined simple portfolio recipe that requires no ongoing decision-making.LEAPSLEAPS (Long-Term Equity Anticipation Securities) are options with expirations far in the future — typically more than a year out, up to about three years. They let traders take a long-term, leveraged position on a stock for a fraction of the capital, while time decay works far more slowly than on short-dated options.LeverageLeverage is using borrowed money — or a small deposit that controls a much larger position — to amplify returns. A 10× leveraged position gains, or loses, ten times as much as the underlying move. It magnifies both profits and losses, and is the double-edged core of futures and margin trading.Life eventA real-life change (job change, marriage, child, medical, large planned spend) that legitimately justifies revisiting the plan.Lifestyle creepThe pattern where spending rises to match every raise, so saving never increases.Limit orderBuy only at $X or better — price-protected, but may not fill.LiquidityHow quickly and cheaply you can turn an investment into spendable cash.Loss aversionFeeling losses about twice as strongly as equivalent gains — leading you to hold losers far too long.Lump sumInvesting a large amount all at once instead of spreading it over time.
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MACDMACD (Moving Average Convergence Divergence) is a momentum indicator built from two moving averages. It plots the gap between a fast and a slow average as the MACD line, adds a smoothed 'signal' line, and shows the difference between them as a histogram — flagging shifts in trend strength and direction.Maintenance marginMaintenance margin is the minimum equity a leveraged account must keep to hold a position open — lower than the initial margin needed to open it. If losses erode equity below the maintenance level, a margin call is triggered. It's the safety buffer the exchange requires against a position moving too far offside.MarginMargin is the deposit a trader must post to open a leveraged position — a fraction of the position's full value, held as collateral. It's what makes leverage possible: a small margin controls a large notional. Margin is not a down payment but a good-faith performance bond against potential losses.Margin callA margin call is a broker's demand for more funds when a leveraged account's equity falls below the required maintenance margin, usually after losses. The trader must deposit cash or the broker closes ('liquidates') positions — often at a bad price. It's the mechanism that forces losing leveraged traders out.Margin of safetyThe discount you demand below your fair-value estimate, so you can be wrong and still not lose.Mark-to-marketMark-to-market is the daily process of revaluing an open position at the current market price and settling the gain or loss into the trader's account. In futures, profits and losses are credited or debited every day — not just when the position closes — which keeps leverage safe for the exchange and drives margin calls.Market orderBuy (or sell) now at whatever the ask (or bid) is.Market priceWhat buyers and sellers are agreeing on right now — the last printed trade.Market timingTrying to buy near lows and sell near highs — which almost nobody does reliably.MaturityThe date a bond's face value is repaid and the loan ends. Can be months, years, or decades away.Mean reversionThe tendency of valuations and margins to return to long-run averages over time.MergerTwo companies legally combine into one new entity, usually with shareholders of both receiving stock in the combined firm.MomentumMomentum measures the speed and strength of a price move — how fast price is changing, rather than its level. Strong momentum means a trend is accelerating; fading momentum warns it's losing steam, often before price itself turns. It's the force behind 'the trend is your friend.'Money market fundA fund that holds very short-term, high-quality debt (like T-bills) and aims to stay stable at a $1 share price.MoneynessMoneyness describes where an option's strike sits relative to the current price of the underlying: 'in the money' (has intrinsic value), 'at the money' (strike near the price), or 'out of the money' (no intrinsic value yet). It's the quick shorthand for how likely — and how expensive — an option is.Moving averageA moving average smooths a jumpy price into one flowing line by continuously averaging the last N closing prices. It strips out the noise so the underlying trend — up, down or sideways — is easier to see, and it often acts as a moving line of support or resistance.Moving average crossoverA moving average crossover is a signal that fires when a shorter moving average crosses through a longer one. The short crossing above the long is bullish; crossing below is bearish. It's one of the simplest, most-used ways to flag a shift in trend.Mutual fundA pooled fund priced once per day at its net asset value. Shares bought and sold directly with the fund company.
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Narrative biasBelieving the better story over the better data.Net asset valueNAV — the fair value of one fund share, computed from the underlying holdings.Net incomeThe bottom line — what's left after everything (costs, OpEx, interest, taxes) is subtracted.Net marginNet income as a percentage of revenue — final profit per dollar of sales.Net worthEverything you own minus everything you owe.New-money rebalancingBringing the portfolio back to target by directing new contributions into underweight sleeves, rather than selling overweight ones.Nominal returnThe headline return, before inflation is subtracted. What the portfolio says on paper.Notional valueNotional value is the total value of a leveraged position — the full amount you're exposed to, not the margin you posted. It's the contract size multiplied by the current price. Your gains and losses are calculated on the notional value, which is why it, not your margin, measures your true risk.
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Open interestOpen interest is the total number of option (or futures) contracts currently open — created but not yet closed or expired. Unlike volume (contracts traded today), open interest counts contracts that actually exist, making it a gauge of how much real, committed money sits at a strike.Opening auctionA single pre-market batch where pent-up orders accumulate and then cross to set the day's opening price.Operating expenses (OpEx)Costs of running the business that aren't directly tied to making the product — sales, marketing, R&D, general & admin.Operating incomeGross profit minus operating expenses — profit from the core business, before interest and taxes.Operating marginOperating income as a percentage of revenue — how much survives all operating costs.Opportunity costThe value of what you give up when you choose one option over another.Option chainAn option chain is the table brokers display of all the options available on a stock — every strike and expiration, with calls on one side and puts on the other, showing prices (bid/ask), volume, and open interest. It's the menu options traders read to choose a contract.Option premiumThe premium is the price a buyer pays for an option — its cost. It has two parts: intrinsic value (how far in the money the option is) and time value (the extra worth of the time left before expiry). Sellers collect the premium in exchange for taking on the option's obligation.Order bookThe running list of every bid (offer to buy) and ask (offer to sell) waiting at an exchange, sorted by price.OverboughtOverbought describes a market that has risen far and fast enough that a momentum indicator flags it as stretched — for example, RSI above 70. It suggests price may be due for a pause or pullback, but in a strong trend a market can stay overbought for a long time.OverconfidenceMistaking a few lucky trades for skill, then sizing up the next one.OversoldOversold describes a market that has fallen far and fast enough that a momentum indicator flags it as stretched — for example, RSI below 30. It suggests price may be due for a bounce, but in a strong downtrend a market can stay oversold for a long time.
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P/B ratio (price-to-book)Market cap ÷ book value of equity. What you're paying for a dollar of accounting net worth.P/S ratio (price-to-sales)Market cap ÷ revenue. What you're paying per dollar of sales the company brings in.Panic sellingDumping investments into a drawdown because the pain of watching feels worse than the pain of missing the rebound.Passive fundA fund that holds the benchmark it's tracking — no stock picking.Pay dateThe date the cash actually lands in your brokerage account.Payout ratioThe share of profit a company pays out as dividends — dividends ÷ earnings (or ÷ free cash flow).PEG ratioP/E ÷ expected earnings growth rate. A way to ask 'how much am I paying per point of growth?'PennantA pennant is a short-term continuation pattern: a sharp price move (the 'pole') followed by a small converging triangle where price coils into an ever-tighter range before breaking out in the pole's direction. It's a flag's close cousin, differing only in the shape of the pause.Permanent lossLoss that does not come back — a stock that goes to zero, or a portfolio sold at the bottom and never reinvested.Perpetual futuresA perpetual future ('perp') is a futures contract with no expiry date — it can be held indefinitely. To keep its price anchored to the spot market without a settlement date, it uses a periodic 'funding rate' payment between longs and shorts. Perpetuals are the dominant instrument in crypto derivatives trading.PhishingFake emails, SMS, or messages impersonating your broker to steal your login or money.Pivot pointA pivot point is a calculated price level, based on the previous period's high, low and close, that traders use to gauge intraday direction. Around it sit support and resistance levels (S1, R1, and so on). Price above the pivot is read as bullish for the day; below it, bearish.Platform feeA recurring monthly or quarterly fee some brokers charge just for holding an account.Ponzi schemeA scam that pays 'returns' to early investors using deposits from later ones, until the flow of new money stops.PortfolioThe combined collection of investments you own across one or more accounts.Position sizeThe fraction of the total portfolio invested in a single holding.Position sizingHow much of your portfolio you put into a single pick.Premium/discountHow far an ETF's trading price is above (premium) or below (discount) its net asset value.Present value (PV)What a future amount of money is worth today, after applying the discount rate.Price actionPrice action is the study of a security's raw price movement itself — the candlesticks, swings, support and resistance — without relying on lagging indicators. Price-action traders read the chart's structure and candle patterns directly to judge who's in control and what's likely next.Price discoveryThe process by which the market figures out what a stock is currently worth.Price-to-earnings (P/E) ratioHow many dollars you pay per dollar of annual earnings — written as 'NN×'.Primary marketWhere a company raises money by issuing new shares. Cash flows to the company.Private equity (PE)Investment in companies that are not listed on public stock exchanges — typically through a fund that buys, restructures, and sells private businesses.Property, plant & equipment (PP&E)Long-lived physical assets — buildings, machinery, vehicles — sitting on the balance sheet at cost minus accumulated depreciation.ProspectusThe legal document that describes a fund — its strategy, fees, risks, holdings, and tax treatment.Protection capThe maximum amount the investor-protection scheme will reimburse per client per broker failure.PullbackA pullback is a temporary, counter-trend dip within an ongoing trend — a pause where price retraces part of its last move before the trend resumes. In an uptrend it's a dip buyers often use as a lower-risk entry; the trend structure stays intact as long as the pullback holds.Pump and dumpCoordinated promotion of a thinly-traded stock or crypto to drive the price up, followed by the promoters selling while retail buyers are still piling in.Purchasing powerWhat your money can actually buy, adjusted for price changes.Put optionA put option is a contract giving the buyer the right — but not the obligation — to sell an asset at a fixed 'strike' price before a set expiry. Put buyers profit when the price falls; their risk is capped at the premium paid. Puts are used to bet on declines or to insure a portfolio.
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Range (consolidation)A range, or consolidation, is a period where price moves sideways between a horizontal support floor and a resistance ceiling instead of trending. Buyers and sellers are in rough balance, so price oscillates in a band — often a pause that later resolves into a breakout.Real assetA physical asset with intrinsic value — property, commodities, infrastructure, farmland.Real returnYour return after subtracting inflation. The true change in your purchasing power.Realized gainThe profit (or loss) on positions you've actually sold, as opposed to paper gains on positions you still hold.Realty Income (O)A US REIT that owns ~15,000 single-tenant retail properties and is famous for paying a monthly dividend that has grown for over 25 years.RebalanceSelling some of what's grown most and buying more of what's grown least to return the portfolio to its target weights.RebalancingPeriodically bringing your allocation back to target as market moves push it off.Rebalancing premiumThe small return boost a disciplined rebalancer earns over a buy-and-drift portfolio, by systematically selling high and buying low.Recency biasTreating the recent past as if it will continue, leading you to chase whatever just performed well.Record dateThe date the company checks its register to confirm who is on it.RecoveryThe time it takes a portfolio to climb back to its previous peak after a drawdown.RectangleA rectangle is a consolidation pattern where price bounces between horizontal support and resistance, forming a clear box on the chart. It marks a pause where buyers and sellers are balanced; it usually resolves as a continuation — breaking out in the direction of the prior trend — but can reverse.RegionA geographic grouping of equity exposure — US, developed-ex-US, emerging markets, etc.RegulatorThe national authority that licenses brokers and enforces investor-protection rules.Regulator checkLooking up a broker or advisor on the national regulator's public register before sending money.REITA Real Estate Investment Trust — a company that owns income-producing real estate and trades on a stock exchange.Retained earningsCumulative net income kept in the business, not paid out as dividends — sits in shareholders' equity.RetestA retest is when price returns to a level it just broke through — a former resistance or support — to test whether that level now holds in its new role. A successful retest (the level holds) confirms the breakout and often offers a lower-risk entry than chasing the initial break.Retirement wrapperA tax-advantaged account type dedicated to long-term retirement savings.ReturnThe percentage change in the value of an investment over a period, usually a year.RevenueThe top line — money the business earned from its primary activity over the period (also called sales).Reverse splitA split run in the opposite direction — fewer shares, higher per-share price.Review cadenceHow often you sit down and look at the portfolio with intent — typically annual or semi-annual, deliberately not more.Rights issueExisting holders receive the right to buy more shares at a discount, by a deadline.Risk capacityYour financial ability to absorb losses without derailing your life.Risk premiumThe extra return investors demand for taking on risk, over and above what cash pays.Risk profileA label describing an investor's combined tolerance, capacity, and horizon — e.g. Conservative, Balanced, Growth, Aggressive.Risk toleranceYour willingness to accept losses in exchange for the chance of higher returns.Risk-reward ratioThe risk-reward ratio compares how much you stand to lose on a trade against how much you stand to gain — the distance from entry to your stop-loss versus the distance to your target. A 1:3 ratio risks $1 to make $3. It's the core math of whether a trade is worth taking.RolloverRollover (or 'rolling') is closing a futures position in an expiring contract and reopening it in a later-dated one, to keep your exposure past the near contract's expiry. Because futures contracts expire, any trader holding them long-term must roll — and the price gap between contracts (contango or backwardation) makes rolling cost or earn money.Round-tripThe full cost of buying and then selling a position — commission + spread + FX, both sides.RSI (Relative Strength Index)The RSI is a momentum oscillator that scores recent price strength from 0 to 100. Readings above 70 flag a market as 'overbought' — it has risen fast and may be stretched — while readings below 30 flag 'oversold.' It measures the speed of a move, not its direction.
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Satellite sleeveA small portion of your portfolio (usually 5–15%) reserved for active picks, with the rest indexed.Savings rateThe share of your income you don't spend. Usually expressed as a percentage.Scheduled contributionAn automatic, recurring deposit from a funding source into your investment account.Secondary marketWhere investors trade existing shares with each other. Cash flows between investors, not to the company.SectorAn industry grouping inside the equity universe — tech, financials, healthcare, energy, consumer staples, etc.Secular changeA long-term, structural shift in an industry — technology, regulation, demographics — not a cyclical wobble.Sell rulePre-committed conditions under which you'll exit a position — written before you buy.Sequence of returnsThe order in which your returns arrive matters — big early losses hurt more than late ones.Sequence-of-returns riskThe danger that bad market years hit right when you start withdrawing — permanently damaging a portfolio.Set and forgetAn investing approach where setup happens once and ongoing decisions are minimal or zero.SettlementThe delay between placing a trade and the money + shares actually changing hands.Share buybackA company buying its own shares back on the secondary market.Share registerThe company's official list of who owns its shares on a given date.ShareholderAnyone who owns a share. The company communicates corporate actions to you because of this.Single-stock riskThe risk that one company you own goes to zero or close to it — independent of the broader market.SlippageWhen your order fills at a worse price than you expected because the order was big enough to eat through the best levels.Social engineeringManipulating someone into giving up access, credentials, or money through psychological tactics rather than technical hacking.Sovereign bondA bond issued by a government — you are lending money to a country in exchange for interest.Special dividendA one-off, larger-than-usual cash dividend, often funded by a windfall.Spin-offA parent company distributes the shares of a subsidiary to existing holders, creating a separate listed company.SpreadThe gap between the best bid and the best ask.Stochastic oscillatorThe stochastic oscillator is a momentum indicator that measures where the current close sits within its recent high-low range, on a 0–100 scale. Readings above 80 are considered overbought and below 20 oversold. It's especially suited to range-bound markets.StockA unit of ownership in a company, also called a share. Entitles the holder to a proportional slice of profits and assets.Stock dividendExtra shares distributed to existing holders instead of cash.Stock splitThe company increases its share count by a fixed ratio while the per-share price drops by the same ratio.Stop-limit orderA protective order that triggers a limit order when the price reaches a threshold.Stop-lossA stop-loss is a preset order that automatically closes a trade once price hits a chosen level, capping the loss. It's the single most important risk-management tool: it turns an open-ended 'how much could I lose?' into a fixed amount decided before the trade.StraddleA straddle is an options strategy that buys both a call and a put at the same strike and expiry. It profits from a big move in either direction — up or down — and loses if the price sits still. It's a bet on volatility itself, not on direction.Strike priceThe strike price is the fixed price at which an option lets its holder buy (for a call) or sell (for a put) the underlying asset. It's the reference point that determines whether an option has value — the relationship between the strike and the market price is what makes an option profitable or worthless.Sunk-costLetting money you've already spent or lost dictate your next decision.Support and resistanceSupport is a price level where a falling market tends to stop and bounce because buyers step in; resistance is a level where a rising market tends to stall as sellers take over. Together they mark the floor and ceiling a chart keeps respecting.Swing high / swing lowA swing high is a peak on the chart where price turned down after a rise; a swing low is a trough where price turned up after a fall. These turning points are the skeleton of market structure — trends, trendlines, support and resistance are all built by connecting swing highs and lows.Symmetrical triangleA symmetrical triangle is a consolidation pattern where price coils between a falling line of lower highs and a rising line of higher lows, converging toward a point. It's neutral — a coiled spring that usually breaks in the direction of the prior trend, but doesn't reveal which way until it does.System 1The fast, automatic, emotional part of the brain that reacts before you can think.
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Tail riskThe risk of rare, extreme outcomes that sit far in the tails of the return distribution — events that 'shouldn't happen but do'.Take-profitA take-profit is a preset order that automatically closes a trade once price reaches a chosen profit target. It's the mirror of a stop-loss — locking in a gain at a level decided in advance, so a winning trade is booked rather than given back.Target allocationThe intended weights of each asset class, sector, or position in your portfolio — the shape you set on a calm day.Target-date fundA single fund that automatically rebalances and gets more conservative as you approach a target retirement year.Tax dragThe return reduction from realising taxable gains when you sell winners to rebalance.Tender offerA public offer to buy your shares at a stated price by a stated date.ThesisA written statement of why you believe a stock will outperform — and what would prove you wrong.ThetaTheta measures how much an option loses in value each day from the passage of time — its rate of time decay. A theta of −0.05 means the option loses about $0.05 per day, all else equal. Theta hurts option buyers and helps sellers, and it accelerates as expiration approaches.Threshold ruleRebalance whenever any sleeve drifts more than a set percentage from its target, regardless of how recently you last rebalanced.Tick sizeTick size is the smallest price increment a contract can move — the minimum step between one quote and the next. Each tick has a fixed dollar value (the 'tick value'), so tick size and tick value together determine what a one-tick move is worth. They're fundamental to sizing and pricing futures trades.Time horizonHow long until you need to spend the money you're investing.Time in forceHow long an order stays active: day (expires at close), GTC (good-till-cancelled), or IOC (immediate-or-cancel).Time in marketHow long your money stays invested — the single most reliable predictor of real returns.TimeframeA timeframe is the amount of time each candle on a chart represents — a minute, an hour, a day, a week. The same market looks different on different timeframes, so traders match their chart's timeframe to their style and often check several at once (multi-timeframe analysis).Total returnThe full return from an investment — price change plus any income (dividends, interest) it paid.Tracking errorHow far a passive fund's performance drifts from its stated index.Trading haltA pause on a single stock's trading, often around news or volatility.Trailing P/EP/E using the most recent four reported quarters of earnings in the denominator.Treasury billA short-term government bond, typically 4–52 weeks to maturity. Considered the safest widely-available asset in its currency.TrendlineA trendline is a straight line drawn along a series of swing lows (in an uptrend) or swing highs (in a downtrend) to map the trend's direction and slope. While price keeps respecting the line the trend is intact; a decisive break of it warns the trend may be turning.TurnoverHow much of a fund's portfolio is bought and sold per year.Two-factor authenticationRequiring a second form of verification beyond your password to log in.
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UCITSUndertakings for Collective Investment in Transferable Securities — the EU fund wrapper used by most European retail investors.Unregulated offshore brokerA broker licensed in a low-regulation jurisdiction with no meaningful investor-protection scheme.UptrendAn uptrend is a market moving generally higher over time, defined by a staircase of higher highs and higher lows — each rally peaks above the last, and each pullback bottoms above the previous one. It stays intact until price makes a lower low.
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Valuation gapThe difference between what a stock is worth (estimated) and what it currently trades at.Value stockA stock priced low on standard multiples relative to its fundamentals — usually slower-growing.Value trapA stock that looks cheap on a backward-looking multiple but is cheap for a reason — the business is impaired.VegaVega measures how much an option's price changes when implied volatility moves by 1 percentage point. A vega of 0.10 means the option gains about $0.10 if implied volatility rises 1 point. Vega is highest for at-the-money options with lots of time left, and it's why options get pricier when markets grow fearful.Vertical spreadA vertical spread is an options strategy that buys one option and sells another of the same type and expiry but a different strike. Selling one option offsets part of the cost of buying the other, which caps both the maximum risk and the maximum reward — a defined-risk, defined-reward trade.VolatilityHow much an investment's price swings, up and down, over time.VolumeVolume is the number of shares or contracts traded in a period, usually shown as bars beneath the price chart. It measures conviction — how much participation is behind a move. A price move on high volume carries far more weight than the same move on thin volume.VWAP (Volume-Weighted Average Price)VWAP is the average price a security has traded at during the day, weighted by volume — so prices where more shares changed hands count for more. It's a single intraday line traders use as a fair-value benchmark and to judge whether they're buying above or below the day's average.
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WedgeA wedge is a pattern where price coils between two trendlines that slope the same direction and converge. A rising wedge (both lines up) is typically bearish; a falling wedge (both lines down) is typically bullish. The tilt against the eventual breakout is what makes the wedge a signal.Working capitalCurrent assets minus current liabilities — the operating buffer the business runs on day-to-day.